<PAGE> 1
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):
AUGUST 31, 1998
MAXIMUS, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 1-12997 54-10005888
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
1356 BEVERLY ROAD, MCLEAN, VIRGINIA 22101
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(703) 734-4200
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 31, 1998, MAXIMUS, Inc. ("MAXIMUS") acquired Carrera Consulting
Group ("Carrera"). The acquisition was structured as a merger (the "Merger") of
a wholly owned subsidiary of MAXIMUS with and into Carrera pursuant to an
Agreement and Plan of Merger (the "Merger Agreement") dated as of August 31,
1998. The Merger was a tax-free reorganization and is being accounted for as a
pooling of interests.
As consideration for the Merger, the sole stockholder of Carrera received
1,137,420 shares of common stock, no par value, of MAXIMUS (the "MAXIMUS Common
Stock") in exchange for the 2,800,000 issued and outstanding shares of common
stock, no par value, of Carrera (the "Carrera Common Stock"). In addition,
holders of options for shares of Carrera Common Stock will each receive an
option for .40622 shares of MAXIMUS Common Stock for each share of Carrera
Common Stock represented by the outstanding Carrera options held by such option
holders.
The number of shares of MAXIMUS Common Stock delivered as the merger
consideration was determined through arms-length negotiation between the
parties. There was no material relationship between Carrera or its stockholder
and MAXIMUS or any of its affiliates, directors or officers, or any associate of
a MAXIMUS director or officer.
The assets acquired in the Merger were used by Carrera in the business of
providing information technology consulting services, primarily with respect to
implementing software developed by PeopleSoft, Inc., and financial and human
resources software for local and state governments. MAXIMUS intends that Carrera
will operate in the same business either as a wholly owned subsidiary or as a
division of MAXIMUS.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Pursuant to Rule 3-05(b)(2)(i) of Regulation S-X financial statements
of the business acquired are not required.
(b) Pro Forma Financial Information.
Pursuant to Rule 3-05(b)(2)(i) of Regulation S-X pro forma financial
statements are not required.
2
<PAGE> 3
(c) Exhibits:
2 Agreement and Plan of Merger dated August 31, 1998 by and between
MAXIMUS, Inc., Carrera Acquisition Corp., Carrera Consulting Group and
Margaret Carrera. Filed herewith. Pursuant to Item 601(b)(2) of
Regulation S-K, the exhibits and schedules to the Agreement and Plan
of Merger are omitted. A list of such exhibits and schedules appears
in the table of contents to the Agreement and Plan of Merger. The
Registrant hereby undertakes to furnish supplementally a copy of any
omitted exhibit or schedule to the Commission upon request.
3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MAXIMUS, INC.
Date: September 14, 1998 By: /s/ David V. Mastran
-----------------------
David V. Mastran
President
4
<PAGE> 5
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
2 Agreement and Plan of Merger dated August 31, 1998, by and
between MAXIMUS, Inc., Carrera Acquisition Corp., Carrera
Consulting Group and Margaret Carrera. Filed herewith. Pursuant
to Item 601(b)(2) of Regulation S-K, the exhibits and schedules
to the Agreement and Plan of Merger are omitted. A list of such
exhibits and schedules appears in the table of contents to the
Agreement and Plan of Merger. The Registrant hereby undertakes to
furnish supplementally a copy of any omitted exhibit or schedule
to the Commission upon request.
5
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MAXIMUS, INC.,
CARRERA ACQUISITION CORP.,
CARRERA CONSULTING GROUP
AND
MARGARET CARRERA
August 31, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1 THE MERGER.................................................................................1
1.1 The Merger.....................................................................................1
1.2 Effective Time.................................................................................2
1.3 Effects of the Merger..........................................................................2
1.4 Articles of Incorporation and Bylaws...........................................................2
1.5 Directors and Officers.........................................................................2
1.6 Conversion of Stock............................................................................2
1.7 Conversion of Options..........................................................................3
1.8 Closing of Carrera's Transfer Books............................................................4
1.9 Dissenting Rights..............................................................................4
1.10 Issuance of Maximus Certificates...............................................................4
1.11 Fractional Shares..............................................................................4
1.12 Escrow of Shares...............................................................................4
ARTICLE 2 REPRESENTATIONS OF THE STOCKHOLDER REGARDING THE CARRERA STOCK.............................5
2.1 Title to Shares................................................................................5
2.2 Authority......................................................................................5
2.3 No Conflict....................................................................................5
2.4 Validity.......................................................................................5
2.5 No Finder's Fee................................................................................5
2.6 Investment Representation......................................................................6
2.7 Continuity of Interest.........................................................................7
2.8 Pooling of Interest............................................................................7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF CARRERA AND THE STOCKHOLDER..............................8
3.1 Organization and Qualification.................................................................8
3.2 Capitalization and Title to Shares.............................................................8
3.3 Authority to Execute and Perform Agreements....................................................8
3.4 Articles of Incorporation and By-laws..........................................................9
3.5 Financial Statements...........................................................................9
3.6 No Material Adverse Change.....................................................................9
3.7 Tax Matters...................................................................................10
3.8 Compliance with Laws..........................................................................11
3.9 No Breach.....................................................................................12
3.10 Actions and Proceedings.......................................................................12
3.11 Contracts and Other Agreements................................................................12
3.12 Real Estate...................................................................................14
3.13 Accounts and Notes Receivable.................................................................14
3.14 Tangible Property.............................................................................14
3.15 Intangible Property...........................................................................14
3.16 Title to Assets; Liens........................................................................15
-i-
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
3.17 Absence of Undisclosed Liabilities............................................................15
3.18 Customers.....................................................................................16
3.19 Employee Benefit Plans........................................................................16
3.20 Employee Relations............................................................................17
3.21 Insurance.....................................................................................17
3.22 Brokerage.....................................................................................17
3.23 Hazardous Materials...........................................................................17
3.24 Bank Accounts and Powers of Attorney..........................................................18
3.25 Full Disclosure...............................................................................18
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF MAXIMUS.................................................18
4.1 Organization..................................................................................18
4.2 Authority to Execute and Perform Agreements...................................................18
4.3 Brokerage.....................................................................................19
4.4 No Breach.....................................................................................19
4.5 Disclosure....................................................................................19
4.6 No Material Changes...........................................................................19
4.7 Issuance, Sale and Delivery of the Shares.....................................................19
4.8 Exempt Transaction............................................................................20
4.9 Validity......................................................................................20
4.10 Actions and Proceedings.......................................................................20
ARTICLE 5 COVENANTS AND AGREEMENTS..................................................................20
5.1 Conduct of Business Until the Closing.........................................................20
5.2 Negative Covenants Pending Closing............................................................21
5.3 Continued Effectiveness of Representations and Warranties.....................................22
5.4 Corporate Examinations and Investigations.....................................................22
5.5 Expenses......................................................................................23
5.6 Authorization from Others.....................................................................23
5.7 Stockholder Vote; Consummation of Agreement...................................................23
5.8 Payment of Debt...............................................................................23
5.9 Further Assurances............................................................................23
5.10 Material Events...............................................................................24
5.11 Tax-Free Transaction..........................................................................24
5.12 Limitation on Resales for Pooling Accounting..................................................24
5.13 Employment Offers to Carrera Employees........................................................24
5.14 Other Agreement...............................................................................24
ARTICLE 6 CONDITIONS PRECEDENT TO THE OBLIGATION OF MAXIMUS TO CLOSE................................25
6.1 Representations, Warranties and Covenants.....................................................25
6.2 Certificate of Secretary of Carrera..........................................................25
6.3 Third Party Consents and Permits..............................................................25
-ii-
</TABLE>
<PAGE> 4
TABLE OF CONTENTS
<TABLE> (continued)
<CAPTION>
PAGE
<S> <C> <C>
6.4 Related Agreements............................................................................25
6.5 Opinion of Counsel to Carrera and the Stockholder.............................................25
6.6 Litigation....................................................................................25
6.7 Business Since the Balance Sheet Date.........................................................26
6.8 Completion of Due Diligence...................................................................26
6.9 Key Personnel.................................................................................26
6.10 Maximus's Accountant's Confirmation...........................................................26
6.11 Eligibility for Pooling of Interest...........................................................26
6.12 Insurance.....................................................................................26
6.13 Debt..........................................................................................26
6.14 Relationship with PeopleSoft, Inc.............................................................26
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE STOCKHOLDER AND CARRERA TO CLOSE............27
7.1 Representations, Warranties and Covenants.....................................................27
7.2 Certificate of Secretary of Maximus...........................................................27
7.3 Certificate of Secretary of CAC...............................................................27
7.4 Related Agreements............................................................................27
7.5 Opinion of Counsel to Maximus.................................................................27
7.6 Litigation....................................................................................28
7.7 Business Since the Date of the `34 Act Filings................................................28
7.8 Completion of Due Diligence...................................................................28
7.9 Third Party Consents and Permits..............................................................28
ARTICLE 8 INDEMNIFICATION...........................................................................28
8.1 Survival......................................................................................28
8.2 Obligation of the Stockholder to Indemnify....................................................29
8.3 Obligation of Maximus to Indemnify............................................................29
8.4 Notice and Opportunity to Defend..............................................................29
8.5 Limitations on Indemnification................................................................30
ARTICLE 9 TERMINATION OF AGREEMENT..................................................................31
9.1 Termination...................................................................................31
9.2 Effect of Termination.........................................................................32
ARTICLE 10 MISCELLANEOUS.............................................................................32
10.1 Publicity.....................................................................................32
10.2 Notices.......................................................................................32
10.3 Entire Agreement..............................................................................33
10.4 Waivers and Amendments; Non-Contractual Remedies; Preservation of Remedies....................33
10.5 Governing Law.................................................................................34
10.6 Enforceability in Jurisdictions; Consent......................................................34
10.7 Binding Effect; No Assignment.................................................................34
-iii-
</TABLE>
<PAGE> 5
TABLE OF CONTENTS
<TABLE> (continued)
<CAPTION>
PAGE
<S> <C> <C>
10.8 Counterparts..................................................................................34
10.9 Exhibits and Schedules........................................................................34
10.10 Headings......................................................................................35
-iv-
</TABLE>
<PAGE> 6
EXHIBITS
--------
Exhibit A Escrow Agreement
Exhibit B Form of Executive Employment and Non-Compete
Agreement
Exhibit C Form of Opinion of Pillsbury Madison & Sutro LLP
Exhibit D Form of Opinion of Palmer & Dodge LLP
SCHEDULES
---------
Schedule I. Stockholder of Carrera
Schedule 3.1 Organization and Qualification
Schedule 3.2.2 Options or Other Rights
Schedule 3.5 Financials
Schedule 3.10 Actions and Proceedings
Schedule 3.11 Contracts and Other Agreements
Schedule 3.12 Real Estate Leases
Schedule 3.16 Proprietary Rights
Schedule 3.17 Liens and Encumbrances
Schedule 3.19 Customers and Distributors
Schedule 3.20 Employee Benefit Plans
Schedule 3.21 Key Employees
Schedule 3.22 Insurance
Schedule 3.24 Hazardous Materials
Schedule 3.25 Bank Accounts
<PAGE> 7
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of the 31st
day of August, 1998 by and among:
MAXIMUS, Inc., a Virginia corporation with an address at 1356 Beverly Road,
McLean, Virginia 22101 ("MAXIMUS");
Carrera Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Maximus ("CAC");
Carrera Consulting Group, a California corporation with an address at 2110
21st Street, Suite 400, Sacramento, CA 95818 ("CARRERA"); and
Margaret Carrera who owns all of the issued and outstanding capital stock
of Carrera (the "STOCKHOLDER").
PRELIMINARY STATEMENT
1. The Stockholder owns the number of the issued and outstanding shares of
the common stock, no par value per share, of Carrera set forth on SCHEDULE I
attached hereto, which shares represent all of the issued and outstanding shares
of capital stock of Carrera (collectively, the "SHARES").
2. Maximus desires to purchase, and the Stockholder desires to sell, the
business of Carrera for the consideration set forth below, subject to the terms
and conditions of this Agreement.
3. This Agreement is intended to be a "plan of reorganization" within the
meaning of ss. 368(a) of the Internal Revenue Code of 1986, as amended (the
"CODE").
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions hereof, and in
accordance with the California General Corporation Law (the "CGCL") and the
General Corporation Law of the State of Delaware (the "DGCL"), CAC shall be
merged with and into Carrera (the "MERGER"). The Merger shall occur at the
Effective Time (as defined herein). Following the Merger, Carrera shall continue
as the surviving corporation (the "SURVIVING CORPORATION") and the separate
corporate existence of CAC shall cease.
<PAGE> 8
1.2 EFFECTIVE TIME. As soon as practicable after satisfaction or waiver of
all conditions to the Merger, the parties shall cause merger documents to be
filed in accordance with Section 1108 of the CGCL and a Certificate of Merger to
be filed in accordance with Section 252 of the DGCL (the California merger
documents and the Certificate of Merger are referred to herein collectively as
the "MERGER DOCUMENTS") and shall take all such further actions as may be
required by law to make the Merger effective. The Merger shall be effective at
such time as the Merger Documents are filed with the Secretary of State of the
State of Delaware in accordance with the DGCL and with the Secretary of State of
the State of California in accordance with the CGCL or at such later time as is
specified in such documents (the "EFFECTIVE TIME"). Immediately prior to the
filing of the Merger Documents, a closing (the "CLOSING") will be held at the
offices of Palmer & Dodge LLP, One Beacon Street, Boston, Massachusetts (or such
other place as the parties may agree) for the purpose of confirming satisfaction
or waiver of all conditions to the Merger. Subject to satisfaction or waiver of
each of the conditions specified in Sections 6 and 7 hereof, the Closing shall
take place within three business days after the day the Merger is approved by
the Stockholder pursuant to Section 5.7; or on such other date as the parties
may agree, but not later than September 15, 1998. The date on which the Closing
occurs is referred to herein as the "CLOSING DATE".
1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
Section 1107 of the CGCL and Section 259 of the DGCL.
1.4 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of Incorporation and
Bylaws of Carrera, in each case as in effect immediately prior to the Effective
Time shall be the Articles of Incorporation and Bylaws of the Surviving
Corporation immediately after the Effective Time.
1.5 DIRECTORS AND OFFICERS.
1.5.1 The directors and officers of CAC immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation
immediately after the Effective Time, except that the President of Carrera
immediately prior to the Effective Time shall be the President of the Surviving
Corporation immediately after the Effective Time, each such officer and director
to hold office in accordance with their respective terms.
1.5.2 Maximus shall take all actions necessary to cause Margaret
Carrera to be elected to the Board of Directors of Maximus promptly following
the Effective Time. Maximus shall further take all actions necessary to cause
Margaret Carrera to be elected as Vice Chairman of the Board of Directors of
Maximus promptly following her election to the Board of Directors of Maximus.
1.6 CONVERSION OF STOCK.
1.6.1 For purposes of this Agreement, "MERGER CONSIDERATION" means
1,137,420 shares of Common Stock, no par value per share, of Maximus (the
"MAXIMUS COMMON STOCK").
1.6.2 At the Effective Time, by virtue of the Merger and without any
action on the part of Maximus or Carrera:
2
<PAGE> 9
(a) All shares of Common Stock of Carrera, no par value per share, (the
"CARRERA STOCK") outstanding immediately prior to the Effective Time, shall be
converted into and become the right to receive, (subject to the payment of cash
in lieu of fractional shares as provided in Section 1.11 and the escrow deposit
required by Section 1.12) Maximus Common Stock in accordance with Section 1.6.3.
(b) All Carrera Stock held at the Effective Time by Carrera as treasury
stock or by a subsidiary of Carrera shall be canceled and no payment shall be
made with respect thereto.
(c) All shares of Common Stock of CAC, $0.01 par value per share,
outstanding immediately prior to the Effective Time, shall be converted into the
right to receive the same number of shares of Common Stock of the Surviving
Corporation.
1.6.3 The Merger Consideration shall be allocated among the holders of
Carrera Stock outstanding immediately prior to the Effective Time by allocating
to each such holder of Carrera Stock that number of shares of Maximus Common
Stock determined by multiplying the number of shares of Carrera Stock held by
each such holder by the Conversion Factor (as defined below).
1.6.4 "CONVERSION FACTOR" means the quotient obtaining by dividing (a)
the number of shares of Maximus Common Stock comprising the Merger Consideration
by (b) the number of shares of Carrera Stock outstanding immediately prior to
the Effective Time.
1.7 CONVERSION OF OPTIONS.
1.7.1 As of the Effective Time, each option to purchase Carrera Stock
that is outstanding under the Carrera Consulting Group Stock Option Plan or
otherwise (each a "Carrera Option") shall be deemed to be an option to purchase
a number of shares of Maximus Common Stock that is equal to the number of shares
of Carrera Stock subject to the unexercised portion of such Carrera Option as of
the Effective Time multiplied by the Conversion Factor (with any fraction
resulting from such multiplication to be rounded up or down to the nearest whole
number). The exercise price per share of Maximus Common Stock of each former
Carrera Option shall be equal to the exercise price of each Carrera Option as of
the Effective Time, divided by the Conversion Factor. All other terms of the
Carrera Options shall remain unchanged, including without limitation the vesting
schedule for the Carrera Options, such that any portion of a Carrera Option
which has vested shall remain vested.
1.7.2 As soon as practicable after the Effective Time, Maximus or the
Surviving Corporation shall deliver to holders of former Carrera Options
appropriate notices setting forth such holders' rights pursuant to such former
Carrera Options, as revised pursuant to this Section 1.7.
1.7.3 Maximus shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Maximus Common Stock for delivery
upon exercise of the options assumed by Maximus in accordance with this
Section 1.7. Maximus shall (i) following the Effective Time, prepare and file
with the Securities and Exchange Commission a Registration Statement on Form S-8
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), with
3
<PAGE> 10
respect to the shares of Maximus Common Stock subject to such options that may
be registered on a Form S-8, and (ii) use its best efforts to maintain the
effectiveness of such Registration Statement for so long as such options remain
outstanding.
1.8 CLOSING OF CARRERA'S TRANSFER BOOKS. At the date of this Agreement, the
stock transfer books of Carrera shall be closed and no transfer of Carrera Stock
shall thereafter be made, except at the direction of Maximus.
1.9 DISSENTING RIGHTS. The Stockholder agrees to vote her Carrera Stock in
favor of the Merger, and therefore, Carrera represents and warrants that there
will be no exercise of dissenter rights under Title 1, Chapter 13 of the CGCL.
1.10 ISSUANCE OF MAXIMUS CERTIFICATES. Maximus shall authorize one or more
persons to act as Exchange Agent hereunder (the "EXCHANGE Agent"). Any and all
outstanding certificates representing Carrera Stock shall be surrendered to the
Exchange Agent. Upon receipt of all of the certificates held by the Stockholder,
the Stockholder shall be entitled to receive (subject to the escrow deposit
required by Section 1.12) a certificate representing shares of Maximus Common
Stock to be received by the Stockholder pursuant to the right to receive such
shares of Maximus Common Stock into which the shares of Carrera Common Stock
shall have been converted pursuant to the provisions of this Agreement. The
shares of Carrera Stock outstanding immediately prior to the Effective Time (and
any certificates representing such shares) shall be deemed canceled as of the
Effective Time. The Maximus Common Stock which will be issued in the Merger
shall be deemed to have been issued at the Effective Time. If any certificates
for Maximus Common Stock are to be issued in a name other than that in which
Carrera Stock was registered immediately prior to the Effective Time, it shall
be a condition of such issuance that the person requesting such issuance shall
deliver to the Exchange Agent all documents necessary to evidence and effect
such transfer and shall pay to the Exchange Agent any transfer or other taxes
required by reason of the issuance of certificates for such shares of Maximus
Common Stock in a name other than that of the registered holder of the
certificate or surrendered or establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable.
1.11 FRACTIONAL SHARES. No certificates representing fractional shares of
Maximus Common Stock shall be issued upon the surrender for exchange of Carrera
Stock certificates. No fractional interest shall entitle the owner to vote or to
any rights of a security holder. In lieu of fractional shares, if the
Stockholder would otherwise have been entitled to a fractional share of Maximus
Common Stock, then she will receive from Maximus at Closing an amount in cash
(without interest) determined by multiplying such fraction by the average of the
closing prices of Maximus Common Stock as reported by The New York Stock
Exchange for the twenty (20) trading days ending on the fifth trading day prior
to the Closing Date (the "CLOSING MARKET VALUE"). Maximus shall not be liable to
the Stockholder for any cash in lieu of fractional interests delivered to a
public official pursuant to escheat or abandoned property laws.
1.12 ESCROW OF SHARES. At the Effective Time, Maximus shall deposit
certificates representing 10% of the Merger Consideration (the "ESCROW AMOUNT"),
with an escrow agent reasonably satisfactory to the Stockholder to be held and
disbursed by such agent in accordance with the form of escrow agreement (the
"ESCROW AGREEMENT") attached hereto as EXHIBIT A.
4
<PAGE> 11
ARTICLE 2
REPRESENTATIONS OF THE STOCKHOLDER REGARDING THE
CARRERA STOCK
The Stockholder represents and warrants to Maximus as follows:
2.1 TITLE TO SHARES. The Stockholder has good and marketable title to the
Shares which are to be transferred to Maximus by the Stockholder pursuant
hereto, free and clear of any and all covenants, conditions, restrictions,
voting trust arrangements, liens, charges, encumbrances, options and adverse
claims or rights whatsoever. SCHEDULE I attached hereto sets forth a true and
correct description of all Shares owned by the Stockholder.
2.2 AUTHORITY. The Stockholder has the full right, power and authority to
enter into this Agreement, the Escrow Agreement, and the Executive Agreement as
defined in Section 6.4 below (collectively, the "RELATED AGREEMENTS") and each
of this Agreement and the Related Agreements has been or will be duly executed
and delivered and is the valid and binding obligation of the Stockholder
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights and
remedies of creditors generally, and to equitable principles..
2.3 NO CONFLICT. The Stockholder is not a party to, subject to or bound by
any agreement or any judgment, order, writ, prohibition, injunction, decree or
award of any federal, state, foreign or local court, arbitration tribunal,
administrative agency or commission or other governmental or regulatory body,
authority or agency (a "GOVERNMENTAL ENTITY") which would prevent the execution
or delivery of this Agreement or any Related Agreements by the Stockholder or
the transfer, conveyance and sale of the Shares to be sold by the Stockholder to
Maximus pursuant to the terms hereof.
2.4 VALIDITY. This Agreement has been duly executed by the Stockholder.
This Agreement constitutes, and the Related Agreements will constitute, the
valid and legally binding obligations of the Stockholder, enforceable against
the Stockholder in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights and remedies of creditors generally, and to equitable principles. The
execution, delivery and performance by the Stockholder of this Agreement and the
Related Agreements, and the consummation by the Stockholder of the transactions
contemplated hereby and thereby, will not, with or without the giving of notice
or the passage of time or both, (a) violate the provisions of any federal,
state, local or foreign laws, regulations, rules, ordinances or orders
(collectively, "LAWS AND REGULATIONS") applicable to the Stockholder; (b)
violate any judgment, order, writ, prohibition, injunction, decree or award of
any Governmental Entity applicable to such Stockholder; or (c) except for the
approvals set forth on SCHEDULE 2.4 hereto, require on the part of the
Stockholder any filing with, or any permit, authorization, consent or approval
of, any Governmental Entity. SCHEDULE 2.4 sets forth a true, correct and
complete list of all consents and approvals of non-governmental third parties
that are required in connection with the consummation by the Stockholder of the
transactions contemplated by this Agreement.
5
<PAGE> 12
2.5 NO FINDER'S FEE. No broker, finder, agent or similar intermediary has
acted on behalf of the Stockholder in connection with this Agreement or the
transactions contemplated hereby, and there are no brokerage commissions,
finders' fees or similar fees or commissions payable in connection therewith
based on any agreement, arrangement or understanding made by or on behalf of the
Stockholder.
2.6 INVESTMENT REPRESENTATION. The Stockholder represents and warrants as
follows:
(a) The Stockholder has not relied upon the advice of a "Purchaser
Representative" as defined in Regulation D under the Securities Act in
evaluating the risks and merits of Maximus Common Stock.
(b) The Stockholder has received and read or reviewed and is familiar
with Maximus's Forms 10-K, 10-Q and Forms 8-K which have been filed with
the Securities and Exchange Commission ("'34 ACT FILINGS").
(c) The Stockholder has had an opportunity to ask questions of and
receive answers from Maximus, or a person or persons acting on Maximus's
behalf, concerning the terms and conditions of Maximus Common Stock.
(d) The Stockholder understands that (i) none of the shares of Maximus
Common Stock being issued pursuant to this Agreement have been registered
under the Securities Act or under the securities laws of any state or other
jurisdiction in reliance upon exemptions for private offerings, (ii) while
Maximus may in the future register the shares of Maximus Common Stock being
issued pursuant to this Agreement, it is under no obligation to do so
(other than pursuant to certain registration rights set forth in the
Executive Agreement), (iii) the Stockholder is acquiring Maximus Common
Stock without being furnished any offering literature or prospectus other
than the `34 Act Filings referred to in paragraph (b) above.
(e) The shares of Maximus Common Stock are being acquired solely for
the Stockholder's own account, for investment and not with a view to or for
the resale, distribution, subdivision, or fractionalization thereof; the
Stockholder has no current plans to enter into any contract, undertaking,
agreement, or arrangement relating thereto.
(f) The Stockholder acknowledges and is aware that there are
substantial restrictions on the transferability of the shares of Maximus
Common Stock issued pursuant to this Agreement; that the shares of Maximus
Common Stock issued pursuant to this Agreement cannot be resold unless such
shares are registered under the Securities Act and any applicable
securities law of any state or other jurisdiction, or an exemption from
registration is available; other than the registration rights described in
the Executive Agreement being entered into with the Stockholder, the
Stockholder has no rights to require that such shares be registered under
the Securities Act; and unless such shares are so registered or an
exemption therefrom is available to the Stockholder, there will be no
public market for the shares of Maximus Common Stock issued pursuant to
this Agreement.
6
<PAGE> 13
(g) The Stockholder has such knowledge and experience in financial and
business matters that she is capable of evaluating the relative risks and
merits of the shares of Maximus Common Stock issued pursuant to this
Agreement.
(h) The Stockholder is a resident of the state appearing hereunder
under her name on the signature pages hereto.
(i) The Stockholder has been advised that, in addition to other
restrictions on the transfer of the shares of Maximus Common Stock issued
pursuant to this Agreement, since she may be an "affiliate" of Maximus at
the Closing and the distribution of such shares by the Stockholder has not
been registered under the Securities Act, Rule 144 under the Act will
restrict the Stockholder's sales of Maximus Common Stock received in the
transaction. The Stockholder acknowledges that the shares of Maximus Common
Stock received by her pursuant to this Agreement shall be subject to stop
transfer instructions and may be legended to reflect the restrictions on
transfer imposed by the Securities Act.
(j) All documents and other papers delivered by or on behalf of the
Stockholder in connection with this Agreement and the transactions
contemplated hereby are true and complete to the best of the Stockholder's
knowledge and authentic. No representation or warranty of the Stockholder
contained in this Agreement, and, to the best knowledge of the Stockholder,
no document or other paper furnished by or on behalf of the Stockholder to
Maximus (or any of its agents) pursuant to this Agreement or in connection
with the transactions contemplated hereby, taken as a whole, contains an
untrue statement of a material fact.
2.7 CONTINUITY OF INTEREST. The Stockholder has no current plan or intent
to engage in any Related Party Sale (as defined below) with respect to more than
50% of the Maximus Common Stock to be received by the Stockholder pursuant to
the plan of reorganization evidenced by this Agreement. A Related Party Sale is
any Sale to Maximus, for consideration other than Maximus Common Stock. A Sale
is any sale, exchange, transfer, pledge, disposition or other transaction which
would result in a reduction in the risk of ownership with respect to Carrera
Stock owned by the Stockholder during the 30 days prior to the Effective Date.
If a Sale occurs with respect to Carrera Stock, for consideration other than
shares of capital stock of Maximus or Carrera, in a transaction that is in
contemplation of, or related or pursuant to, the Agreement, and the Sale is with
Carrera or Maximus, such Sale of Carrera Stock shall be treated as if Carrera
Stock was exchanged for Maximus Common Stock pursuant to the plan of
reorganization and Maximus Common Stock was then disposed of in a Related Party
Sale pursuant to a plan. Further, for purposes of determining whether a Related
Party Sale has occurred, a Sale to a partnership shall be treated as a Sale to
each partner of the partnership, in proportion to that partner's interest in the
partnership.
2.8 POOLING OF INTEREST. The Stockholder shall not have engaged in any
sale, exchange, transfer, pledge, disposition or any other transaction which
would result in a reduction in the risk of ownership with respect to the Shares
owned by the Stockholder during the 30 days prior to the Closing.
7
<PAGE> 14
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF CARRERA AND THE STOCKHOLDER
Carrera and the Stockholder represent and warrant to Maximus that:
3.1 ORGANIZATION AND QUALIFICATION. Carrera is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has full corporate power and lawful authority to own, lease and
operate its assets, properties and business and to carry on its business as now
being and as heretofore conducted. Carrera is qualified or otherwise authorized
to transact business as a foreign corporation in each jurisdiction (in the
United States and outside of the United States) in which such qualification or
authorization is required by law and in which the failure to so qualify or be
authorized would have a material adverse effect on Carrera or its assets,
properties, business, operations or condition (financial or otherwise). Except
as set forth in SCHEDULE 3.1, Carrera does not file, and is not required to
file, any franchise, income or other tax returns in any other jurisdiction (in
the United States or outside of the United States), other than its jurisdiction
of incorporation, based upon the ownership or use of property therein or the
derivation of income therefrom. Carrera does not lease property in any
jurisdiction (in the United States or outside the United States) other than real
estate leases in the States of California and Washington and automobile leases,
if any, in the State of California.
3.2 CAPITALIZATION AND TITLE TO SHARES.
3.2.1 OUTSTANDING CAPITAL STOCK. Carrera is authorized to issue
10,000,000 shares of Common Stock, no par value per share, of which 2,800,000
shares are issued and outstanding owned beneficially and of record by the
Stockholder, free and clear of any claim, lien or other encumbrance. No other
class of capital stock of Carrera is authorized or outstanding. All of the
issued and outstanding shares of Carrera's capital stock are duly authorized and
are validly issued, fully paid, nonassessable and free of pre-emptive rights. No
shares of any class of Carrera's capital stock are held in the treasury of
Carrera. Since January 1, 1997, Carrera has not made repurchases or redemptions
of shares of its capital stock. The Shares of Common Stock of Carrera held by
the Stockholder constitute all of the issued and outstanding capital stock of
Carrera on the Closing Date. None of the issued and outstanding shares of
Carrera's capital stock has been issued in violation of any federal or state
law.
3.2.2 OPTIONS OR OTHER RIGHTS. Except as set forth on Schedule 3.2.2,
there are no rights, subscriptions, warrants, calls, preemptive rights, options
or other agreements or commitments of any kind to purchase or otherwise to
receive from Carrera any of the outstanding, authorized but unissued,
unauthorized or treasury shares of the capital stock or any other security of
Carrera and there are not any outstanding securities of any kind convertible
into or exchangeable for such capital stock. There are no shareholder
agreements, voting trusts or agreements, proxies or other agreements,
instruments or understandings with respect to the outstanding shares of capital
stock of Carrera.
3.3 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Carrera has the full legal
right and power and all authority and, except as otherwise provided herein,
approvals required to enter
8
<PAGE> 15
into, execute and deliver this Agreement and the Related Agreements and to
perform fully its obligations hereunder and thereunder, and each of this
Agreement and the Related Agreements has been or will be duly executed and
delivered and is the valid and binding obligation of Carrera enforceable in
accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights and remedies of
creditors generally, and to equitable principles.
3.4 ARTICLES OF INCORPORATION AND BY-LAWS. Carrera has previously delivered
or made available to Maximus true and complete copies of its Articles of
Incorporation, certified by the Secretary of the State of California and By-laws
of Carrera as in effect on the date hereof. The minute books of Carrera contain
true and complete records of all meetings and consents in lieu of meetings of
the Board of Directors (and any committees thereof) and of the Stockholders of
Carrera since the time of Carrera's incorporation and accurately reflects all
transactions referred to in such minutes and consents in lieu of meetings. The
stock books of Carrera are true and complete.
3.5 FINANCIAL STATEMENTS. The balance sheet of Carrera as at December 31,
1997 and the related statement of operations for its fiscal year then ended
compiled by Hullen & Accountancy Corp., independent public accountants, and the
interim consolidated balance sheet of Carrera as at June 30, 1998 and related
statement of operations for the period then ended, all of which are attached
hereto as SCHEDULE 3.5, fairly present the financial condition and results of
operations of Carrera as of the end of such fiscal year and for the period then
ended in accordance with generally accepted accounting principles, consistently
applied throughout the periods covered thereby, except to the extent otherwise
disclosed in such financial statements or in SCHEDULE 3.5 hereto and evidence,
at December 31, 1997, (a) revenue of not less than $8,100,000. The foregoing
financial statements of Carrera are sometimes herein called the "FINANCIALS,"
the balance sheet of Carrera as at December 31, 1997 is sometimes herein called
the "BALANCE SHEET" and December 31, 1997 is sometimes herein called the
"BALANCE SHEET DATE."
3.6 NO MATERIAL ADVERSE CHANGE. Since the Balance Sheet Date:
(a) there have been no changes in the assets, properties, business,
operations or condition (financial or otherwise) of Carrera which either
individually or in the aggregate materially and adversely affect Carrera,
nor does Carrera know of any such change that is threatened, nor has there
been any damage, destruction or loss materially and adversely affecting the
assets, properties, business, operations or condition (financial or
otherwise) of Carrera whether or not covered by insurance; and
(b) Carrera has not, except as set forth on SCHEDULE 3.6:
(i) incurred any indebtedness for borrowed money;
(ii) declared or paid any dividend or declared or made any other
distribution of any kind to the Stockholder on account of her equity
holdings in Carrera, or made any direct or indirect redemption,
retirement, purchase or other acquisition of any shares of their
capital stock;
9
<PAGE> 16
(iii) made any loan or advance to the Stockholder, its officers,
directors, employees, consultants, agents or other representatives
(other than travel advances made in the ordinary course of business)
for more than $1,000, or made any other loan or advance otherwise than
in the ordinary course of business;
(iv) made any payment or commitment to pay any severance or
termination pay to any of its officers, directors, employees,
consultants, agents or other representatives, other than payments or
commitments to pay persons other than its officers, directors or the
Stockholder made in the ordinary course of business;
(v) except in the ordinary course of business: entered into any
lease (as lessor or lessee); sold, abandoned or made any other
disposition of any of its assets or properties, granted or suffered
any lien or other encumbrance on any of its assets or properties,
other than purchase money liens; entered into or amended any contract
or other agreement to which it is a party, or by or to which it or
their assets or properties are bound or subject, or pursuant to which
it agrees to indemnify any party or to refrain from competing with any
party; or
(vi) except for inventory or equipment acquired in the ordinary
course of business, made any acquisition of all or any part of the
assets, properties, capital stock or business of any other person.
3.7 TAX MATTERS.
3.7.1 Except as set forth on SCHEDULE 3.7.1, all required federal,
state, county, local, foreign, and other taxes, including, without limitation,
income taxes, estimated taxes, excise taxes, sales taxes, use taxes, gross
receipts taxes, franchise taxes, employment and payroll related taxes,
withholding taxes, property taxes and import duties, whether or not measured in
whole or in part by net income and all deficiencies, or other additions to tax,
interest and penalties (hereinafter, "TAXES" or, individually, a "TAX") required
to be paid by Carrera through the date hereof, have been paid and all required
returns relating to such Taxes have been filed. All such returns are true,
correct and complete and correctly and accurately reflects the amount of Tax
liability for such period. Carrera does not know of any Tax deficiency or claim
for additional Taxes or interest thereon or penalties in connection therewith,
asserted or threatened to be asserted against Carrera by any taxing authority.
Except as set forth on SCHEDULE 3.7.1, there has not been any audit of any tax
return filed by Carrera and no audit of any tax return of Carrera is in progress
and Carrera has not been notified by any tax authority that any such audit is
contemplated or pending. No extension of time with respect to any date on which
a tax return was or is to be filed by Carrera is in force, and no waiver or
agreement by Carrera is in force for the extension of time for the assessment or
payment of any Tax. Carrera does not know of any payments or other items subject
to Section 280G of the Code.
3.7.2 The provisions for taxes on the Balance Sheet are sufficient for
the payment of all accrued and unpaid state and federal Taxes owed by Carrera,
including interest and penalties thereon and any applicable taxes owing to any
foreign jurisdiction, whether or not assessed or disputed, as of the Balance
Sheet Date. Carrera has timely paid or will pay before
10
<PAGE> 17
the Closing, or where payment is not required to be made, has made or will make
adequate provision for the payment of, all material Taxes, including interest
and penalties due and payable, in respect of any taxable period ending on or
before the Closing Date. For purposes of the preceding sentence, the Closing
Date shall be treated as the last day of a taxable period whether or not the
Closing Date is in fact the last day of such taxable period.
3.8 COMPLIANCE WITH LAWS.
3.8.1 Carrera is not in violation of any order, judgment, injunction,
award or decree binding upon it, the effect of which would be a material and
adverse effect on Carrera's business. Carrera is not in violation in any
material respect of any federal, state, local law, ordinance or regulation of
any governmental or regulatory body, including, without limitation, regulations
and requirements of the Occupational Safety and Health Administration ("OSHA"),
applicable to its businesses or assets, and laws, ordinances, regulations and
other requirements respecting labor, employment and employment practices, terms
and conditions of employment and wages and hours, or relating to the uses of its
assets, including, without limitation, laws relating to emissions, discharges,
releases of Hazardous Materials, as defined in Section 3.23 (including, without
limitation, ambient air, surface water, ground water or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, the effect of which
would have a material and adverse effect on Carrera's business. Carrera has
never received notice of, and there has never been, any citation, fine or
penalty imposed or asserted against Carrera for any such violation or alleged
violation.
3.8.2 Carrera has in full force and effect all current licenses,
permits, or other approvals required by OSHA and other licenses, permits,
franchises, and other approvals relating to employment or environmental matters
(including the disposal of Hazardous Materials), and all other licenses,
permits, franchises, orders or approvals of any federal, state (including the
state of California), local (including Sacramento, California) or foreign
governmental or regulatory body required for the conduct of Carrera's business,
the failure of which to obtain would have a material and adverse effect on
Carrera's business; all personnel of Carrera have all licenses, permits,
franchises orders or approvals of any federal state, local or foreign
governmental or regulatory required to perform their duties with Carrera;
Carrera has licenses required from all applicable state (including the state of
California) and local (including Sacramento, California) licensing authorities
(collectively, "PERMITS") that are material to the conduct of Carrera's
businesses and the uses of its assets, the failure of which to obtain would have
a material and adverse effect on Carrera's business; all such Permits are
described on SCHEDULE 3.8; such Permits are in full force and effect and if such
Permits are not automatically transferred to Maximus in the transaction
contemplated hereby, the parties hereto will use their best efforts to transfer
to Maximus those Permits affecting the business of Carrera which are
transferable; no material violations are or have been recorded with any federal,
state, local or foreign governmental or regulatory body in respect of any
Permit; and no proceeding is pending as to which notice has been served or, to
the best knowledge of Carrera and the Stockholder, threatened to revoke or limit
any Permit. For the purposes of this Agreement the terms "Carrera knows", "to
the knowledge of Carrera" or "to the best knowledge of Carrera" or similar terms
or phrases shall refer to the actual knowledge of the responsible officers of
Carrera and "responsible officers" shall be limited to Margaret Carrera and Lisa
Hoffman.
11
<PAGE> 18
3.9 NO BREACH. The execution, delivery and performance of this Agreement
and the Related Agreements and the consummation of the transactions contemplated
hereby and thereby will not (a) violate any provision of the Certificate of
Incorporation or By-laws of Carrera; (b) except as set forth in Schedule 3.9,
violate, conflict with or result in the breach of any of the terms or conditions
of, result in modification of the effect of, or otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any material instrument, contract
or other agreement to which Carrera or the Stockholder are a party or to which
any of them or any of their assets or properties may be bound or subject; (c)
violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon, Carrera
or the Stockholder or upon the securities, properties, assets or business of
Carrera; (d) violate any statute, law or regulation of any jurisdiction as such
statute, law or regulation relates to Carrera or the Stockholder or to the
securities, properties, assets or business of Carrera, the effect of which is to
materially and adversely effect the results of the business of Carrera; (e)
violate any Permit; (f) require the approval or consent of any foreign, federal,
state, local or other governmental or regulatory body or the approval or consent
of any other person other than consent of other parties to the contracts
described in SCHEDULE 3.9; or (g) result in the creation of any lien or other
encumbrance on the assets or properties of Carrera.
3.10 ACTIONS AND PROCEEDINGS. Except as set forth on SCHEDULE 3.10, there
are no outstanding orders, judgments, injunctions, awards or decrees of any
court, governmental or regulatory body or arbitration tribunal against or
involving Carrera or the Stockholder or any of the securities, assets, or
properties of Carrera, as to which Carrera has been served. There are no
actions, suits or claims or legal, administrative or arbitration proceedings, as
to which Carrera has been served, or, to the best knowledge of Carrera and the
Stockholder, investigations (whether or not the defense thereof or liabilities
in respect thereof are covered by insurance) pending or, to the best knowledge
of Carrera and the Stockholder, threatened against or involving Carrera or the
Stockholder or any of the securities, assets or properties of Carrera. To the
best knowledge of Carrera and the Stockholder, there is no fact, event or
circumstance that may give rise to any suit, action, claim, investigation or
proceeding that individually or in the aggregate could have a material adverse
effect upon the transactions contemplated hereby or upon the assets, properties,
business, operations or condition (financial or otherwise) of Carrera.
3.11 CONTRACTS AND OTHER AGREEMENTS. SCHEDULE 3.11 sets forth all of the
following contracts and other agreements to which Carrera is a party or by or to
which it or its assets or properties are bound or subject (and under which
Carrera has current or future rights or obligations):
(a) contracts and other agreements with any current or former
officer, director, stockholder, employee, consultant, agent or other
representative of Carrera;
(b) contracts and other agreements with any labor union or
association representing any employee of Carrera;
(c) contracts and other agreements for the purchase or sale of
materials, supplies, equipment, merchandise or services that contain
an escalation, renegotiation or redetermination clause or that
obligate Carrera to purchase all or substantially all of its
12
<PAGE> 19
requirements of a particular product from a supplier, or for periodic
minimum purchases of a particular product from a supplier;
(d) contracts and other agreements for the sale of any of the
assets or properties of Carrera other than in the ordinary course of
business or for the grant to any person of any options, rights of
first refusal, or preferential or similar rights to purchase any of
such assets or properties;
(e) partnership or joint venture agreements;
(f) contracts or other agreements under which Carrera agrees to
indemnify any party for tax liabilities or to share the tax liability
of any party;
(g) contracts and other agreements in which Carrera is the
purchaser of goods or services and calling for an aggregate purchase
price or payments in any one year of more than $10,000 in any one case
(or in the aggregate, in the case of any related series of contracts
and other agreements);
(h) contracts and other agreements in which Carrera is the
purchaser of goods or services and that require more than thirty days
notice to be cancelled by Carrera or an assignee of Carrera (in order
to avoid incurring any liability, premium or penalty);
(i) contracts and other agreements with customers or suppliers
for the sharing of fees, the rebating of charges or other similar
arrangements;
(j) contracts and other agreements containing obligations or
liabilities of any kind to holders of the securities of Carrera as
such (including, without limitation, an obligation to register any of
such securities under any federal or state securities laws);
(k) contracts and other agreements containing covenants of
Carrera not to compete in any line of business or with any person or
covenants of any other person not to compete with Carrera or in any
line of business;
(l) contracts and other agreements relating to the acquisition by
Carrera of any operating business or the capital stock of any other
person;
(m) options for the purchase of any asset, tangible or
intangible, for an aggregate purchase price of more than $5,000;
(n) contracts and other agreements requiring the payment to any
person of a commission or fee other than in the ordinary course of
business;
(o) contracts and other agreements for the payment of fees or
other consideration to any officer or director of Carrera or to any
other entity in which any of the foregoing has an interest;
(p) contracts and other agreements relating to the borrowing of
money;
13
<PAGE> 20
(q) distributorship or licensing agreements;
(r) contracts with purchasers of services from Carrera;
(s) leases, subleases or other agreements under which Carrera is
lessor or lessee of any real property; or
(t) any other material contract or agreement whether or not made
in the ordinary course of business.
There have been delivered or made available to Maximus true and complete copies
of all of the contracts and other agreements (and all amendments, waivers or
other modifications thereto) set forth on SCHEDULE 3.11. Except as set forth on
SCHEDULE 3.11, there are no contracts or other agreements outstanding which on
their face are contingent on Carrera's status as a minority and/or woman-owned
business enterprise. All of the contracts and other agreements listed on
SCHEDULE 3.11 are valid, subsisting, in full force and effect, binding upon
Carrera, and to the best knowledge of Carrera and the Stockholder, binding upon
the other parties thereto in accordance with their terms, and Carrera has paid
in full or accrued all amounts now due from it thereunder and has satisfied in
full or provided for all of its liabilities and obligations thereunder which are
presently required to be satisfied or provided for, and is not in default under
any of them, nor, to the best knowledge of Carrera and the Stockholder, is any
other party to any such contract or other agreement in default thereunder, nor,
to the best knowledge of Carrera and the Stockholder, does any condition exist
that with notice or lapse of time or both would constitute a default thereunder.
3.12 REAL ESTATE. Carrera does not own any real property or any buildings
or other structures nor has options or any contractual obligations to purchase
or acquire any interest in real property. The leasehold interests of Carrera set
forth in SCHEDULE 3.12 are subject to no lien or other encumbrance other than
statutory and common law landlord's liens and superior rights of lenders to
landlords.
3.13 ACCOUNTS AND NOTES RECEIVABLE. Except as set forth on SCHEDULE 3.13,
subject to any reserve set forth on the Balance Sheet for doubtful accounts, all
accounts and notes receivable reflected on the Balance Sheet and all accounts
and notes receivable arising subsequent to the Balance Sheet Date, have arisen
in the ordinary course of business of Carrera, represent valid and enforceable
obligations due to Carrera, have been and are subject to no set-off or
counter-claim that has been asserted or threatened, and have been collected or
are fully collectible in the ordinary course of business of Carrera in the
aggregate recorded amounts thereof in accordance with their terms.
3.14 TANGIBLE PROPERTY. The equipment, furniture, leasehold improvements,
fixtures, vehicles, any related capitalized items and other tangible property
material to the business of Carrera is, to the best knowledge of Carrera, in
good operating condition and repair, ordinary wear and tear excepted, and
Carrera has not received notice that any of such property is in violation of any
existing law or any building, zoning, health, safety or other ordinance, code or
regulation.
14
<PAGE> 21
3.15 INTANGIBLE PROPERTY. SCHEDULE 3.15 sets forth all of the patents,
trademarks, service marks, trade names, franchises, and inventions, all
information regarding the registration of any of the foregoing, or applications
therefor, and all permits, grants and licenses or other rights relating to any
of the foregoing (collectively, the "PROPRIETARY RIGHTS") that are material to
the business of Carrera. Except as set forth on SCHEDULE 3.15, Carrera has
exclusive ownership of all Proprietary Rights used in its business as presently
conducted or to be used in its business as it is contemplated to be conducted.
Except as set forth in SCHEDULE 3.15, Carrera has not received any notices of
infringement by Carrera of any Proprietary Rights of others. Except as set forth
in Schedule 3.15, to the best knowledge of Carrera none of the present
activities, or contemplated activities under planning or development, of
Carrera, or its products or assets infringe on any Proprietary Rights of others;
and Carrera is not aware of any infringement or violation by others of the
Proprietary Rights of Carrera. Except as set forth on SCHEDULE 3.15, Carrera has
the right to use, free and clear of claims or rights of others, all trade
secrets, customer lists, procedures, processes, and other information required
for or incident to its services or its business as presently conducted or
contemplated to be conducted. Carrera's policies and procedures designed to
establish and preserve its ownership of its Proprietary Rights are described in
SCHEDULE 3.15. In particular, without limitation of the foregoing, Carrera has
(a) affixed appropriate copyright notices to all copies of any original written
material prepared by Carrera and distributed to the public; and (b) disclosed or
made available any confidential information relating to patents, trade secrets,
inventions, know-how and related Proprietary Rights only to (a) employees or
consultants of Carrera who required such disclosure or access for the business
purposes of Carrera and who have executed written confidentiality agreements
governing their use of confidential information and (b) as set forth in SCHEDULE
3.15. Neither Carrera nor the Stockholder is aware of any violation of the
confidentiality of the Proprietary Rights of Carrera. To the best knowledge of
Carrera and the Stockholder, except as provided on SCHEDULE 3.15, Carrera 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
employees of Carrera. The Stockholder does not have any agreements or
arrangements with former employers currently in effect relating to confidential
information or trade secrets of such employers. To the best knowledge of Carrera
and the Stockholder, none of the activities of the employees of Carrera on
behalf of Carrera violates any valid and enforceable agreements or arrangements
which any such employees have with former employers currently in effect.
3.16 TITLE TO ASSETS; LIENS. Except as set forth on SCHEDULE 3.16, Carrera
owns outright and has good title to all of its owned assets and properties,
including, without limitation, all of the assets and properties reflected on the
Balance Sheet, free and clear of any claim, lien or other encumbrance, except
for (a) assets and properties disposed of, or subject to purchase or sales
orders, in the ordinary course of business since the applicable Balance Sheet
Date; (b) liens or other encumbrances securing the claims of materialmen,
carriers, landlords and like persons, all of which are not yet due and payable,
or (c) purchase money liens.
3.17 ABSENCE OF UNDISCLOSED LIABILITIES. As at the Balance Sheet Date,
Carrera did not have liabilities of any nature, whether accrued, absolute,
contingent or otherwise (including, without limitation, liabilities as guarantor
or otherwise with respect to obligations of others or material liabilities for
taxes due or then accrued or to become due), required to be shown on the Balance
Sheet that were not fully and adequately reflected or reserved against on the
Balance Sheet. Carrera does not have any such liabilities other than liabilities
(a) fully and adequately
15
<PAGE> 22
reflected or reserved against on the Balance Sheet, and (b) incurred since the
Balance Sheet Date in the ordinary course of business.
3.18 CUSTOMERS. SCHEDULE 3.18 sets forth the ten (10) customers who
accounted for the largest sales of Carrera for the twelve months ended December
31, 1997 (the "CUSTOMERS"). The relationships between Carrera and its Customers
are generally good commercial working relationships. Except at the request of
Carrera, no Customer of Carrera has cancelled or otherwise terminated its
relationship with Carrera (except in the course of the natural expiration of any
contracts governing such relationship), or has during the last 12 months
decreased materially its services, supplies or materials to Carrera or its usage
or purchase of the services or products of Carrera, as the case may be. Neither
Carrera or the Stockholder knows of any plan or intention of any such Customer,
nor has received any written threat from any Customer, to terminate early (i.e.,
prior to scheduled contract expiration), to cancel or otherwise materially and
adversely modify its relationship with Carrera nor to decrease materially or
limit its services, supplies or materials to Carrera or its usage, or purchase
of the services or products of Carrera except in the course of the natural
expiration of any contracts governing such relationship.
3.19 EMPLOYEE BENEFIT PLANS. SCHEDULE 3.19 sets forth a correct and
complete list of all pension, profit sharing, retirement, deferred compensation,
welfare, insurance, disability, bonus, vacation pay, severance pay and similar
plans, programs or arrangements, including without limitation all employee
benefit plans as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") with respect to which Carrera is the
"PLAN SPONSOR" within the meaning of Section 3(16)(B) of ERISA, or in which
Carrera participates (the "PLANS"). Carrera has never maintained or contributed
to a defined benefit pension plan that is subject to Title IV of ERISA. Carrera
has never maintained or contributed to any "MULTIEMPLOYER PLAN" as defined in
Section 4001(a)(3) of ERISA, and Carrera has not incurred any material liability
under Sections 4062, 4063 or 4201 of ERISA. Each Plan which is intended to be
qualified under Section 401(a) or 501(c)(9) of the Internal Revenue Code of
1986, as amended (the "CODE"), has received a favorable determination letter
from the Internal Revenue Service. Except as set forth on SCHEDULE 3.19, each
Plan has been administered in all material respects in accordance with the terms
of such Plan and the provisions of any and all applicable statutes, orders or
governmental rules or regulations, including without limitation ERISA and the
Code. Except as set forth on SCHEDULE 3.19, to the knowledge of Carrera, nothing
has been done or omitted to be done with respect to any Plan which is intended
to comply with Section 401(a) of the Code that would adversely affect the
qualified status of such Plan or result in any material liability on the part of
Carrera including, without limitation, under Title I of ERISA or Section 4975 of
the Code. All material reports, returns, notices and documents required to be
filed with respect to all Plans, including without limitation annual reports on
Form 5500, have been timely filed. Except as set forth on SCHEDULE 3.19, all
contributions required by law or the terms of any Plan have been made. Except as
set forth on SCHEDULE 3.19, all claims for welfare benefits incurred by
employees of Carrera on or before the Closing are or will be fully covered by
third-party insurance policies or programs. Except for continuation of health
coverage to the extent required under Section 4980B of the Code or as otherwise
set forth in this Agreement, there are no obligations under any Plan providing
group health expense reimbursements benefits after termination of employment.
Complete copies of the following documents with respect to each Plan (as
applicable) have been delivered or made available to Maximus: (i) each relevant
Plan document and subsequent amendment thereto; (ii) each trust agreement, group
annuity contract,
16
<PAGE> 23
insurance policy or contract; (iii) each Form 5500 series annual report with
each required schedule and attachment for each of the three (3) most recent plan
years; (iv) the most recent IRS determination letter; and (v) the most recent
summary plan description and each summary of material modification thereto. For
purposes of this Section 3.19, references to Carrera include Carrera and its
ERISA Affiliates. An "ERISA Affiliate" of Carrera means any trade or business
(whether or not incorporated) that together with Carrera would have been deemed
a "single employer" within the meaning of Section 4001(b) of ERISA or Section
414(m) of the Code at any time within the five-year period ending on the Closing
Date.
3.20 EMPLOYEE RELATIONS. As of July 31, 1998, Carrera employed an aggregate
of approximately 100 employees. Carrera believes it generally enjoys a good
employer-employee relationship with its employees. SCHEDULE 3.20 sets forth the
key employees of Carrera, none of whom have given notice of an intention to
leave Carrera's employ before or after the Closing. Carrera will use its
reasonable best efforts to retain its employees. Carrera is not delinquent in
payments to any of its respective employees or consultants for any wages,
salaries, commissions, bonuses or other direct compensation for any services
performed by such party to the date hereof or amounts required to be reimbursed
to such employees. Upon termination of the employment of any said employees,
neither Carrera nor Maximus will by reason of anything done prior to the Closing
be liable to any of said employees or consultants for severance pay or any other
payments (other than accrued salary, vacation or sick pay in accordance with
Carrera's normal policies and reasonable compensation if termination occurs
other than following notice).
3.21 INSURANCE. SCHEDULE 3.21 sets forth a list of all policies or binders
of fire, liability, product liability, workmen's compensation, vehicular,
directors and officers and other insurance held by or on behalf of Carrera. Such
policies and binders are in full force and effect, are reasonably believed to be
adequate for the business engaged in by Carrera and are in conformity with the
requirements of all leases to which Carrera is a party and to the best knowledge
of Carrera and the Stockholder, are valid and enforceable in accordance with
their terms.
3.22 BROKERAGE. No broker, finder, agent or similar intermediary has acted
on behalf of Carrera in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finders' fees or
similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with Carrera, or any action taken by it.
3.23 HAZARDOUS MATERIALS. Except as set forth on SCHEDULE 3.23, Carrera has
never generated, used or handled any Hazardous Materials (as hereinafter
defined) other than normal office products, nor has Carrera treated, stored or
disposed of any Hazardous Materials other than normal office products at any
site owned or leased by Carrera or shipped any Hazardous Materials for
treatment, storage or disposal at any other site or facility. Except as set
forth on SCHEDULE 3.23, to the best of Carrera's and the Stockholder's
knowledge, no other person has ever generated, used, handled, stored or disposed
of any Hazardous Materials at any site owned or premises leased by Carrera
during the period of Carrera's ownership or lease, nor has there been or is
there threatened any release of any Hazardous Materials on or at any such site
or premises during such period. For purposes of this Agreement, "HAZARDOUS
MATERIALS" shall mean and include any "hazardous waste" as defined in either the
United States Resource Conservation and Recovery Act, 42 U.S.C. 6901,
regulations adopted pursuant to said Act, and also any
17
<PAGE> 24
"hazardous substances" or "hazardous materials" as defined in the United States
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
9601.
3.24 BANK ACCOUNTS AND POWERS OF ATTORNEY. SCHEDULE 3.24 identifies all
bank accounts used in connection with the operations of Carrera whether or not
such accounts are held in the name of Carrera, lists the respective signatories
therefor and lists the names of all persons holding a power of attorney from
Carrera and a summary statement of the terms thereof. Except as set forth on
SCHEDULE 3.24, Carrera has not granted powers of attorney to any person or
entity.
3.25 FULL DISCLOSURE. All documents and other papers delivered by or on
behalf of Carrera or the Stockholder in connection with this Agreement and the
transactions contemplated hereby are true and complete, to the best of Carrera's
and the Stockholder's knowledge, and authentic. No representation or warranty of
Carrera or the Stockholder contained in this Agreement, and, to the best
knowledge of Carrera and the Stockholder, no document or other paper furnished
by or on behalf of Carrera or the Stockholder to Maximus (or any of its agents)
pursuant to this Agreement or in connection with the transactions contemplated
hereby, taken as a whole, contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements made, in the context in which made, not false or misleading.
There is no fact known to Carrera or the Stockholder that has not been disclosed
to Maximus in this Agreement or the Schedules hereto that materially adversely
affects, or (in the reasonable business judgment of Carrera or the Stockholder
based on facts of which they have knowledge) is likely to materially adversely
affect, the assets, properties, business, operations or condition (financial or
otherwise) of Carrera.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MAXIMUS
Maximus represents and warrants to Carrera and the Stockholder as follows:
4.1 ORGANIZATION. Maximus is duly organized, validly existing and in good
standing under the laws of the Commonwealth of Virginia and has full corporate
power and lawful authority to own, lease and operate its assets, properties and
business and to carry on its business as now being and as heretofore conducted.
Maximus is qualified or otherwise authorized to transact business as a foreign
corporation in each jurisdiction (in the United States and outside of the United
States) in which such qualification or authorization is required by law and in
which the failure to so qualify or be authorized would have a material adverse
effect on Maximus or its assets, properties, business, operations or condition
(financial or otherwise).
4.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Except for the approvals
referred to in Section 5.7 hereof, Maximus has the corporate power and all
authority and approvals required to enter into, execute and deliver this
Agreement and the Related Agreements and to issue the shares of Maximus Common
Stock to be issued to the Stockholder at the Closing, and to perform fully its
obligations hereunder and thereunder, and each of this Agreement and the Related
Agreements has been or will be duly executed and delivered and the valid and
binding obligation of Maximus enforceable in accordance with its terms subject
to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights and
18
<PAGE> 25
remedies of creditors generally, and to equitable principles. Maximus has
obtained the necessary approval of its board of directors for the execution,
delivery and performance of this Agreement and the Related Agreements and the
issuance of the shares of Maximus Common Stock to be issued to the Stockholder
at the Closing, and the consummation of the transactions contemplated hereunder
and thereunder, and no other corporate proceedings or actions on the part of
Maximus are necessary therefor.
4.3 BROKERAGE. No broker, finder, agent or similar intermediary has acted
on behalf of Maximus in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finders' fees or
similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with Maximus or any action taken by
Maximus.
4.4 NO BREACH. The execution, delivery and performance of this Agreement
and the Related Agreements and the consummation of the transactions contemplated
hereby and thereby will not (a) violate any provision of the Amended and
Restated Articles of Incorporation or Amended and Restated By-laws of Maximus;
(b) violate, conflict with or result in the breach of any of the terms or
conditions of, result in modification of the effect of, or otherwise give any
other contracting party the right to terminate, or constitute (or with notice or
lapse of time or both constitute) a default under, any material instrument,
contract or other agreement to which Maximus is a party or to which any of them
or any of their assets or properties may be bound or subject; (c) violate any
order, judgment, injunction, award or decree of any court, arbitrator or
governmental or regulatory body against, or binding upon, Maximus or upon the
securities, properties, assets or business of Maximus; (d) violate any statute,
law or regulation of any jurisdiction as such statute, law or regulation relates
to Maximus or to the securities, properties, assets or business of Maximus; (e)
violate any Permit; (f) require the approval or consent of any foreign, federal,
state, local or other governmental or regulatory body or the approval or consent
of any other person; or (g) result in the creation of any lien or other
encumbrance on the assets or properties of Maximus.
4.5 DISCLOSURE. None of the `34 Act Filings referred to in Section 2.6
above, when filed, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading. Maximus has made all filings with the Securities and Exchange
Commission ("SEC") which it is required to make, and Maximus has not received
any request from the SEC to file or filed any amendment or supplement to any
such reports.
4.6 NO MATERIAL CHANGES. As of the date hereof, there has been no material
adverse change in the financial condition or results of operations of Maximus
since the filing date of Maximus's last `34 Act Filing, nor information known to
Maximus which indicates a material and adverse change in the condition or
results of operations of Maximus.
4.7 ISSUANCE, SALE AND DELIVERY OF THE SHARES. Maximus has available and
will have available on the Closing Date a sufficient number of authorized shares
of Maximus Common Stock to enable it to consummate the transactions contemplated
hereunder. When issued and paid for, Maximus Common Stock to be sold hereunder
by Maximus, will be validly issued and
19
<PAGE> 26
outstanding, fully paid and non-assessable, and duly registered with the New
York Stock Exchange.
4.8 EXEMPT TRANSACTION. Subject to the accuracy of the Stockholder's
representations in Section 2 of this Agreement, the issuance of the shares of
Maximus Common Stock to the Stockholder at the Closing will constitute a
transaction exempt from (a) the registration requirements of Section 5 of the
Securities Act, in reliance upon Section 4(2) of the Securities Act and the
regulations promulgated pursuant thereto and (b) the qualification requirements
of the applicable state securities laws.
4.9 VALIDITY. Except for the approvals by the Boards of Directors of
Maximus and CAC and Maximus as the sole stockholder of CAC, there are no
consents, approvals, registrations, filings, applications, notices,
qualifications and waivers to be made, filed, given or obtained by Maximus or
CAC in connection with the execution and delivery of this Agreement and the
Related Agreements and the consummation of the transactions contemplated
hereunder and thereunder except for those the failure to make, file, give or
obtain which would not, individually or in the aggregate, either have a material
adverse effect upon the assets, properties, business, operations or condition
(financial or otherwise) of Maximus or upon the consummation of the transactions
contemplated hereunder.
4.10 ACTIONS AND PROCEEDINGS. Except as set forth or reflected in the `34
Act Filings, there are no outstanding orders, judgments, injunctions, awards or
decrees of any court, governmental or regulatory body or arbitration tribunal
against or involving Maximus or any of the securities, assets, or properties of
Maximus. Except as set forth or reflected in the '34 Act Filings, there are no
actions, suits or claims or legal, administrative or arbitration proceedings or,
to the best knowledge of Maximus, investigations (whether or not the defense
thereof or liabilities in respect thereof are covered by insurance) pending or,
to the best knowledge of Maximus, threatened against or involving Maximus or any
of the securities, assets or properties of Maximus that would have a material
adverse effect upon the assets, properties, business, operations or condition
(financial or otherwise) of Maximus. To the best knowledge of Maximus, there is
no fact, event or circumstance that may give rise to any suit, action, claim,
investigation or proceeding that individually or in the aggregate could have a
material adverse effect upon the transactions contemplated hereby or upon the
assets, properties, business, operations or condition (financial or otherwise)
of Maximus. For the purposes of this Agreement, the terms "Maximus knows", "to
the knowledge of Maximus" or "to the best knowledge of Maximus" or similar terms
or phrases shall refer to the actual knowledge of the responsible officers of
Maximus and "responsible officers" shall be limited to the executive officers of
Maximus.
20
<PAGE> 27
ARTICLE 5
COVENANTS AND AGREEMENTS
The parties covenant and agree as follows:
5.1 CONDUCT OF BUSINESS UNTIL THE CLOSING. During the period from the date
hereof to the Closing Date, Carrera shall:
5.1.1 PRESERVATION OF PERSONNEL. Use reasonable efforts to preserve
intact and keep available the services of Carrera's present employees, and to
facilitate the employment of such persons by Maximus on or before the Closing;
5.1.2 INSURANCE. Use reasonable efforts to keep in effect casualty,
public liability, worker's compensation and other insurance policies in coverage
amounts not less than those in effect at the date of this Agreement;
5.1.3 PRESERVATION AND ADVANCEMENT OF THE BUSINESS; MAINTENANCE OF
PROPERTIES, CONTRACTS. Use reasonable efforts in each case to preserve and
advance the business of Carrera, advertise, promote and market its services in
accordance with past practices over the last twelve months, keep its properties
intact, preserve its goodwill and its business, maintain all physical properties
in good repair and operating condition subject only to ordinary wear and tear,
in each case in accordance with past practices, and perform and comply in all
material respects with the terms of the contracts set forth in SCHEDULE 3.11
hereto;
5.1.4 INTELLECTUAL PROPERTY RIGHTS. Use reasonable efforts to preserve
and protect the Proprietary Rights of Carrera; and
5.1.5 ORDINARY COURSE OF BUSINESS. Operate the business of Carrera solely
in the ordinary course and in the normal, usual and customary manner.
5.2 NEGATIVE COVENANTS PENDING CLOSING. The Stockholder and Carrera will not:
5.2.1 TRANSACTIONS WITH OTHERS. Solicit inquiries from third parties or
enter into negotiations with any other party for the sale of capital stock or
the assets of Carrera, or otherwise sell or transfer, or mortgage, pledge or
create or permit to be created any security interest on, any of the capital
stock or assets of Carrera other than sales and purchases in the ordinary course
of business;
5.2.2 LIABILITIES. Incur any obligation or liability other than in the
ordinary course of Carrera's business or incur any indebtedness for borrowed
money, other than in the ordinary course of Carrera's business;
5.2.3 COMPENSATION. Increase the rates of direct or bonus compensation
payable or to become payable to any officer, employee, agent or consultant other
than in the ordinary course of Carrera's business;
21
<PAGE> 28
5.2.4 CAPITAL STOCK. Make any change in the number of shares of the
capital stock of Carrera authorized, issued or outstanding or grant any option,
warrant or other right to purchase, or to convert any obligation into, shares of
Carrera's capital stock, or declare or pay any dividend on any shares of its
capital stock, or sell or transfer any shares of its capital stock;
5.2.5 ARTICLES OF INCORPORATION AND BY-LAWS. Amend the Articles of
Incorporation or By-Laws of Carrera;
5.2.6 ACQUISITIONS. Make any acquisition of property other than in the
ordinary course of Carrera's business;
5.2.7 MATERIAL CONTRACTS. Modify or amend in any material respect, or
cancel, any material contract of Carrera which modification, amendment or
cancellation would affect the business of Carrera in a material adverse manner
or enter into any material contract or commitment affecting the business of
Carrera in a material adverse manner except for the normal purchase of
materials, supplies and services and entrance into client agreements in the
ordinary course of business, provided, that prior to entering into any client
contract involving total revenues of $1,000,000 or more, Carrera must notify
Maximus and obtain Maximus's consent for Carrera to enter into such contract; or
5.2.8 MAXIMUS COMMON STOCK TRANSACTIONS. Buy or sell any Maximus Common
Stock without the explicit written approval of counsel to Maximus.
5.3 CONTINUED EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES.
5.3.1 From the date hereof through the Closing Date, the Stockholder
shall use, the Stockholder shall cause Carrera to use, and Carrera shall use,
reasonable efforts to conduct their and its business and affairs in such a
manner so that the representations and warranties contained in Sections 2 and 3
hereof shall continue to be true and correct in all material respects on and as
of the Closing Date as if made on and as of the Closing Date, and Maximus shall
promptly be given notice of any event, condition or circumstance occurring from
the date hereof through the Closing Date that would constitute a violation or
breach of this paragraph.
5.3.2 From the date hereof through the Closing Date, Maximus shall use
reasonable efforts to conduct its business and affairs in such a manner so that
the representations and warranties contained in Section 4 hereof shall continue
to be true and correct in all material respects on and as of the Closing Date as
if made on and as of the Closing Date, and the Stockholder and Carrera shall
promptly be given notice of any event, condition or circumstance occurring from
the date hereof through the Closing Date that would constitute a violation or
breach of this paragraph.
5.4 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the Closing,
Maximus shall be entitled, through its employees and representatives, to have
such access to the assets, properties, business and operations of Carrera, as is
reasonably necessary or appropriate in connection with Maximus's investigation
of Carrera. Any such investigation and examination shall be conducted at
reasonable times and under reasonable circumstances so as to minimize any
disruption to or impairment of Carrera's businesses and Carrera shall cooperate
fully therein. Carrera shall provide Maximus and its advisors with full access
to Carrera's financial, legal and
22
<PAGE> 29
business records and to arrange for Maximus to discuss with Carrera's
advisors and any party to a material agreement with Carrera such matters as
Maximus may reasonably request. Maximus must obtain Carrera's approval prior to
initiating any such discussion with a Carrera advisor or a party to a Carrera
material agreement, and the Stockholder shall have a right of participation in
any such discussion. No investigation by Maximus shall diminish or obviate any
of the representations, warranties, covenants or agreements of Carrera or the
Stockholder under this Agreement. In order that Maximus may have full
opportunity to make such review, Carrera and the Stockholder shall furnish the
representatives of Maximus with all such information and copies of such
documents concerning the affairs of Carrera as such representatives may
reasonably request and cause its officers, employees, consultants, agents,
accountants and attorneys to cooperate fully with such representatives in
connection with such review and to make full disclosure to Maximus of all
material facts affecting the assets, properties, business, operations and
financial condition of Carrera. Except as provided in this Section 5.4, each of
the parties agrees to hold in confidence and not to use, disclose or reveal to
any other person any confidential or proprietary information disclosed to the
other in connection with the transactions contained in this Agreement and the
Related Agreements or the negotiations between such parties until such
information has become generally available to the public through no fault or
omission on the part of the receiving party. Notwithstanding the foregoing, each
party shall be permitted to make such disclosures to the public or to
governmental agencies as its counsel shall deem necessary to maintain compliance
with and to prevent violation of applicable federal or state laws. In the event
that the Closing does not occur, Maximus will promptly return to Carrera all
copies of any materials or other written information furnished to Maximus by
Carrera or the Stockholder except for one copy to be retained by counsel for
Maximus to enable compliance hereunder. If the confidentiality provisions hereof
conflict with the provisions of a previously executed confidentiality agreement,
the provisions of such prior agreement shall govern.
5.5 EXPENSES. Each of Maximus, on the one hand, and Carrera and the
Stockholder, on the other, shall bear their respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the transactions contemplated hereby, including, without limitation, all fees
and expenses of agents, representatives, counsel and accountants.
5.6 AUTHORIZATION FROM OTHERS. Prior to the Closing, Maximus, Carrera and
the Stockholder will take all reasonable actions necessary to comply promptly
with all legal requirements which may be imposed with respect to the
transactions contemplated hereby and Maximus, Carrera and the Stockholder will
use their best efforts to obtain all authorizations, consents and Permits of
others required to permit the consummation by them of the transactions
contemplated by this Agreement.
5.7 STOCKHOLDER VOTE; CONSUMMATION OF AGREEMENT. The Stockholder shall vote
her Shares in favor of or consent to the Merger. Each of Maximus, the
Stockholder and Carrera shall use their respective best efforts to perform and
fulfill all conditions and obligations to be performed and fulfilled by them
under this Agreement and further to ensure that to the extent in their
collective control or capable of influence by them, no breach of any of
Maximus's, Carrera's or the Stockholder's respective representations, warranties
and agreements hereunder or contemplated hereby occurs or exists on or prior to
the Closing to the end that the transactions contemplated by this Agreement
shall be fully carried out.
23
<PAGE> 30
5.8 PAYMENT OF DEBT. Except as set forth on SCHEDULE 3.6, prior to the
Closing, Carrera shall pay in full (including any accrued interest, fees,
charges or penalties) discharge and retire any outstanding indebtedness of
Carrera (other than short-term trade indebtedness incurred in the ordinary
course of business) including all indebtedness to any of its current or former
employees, officers, directors, stockholders, affiliates or other related
parties.
5.9 FURTHER ASSURANCES. Each of the parties shall execute such documents,
further instruments of transfer and assignment and other papers and take such
further actions as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby.
5.10 MATERIAL EVENTS. At all times prior to the Closing, each party shall
promptly notify the others in writing of the occurrence of any event which will
or may reasonably be expected to result in the failure to satisfy any of the
conditions of Articles 6 or 7 hereof.
5.11 TAX-FREE TRANSACTION. It is the intention of the parties that the
transaction contemplated by this Agreement be treated as a reorganization as
defined in Section 368 of the Code.
5.12 LIMITATION ON RESALES FOR POOLING ACCOUNTING. The Stockholder shall
not engage in any Sale (as defined in Section 2.7) of Maximus Common Stock until
after such time as Maximus has published financial results covering at least 30
days of combined operations after the Closing. The Stockholder understands that
the certificates representing shares of Maximus Common Stock received by the
Stockholder will be placed on the "stop-transfer list" maintained by Maximus's
transfer agent and will remain so listed until the publication of such financial
results and until the provisions of this Section 5.12 have been satisfied.
5.13 EMPLOYMENT OFFERS TO CARRERA EMPLOYEES. Maximus shall make offers of
employment to such employees of Carrera as Maximus selects in its sole
discretion. Unless otherwise stated, all such offers will be for employment on
an at-will basis and will otherwise be on such terms as Maximus deems
appropriate. Maximus agrees to employ Robert Smith at an annual salary of not
less than $200,000. Following the Effective Time, in its sole discretion,
Maximus shall: (i) continue and maintain the current Carrera 401(k) Plan; (ii)
merge the current Carrera 401(k) Plan and the current Maximus 401(k) Plan; or
(iii) terminate the current Carrera 401(k) Plan. In the event that Maximus
merges the current Carrera 401(k) Plan and the current Maximus 401(k) Plan or
terminates the current Carrera 401(k) Plan, any former employee of Carrera who
accepts employment with Maximus (a "Transferring Employee") shall be eligible to
participate in the Maximus 401(k) Plan, in accordance with the terms of such
plan, provided that Maximus shall give each Transferring Employee who
participates in the Maximus 401(k) Plan credit for the years of service of such
Transferring Employee to Carrera solely for purposes of determining years of
vesting service under the Maximus 401(k) Plan. To the extent a Transferring
Employee is eligible, Carrera shall fully vest each such Transferring Employee's
rights under the Carrera 401(k) Plan and shall further perform all of Carrera's
obligations to Transferring Employees under the terms of the Carrera 401(k)
Plan.
24
<PAGE> 31
5.14 OTHER AGREEMENT. Maximus hereby agrees that from and after the Closing
Date Carrera shall be permitted to maintain the dress code policy currently in
effect for Carrera employees.
ARTICLE 6
CONDITIONS PRECEDENT TO THE OBLIGATION
OF MAXIMUS TO CLOSE
The obligation of Maximus to close is subject, at the option of Maximus
acting in accordance with the provisions of this Agreement with respect to
termination hereof, to the fulfillment of the following conditions, any one or
more of which may be waived by it:
6.1 REPRESENTATIONS, WARRANTIES AND CONVENANTS. The representations and
warranties of Carrera and the Stockholder contained in this Agreement shall be
true in all respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date, except for such changes as
do not reflect a material adverse change in the assets, properties, business,
operations or condition (financial or otherwise) of Carrera. Each of Carrera and
the Stockholder shall have performed and complied in all material respects with
all covenants and agreements required by this Agreement to be performed or
complied with by such party on or prior to the Closing Date. Carrera and the
Stockholder shall have delivered to Maximus certificates, dated the Closing Date
and signed by the President of Carrera to the foregoing effect and stating that
all conditions to Maximus's obligations hereunder have been satisfied.
6.2 THIRD PARTY CONSENTS AND PERMITS. All consents and approvals from
parties to material contracts or other agreements with Carrera and all Permits
(including any state securities law approvals required in connection with the
issuance of Maximus Common Stock) that may be required in connection with the
performance by Carrera or the Stockholder of their respective obligations under
this Agreement or the continuance of such contracts or other agreements with
Carrera or Maximus after the Closing shall have been obtained.
6.3 RELATED AGREEMENTS. The Stockholder shall have entered into the Escrow
Agreement substantially in the form of EXHIBIT A hereto, and an Executive
Employment and Non-Compete Agreement with Maximus substantially in the form of
EXHIBIT B hereto (the "EXECUTIVE AGREEMENT").
6.4 OPINION OF COUNSEL TO CARRERA AND THE STOCKHOLDER. Maximus shall have
received the opinion of Pillsbury Madison & Sutro LLP, counsel to Carrera and
the Stockholder, dated the Closing Date, addressed to Maximus, and substantially
in the form of EXHIBIT C hereto.
6.5 LITIGATION. No action, suit or proceeding shall have been instituted
before any court or governmental or regulatory body or instituted or threatened
by any governmental or regulatory body, to restrain, modify or prevent the
carrying out of the transactions contemplated hereby, or to seek damages or a
discovery order in connection with such transactions, or that has or may have,
in the reasonable opinion of Maximus, a material adverse effect on the assets,
properties, business, operations or condition (financial or otherwise) of
Carrera.
25
<PAGE> 32
6.6 BUSINESS SINCE THE BALANCE SHEET DATE. There shall have been no
material adverse change in Carrera's financial condition, business, assets or
operations since the Balance Sheet Date, nor shall any event have occurred which
so far as can reasonably be foreseen at the Closing Date appears reasonably
likely to affect materially and adversely the financial condition, business,
assets, operations or prospects of Carrera.
6.7 COMPLETION OF DUE DILIGENCE. Maximus's due diligence review and
inspection of Carrera and of the matters set forth in this Agreement and the
Schedules hereto shall not have revealed any facts not previously disclosed to
or known by Maximus that, when taken into account individually or together,
causes the financial value of Carrera to be significantly lower than it would be
in the absence of such facts, and the significant reduction in value caused by
taking such facts into account cannot be cured by Carrera to the reasonable
satisfaction of Maximus, including but not limited to, delivery of a current
backlog report evidencing (i) Carrera's ability to achieve revenue of not less
than $18,000,000 and an operating profit margin of 20% for fiscal year 1998 and
(ii) prospects for revenue growth of 50% for fiscal year 1999. Except for
matters expressly waived by Maximus in writing, no investigation, inspection or
review by Maximus shall in any way abrogate or diminish any representation or
warranty given herein by Carrera or the Stockholder.
6.8 KEY PERSONNEL. None of the key personnel identified on SCHEDULE 3.20
shall have left the employ of Carrera or have indicated their intention to
Carrera, the Stockholder or Maximus to terminate their employment with Maximus
following the Closing Date.
6.9 MAXIMUS'S ACCOUNTANT'S CONFIRMATION. Maximus's independent public
accountants shall have confirmed to Maximus that Carrera's financial records are
adequate to permit the financial statements of Carrera to be audited to the
extent necessary to fulfill Maximus's financial reporting obligations to the SEC
in connection with its future financings without unreasonable effort or expense.
6.10 ELIGIBILITY FOR POOLING OF INTEREST. Maximus shall have received a
letter from the Stockholder indicating that to the best knowledge of the
Stockholder, no facts, events or set of circumstances exist that would adversely
affect the ability of Maximus to account for the transactions contemplated
herein under the pooling of interests accounting method.
6.11 INSURANCE. Carrera shall have delivered to Maximus, in a form
satisfactory to Maximus's counsel, evidence that the transactions contemplated
hereby will not limit, diminish or effect in any way the liability insurance
policies maintained by Carrera as described in the Schedules hereto.
6.12 DEBT. Carrera shall have delivered to Maximus, in a form satisfactory
to Maximus's counsel, evidence that all of Carrera's indebtedness, other than
that permitted by Section 5.9, has been fully paid, discharged and retired.
6.13 RELATIONSHIP WITH PEOPLESOFT, INC. Carrera shall have delivered to
Maximus, in a form satisfactory to Maximus's counsel, evidence that as of and
after the Closing Date, Carrera shall have an ongoing relationship with
PeopleSoft, Inc. and that such relationship is neither
26
<PAGE> 33
contingent on Carrera's status as a minority-owned business enterprise nor
restricted by geographic boundaries.
ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE STOCKHOLDER AND CARRERA TO CLOSE
The obligation of the Stockholder and Carrera to consummate the
transactions contemplated hereby is subject, at the option of the Stockholder
and Carrera acting in accordance with the provisions of this Agreement with
respect to termination hereof, to the fulfillment of the following conditions,
any one or more of which may be waived:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of Maximus contained in this Agreement shall be true in all respects
on and as of the Closing Date with the same force and effect as though made on
and as of the Closing Date, except for such changes as do not reflect a material
adverse change in the assets, properties, business, operations or condition
(financial or otherwise) of Maximus. Maximus shall have performed and complied
in all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date. Maximus shall have delivered to the Stockholder a certificate, dated the
Closing Date and signed by an officer of Maximus, to the foregoing effect and
stating that all conditions to the obligations of the Stockholder and Carrera
hereunder have been satisfied.
7.2 CERTIFICATE OF SECRETARY OF MAXIMUS. Maximus shall have delivered to
Carrera a certificate of the Secretary of Maximus dated as of the Closing Date,
certifying as to (i) the Articles of Incorporation and the Bylaws of Maximus, as
in effect on and as of the Closing Date and (ii) the resolutions of the Board of
Directors of Maximus authorizing and approving the execution, delivery and
performance by Maximus of this Agreement and the transactions contemplated
hereby.
7.3 CERTIFICATE OF SECRETARY OF CAC. CAC shall have delivered to Carrera a
certificate of the Secretary of CAC dated as of the Closing Date, certifying as
to (i) the Certificate of Incorporation and the Bylaws of CAC, as in effect on
and as of the Closing Date and (ii) the resolutions of the Board of Directors
and Stockholder of CAC authorizing and approving the execution, delivery and
performance by CAC of this Agreement and the transactions contemplated hereby.
7.4 RELATED AGREEMENTS. Maximus shall have entered into the Escrow
Agreement and an Executive Employment and Non-Compete Agreement substantially in
the form of EXHIBIT B hereto with the Stockholder.
7.5 OPINION OF COUNSEL TO MAXIMUS. The Stockholder shall have received the
opinion of Palmer & Dodge LLP, counsel to Maximus, dated the Closing Date and
substantially in the form of EXHIBIT D hereto.
27
<PAGE> 34
7.6 LITIGATION. No action, suit or proceeding shall have been instituted or
threatened before any court or governmental or regulatory body, or instituted or
threatened by any governmental or regulatory body, to restrain, modify or
prevent the carrying out of the transactions contemplated hereby or to seek
damages or a discovery order in connection with such transactions, or that has
or may have, in the reasonable opinion of the Stockholder, a material adverse
affect on the assets, properties, business, operations or condition (financial
or otherwise) of Maximus.
7.7 BUSINESS SINCE THE DATE OF THE "34 ACT FILINGS. There shall have been
no material adverse change in Maximus's financial condition, business, assets or
operations since the date of Maximus's most recent `34 Act Filing, nor shall any
event have occurred which so far as can reasonably be foreseen at the Closing
Date appears reasonably likely to affect materially and adversely the financial
condition, business, assets, operations or prospects of Maximus.
7.8 COMPLETION OF DUE DILIGENCE. The Stockholder's due diligence review and
inspection of Maximus and of the matters set forth in this Agreement and the
Schedules hereto shall not have revealed any facts not previously disclosed to
or known by the Stockholder that, when taken into account individually or
together, causes the financial value of Maximus Common Stock to be significantly
lower than it would be in the absence of such facts, and the significant
reduction in value resulting from taking such facts into account cannot be cured
by Maximus to the reasonable satisfaction of the Stockholder. Except for matters
expressly waived by the Stockholder and Carrera in writing, no investigation,
inspection or review by the Stockholder shall in any way abrogate or diminish
any representation or warranty given herein by Maximus.
7.9 THIRD PARTY CONSENTS AND PERMITS. All consents and approvals from
parties to contracts or other agreements with Maximus and all Permits (including
any state securities law approvals required in connection with the issuance of
Maximus Common Stock) that may be required in connection with the performance by
Maximus of its obligations under this Agreement shall have been obtained.
ARTICLE 8
INDEMNIFICATION
8.1 SURVIVAL. Notwithstanding any right of any party to fully investigate
the affairs of the other party and notwithstanding any knowledge of facts
determined or determinable by such party pursuant to such investigation or right
of investigation, each party has the right to rely fully upon the
representations, warranties, covenants and agreements of each other party in
this Agreement or in any Schedule, certificate or financial statement delivered
by any party pursuant hereto. All such representations, warranties, covenants
and agreements shall survive the execution and delivery hereof and the Closing
hereunder (except where expressly limited to a specific time period) and be
indemnified in accordance with this Section 8, and shall thereafter survive in
accordance with the provisions of Section 8.5 below.
28
<PAGE> 35
8.2 OBLIGATION OF THE STOCKHOLDER TO INDEMNIFY. Subject to the limitations
set forth in Section 8.5 hereof, the Stockholder agrees to indemnify, defend and
hold harmless Maximus (and its directors, officers, employees, affiliates and
assigns) from and against all losses, liabilities, damages, deficiencies, costs
or expenses (including interest and penalties imposed or assessed by any
judicial or administrative body and reasonable attorneys fees) ("LOSSES") based
upon, arising out of or otherwise in respect of:
(a) any inaccuracy in or any breach of any representation,
warranty, covenant or agreement of Carrera or the Stockholder contained
in this Agreement or in any Schedule, certificate, financial statement,
document or other papers delivered pursuant hereto;
(b) any claim or demand for commission or other compensation
by any broker, finder, agent or similar intermediary claiming to have
been employed or retained by or on behalf of Carrera or the
Stockholder, whether or not included in clause (a); and
(c) any claim arising out of the ownership of Carrera Stock by
any person other than the Stockholder.
8.3 OBLIGATION OF MAXIMUS TO INDEMNIFY. Subject to the limitations set
forth below and in Section 8.5 hereof, Maximus agrees to indemnify, defend and
hold harmless the Stockholder and Carrera (and its respective directors,
officers, employees, affiliates and assigns) from and against any Losses based
upon, arising out of or otherwise in respect of:
(a) any inaccuracy in or breach of any representation,
warranty, covenant or agreement of Maximus contained in this Agreement
or in any Schedule, certificate, document or other papers delivered
pursuant hereto or in any of the `34 Act Filings; and
(b) any claim or demand for commission or other compensation
by any broker, finder, agent or similar intermediary claiming to have
been employed by or on behalf of Maximus, whether or not included in
clause (a).
8.4 NOTICE AND OPPORTUNITY TO DEFEND
8.4.1 NOTICE OF ASSERTED LIABILITY. Promptly after receipt by any party
hereto (the "INDEMNITEE") of notice of any demand, claim or circumstances which,
with the lapse of time, would give rise to a claim or the commencement (or
threatened commencement) of any action, proceeding or investigation (an
"ASSERTED LIABILITY") that may result in a Loss, the Indemnitee shall give
notice thereof (the "CLAIMS NOTICE") to any other party or parties obligated to
provide indemnification pursuant to Sections 8.2 or 8.3 hereof (the
"INDEMNIFYING PARTY"). The Claims Notice shall describe the Asserted Liability
in reasonable detail, and shall indicate the amount (estimated, if necessary) of
the Loss that has been or may be suffered by the Indemnitee.
8.4.2 OPPORTUNITY TO DEFEND. The Indemnifying Party may elect to compromise
or defend, and control the defense of, at its own expense and by counsel of its
own choosing, any Asserted Liability, provided that the Indemnitee shall have no
liability under any compromise or settlement agreed to by the Indemnifying Party
to which it has not consented in writing, which
29
<PAGE> 36
consent shall not be unreasonably withheld. If the Indemnifying Party elects to
compromise or defend such Asserted Liability, it shall within 30 days (or
sooner, if the nature of the Asserted Liability so requires) notify the
Indemnitee of its intent to do so, and the Indemnitee shall cooperate upon the
request and at the expense of the Indemnifying Party, in the compromise of, or
defense against, such Asserted Liability. If the Indemnifying Party elects not
to compromise or defend the Asserted Liability, or fails to notify the
Indemnitee of its election as herein provided, or fails to diligently defend or
seek to compromise such Asserted Liability after electing to assume such defense
or compromise, the Indemnitee may pay, compromise or defend such Asserted
Liability and receive full indemnification for its losses, liabilities, damages,
deficiencies, costs and expenses as provided in Sections 8.2 and 8.3 hereof. In
any event, the Indemnitee and the Indemnifying Party may participate in (but
shall not have the right to control), at their own expense, the defense of such
Asserted Liability by the Indemnifying Party or the Indemnitee, respectively. If
the Indemnifying Party chooses to defend any claim, the Indemnitee shall make
available to the Indemnifying Party any books, records or other documents within
its control that are reasonably requested for such defense and shall otherwise
cooperate with the Indemnifying Party, in which event the Indemnitee shall be
reimbursed for its out-of-pocket expense. All amounts required to be paid in
connection with any such Asserted Liability pursuant to the determination of any
court, governmental or regulatory body or arbitrator, and all amounts required
to be paid in connection with any such compromise or settlement entered into by
the Indemnifying Party, shall be borne and paid by the Indemnifying Party. The
parties agree to cooperate fully with one another in the defense, compromise or
settlement of any such Asserted Liability.
8.5 LIMITATIONS ON INDEMNIFICATION. The indemnification provided by
Sections 8.2 and 8.3 shall be subject to the following limitations:
8.5.1 DEDUCTIBLE. Maximus shall not be entitled to receive any
indemnification under Section 8.2 hereof until the aggregate indemnification
claims equal $25,000, whereupon Maximus shall receive indemnification payments
only for sums in excess of such amount. The Stockholder shall not be entitled to
receive any indemnification under Section 8.3 hereof until the aggregate
indemnification claims equal $25,000, whereupon the Stockholder shall receive
indemnification payments only for sums in excess of such amount.
8.5.2 LIMITATION ON SURVIVAL. The obligation of the Stockholder to
indemnify Maximus for any Loss (other than a Loss resulting, directly or
indirectly, from the breach of any tax related warranty with respect to the
operations of Carrera prior to the Closing (a "TAX LOSS")) and the obligation of
Maximus to indemnify the Stockholder for any Loss shall expire the earlier of
(i) the date one year after the Closing Date or (ii) the date of the completion
of the next audited financial statements of Maximus after the Merger (the
"Expiration Date"). On the Expiration Date, the Escrow Agent shall deliver to
the Stockholder 85% of the Escrow Amount and shall retain 15% of the Escrow
Amount (the "Retained Amount"). The Retained Amount shall remain in escrow until
the first anniversary of the Closing Date, to be used solely for the
satisfaction of an indemnification claim by Maximus based on a Tax Loss The
obligation of the Stockholder to indemnify Maximus for any Tax Loss shall
survive until the expiration of the applicable statute of limitations for such
Tax Loss.
30
<PAGE> 37
8.5.3 MAXIMUM INDEMNIFICATION AMOUNT. The maximum aggregate
indemnification amount that shall be due from the Stockholder to Maximus, on the
one hand, and from Maximus to the Stockholder, on the other hand, for any Losses
including Tax Losses (other than Unlimited Losses, as defined in Section 8.5.5),
shall not in any event exceed the Escrow Amount or, subsequent to the
distribution of the Escrowed Property and the termination of the Escrow
Agreement, the dollar amount equal to the dollar value of the Escrow Amount,
less any amounts previously paid under the Escrow Agreement.
8.5.4 SATISFACTION OF INDEMNIFICATION CLAIMS. All indemnification
claims under Section 8.2, excluding indemnification for any Tax Loss subsequent
to the distribution of the Escrowed Property and the termination of the Escrow
Agreement, shall be satisfied solely and exclusively from the shares held
pursuant to the Escrow Agreement. Without limitation of the foregoing, excluding
indemnification for any Tax Loss subsequent to the distribution of the Escrowed
Property and the termination of the Escrow Agreement, the maximum liability of
the Stockholder for any breach of a representation, warranty or covenant of
Carrera, or of a representation or warranty given individually by the
Stockholder in Article 2 or Article 3, shall be limited to those shares of
Maximus Common Stock in which the Stockholder has an interest that are held
pursuant to the Escrow Agreement.
8.5.5 UNLIMITED LOSSES. The limitations of this Section 8.5 shall not
apply in the case of Losses resulting from a misrepresentation or breach by
Carrera, the Stockholder or Maximus that a court of competent jurisdiction has
determined was fraudulent ("UNLIMITED LOSSES").
ARTICLE 9
TERMINATION OF AGREEMENT
9.1 TERMINATION. This Agreement may be terminated prior to the Closing as
follows:
(a) at the election of Carrera and the Stockholder upon
written notice to Maximus from Carrera or the Stockholder if, on or
after the Closing Date, any one or more of the conditions to the
obligation of Carrera and the Stockholder to close has not been
fulfilled;
(b) at the election of Maximus upon written notice to Carrera
or the Stockholder if, on or after the Closing Date, any one or more of
the conditions to its obligation to close has not been fulfilled;
(c) at the election of Carrera and the Stockholder upon
written notice to Maximus from Carrera or the Stockholder if Maximus
has breached any representation, warranty, covenant or agreement
contained in this Agreement and has not, within fifteen (15) business
days of receipt by Maximus of written notice from Carrera or the
Stockholder of such breach of representation, warranty, covenant or
agreement, cured such breach;
31
<PAGE> 38
(d) at the election of Maximus upon written notice to Carrera
or the Stockholder if Carrera or the Stockholder have breached any
representation, warranty, covenant or agreement contained in this
Agreement and have not, within fifteen (15) business days of receipt by
Carrera or the Stockholder of written notice from Maximus of such
breach of representation, warranty, covenant or agreement, cured such
breach; or
(e) at any time on or prior to the Closing, by mutual written
agreement of Carrera, the Stockholder and Maximus.
9.2. EFFECT OF TERMINATION.
9.2.1 Except as provided in Section 9.2.2 below if this Agreement is
terminated and the transactions contemplated hereby are not consummated as
provided above, each and every representation and warranty contained in this
Agreement or any Schedule hereto, or any certificate, document or other
instrument delivered by the parties in connection herewith, shall expire and
none of the parties hereto shall be under any liability whatsoever with respect
to any such representation or warranty; provided, however, that notwithstanding
the foregoing, each party shall, subject to Section 9.2.2, be and remain liable
to the other in the event that the failure so to close hereunder shall occur as
a consequence of the failure of a party to fully perform its covenants and
agreements hereunder or the material breach by a party of its representations or
warranties contained herein.
9.2.2 In the event of a termination of this Agreement prior to the
Closing, the Stockholder shall not have any personal liability to Maximus
arising under this Agreement except to the extent of a fraudulent
misrepresentation by the Stockholder.
9.2.3 In the event of a termination of this Agreement prior to the
Closing, the parties' obligations of confidentiality under Sections 5.4 and 10.1
of this Agreement and any other confidentiality agreement between the parties
shall survive such termination.
ARTICLE 10
MISCELLANEOUS
10.1 PUBLICITY. Prior to the Closing, no publicity release or public
announcement concerning this Agreement or the transactions contemplated hereby
shall be made without advance approval thereof by Carrera and Maximus, except to
the extent required by law on the reasonable advice of counsel to such party.
After the Closing no such release or announcement may be made without advance
approval thereof by Maximus, except to the extent required by law on the
reasonable advice of counsel to such party.
10.2 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission with confirmation retained or sent by
certified, registered or express mail, postage prepaid. Any such notice shall be
deemed given when so delivered personally, telegraphed, telexed or sent by
facsimile transmission with confirmation retained or, if mailed, two days after
the date of deposit in the United States mail, as follows:
32
<PAGE> 39
(a) if to Maximus, to:
MAXIMUS, Inc.
1356 Beverly Road
McLean, VA 22101
Attention: David V. Mastran
Facsimile: (703) 734-4277
with a copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108-3190
Attention: Lynnette C. Fallon, Esq.
Facsimile: (617) 227-4420
(b) if to Carrera or the Stockholder:
Carrera Consulting Group.
2110 21st Street, Suite 400
Sacramento, CA 95818
Attention: Margaret Carrera
Facsimile: (916) 456-3306
with a copy to:
Pillsbury Madison & Sutro LLP
400 Capital Mall, Suite 1700
Sacramento, CA 95814
Attention: Cary C. Boyden
Facsimile: (916) 441-3583
Any party may by notice given in accordance with this Section 10.2 to the other
parties designate another address or person for receipt of notices hereunder.
10.3 ENTIRE AGREEMENT. This Agreement (including the Schedules), the
Related Agreements and any collateral agreements executed in connection with the
consummation of the transactions contemplated herein contain the entire
agreement among the parties with respect to the purchase of the Shares and
related transactions, and supersedes all prior agreements, written or oral, with
respect thereto.
10.4 WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES; PRESERVATION OF
REMEDIES. This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any waiver on
the part of any party of any such right, power or privilege, nor any single or
partial exercise of
33
<PAGE> 40
any such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. The rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
that any party may otherwise have at law or in equity except where this
Agreement expressly provides otherwise. The rights and remedies of any party
based upon, arising out of or otherwise in respect of any inaccuracy in or
breach of any representation, warranty, covenant or agreement contained in this
Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement (or in any other
agreement between the parties) as to which there is not inaccuracy or breach.
10.5 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Virginia exclusive of its choice
of law rules.
10.6 ENFORCEABILITY IN JURISDICTIONS; CONSENT. The parties hereto intend
to and hereby confer jurisdiction to enforce the provisions of this Agreement
and of the Related Agreements, expressly including without limitation, the
provisions of Section 8 hereof, upon the courts of Virginia, Massachusetts and
California. In the case of any claim brought by Carrera or the Stockholder, any
legal action, suit or proceeding arising out of or relating to such claim may be
instituted against Maximus and/or CAC in any state or federal court located in
Northern Virginia or Boston, Massachusetts and Maximus and/or CAC agree not to
assert, by way of motion, as a defense, or otherwise, in any such action, suit
or proceeding, any claim that it is not subject personally to the jurisdiction
of such courts that the action, suit or proceeding is brought in an inconvenient
forum, that the venue of the action, suit or proceeding is improper or that this
Agreement or the subject matter hereof or thereof may not be enforced in or by
such court. In the case of any claim brought by Maximus, any legal action, suit
or proceeding arising out of or relating to such claim may be instituted against
the Stockholder and/or Carrera in any state or federal court located in
Sacramento, California and the Stockholder and/or Carrera agree not to assert,
by way of motion, as a defense, or otherwise, in any such action, suit or
proceeding, any claim that it is not subject personally to the jurisdiction of
such courts that the action, suit or proceeding is brought in an inconvenient
forum, that the venue of the action, suit or proceeding is improper or that this
Agreement or the subject matter hereof or thereof may not be enforced in or by
such court.
10.7 BINDING EFFECT; NO ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
legal representatives. This Agreement is not assignable except by operation of
law or by Maximus to any of its affiliates.
10.8 COUNTERPARTS. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
10.9 EXHIBITS AND SCHEDULES. The Exhibits and Schedules are a part of this
Agreement as if fully set forth herein. All references herein to Sections,
subsections, clauses, Exhibits and
34
<PAGE> 41
Schedules shall be deemed references to such parts of this Agreement, unless the
context shall otherwise require.
10.10 HEADINGS. The headings in this Agreement are for reference only, and
shall not affect the interpretation of this Agreement.
10.11 SCHEDULES. With respect to the Schedules supplied by Carrera and the
Stockholder to Maximus, the section numbers and letters of such Schedules
correspond to the section and subsection numbers and letters of this Agreement
to which they refer; however, disclosure made by Carrera and the Stockholder
under any one section of the Schedules shall also be applicable to any other
section of the Schedules.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
35
<PAGE> 42
IN WITNESS WHEREOF, the parties have executed this Agreement under
seal as of the date first above written.
MAXIMUS, INC.
By: /s/ David V. Mastran
------------------------------------
David V. Mastran, President
CARRERA ACQUISITION CORP.
By: /s/ David V. Mastran
------------------------------------
David V. Mastran, President
CARRERA CONSULTING GROUP
By: /s/ Margaret Carrera
-------------------------------------
Margaret Carrera, President
STOCKHOLDER:
/s/ Margaret Carrera
----------------------------------------
Margaret Carrera
Address:
36
<PAGE> 43
SCHEDULE I
SHARES OF CARRERA CONSULTING GROUP.
<TABLE>
<CAPTION>
NUMBER OF CARRERA
STOCKHOLDER SHARES OWNED
- ----------- -----------------
<S> <C>
Margaret Carrera 2,800,000
</TABLE>
