<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
HAGLER BAILLY, INC.
(NAME OF ISSUER)
Common Stock
(TITLE OF CLASS OF SECURITIES)
405 183 104
(CUSIP NUMBER)
Pascal Giraud
CAP GEMINI
11, rue de Tilsitt
75017 PARIS, France
(011-33-1) 47 54 50 00
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
With a copy to:
Steven D. Guynn
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
(212) 326-3939
April 12, 1999
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
<TABLE>
<CAPTION>
<S> <C>
CUSIP NO. 405 183 104 Page 2 of 9
==================================================================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CAP GEMINI S.A.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP a [X]
b [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or (e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
France
7 SOLE VOTING POWER
1,500,000
NUMBERS OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING PERSON 1,500,000
WITH 10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,500,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.1
14 TYPE OF REPORTING PERSON*
CO
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</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
CUSIP NO. 405 183 104 Page 3 of 9
==================================================================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CAP GEMINI HOLDING, INC.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP a [X]
b [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or (e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
7 SOLE VOTING POWER
470,975
NUMBERS OF SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH -0-
REPORTING PERSON
WITH 9 SOLE DISPOSITIVE POWER
470,975
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
470,975
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.9%
14 TYPE OF REPORTING PERSON*
CO
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</TABLE>
<PAGE> 4
CUSIP NO. 405 183 104 Page 4 of 9
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ITEM 1. SECURITY AND ISSUER.
The securities to which this statement relates are the common shares,
with a par value of $0.01 per share ("HB Shares"), of Hagler Bailly, Inc., a
Delaware corporation ("HB"). HB's principal executive offices are located at
1530 Wilson Boulevard, Suite 400, Arlington, Virginia 22209, Delaware.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is filed by Cap Gemini S.A., a French societe anonyme
("CG") and Cap Gemini Holding, Inc., a New Jersey corporation ("CG Holding") (CG
together with CG Holding, being collectively referred to as the "Reporting
Purchasers"). CG is the holding company of a group which operates in two
segments of the information technology market, management consulting and IT
services. The head office of CG is located at 11, rue de Tilsitt, 75017 Paris,
France. CG Holding is a wholly-owned subsidiary of CG and is the holding company
of the U.S. activities of CG. The head office of CG Holding is located at 1114
Avenue of Americas, 29th floor, New York, New York 10036.
Schedule I hereto, which is incorporated herein by this reference, sets
forth the name, the business address, the present principal occupation or
employment (and the name, principal business, and address of any corporation or
other organization in which such employment is conducted), and the citizenship
of the members of the Directoire and Supervisory Board and executive officers of
CG.
Schedule II hereto, which is incorporated herein by this reference,
sets forth the name, the business address, the present principal occupation or
employment (and the name, principal business, and address of any corporation or
other organization in which such employment is conducted), and the citizenship
of the directors and executive officers of CG Holding.
Neither the Reporting Purchasers nor, to its knowledge, any of the
persons identified in Schedule I and Schedule II hereto has, during the last
five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree, or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The amount of the funds used by CG to purchase HB shares was
$11,140,109, including brokerage commissions. The amount of the funds used by
CG America (as defined in Item 4 below) to purchase in June 1998 HB shares was
approximately $12.5 million. These funds were provided from the Reporting
Purchasers' working capital.
ITEM 4. PURPOSE OF TRANSACTION.
On June 16, 1998, HB and CG and Cap Gemini America, Inc., a Delaware
corporation ("CG America") entered into an exclusive joint venture to deliver
information technology consulting services and solutions to electric, gas and
water utilities and service providers in the United States and Canada.
Concurrently with the creation of the joint venture, CG America purchased
470,975 newly issued shares of HB's common stock for $26.447 per share pursuant
to a Securities Purchase Agreement between CG America and HB dated as of June
11, 1998. A copy of the Securities Purchase Agreement is attached hereto as
Exhibit 1, and is hereby incorporated herein by reference. Immediately following
this transaction, CG America was merged into CG Holding.
Under the Securities Purchase Agreement, CG America has agreed that it
will not, without the prior consent of HB, directly or indirectly, acquire more
than 19.9% of the then outstanding common stock of HB before January 1, 2008 or
an earlier date in the event of a change in control of HB. Given the decrease of
the market price of HB Shares, CG has decided to purchase on the market 9.1% of
HB. As a result of such purchases, the Reporting Purchasers currently owns
1,970,975 HB shares representing 12.0% of the outstanding common stock of HB.
This acquisition was made for investment purposes and to increase its ownership
of shares of HB. In this regard, the Reporting Purchasers may seek to obtain
representation to HB Board of Directors.
<PAGE> 5
CUSIP NO. 405 183 104 Page 5 of 9
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Subject to the standstill undertaking under the Securities Purchase
Agreement, the Reporting Purchasers intend to review on a continuing basis its
investment in HB. The Reporting Purchasers may decide to increase or decrease
its investment in HB depending upon the price and availability of HB's
securities, subsequent development affecting HB, HB's business and prospects,
other investment and business opportunities available to the Reporting
Purchasers, general stock market and economic conditions, tax considerations and
other factors. Such acquisition or disposal may be done in the open market, in
private Transaction or by any other permissible means if deemed advisable by the
Reporting Purchasers at such time.
Other than as described above, none of the Reporting Purchasers have
any plans or proposals that relate to or would result in any of the actions
described in subparagraphs (a) through (j) of Item 4 of Schedule 13D (although
they reserve the right to develop such plans).
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) CG directly and beneficially owns 1,500,000 HB Shares, which
represents 9.1% of the outstanding HB Shares. CG Holding
directly and beneficially owns 470,975 HB Shares, which
represents 2.9% of the outstanding HB Shares.
(b) CG has the power to vote and dispose of such 1,500,000 HB
Shares. CG Holding has the power to vote and dispose of such
470,975 HB Shares.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Securities Purchase Agreement. See Item 4 above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
1 Securities Purchase Agreement, dated as of June 11, 1998, among HB and CG
America.
2 Group Agreement, dated as of April 20, 1999, among CG and CG Holding.
</TABLE>
<PAGE> 6
CUSIP NO. 405 183 104 Page 6 of 9
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SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: April 20, 1999
CAP GEMINI
/s/ Serge Kampf
------------------------------------
Serge Kampf
Chairman of the Directoire
CAP GEMINI HOLDING, INC.
/s/ Geoff Unwin
------------------------------------
Geoff Unwin
Chairman and Chief Executive Officer
<PAGE> 7
CUSIP NO. 405 183 104 Page 7 of 9
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page Number
- ----------- ----------- -----------
<S> <C> <C>
1 Securities Purchase Agreement, dated as of June 11, 1998,
between HB and CG America.
2 Group Agreement, dated as of April 20, 1999, between CG and CG Holding.
</TABLE>
<PAGE> 8
SCHEDULE I
The following are the members of the Directoire, Supervisory Board and
executive officers of CG as of March 31, 1999 and their principal occupations or
employment. The business address of all such persons for purposes of this
Schedule 13D is 11, rue de Tilsitt, 75017 Paris, France. Each of such directors
and executive officers is a citizen of France except for Geoff Unwin, who is a
citizen of the United Kingdom, Pierre Hessler, who is a citizen of Switzerland,
Chris van Breugel, who is a citizen of The Netherlands and Guy de Wouters, who
is a citizen of Belgium.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- -------------------------------- --------------------------------------------------------------------------
<S> <C>
MEMBERS OF THE DIRECTOIRE
Serge Kampf Chairman of the Directoire of CG
Geoff Unwin Vice Chairman of the Directoire of CG and Chairman and
Chief Executive Officer of CG Holding
Paul Hermelin Member of the Directoire of CG
Pierre Hessler Member of the Directoire of CG
MEMBERS OF THE SUPERVISORY
BOARD
Ernest-Antoine Seilliere Chairman and Chief Executive Officer of Compagnie
Generale d'Industrie et de Participations (CGIP), French
corporation having its executive offices located at 89,
rue Taitbout, 75009 Paris, France and Chairman of
CG Supervisory Board
Michel Jalabert Vice Chairman of CG Supervisory Board and Risk
General Manager of CG
Christian Blanc Former Chairman of Air France
Chris van Breugel Group business controller of CG
Bruno Roger Managing Partner of Lazard Freres et Compagnie, French
corporation having its executive offices located at
121, Bd Haussmann, 75008 Paris, France
Guy de Wouters Director and member of the Executive Committee of CGIP, French
corporation having its principal offices located at
89, rue Taitbout, 75009 Paris, France
EXECUTIVE OFFICERS
Pascal Giraud Chief Financial Officer of CG
Michel Jalabert Risk General Manager of CG
Jacques Collin Head of Communication and University of CG
Jean-Paul Figer Innovation and New Technologies Manager of CG
Eric Lutaud Transnational Sales and Delivery Manager of CG
</TABLE>
<PAGE> 9
SCHEDULE II
The following are the directors and executive officers of CG Holding as
of March 31, 1999 and their principal occupations or employment. The business
address of all such persons for purposes of this Schedule 13D is 1114 Avenue of
Americas, 29th floor, New York, New York 10036. Each of such directors and
executive officers is a citizen of the United States of America except for Geoff
Unwin, who is a citizen of the United Kingdom, Serge Kampf, Pierre Hessler,
Michel Jalabert, Ernest-Antoine Seilliere, Pascal Giraud, who are citizens of
France.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- -------------------------------- --------------------------------------------------------------------------
<S> <C>
DIRECTORS
Geoff Unwin Chairman and Chief Executive Officer of CG Holding and
Vice Chairman of the Directoire of CG
Serge Kampf Chairman of the Directoire of CG
Pierre Hessler Member of the Directoire of CG
Michel Jalabert Vice Chairman of CG Supervisory Board
Ernest-Antoine Seilliere Chairman and Chief Executive Officer of Compagnie
Generale d'Industrie et de Participations (CGIP), French
corporation having its executive offices located at
89, rue Taitbout, 75009 Paris, France and Chairman of
CG Supervisory Board
EXECUTIVE OFFICERS
Mike Chayet Secretary
Pascal Giraud Treasurer
</TABLE>
<PAGE> 1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of June
11, 1998, is made by and between HAGLER BAILLY, INC., a Delaware corporation,
with its principal office at 1530 Wilson Boulevard, Suite 900, Arlington,
Virginia (the "Company" or "HBIX"), and CAP GEMINI AMERICA, INC., a Delaware
corporation, with its principal office at 1114 Avenue of the Americas, 29th
Floor, New York, New York 10036 (the "Purchaser" or "Cap Gemini").
WHEREAS, the Company desires to issue and sell to the Purchaser an
aggregate of 470,975 shares (the "Shares") of the authorized but unissued shares
of common stock, $0.01 par value per share, of the Company (the "Common Stock");
WHEREAS, the Purchaser desires to purchase the Shares on the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Company and the Purchaser are entering into, executing and
delivering the Operating Agreement (as defined below) with respect to a joint
venture, the general purpose of which is to serve customers in the electricity,
gas and water utilities markets in the United States and Canada by providing
them with specific information technology services and information technology
management consulting services (the "Joint Venture"), the consummation of the
Joint Venture being contingent upon the execution and delivery of this Agreement
and vice versa.
NOW THEREFORE, in consideration of the mutual agreements,
representations, warranties and covenants herein contained, the Company and the
Purchaser agree as follows:
1. DEFINITIONS. As used in this Agreement, the following capitalized
terms shall have the following respective meanings:
(a) "Affiliate" means, with respect to any Person, any other
Person that directly, or indirectly, through one or more intermediaries
controls, is controlled by or is under common control with such specified
Person. For this purpose the term "control" (including the terms "controlling",
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a person whether through the ownership voting securities, by
contract, or otherwise.
(b) "Beneficial Ownership" has the meaning set forth in the
definition of Change of Control below.
(c) "Business Day" means any day that is not a Saturday,
Sunday or other day on which banking institutions in New York, New York or
Paris, France are authorized or required by law or executive order to close.
<PAGE> 2
(d) "Change in Control" means: (i) any Person or group (within
the meaning of Section 13(d) or 14(d) of the Exchange Act), other than a group
consisting solely of currently existing executive officers and directors of the
Company, acquires, directly or indirectly, the beneficial ownership (as such
term is determined pursuant to Rule 13d-3 of the Exchange Act Rules, referred to
herein as "Beneficial Ownership"), by way of merger, consolidation or otherwise,
of more than 34% of the Common Stock; (ii) the sale, lease or transfer of all or
substantially all of the assets of the Company; or (iii) the consolidation or
merger of the Company with or into another Person.
(e) "Closing Date" means the date of the Closing.
(f) "Company Securities" has the meaning set forth in Section
3.2(b) hereof.
(g) "Exchange Act" means the Securities Exchange Act of 1934,
as amended, and all of the rules and regulations promulgated thereunder.
(h) "Financial Statements" has the meaning set forth in
Section 3.5 hereof.
(i) "Material Adverse Effect" means, with reference to a
party, any effect on the business, financial condition or results of operations
of such party or any of its Subsidiaries that is material and adverse to the
such party and its Subsidiaries taken as a whole, or on the ability of such
party to consummate the transactions contemplated by the Transaction Documents.
(j) "Offered Shares" has the meaning set forth in Section
5.5(a) hereof.
(k) "Offered Shares Price" has the meaning set forth in
Section 5.5(a) hereof.
(l) "Operating Agreement" means that certain Operating
Agreement dated as of the date hereof, of Cap Gemini Hagler Bailly LLC, a
Delaware limited liability company, made by and between HBIX and Cap Gemini,
with respect to the Joint Venture.
(m) "Person" means an individual, corporation, partnership,
limited liability company, unincorporated syndicate, unincorporated
organization, trust or trustee, executor, administrator or other legal
representative or any group of people acting in concert.
(n) "Purchase Notice" has the meaning set forth in Section
5.5(a) hereof.
(o) "Sale Notice" has the meaning set forth in Section 5.5(a).
(p) "SEC" shall mean the United States Securities and Exchange
Commission.
2
<PAGE> 3
(q) "SEC Documents" has the meaning set forth in Section 3.6
hereof.
(r) "Securities Act" shall mean the Securities Act of 1933, as
amended, and all of the rules and regulations promulgated thereunder.
(s) "Subsidiary" means a "Significant Subsidiary" as set forth
in Rule 1-02(w) of Regulation S-X as promulgated by the SEC under the Securities
Act.
(t) "Standstill Termination Date" has the meaning set forth in
Section 5.1 hereof.
(u) "Trading Day" means a day that is a trading day on the
NASDAQ National Market System (other than a day on which trading on this market
is scheduled to close prior to its regular closing time).
(v) "Transaction Documents" means this Agreement and the
Operating Agreement.
2. PURCHASE AND SALE OF SHARES.
2.1 PURCHASE AND SALE.
(a) Subject to and upon the terms and conditions set forth in
this Agreement and on the basis of the representations and warranties set forth
herein, the Company hereby agrees to issue and sell, transfer and deliver to the
Purchaser, and the Purchaser hereby agrees to purchase from the Company, the
Shares, free and clear of any lien, security interest, option or other charge or
encumbrance, at a per Share purchase price equal to $26,447 per Share.
(b) In the event of any change in the number of issued and
outstanding shares of Common Stock by reason of any stock dividend, split-up,
combination, reclassification, recapitalization or merger with or into another
Person or other change in the capital structure of the Company (but not
including any increase(s) in the authorized capital stock of the Company) from
the date of this Agreement and through and including the Closing Date, the
Purchaser shall also receive, at the Closing, the stock or other securities,
cash or property to which the Purchaser would have been entitled if the
Purchaser had been a holder of record of the Shares on the record date fixed by
the Company for determination of holders of Common Stock entitled to receive
such stock or other securities, cash or property, for no additional
consideration.
2.2 CLOSING. The purchase and sale of the Shares will take
place at a closing (the "Closing") at the Boston offices of Bingham Dana LLP,
150 Federal Street, Boston, Massachusetts 02110 at 10:00 a.m. on a date not
later than two (2) Business Days after the later to occur of (a) June 14, 1998
and (b) the fulfillment or waiver by the applicable party of each of the
conditions in Section 6, or at such other location, date and time as may be
agreed upon between the Purchaser and the Company. At the Closing, the Company
shall deliver to the Purchaser a single stock certificate, registered in the
name of the Purchaser or its nominee, for
3
<PAGE> 4
the Shares, against payment in full of the purchase price therefor in lawful
money of the United States of America by wire transfer of immediately available
funds to such account or accounts as the Company shall designate in writing not
less than two (2) Business Days prior to the Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Purchaser as follows (subject to a Disclosure
Schedule attached hereto which identifies by Section (some of which have, for
ease of reference, been included herein) any exception to the representations
and warranties contained in this Section 3, which the Company represents is true
and complete only as of the date hereof):
3.1 INCORPORATION. Each of the Company and its Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation and is qualified to own its properties and
conduct its business as it is being conducted as of the date hereof in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification, except where the failure to so qualify
would not have a Material Adverse Effect. The Company has all requisite
corporate power and authority to carry on its business as now conducted.
3.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
(i) 20,000,000 shares of Common Stock, of which 8,948,597 shares are issued and
outstanding as of the date hereof and (ii) 5,000,000 shares of preferred stock,
$0.01 par value per share, of which none are issued and outstanding.
(b) No shares of Common Stock are held in the Company's
treasury. Except as disclosed on Schedule 3.2(b), since March 31, 1998, the
Company (i) has not issued any shares of Common Stock, (ii) has not granted any
options or rights to purchase or acquire shares of Common Stock, and (iii) has
not split, combined or reclassified any of its shares of Common Stock. Except as
disclosed on Schedule 3.2(b), all of the outstanding shares of Common Stock of
the Company have been duly authorized, validly issued, fully paid and
non-assessable. Except as disclosed on Schedule 3.2(b), there are outstanding
(x) no securities of the Company convertible into or exchangeable for shares of
capital stock of voting securities of the Company, (y) no options, warrants,
rights or other agreements or commitments to acquire from the Company, and no
obligation of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company and (z) no obligations of the Company to grant, extend
or enter into any subscription, warrant, option, right, convertible or
exchangeable security or other similar agreement or commitment (the Common
Stock, together with the items in clauses (x), (y) and (z) being referred to
collectively as the "Company Securities"). Except as disclosed on Schedule
3.2(b), there are no outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities.
There are no voting trusts or other agreements or understandings to which the
Company or any of its Subsidiaries is a party with respect to the voting capital
stock of the Company or any of its Subsidiaries.
4
<PAGE> 5
3.3 AUTHORIZATION. All requisite corporate action and
approvals on the part of the Company, its officers, directors and shareholders
necessary for the authorization, execution, delivery and performance of the
Transaction Documents and the consummation and performance of the transactions
contemplated thereby, including without limitation the issuance of the Shares at
the Closing, have been taken, and no other corporate proceedings on the part of
the Company or its shareholders are necessary to authorize the Transaction
Documents or to consummate the transactions contemplated thereby. When executed
and delivered by the Company, the Transaction Documents shall constitute the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors' rights
generally and by general equitable principles. The Company has all requisite
corporate power and authority to enter into, execute and deliver the Transaction
Documents and to carry out and perform its obligations under the terms of the
Transaction Documents.
3.4 VALID ISSUANCE OF THE SHARES. The Shares being issued and
sold by the Company hereunder shall, upon issuance pursuant to the terms hereof,
be duly authorized and validly issued, fully paid and non-assessable and free
and clear of any lien, security interest, option or other charge or encumbrance
and the issuance of the Shares will not be subject to any pre-emptive or similar
rights with respect to such Shares.
3.5 FINANCIAL STATEMENTS. The Company has furnished to the
Purchaser its audited statements of income, stockholders' equity and cash flows
for the fiscal year ended December 31, 1997, its audited consolidated balance
sheet as of December 31, 1997, its unaudited statements of income, stockholders'
equity and cash flows for the period from January 1, 1998 to March 31, 1998, and
its unaudited balance sheet as of March 31, 1998. All such financial statements
and any other audited and unaudited financial statements included in any SEC
Documents (as defined below) are hereinafter referred to collectively as the
"Financial Statements". The Financial Statements have been prepared or will be
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods therein indicated, and fairly present the
financial position of the Company and the results of its operations as of the
date and for the periods indicated thereon, except that the unaudited financial
statements may not be in accordance with generally accepted accounting
principles because of the absence of footnotes normally contained therein and
are subject to normal year-end audit adjustments which, individually, and in the
aggregate, shall not be material. Since March 31, 1998, there has been no change
(actual or threatened) in the assets, liabilities (contingent or other),
operations or condition (financial or other) of the Company that has had or will
have a Material Adverse Effect.
3.6 SEC DOCUMENTS. The Company has furnished to the Purchaser
a true and complete copy of the Company's Annual Report on Form 10-K for the
year ended December 31, 1997, the Company's Quarterly Report on Form 10-Q for
the three months ended March 31, 1998, and any other statement, report,
registration statement (other than registration statements on Form S-8) or
definitive proxy statement filed by the Company with the SEC during the period
commencing March 31, 1998 and ending on the date hereof. The Company shall,
promptly upon the filing thereof, also furnish to the Purchaser all statements,
reports (including, without
5
<PAGE> 6
limitation, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K),
registration statements and definitive proxy statements filed by the Company
with the SEC during the period commencing on the date hereof and ending on the
Closing Date (all such materials furnished or required to be furnished to the
Purchaser pursuant to this Section 3.6 being called, collectively, the "SEC
Documents"). As of their respective filing dates, the SEC Documents complied or
shall comply in all material respects with the requirements of the Exchange Act
or the Securities Act, as applicable, and none of the SEC Documents at the time
filed contained or will contain any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading, as of their respective filing dates, except to the extent corrected
by a subsequently filed SEC Document.
3.7 CONSENTS AND APPROVALS; NO VIOLATIONS. All consents,
approvals, orders and authorizations required on the part of the Company in
connection with the execution, delivery or performance of the Transaction
Documents and the consummation of the transactions contemplated thereby have
been obtained as of the date hereof or will be obtained prior to the Closing
Date, as applicable, and shall be effective as of the Closing Date. Except as
disclosed on Schedule 3.7, neither the execution and delivery of the Transaction
Documents by the Company nor the consummation of the transactions contemplated
thereby, including without limitation the issuance of the Shares hereunder,
will, (i) require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, except where
the failure to obtain such consent, approval, authorization or permit, or to
make such filing or notification would not, in the aggregate, have a Material
Adverse Effect; (ii) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, license, agreement or other instrument or obligation to
which the Company is a party or by which the Company or any of its assets or
Subsidiaries may be bound, except for such defaults (or rights of termination,
cancellation or acceleration) which would not, in the aggregate, have a Material
Adverse Effect; (iii) result in the creation or imposition of any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind on any asset
of the Company or any of its Subsidiaries which would, in the aggregate, have a
Material Adverse Effect; and (iv) violate any order, writ, injunction,
agreement, contract, decree, statute, rule or legislation applicable to the
Company, any of its Subsidiaries or by which any of their respective assets are
bound.
3.8 NO CONFLICT. The execution and delivery of the Transaction
Documents by the Company and the consummation of the transactions contemplated
thereby and the issuance of the Shares as contemplated hereby shall not conflict
with or result in any violation of or default by the Company (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under (i) any provision of the Certificates of Incorporation or Bylaws
of the Company or any of its Subsidiaries or (ii) any agreement or instrument,
permit, franchise, license, judgment, order, statute, law, ordinance, rule or
regulations, applicable to the Company, any of its Subsidiaries or their
respective properties or assets.
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3.9 BROKERS OR FINDERS. Except as disclosed on Schedule 3.9,
the Company has not dealt with any broker or finder in connection with the
transactions contemplated by the Transaction Documents, and the Company has not
incurred, and shall not incur, directly or indirectly, any liability for any
brokerage or finders' fees or agents commissions or any similar charges in
connection with the Transaction Documents or any transaction contemplated
thereby. The Company agrees that it shall be solely responsible for all fees,
expenses, commissions and charges of any Person identified on Schedule 3.9.
3.10 NASDAQ NATIONAL MARKET SYSTEM. The Common Stock is listed
on the NASDAQ National Market System, and there are no proceedings to revoke or
suspend such listing.
3.11 NO DEALING IN COMMON STOCK. Neither the Company nor any
of its Affiliates has, directly or indirectly, bid for, purchased or attempted
to induce any Person to bid for or purchase any shares of Common Stock or any
rights to buy shares of Common Stock (or any security convertible into shares of
Common Stock) during the five (5) Trading Days prior to the day that is one (1)
Trading Day prior to the date of this Agreement; provided, however, that the
Company has (a) participated in ordinary course analysts meetings, public
announcements and similar activities; and (b) pursued negotiations with
potential acquisition targets, including Izsak Grapin et Associes and Putnam
Hayes & Bartlett, Inc., that may receive Common Stock as part of the
acquisitions contemplated by the Company.
3.12 ABSENCE OF LITIGATION. Except as disclosed on the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, there
are no actions, suits or proceedings or, to the Company's knowledge, any
investigations, pending, or threatened by or before any governmental body
against the Company and in which an unfavorable outcome, ruling or finding in
any such matter, or for all such matters taken as a whole, would have a Material
Adverse Effect. The foregoing includes, without limitation, any action, suit,
proceeding or investigation that questions the Transaction Documents or the
right of the Company to execute, deliver and perform its obligations under the
Transaction Documents or to issue the Shares pursuant to the terms hereof.
3.13 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the
SEC Documents, since December 31, 1997, each of the Company and its Subsidiaries
has conducted its businesses in the ordinary course consistent with past
practice, except in connection with the negotiation and execution and delivery
of the Transaction Documents and the Izsak Grapin et Associes and Putnam Hayes &
Bartlett, Inc. transactions. Except as disclosed in the SEC Documents, since
December 31, 1997, there has not been any change by the Company in its
accounting methods, principles or practices except as required by United States
generally accepted accounting principles.
3.14 TAKEOVER LAWS. The Company has taken reasonable steps to
ensure that the transactions contemplated by the Transaction Documents,
including without limitation the issuance of the Shares, are exempt from the
anti-takeover laws of the State of Delaware. Without limiting the generality of
the foregoing, the Company's Board of Directors has approved
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the acquisition of Common Stock by the Purchaser (and its permitted assignee(s)
under Section 9.11) pursuant to the terms of this Agreement and will adopt
(prior to the Closing Date) additional resolutions relating to the foregoing in
the form previously provided to the Purchaser.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to the Company as follows:
4.1 INCORPORATION. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified to own its properties and conduct its business as it
is being conducted as of the date hereof in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification, except where the failure to so qualify would not have a Material
Adverse Effect. The Purchaser has all requisite corporate power and authority to
carry on its business as now conducted.
4.2 AUTHORIZATION. All requisite corporate action and
approvals on the part of the Purchaser, its officers, directors and shareholders
necessary for the authorization, execution, delivery and performance of the
Transaction Documents and the consummation of the transactions contemplated
thereby, including without limitation the purchase of the Shares at the Closing,
have been taken and no other corporate proceedings on the part of the Purchaser
or its shareholders are necessary to authorize the Transaction Documents or to
consummate the transactions contemplated thereby. When executed and delivered by
the Purchaser, the Transaction Documents shall constitute the legal, valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as such may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally
and by general equitable principles. The Purchaser has all requisite corporate
power to enter into, execute and deliver the Transaction Documents and to carry
out and perform its obligations under the terms of the Transaction Documents.
4.3 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Purchaser is
acquiring the Shares for its own account, and not for resale or with a view to
distribution thereof in violation of the Securities Act; subject nevertheless to
the understanding that the disposition of its property will at all times be and
remain in the Purchaser's control.
4.4 INVESTOR STATUS; INVESTOR REPRESENTATIONS; ETC. The
Purchaser certifies and represents to the Company that it is an "Accredited
Investor" as defined in Rule 501(a)(3) of Regulation D promulgated under the
Securities Act and was not organized for the purpose of acquiring the Shares.
The Purchaser has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the investment
in the Shares. The Purchaser's financial condition is such that it is able to
bear the risk of holding the Shares for an indefinite period of time and the
risk of loss of its entire investment. The Company has provided the Purchaser
with copies of publicly available financial information concerning the Company
and the Purchaser has been afforded the opportunity to ask questions of and
receive answers from the management of the Company concerning this investment
and has sufficient knowledge and experience in investing in companies similar to
the Company in terms of the
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Company's stage of development so as to be able to evaluate the risks and merits
of its investment in the Company.
4.5 SHARES NOT REGISTERED. The Purchaser understands that the
Shares have not been registered under the Securities Act, by reason of their
issuance by the Company in a transaction exempt from the registration
requirements of the Securities Act, and that the Shares must continue to be held
by the Purchaser unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration. The Purchaser understands
that the exemptions from registration afforded by Rule 144 (the provisions of
which are known to it) promulgated under the Securities Act depend on the
satisfaction of various conditions, and that, if applicable, Rule 144 may afford
the basis for sales only in limited amounts. The Purchaser is acquiring the
Shares solely for investment purposes, with no present intention of distributing
or reselling any of such Shares or any interest therein; subject nevertheless to
the understanding that the disposition of its property will at all times be and
remain in the Purchaser's control.
4.6 NO CONFLICT. The execution and delivery of the Transaction
Documents by the Purchaser and the consummation of the transactions contemplated
thereby and the purchase of the Shares as contemplated hereby shall not conflict
with or result in any violation of or default by the Purchaser (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under (i) any provision of the organizational documents (the Certificate
of Incorporation or By-laws) of the Purchaser or (ii) any agreement or
instrument, permit, franchise, license, judgment, order, statute, law,
ordinance, rule or regulations, applicable to the Purchaser or its respective
properties or assets.
4.7 BROKERS. The Purchaser has not dealt with any broker or
finder in connection with the transactions contemplated by the Transaction
Documents and the Purchaser has not incurred, and shall not incur, directly or
indirectly, any liability for any brokerage or finders' fees or agents
commissions or any similar changes in connection with the Transaction Documents
or any transaction contemplated thereby.
4.8 CONSENTS AND APPROVALS; NO VIOLATIONS. All consents,
approvals, orders and authorizations required on the part of the Purchaser in
connection with the execution, delivery or performance of the Transaction
Documents and the consummation of the transactions contemplated thereby have
been obtained as of the date hereof or will be obtained prior to the Closing
Date and shall be effective as of the Closing Date. Neither the execution and
delivery of the Transaction Documents by the Purchaser nor the consummation of
the transactions contemplated thereby, including without limitation the purchase
of the Shares hereunder, will (i) require any consent, approval, authorization
or permit of, or filing with or notification to, any governmental or regulatory
authority, (ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, license, agreement or other instrument or obligation to which the
Purchaser is a party or by which the Purchaser or any of its assets may be
bound, and (iii) result in the creation or imposition of any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind on any asset of the
Purchaser which would, in the aggregate, have a Material Adverse Effect.
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4.9 NO DEALING IN COMMON STOCK. Neither the Purchaser nor any
of its Affiliates has, directly or indirectly, sold or attempted to sell, or
attempted to induce any Person to sell or offer to sell any shares of Common
Stock or any rights to buy or sell shares of Common Stock (or any security
convertible into shares of Common Stock) during the five (5) Trading Days prior
to the day that is one (1) Trading Day prior to the date of this Agreement.
5. COVENANTS.
5.1 STANDSTILL OBLIGATIONS. The Purchaser hereby agrees with
the company that after the Closing Date and until the Standstill Termination
Date (as defined below), without the prior written consent of the Company (which
written consent the Company may decide to give or withhold in its absolute
discretion), the Purchaser shall not directly or indirectly (through an
Affiliate or otherwise) acquire Beneficial Ownership of any shares of Common
Stock if the effect of any such acquisitions, taken individually or
collectively, would be to increase the Purchaser's total Beneficial Ownership in
the Company to greater than 19.9% of then outstanding Common Stock. The
"Standstill Termination Date" shall mean the earliest to occur of (i) January 1,
2008, (ii) a Change in Control, or (iii) the public announcement of any
transaction which, if consummated, would result in a Change in Control.
5.2 BOARD MEMBERS. The Company hereby agrees that if the
Purchaser or any of its Affiliates acquire in the aggregate Beneficial Ownership
of at least 19.9% of the then outstanding Common Stock, the Company shall use
its best efforts to assist the Purchaser in obtaining representation on the
Company's Board of Directors as would be commensurate with such level of
Beneficial Ownership.
5.3 REGISTRATION RIGHTS.
(a) DEFINITIONS. As used in this Section 5.3:
"Registered" and "registration" (regardless of
whether capitalized) refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and the declaration
or ordering by the SEC of effectiveness of such registration statement.
"Registrable Securities" means, at any particular
time, the Shares and other securities issued with respect thereto upon any stock
split, stock dividend, recapitalization, merger, consolidation or similar event.
Shares shall cease to be Registrable Securities when (i) they may be sold
pursuant to an effective registration statement under the Securities Act, or
distributed to the public through a broker, dealer or market maker pursuant to
Rule 144 under the Securities Act, or any other exemption from the registration
requirements of the Securities Act under which the transferee receives
securities that are not "restricted securities" within the meaning of that term
as defined in Rule 144(a)(3), or (ii) when they may be sold under Rule 144(k)
(or other similar exemption from registration) without volume limitation.
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"Underwriters' Maximum Number" means, with respect
to an underwritten registration, that number of securities to which such
registration should be limited, in the written opinion of the managing
underwriters of such registration in the light of marketing factors.
(b) DEMAND REGISTRATIONS.
(i) REQUEST FOR DEMAND REGISTRATION.
(A) Subject to the limitations set forth in the
following paragraphs of this Section 5.3, the Purchaser may at any time give to
the Company a written request for the registration (a "Demand Registration") by
the Company under the Securities Act of all or any portion of the Registrable
Securities then held by the Purchaser.
(B) Subject to the limitations set forth in the
following paragraphs of this Section 5.3, after the receipt of a written request
for a Demand Registration, (1) the Company will be obligated to include in such
Demand Registration all Registrable Securities with respect to which the Company
shall receive from the Purchaser the written request for inclusion in such
Demand Registration and (2) the Company shall prepare and promptly, but not
later than 60 days after receipt of such written request, file with the SEC a
registration statement and thereafter will use its best efforts in good faith to
effect promptly the registration of all such Registrable Securities. Unless the
Purchaser shall otherwise request, the method of disposition of the Registrable
Securities shall be a firm commitment underwritten offering in respect of which
the Company will provide reasonable and customary indemnification to the
underwriters.
(ii) LIMITATIONS ON DEMAND REGISTRATIONS.
(A) The Company shall not be obligated to effect
more than two (2) Demand Registrations during any consecutive twelve (12) month
period after the Closing Date.
(B) The Company shall not be obligated to effect any
Demand Registration of any Registrable Securities prior to July 1, 1999.
(C) The Company shall not be obligated to effect the
Demand Registration of any Registrable Securities during the period commencing
on the date falling 90 days prior to the Company's estimated date of filing of,
and ending on the date 90 days following the effective date of, any registration
statement pertaining to any registration initiated by the Company, for the
account of the Company (other than with respect to securities registered solely
in connection with acquisitions, employee benefit plans, and the like); provided
that the Company complies with its obligations under Section 5.3(c)(i) hereof
with respect to such registration statement.
(D) The Company shall not be obligated to effect any
Demand Registration of Registrable Securities for any 90-day period following
receipt of any written request for registration, if in the good faith judgment
of the Board of Directors of the Company
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the filing of any registration statement during such 90-day period would
adversely affect a proposed or pending acquisition, merger, or similar corporate
event to which the Company is or expects to be party.
(iii) PRIORITY IN DEMAND REGISTRATIONS. If the
Underwriters' Maximum Number in any Demand Registration exceeds the number of
Registrable Securities requested by the Purchaser to be included in such
registration, then the Company and other shareholders who may have requested to
be included in such registration and/or who have the right to be included in
such registration will be entitled to include in such registration that number
of securities as shall have been requested by the Company and such other
shareholders, as the case may be, and that is not greater than such excess; and
such number of Registrable Securities shall be allocated in accordance with the
obligations and/or the determination of the Company. Neither the Company nor any
of its other shareholders shall be entitled to include any securities in any
underwritten Demand Registration unless the Company or such shareholders (as the
case may be) agree in writing to sell such securities on the same terms and
conditions as apply to the Registrable Securities held by the Purchaser to be
included in such Demand Registration.
(iv) SELECTION OF UNDERWRITERS. In any Demand
Registration, the Purchaser shall, after consultation with the Company, have the
right to select the underwriters and/or placement agent for any transfer of
Registrable Securities contemplated by such Registration
(c) PIGGYBACK REGISTRATIONS.
(i) RIGHTS TO PIGGYBACK.
(A) If (and on each occasion that) the Company
proposes to register of its securities under the Securities Act, either for the
Company's own account or for any the account of any of its shareholders (each
such registration not withdrawn or abandoned prior to the effective date
thereof, a "Piggyback Registration"), the Company will give written notice to
the Purchaser of such proposal not later than the earlier to occur of (1) the
tenth day following the receipt by the Company of notice of exercise of any
registration rights by any such shareholders, and (2) 30 days prior to the
anticipated filing date of such Piggyback Registration. Notwithstanding the
foregoing, the Company will not be obligated to give notice to the Purchaser as
to or to include any Registrable Securities in any registration on Form S-4 or
similar limited-purpose form of registration statement effected solely to
implement an acquisition or any registration on Form S-8 or similar
limited-purpose form of registration statement effected solely to implement an
employee benefit plan.
(B) Subject to the provisions and limitations
contained in paragraphs (ii) and (iv) of this Section 5.3(c) and in the last
sentence of this clause (B): (1) the Company will be obligated to include in
each Piggyback Registration all Registrable Securities with respect to which the
Company shall receive, within 20 days after the date on which the Company shall
have given written notice of such Piggyback Registration to the Purchaser, the
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written request of the Purchaser for inclusion in such Piggyback Registration,
and (2) the Company will use its best efforts in good faith to effect promptly
the registration of all such Registrable Securities. The Purchaser shall be
permitted to withdraw all or any part of their Registrable Securities from any
Piggyback Registration at any time prior to the effective date of such Piggyback
Registration.
(ii) PRIORITY IN PIGGYBACK REGISTRATIONS. If a
Piggyback Registration is an underwritten registration, and the managing
underwriters thereof give written advice to the Company that the inclusion of
all the securities requested to be included would exceed the Underwriters'
Maximum Number, the Company shall so advise the Purchaser and the number of
Securities that are entitled to be included in the Piggyback Registration and
underwriting shall be allocated in the following manner: (i) all of the
securities requested by the Company to be included in the Registration for the
Company's own account up to the Underwrites' Maximum Number; and (ii) if
thereafter a further limitation on the number of securities is still required in
order to reduce the number of securities to an amount less than the Maximum
Offering Size, then the number of securities that may be included in the
Registration and underwriting shall be allocated among the officers and
directors of the Company, the Purchaser and other shareholders of the Company in
proportion, as nearly as practicable, to their respective ownership of the
Company and to the respective amounts of Registrable Securities and other
securities which were requested or proposed to be included in such Registration
at the time of filing a Registration statement.
(iii) SELECTION OF UNDERWRITERS. In any Piggyback
Registration, the Company shall have the right to select the investment bankers
and managing underwriters in such registration.
(iv) LIMITATION. The Company shall not be obligated
to include in any Piggyback Registration any Registrable Securities for which it
receives a written request from the Purchaser prior to the earlier of (1) July
1, 1999 or (2) the date on which the Company notifies Purchaser that the Company
proposes to make the second (2nd) Piggyback Registration following the Closing
Date.
(d) LOCKUP AGREEMENT. If the Company or the managing
underwriters so request of the Purchaser in connection with any registration,
the Purchaser will not, without the prior written consent of the Company or such
underwriters, effect any public sale or any other sale, transfer, assignment or
distribution of any equity securities of the Company, including any sale
pursuant to Rule 144, during the seven days prior to, and during the 90-day
period commencing on, the effective date of such underwritten registration.
(e) COOPERATION BY PROSPECTIVE SELLERS, ETC.
(i) The Purchaser will furnish to the Company in
writing such information as the Company may reasonably require from the
Purchaser, and otherwise reasonably cooperate with the Company in connection
with any registration statement with respect to such Registrable Securities.
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(ii) The failure of the Purchaser to furnish any
information or documents shall not affect the obligations of the Company to any
remaining sellers who furnish such information and documents unless in the
reasonable opinion of counsel to the Company or the underwriters, such failure
impairs or may impair the viability of the offering or the legality of the
registration statement or the underlying offering.
(iii) The Purchaser will not (until further notice)
effect sales thereof after receipt of telegraphic or written notice from the
Company to suspend sales to permit the Company to correct or update such
registration statement or prospectus.
(iv) At the end of any period during which any
registration statement is current and effective, the Purchaser shall discontinue
sales pursuant to such registration statement upon notice from the Company of
its intention to remove from registration the shares covered by such
registration statement which remain unsold, and the Purchaser shall notify the
Company of the number of shares registered that remain unsold promptly after
receipt of such notice from the Company.
(f) REGISTRATION EXPENSES.
(i) The Company will be responsible for and will pay
all costs and expenses incurred or sustained in connection with or arising out
of the first two (2) Demand Registrations, including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
Blue Sky laws (including reasonable fees and disbursements of counsel for the
underwriters in connection with the Blue Sky qualification of Registrable
Securities), printing expenses, messenger, telephone, and delivery expenses,
fees and disbursements of counsel for the Company, reasonable fees and
disbursements of one counsel representing the Purchaser, fees and disbursements
of all independent certified public accountants (including the expenses relating
to the preparation and delivery of any special audit or comfort letters required
by or incident to such registration), and fees and disbursements of underwriters
(excluding discounts and commissions), the reasonable fees and expenses of any
special experts retained by the Company on its own initiative or at the request
of the managing underwriters in connection with such registration, and fees and
expenses of all (if any) other Persons retained by the Company (all such costs
and expenses, collectively, "Registration Expenses"). The Purchaser will be
responsible for and will pay all Registration Expenses incurred or sustained in
connection with or arising out of the third and subsequent Demand Registrations.
The Purchaser shall not be responsible for any Registration Expenses in
connection with or arising out of any Piggyback Registration in which the
Purchaser participates.
(ii) The Company will not bear the cost of nor pay
for any stock transfer taxes imposed in respect of the transfer of any
Registrable Securities to any purchaser thereof by any Purchaser in connection
with any registration of Registrable Securities.
(iii) To the extent that Registration Expenses
incident to any Demand Registration or Piggyback Registration are not required
to be paid by the Purchaser, the Company will pay all such remaining
Registration Expenses.
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(g) PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. The Purchaser
shall not participate in any underwritten registration unless the Purchaser (a)
agrees to sell its securities on the basis provided in any underwriting
arrangements approved by the Persons is entitled, under the provisions hereof,
to approve such arrangements, and (b) completes and executes all reasonably
requested questionnaires, powers of attorney, custody agreements, indemnities,
underwriting agreements, and other documents reasonably required by the terms of
such underwriting arrangements.
(h) TERMINATION OF REGISTRATION RIGHTS. Notwithstanding
anything else contained herein, all of the registration rights under this
Section 5.3 shall automatically and without further action terminate three (3)
years after the Closing Date.
5.4 NASDAQ NATIONAL MARKET SYSTEM QUOTATION. The Company shall
use its best efforts to have the Shares quoted on the NASDAQ National Market
System upon the registration of the Shares and retain the Shares and the Common
Stock quoted on the NASDAQ National Market System.
5.5 SALE OF SHARES BY THE PURCHASER. At any time after the
Closing Date, the Purchaser may (subject to Section 7 hereof) transfer all or
any portion of the Shares to any Person; provided, that, if such transfer is to
be consummated at any time prior to January 1, 2001, the Purchaser complies with
the procedure set forth in this Section 5.5:
(a) the Purchaser shall first give written notice (the "Sale
Notice") to the Company stating (i) the Purchaser's desire to make such
transfer, (ii) the number of Shares to be transferred (the "Offered Shares"),
and (iii) the Offered Shares Price (as defined below).
For the purposes of this Section 5.5 the "Offered Shares Price" shall
mean a cash price calculated by multiplying the number of Offered Shares by a
price per Offered Share equal to 97.5% of the average of the closing prices of a
share of Common Stock as quoted on the NASDAQ National Market System (or any
other principal exchange on which the Common Stock is then traded) for the five
Trading Days up to and including the day that is one Trading Day prior to the
date of the Sale Notice.
(b) Upon receipt of the Sale Notice the Company shall have the
irrevocable and exclusive option to buy all of the Offered Shares at the Offered
Shares Price. The right to purchase under this Section 5.5(b) shall be
exercisable by a written notice to the Purchaser (the "Purchase Notice") given
to the Purchaser within five (5) Business Days from the date of the Sale Notice
which Purchase Notice shall constitute an unconditional and irrevocable
obligation of the Company to acquire the Offered Shares at the Offered Price.
The Company will complete the purchase of the Offered Shares within ten (10)
Business Days after the date of the Sale Notice.
(c) If the Sale Notice shall be duly given and if the Company
shall not exercise the right to purchase the Offered Shares at the Offered
Shares Price and the other terms of the Sale Notice, then the Purchaser shall be
free from the earlier of (i) the date the Purchaser
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shall have received written notice from the Company stating its intention not to
exercise the option granted under Section 5.5(b), or (ii) the fifth (5th)
Business Day following the date of the Sale Notice if by such date the Purchaser
shall not have received a valid Purchase Notice, or (iii) the fifteenth (15th)
Business Day following the date of a duly given Purchase Notice if by such date
the transfer of the Offered Shares is not consummated, to consummate a transfer
of Offered Shares to any Person at any price and on any terms as the Purchaser
in its sole discretion may determine and whether or not pursuant to Section 5.3
hereof.
6. CONDITIONS TO CLOSING.
6.1 CONDITIONS TO THE OBLIGATION OF THE PURCHASER TO
CONSUMMATE THE CLOSING. The obligation of the Purchaser to consummate the
Closing and to purchase and pay for the Shares is subject to the satisfaction of
each of the following conditions precedent:
(a) The representations and warranties made by the Company
herein shall be true and correct on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date (it being
understood and agreed by the Purchaser that, in the case of any representation
and warranty of the Company contained herein which is not hereinabove qualified
by application thereto of a materiality standard, such representation and
warranty need be true and correct only in all material respects in order to
satisfy as to such representation or warranty the condition precedent set forth
in the foregoing provisions of this Section 6.1 (a)).
(b) The Company shall have performed all obligations and
conditions herein required to be performed or observed by the Company on or
prior to the Closing Date.
(c) No proceeding challenging this Agreement or the
transactions contemplated hereby, or seeking to prohibit, alter, prevent or
materially delay the Closing, shall have been instituted before any court,
arbitrator or governmental body, agency or official or shall be pending.
(d) The issuance and purchase of and payment for the Shares by
the Purchaser shall not be prohibited by any law or governmental order or
regulation. All necessary consents, approvals, licenses, permits, orders and
authorizations of, or registrations, declarations and filings with, any
governmental or administrative agency or of any other person of the transactions
contemplated hereby shall have been duly obtained or made and shall be in full
force and effect as of the Closing Date.
(e) All instruments and corporate proceedings required to be
obtained or made by the Company prior to the Closing in connection with the
consummation of the transactions contemplated by the Transaction Documents to be
consummated at the Closing shall be satisfactory in form and substance to the
Purchaser, and the Purchaser shall have received copies (executed or certified,
as may be appropriate) of all documents which the Purchaser may have reasonably
requested in connection with such transactions.
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(f) The Company and the Purchaser shall have entered into,
executed and delivered the Operating Agreement.
(g) The Purchaser shall have received the written opinion of
Bingham Dana LLP, addressed to the Purchaser and dated as of the Closing Date,
in the form attached as Exhibit A hereto.
6.2 CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CONSUMMATE
THE CLOSING. The obligation of the Company to consummate the Closing and to
issue and sell to the Purchaser the Shares is subject to the satisfaction of
each of the following conditions precedent:
(a) The representations and warranties made by the Purchaser
herein shall be true and correct on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date (it being
understood and agreed by the Company that, in the case of any representation and
warranty of the Purchaser contained herein which is not hereinabove qualified by
application thereto of a materiality standard, such representation and warranty
need be true and correct only in all material respects in order to satisfy as to
such representation or warranty the condition precedent set forth in the
foregoing provisions of this Section 6.2(a)).
(b) The Purchaser shall have performed all obligations and
conditions herein required to be performed or observed by the Purchaser on or
prior to the Closing Date.
(c) No proceeding challenging this Agreement or the
transactions contemplated hereby, or seeking to prohibit, alter, prevent or
materially delay the Closing, shall have been instituted before any court,
arbitrator or governmental body, agency or official or shall be pending.
(d) The sale of the Shares by the Company shall not be
prohibited by any law or governmental order or regulation. All necessary
consents, approvals, licenses, permits, orders and authorizations of, or
registrations, declarations and filings with, any governmental or administrative
agency or of any other person of the transactions contemplated hereby shall have
been duly obtained or made and shall be in full force and effect as of the
Closing Date.
(e) The Company shall have obtained all corporate approvals
required by its officers, directors and shareholders necessary for the
authorization, execution, performance and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
(f) All instruments and corporate proceedings required to be
obtained or made by the Purchaser prior to the Closing in connection with the
consummation of the transactions contemplated by the Transaction Documents to be
consummated at the Closing shall be satisfactory in form and substance to the
Company, and the Company shall have received counterpart originals, or certified
or other copies of all documents, including without limitation records of
corporate or other proceedings, which it may have reasonably requested in
connection with such transactions.
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<PAGE> 18
(h) The Company and the Purchaser shall have entered into,
executed and delivered the Operating Agreement.
7. TRANSFER, LEGENDS. (a) Each certificate or other document evidencing
any of the Shares shall be endorsed with the legend set forth below, and the
Purchaser covenants that, except to the extent such restrictions are waived by
the Company, it shall not transfer the shares represented by any such
certificate without complying with the restrictions on transfer described in
this Agreement and the legends endorsed on such certificate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED,
SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID ACT
AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED
TRANSFER IS EXEMPT FROM SAID ACT. THE TRANSFER OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO A SECURITIES PURCHASE
AGREEMENT DATED JUNE 11, 1998 BETWEEN CAP GEMINI AMERICA, INC. AND
HAGLER BAILLY, INC."
(b) The Company agrees to reissue such certificate without the
foregoing legend in the event of a disposition of the Shares in accordance with
Section 4.5 hereof: (i) in a transaction that does not require registration
under the Securities Act; provided the Purchaser theretofore furnishes to the
Company (or its designee) an opinion of counsel experienced in securities law
matters to such effect or such other documentation as the Company or its
designee may reasonably request or (ii) at the Purchaser's request at such time
as it would be permitted to dispose of the Shares in compliance with Rule 144(k)
under the Securities Act.
8. TERMINATION; LIABILITIES CONSEQUENT THEREON. This Agreement may be
terminated and the transactions contemplated hereunder abandoned at any time
prior to the Closing only as follows:
(a) by the Purchaser, upon notice to the Company if the
conditions set forth in Section 6.1 shall not have been fulfilled or waived by
the Purchaser on or prior to August 1, 1998 or shall have become incapable of
fulfillment prior to such date; or
(b) by the Company, upon notice to the Purchasers if the
conditions set forth in Section 6.2 shall not have been fulfilled or waived by
the Company on or prior to August 1, 1998 or shall have become incapable of
fulfillment prior to such date; or
(c) at any time by mutual agreement of the Company and the
Purchaser.
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<PAGE> 19
Any termination pursuant to this Section 8 shall be without liability
on the part of any party, unless such termination is the result of a material
breach of this Agreement by a party to this Agreement, in which case such
breaching party shall remain liable for such breach notwithstanding any
termination of this Agreement.
9. MISCELLANEOUS PROVISIONS.
9.1 PUBLIC STATEMENTS OR RELEASES. None of the parties to this
Agreement shall make, issue, or release any announcement, whether to the public
generally, or to any of its employees, suppliers, or customers, with respect to
the Transaction Documents or the transactions provided for therein, or make any
statement or acknowledgment of the existence of, or reveal the status or terms
of, or information contained in the Transaction Documents or the transactions
provided for therein, without the prior consent of the other party, which shall
not be unreasonably withheld or delayed, provided, that nothing in this Section
9.1 shall prevent any of the parties hereto from making such public
announcements as it may consider necessary in order to satisfy its legal
obligations, but to the extent not inconsistent with such obligations, it shall
provide the other party with an opportunity to review and comment on any
proposed public announcement before it is made.
9.2 FURTHER ASSURANCES. Each party agrees to cooperate fully
with the other party and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be reasonably
requested by the other party to better evidence and reflect the transactions
described herein and contemplated hereby, and to carry into effect the intents
and purposes of this Agreement. Without limiting the generality of the
foregoing, each of the Company and the Purchaser agree to use its reasonable
efforts to satisfy the conditions set forth in Section 6.
9.3 RIGHTS CUMULATIVE. Each and all of the various rights,
powers and remedies of the parties shall be considered to be cumulative with and
in addition to any other rights, powers and remedies which such parties may have
at law or in equity in the event of the breach of any of the terms of this
Agreement. The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party.
9.4 PRONOUNS. All pronouns or any variation thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
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<PAGE> 20
9.5 NOTICES.
(a) Any notices, reports or other correspondence (hereinafter
collectively referred to as "correspondence") required or permitted to be given
hereunder shall be sent by postage prepaid first class mail, courier or telecopy
or delivered by hand to the party to whom such correspondence is required or
permitted to be given hereunder. The date of giving any notice shall be the date
of its actual receipt.
(b) All correspondence to the Company shall be addressed as
follows:
Hagler Bailly, Inc.
1530 Wilson Boulevard, Suite 900
Arlington, VA 22209-2424
Attention: Henri-Claude Bailly
President and Chief Executive Officer
Telecopier: (703) 351-0344
(c) All correspondence to the Purchaser shall be addressed as
follows:
Cap Gemini America, Inc.
1114 Avenue of the Americas
29th Floor
New York, New York 10036
Attention: General Counsel
Telecopier: (212) 944-8624
With a copy to:
Cap Gemini S.A.
Place de l'Etoile
11, Rue de Tilsitt
75017 Paris France
Attention: Chief Financial Officer
Telecopier: (331) 44-092090
(d) Any entity may change the address to which correspondence
to it is to be addressed by notification as provided for herein.
9.6 CAPTIONS. The captions and paragraph headings of this
Agreement are solely for the convenience of reference and shall not affect its
interpretation.
9.7 SEVERABILITY. Should any part or provision of this
Agreement be held unenforceable or in conflict with the applicable laws or
regulations of any jurisdiction, the invalid or unenforceable part or provisions
shall be replaced with a provision which accomplishes, to the extent possible,
the original business purpose of such part or provision in a
20
<PAGE> 21
valid and enforceable manner, and the remainder of this Agreement shall remain
binding upon the parties hereto.
9.8 GOVERNING LAW; INJUNCTIVE RELIEF.
(a) This Agreement shall be governed by and construed in
accordance with the internal and substantive laws of the State of New York and
without regard to any conflicts of laws concepts which would apply the
substantive law of some other jurisdiction.
(b) Each of the parties hereto acknowledges and agrees that
damages shall not be an adequate remedy for any material breach or violation of
this Agreement if such material breach or violation would cause immediate and
irreparable harm (an "Irreparable Breach"). Accordingly, in the event of a
threatened or ongoing Irreparable Breach, each party hereto shall be entitled to
seek, in any state, or federal court in the State of New York, equitable relief
of a kind appropriate in light of the nature of the ongoing or threatened
Irreparable Breach, which relief may include, without limitation, specific
performance or injunctive relief; provided, however, that if the party bringing
such action is unsuccessful in obtaining the relief sought, the moving party
shall pay the non-moving party's reasonable costs, including attorney's fees,
incurred in connection with defending such action. Such remedies shall not be
the parties' exclusive remedies, but shall be in addition to all other remedies
provided in this Agreement.
9.9 WAIVER; AMENDMENT. No waiver of any term, provision or
condition of this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or be construed as, a further or continuing
waiver of any such term, provision or condition or as a waiver of any other
term, provision or condition of this Agreement. This Agreement may be amended or
modified, and the terms and conditions hereof may be waived, only by a written
instrument signed by the parties hereto or, in the case of waiver, by the party
waiving compliance.
9.10 EXPENSES. Each party shall bear its own costs and
expenses in connection with this Agreement.
9.11 ASSIGNMENT. The rights and obligations of the parties
hereto shall inure to the benefit of and shall be binding upon the authorized
successors and permitted assigns of each party. Neither party may assign its
rights or obligations under this Agreement or designate another Person (i) to
perform all or part of its obligations under this Agreement or (ii) to have all
or part of its rights and benefits under this Agreement, in each case without
the prior written consent of the other party except, solely in the case of the
Purchaser, the Purchaser may assign its rights and obligations under this
Agreement to an Affiliate or to a successor of the Purchaser's business by
merger or otherwise pursuant to a plan of reorganization previously disclosed by
Purchaser to the Company, provided, that the Purchaser shall give prior written
notice to the Company and that, as a condition to such assignment, if the
Company so requires, each such assignee or transferee shall specifically assume
and be bound by the provisions of this Agreement by agreeing to and executing an
instrument of accession or assumption agreement on terms reasonably acceptable
to the Company.
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<PAGE> 22
9.12 SURVIVAL. The respective representations and warranties
given by the parties hereto, and the other covenants and agreements contained
herein, shall survive the Closing Date and the consummation of the transactions
contemplated herein for a period of two years, without regard to any
investigation made by any party.
9.13 ENTIRE AGREEMENT. This Agreement and the Operating
Agreement constitute the entire agreement between the parties hereto respecting
the subject matter hereof and supersedes all prior agreements, negotiations,
understandings, representations and statements respecting the subject matter
hereof, whether written or oral. No modification, alteration, waiver or change
in any of the terms of this Agreement shall be valid or binding upon the parties
hereto unless made in writing and duly executed by the parties hereto.
9.14 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Securities
Purchase Agreement under seal as of the day and year first above written.
HAGLER BAILLY, INC.
By:
----------------------------------------
Name: Henri-Claude Bailly
Title: President and Chief Executive Officer
CAP GEMINI AMERICA, INC.
By:
----------------------------------------
Name:
Title:
22
<PAGE> 23
SCHEDULE 3.2(b)
CAPITALIZATION
(as of June 11, 1998)
SHARES OUTSTANDING 8,948,597
OPTIONS GRANTED (1) 1,398,669
TOTAL (FULLY-DILUTED) 10,347,266
(1) Of which 598,936 are exercisable within 90 days
On April 30, 1998, the Company issued options to acquire 64,306 shares of its
Common Stock to Estudio Q S.A.R.L. ("Estudio Q") in connection with the
acquisition of Estudio Q.
Since March 30, 1998, the Company has issued options to acquire an aggregate
24,000 shares of its Common Stock to three outside directors and one officer.
<PAGE> 24
SCHEDULE 3.7
CONSENTS AND APPROVALS; NO VIOLATIONS
The Company is required to make certain filings with the Securities
Exchange Commission (whether on Form 8-K, Form 10-Q or on any other applicable
form) in connection with disclosing the transactions contemplated by this
Agreement.
<PAGE> 25
SCHEDULE 3.9
BROKERS OR FINDERS
HB Capital Inc. (a wholly owned subsidiary of Hagler Bailly, Inc.) will
be paid a fee not to exceed 5 percent of the total investment made by Cap Gemini
America, Inc. HB Capital's fee covers all expenses associated with the
transaction, including all legal and accounting expenses and a fee not to exceed
0.5 percent of the total investment payable to Jacques Zyss, a senior advisor to
HB Capital.
<PAGE> 26
SCHEDULE B
GEMINI CONSULTING CLIENTS
FRANCE NORDIC COUNTRIES
Electricite de France group Vattenfall (S)
Gaz de France group Sydkraft (S)
Suez / Lyonnaise des Eaux group Neste Gaz (F)/IVO (F)/Gullspankraft (S)
Generale des Eaux (VIVENDI) group
SAUR
UK U.S.A.
National Grid MichCon (Michigan Consolidated)
British Gas Consumers Gas
Yorkshire Water UtiliCorp
National Power Enron
British Energy Louisville Gas & Electric
Northern Electricity/Cal Energy Duke Energy
OM group Mid American Energy
Scottish Power Houston Industries
Power Gen Williams Companies
Wisconsin Power and Electric
GERMANY SPAIN
VEBA group Gas Natural
RWE
ITALY
Italgas
<PAGE> 27
SCHEDULE C
HBIX SERVICES IN THE RELEVANT MARKET
1. IT architecture to support non-regulated retailing of energy, network
and ancillary services.
2. IT architecture to support trading of single form energy and convergent
trading.
3. IT architecture to support energy risk management protocols and
analytics.
4. Call-center enhancement.
5. IT architecture to support to enhance the operational efficiency of
pipes and wires operations.
6. IT architecture and capabilities analysis to support strategic and
tactical Billings, Collection and Customer Service (BCCS) systems.
7. Design and capabilities analysis of Knowledge Management systems.
8. IT services to support price bidding in power pools and after wholesale
market structure.
9. IT architecture to support energy nomination and control systems.
HBIX CONTRACTS IN THE RELEVANT MARKET
1. Contract: None.
2. Proposal: Duke Solutions/Duke Energy
3. Leads: Con Edison and Con Edison Energy
US Generating Co.
Nevada Power/Sierra Pacific (Systems integration
issues related to merger)
New-York Power Pool RFI dated January 7, 1998
<PAGE> 28
SCHEDULE D
CG SERVICES IN THE RELEVANT MARKET
Target Industry Specific Information Technology Services Offered by CG:
1. Supply and Demand: Portfolio management
- Trading and Risk Management
- Contract Management
2. Grid Operation and Settlement
3. Asset Management: Plants, Transmission Lines, Distribution Lines, Pipes
- Maintenance
- Process and Organization Model
- Risk Management
4. Waste Handling
5. Safety Management
- Plants
- Transmission Lines
- Distribution Lines
- Pipes
6. Customer Management
- Contract management, Call Center Implementation
- Sales Force Automation
- Customer Account Administration
- Billing System Implementation
- Demand Forecasting
- Metering
7. ERP Solutions
- Industry Specific Solutions
CG CONTRACTS IN THE RELEVANT MARKET
1. None
<PAGE> 29
SCHEDULE E
INITIAL BUSINESS PLAN
<PAGE> 1
EXHIBIT 2
GROUP AGREEMENT
In accordance with Rule 13d-1(k) under the Securities Exchange Act of
1934, as amended, the undersigned hereby agree to the joint filing on behalf of
each of us of a statement on Schedule 13D relating to the Common Stock, par
value $.01 per share, of Hagler Bailly, Inc., a Delaware corporation, and that
any amendments thereto filed by any of us will be filed on behalf of each of us.
This Agreement may be included as an exhibit to any such joint filing.
Dated April 20, 1999.
CAP GEMINI
By: /s/ Serge Kampf
-------------------------------------------
Name: Serge Kampf
Title: Chairman of the Directoire
CAP GEMINI HOLDING, INC.
By: /s/ Geoff Unwin
-------------------------------------------
Name: Geoff Unwin
Title: Chairman and Chief Executive Officer
