<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report : January 10, 1997
TELOS CORPORATION
(Exact name of registrant as specified in charter)
Maryland 52-0880974
(State of Incorporation) (I.R.S. Employer Identification No.)
19886 Ashburn Road, Ashburn, Virginia 20147-2358
(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code
(703) 724-3800
Number of pages (excluding exhibits): 7
<PAGE>
Item 5. Other Events
On December 27, 1996, Telos Corporation (the "Company") sold
substantially all of the assets of its Consulting division, Telos
Consulting Services (TCS), to COMSYS Technical Services, Inc., a
subsidiary of COREStaff, Inc. for approximately $31 million. The
purchase price is subject to a working capital adjustment to be
finalized within forty five days from the date of the closing.
The sale of Telos Consulting Services has been treated as a
discontinued operation in accordance with APB Opinion Number 30
("APB 30"). Pursuant to APB 30, the revenue, costs and expenses
of TCS have been excluded from their respective captions in the
Company's consolidated statements of income and the net results
of these operations have been reported separately as "income
(loss) from discontinued operations." Additionally, the net
assets of TCS have been reported separately as "net assets of
discontinued operations" in the consolidated balance sheet.
The Company's unaudited condensed Consolidated Statements of
Income for the three years ended December 31, 1995 and for the
nine month period ended September 30, 1996 are presented below in
accordance with APB 30.
<PAGE>
<TABLE>
<CAPTION>
(amounts in thousands)
Nine Months Ended Year Ended
September 30 December 31,
1996 1995 1994 1993
<S> <C> <C> <C> <C>
Sales
Systems and Support Services $79,605 $105,801 $111,357 $122,657
Systems Integration 53,363 69,958 39,319 64,627
132,968 175,759 150,676 187,284
Costs and expenses
Cost of sales 116,912 145,522 127,218 152,619
Selling, general and
administrative expenses 20,287 23,262 25,321 22,774
Goodwill amortization 825 1,950 2,701 2,701
Operating (loss) income (5,056) 5,025 (4,564) 9,190
Other income (expenses)
Other (expenses) income (346) 27 (5,458) (3,440)
Interest expense (3,929) (4,385) (3,029) (2,490)
(Loss) income before taxes,
discontinued operations and
extraordinary item (9,331) 667 (13,051) 3,260
Income tax (benefit) provision (421) 75 (1,213) 2,010
(Loss) income from continuing
operations (8,910) 592 (11,838) 1,250
Discontinued operations:
Income (loss) from discontinued
operations (net of tax benefits
of $70 and $138 for 1994 and
1993, respectively) 624 423 (583) (702)
(Loss) income before extraordinary
item (8,286) 1,015 (12,421) 548
Extraordinary item
Loss from early debt retirement -- -- (196) --
Net (loss) income $(8,286) $1,015 $(12,617) $548
</TABLE>
Included in the results of the discontinued operations is allocated
interest expense of $538,000, $1,028,000, $1,106,000 and $1,065,000
<PAGE>
for the years 1993, 1994, 1995 and the nine month period of 1996,
respectively. Interest has been allocated based on the net assets
of the discontinued operation in relation to the Company's
consolidated net assets plus non-specific debt. Additionally,
goodwill amortization of $477,000 for the years 1993 and 1994,
$420,000 for 1995 and $345,000 for the nine months ended 1996 has
been included in the results of the discontinued operations.
The results of the discontinued operations for 1995 and the nine
month period of 1996 do not include an income tax provision as a
result of the overall net operating loss position of the Company.
The unaudited condensed consolidated statements of income of Telos
Consulting Services for the nine months ended September 30, 1996
and for the three years ended December 31, 1995 are presented
below.
<TABLE>
<CAPTION>
(amounts in thousands)
Nine Months Ended Year Ended
September 30, December 31,
1996 1995 1994 1993
<S> <C> <C> <C> <C>
Sales $24,037 $27,069 $24,445 $23,944
Costs and expenses
Cost of sales 19,278 22,056 20,018 21,032
Selling, general and
administrative expenses 2,725 3,064 3,575 2,737
Goodwill amortization 345 420 477 477
Operating income (loss) 1,689 1,529 375 (302)
Interest expense (1,065) (1,106) (1,028) (538)
Income (loss) before taxes 624 423 (653) (840)
Estimated income tax benefit -- -- (70) (138)
Net income (loss) 624 $423 $(583) $(702)
</TABLE>
<PAGE>
The Company's unaudited condensed consolidated balance sheet at
September 30, 1996 is presented below in accordance with APB 30.
<TABLE>
<CAPTION>
(amounts in thousands)
ASSETS
September 30, 1996
<S> <C>
Current assets
Cash and cash equivalents $ 1,284
Accounts receivable, net 41,950
Inventories, net 14,228
Other current assets 3,225
Net assets of discontinued operations 10,518
Total current assets 71,205
Property and equipment, net of
accumulated depreciation of
$19,590 15,762
Goodwill 14,646
Other assets 6,737
108,350
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities
Accounts payable 26,865
Other current liabilities 8,539
Accrued compensation and benefits 8,677
Senior credit facility 37,129
Total current liabilities 81,210
Subordinated notes 18,056
Capital lease obligation 12,395
Other long-term liabilities 324
Total liabilities 111,985
Redeemable preferred stocks
Senior redeemable preferred stock 4,744
Class B redeemable preferred stock 10,877
Redeemable preferred stock 21,745
Total preferred stock 37,366
Stockholders' investment
Common stock 78
Capital in excess of par 4,562
Retained earnings (deficit) (45,641)
Total stockholders' investment (41,001)
$108,350
</TABLE>
<PAGE>
Item 7. Financial Statements and Exhibits
(c) Exhibits:
10.80 Asset Purchase Agreement
10.81 Amendment No. 1 to Asset Purchase Agreement
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
and on its behalf by the undersigned hereunto duly authorized.
Telos Corporation
Date: January 10, 1997 By: /s/ Lorenzo Tellez
Lorenzo Tellez
V.P., Treasurer
Chief Financial Officer
<PAGE>
TELOS CORPORATION
FORM 8-K
EXHIBIT INDEX
10.80 Asset Purchase Agreement
10.81 Amendment No. 1 to Asset Purchase Agreement
<PAGE>
ASSET PURCHASE AGREEMENT
dated as of December 13, 1996
by and among
TELOS CORPORATION,
a Maryland corporation,
("Shareholder")
TELOS CORPORATION,
a California corporation,
("Seller")
and
COMSYS TECHNICAL SERVICES, INC.,
a Maryland corporation,
("Purchaser")
Covering the Purchase of Substantially
All of the Assets of
TELOS CONSULTING SERVICES,
a division of Telos Corporation
<PAGE>
TABLE OF CONTENTS
Page
1. GENERAL DEFINITIONS 1
2. PURCHASE AND SALE OF THE ASSETS; CLOSING DATE 2
2.1 Purchase and Sale 2
2.2 Delivery of Assets and Transfer Documents 2
2.3 Closing; Closing Date 3
3. PURCHASE PRICE 3
3.1 Price and Payment 3
3.2 Purchase Price Adjustment 3
3.3 Excluded Assets 4
3.4 Assumed Obligations 4
3.5 Excluded Liabilities and Obligations 4
3.6 Transfer Taxes 4
3.7 Allocation of Purchase Price 5
4. REPRESENTATIONS AND WARRANTIES OF SELLER 5
4.1 Organization 5
4.2 Ownership 5
4.3 Financial Statements 5
4.4 Events Since the Balance Sheet Date 6
4.5 Competing Interests 7
4.6 Notes and Accounts Receivable 7
4.7 Employee Matters 7
4.8 Contracts and Agreements 8
4.9 Effect of Agreement 9
4.10 Properties, Assets and Leasehold Estates 9
4.11 Intangible Property 10
4.12 Suits, Actions and Claims 10
4.13 Licenses and Permits; Compliance with
Governmental Regulations 10
4.14 Authorization 10
4.15 No Untrue Statements 11
4.16 Records 11
4.17 Work-In-Process 11
4.18 Brokers and Finders 11
4.19 Adverse Facts 11
<PAGE>
4.20 Deposits 11
4.21 Workers' Compensation Data 12
4.22 Customer List 12
4.23 No Royalties 12
4.24 Business 12
4.25 Subsidiaries 12
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER 12
5.1 Incorporation 12
5.2 Authorization 12
5.3 Brokers and Finders 13
6. PRE-CLOSING COVENANTS 13
6.1 General 13
6.2 Notices and Consents 13
6.3 Operation of Business 13
6.4 Preservation of Business 13
6.5 Full Access 13
6.6 Notice of Developments 13
6.7 Exclusivity 14
6.8 Updated Schedules 14
7. CONDITIONS TO OBLIGATION TO CLOSE 14
7.1 Conditions to Obligation of the Purchaser 14
7.2 Conditions to Obligations of the Seller 16
8. TERMINATION 17
8.1 Termination of Agreement 17
8.2 Effect of Termination 18
9. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNIFICATIONS,
GUARANTEES, REPRESENTATIONS AND WARRANTIES OF SELLER AND
SHAREHOLDER 18
10. SPECIAL CLOSING AND POST-CLOSING COVENANTS 18
10.1 Delivery of Funds and Other Assets Collected
by Purchaser;
Power of Attorney 18
10.2 Delivery of Funds and Other Assets Collected
by Seller or Shareholder; Power of Attorney 18
10.3 Consents of Landlords 19
<PAGE>
11. INDEMNITY BY SELLER. 19
11.1 Indemnity 19
11.2 Limitation of Certain Liability 20
11.3 Notice of Claim 20
11.4 Right to Defend 21
11.5 Cooperation by Purchaser 21
11.6 Payment 21
12. LEASE AGREEMENT 22
13. NON-COMPETITION AGREEMENTS 22
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION 22
15. ASSIGNMENT OF CONTRACTS 23
16. SPECIAL PROVISIONS REGARDING EMPLOYEES OF SELLER 23
16.1 New Employees of Purchaser 23
16.2 Hiring of Employees 23
16.3 Existing Employee Benefit Plans 24
16.4 Indemnity Concerning Accrued Benefits 24
17. EXPENSES 24
18. FURTHER ACTIONS 24
19. NOTICES 24
20. GENERAL PROVISIONS 25
20.1 GOVERNING LAW; INTERPRETATION; SECTION HEADINGS 25
20.2 Severability 26
20.3 Entire Agreement 26
20.5 Assignment 26
20.6 Amendment; Waiver 26
20.7 Gender; Numbers 26
20.8 Counterparts 27
20.9 Telecopy Execution and Delivery 27
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into this 13th day of December, 1996, by and among
TELOS CORPORATION, a Maryland corporation ("Shareholder"), TELOS
CORPORATION, a California corporation ("Seller") and COMSYS
TECHNICAL SERVICES, INC., a Maryland corporation ("Purchaser").
W I T N E S S E T H
WHEREAS, Seller is the owner of all right, title and
interest in and to the assets described on Schedule 2.1 hereto
(the "Assets"), with such assets being substantially all of the
assets currently used in the Telos Consulting Services division
operated by the Seller (the "Business");
WHEREAS, Shareholder is the owner of all of the outstanding
capital stock of Seller and is reasonably expected to benefit
from the transactions contemplated by this Agreement;
WHEREAS, Seller desires to sell the Assets to Purchaser and
Purchaser desires to acquire the Assets from Seller, all pursuant
to this Agreement as hereinafter provided; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the
other as an inducement to the execution and delivery of this
Agreement, and to set forth certain additional agreements related
to the transactions contemplated hereby;
Agreement
NOW, THEREFORE, for and in consideration of the premises,
the mutual representations, warranties and covenants herein
contained and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
. GENERAL DEFINITIONS. For purposes of this Agreement,
the following terms shall have the respective meanings set forth
below:
Governmental Authority shall mean any and all
foreign, federal, state or local governments, governmental
institutions, public authorities and governmental entities and
courts.
<PAGE>
Governmental Requirement shall mean any and all
laws (including, but not limited to, applicable common law
principles), statutes, ordinances, codes, rules, regulations,
orders, judgments, writs, injunctions, decrees, decisions or
pronouncements, promulgated, issued, passed or set forth by any
Governmental Authority.
Person shall mean any natural person, any
Governmental Authority and any entity the separate existence of
which is recognized by any Governmental Authority or Governmental
Requirement, including, but not limited to, corporations,
partnerships, joint ventures, joint stock companies, trusts,
estates, companies and associations, whether organized for profit
or otherwise.
Taxes. "Tax" and "Taxes" shall mean any and all
income, excise, franchise or other taxes and all other charges or
fees imposed or collected by any Governmental Authority or
pursuant to any Governmental Requirement, and shall also include
any and all penalties, interest, deficiencies, assessments and
other charges with respect thereto.
Affiliate of any Person shall mean any Person
Controlling, Controlled by or under common Control with such
Person.
Control and all derivations thereof shall mean the
possession, direct or indirect, of either (i) the ownership of or
ability to direct the voting of, as the case may be, fifty-one
percent (51%) or more of the equity interests, value or voting
power in any Person or (ii) the power to direct or cause the
direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
Best Knowledge of Seller means actual knowledge of
either Seller or Shareholder after reasonable inquiry and
investigation.
Purchaser's Business means the temporary placement
of computer support staff and consulting services personnel on a
time and material basis.
. PURCHASE AND SALE OF THE ASSETS; CLOSING DATE.
Purchase and Sale. Seller hereby sells, assigns,
transfers and delivers to Purchaser all right, title and interest
in and to the Assets (as more fully described on Schedule 2.1
hereto), free and clear of any liens or encumbrances of any
nature whatsoever (except for any liens, encumbrances or
obligations, if any, expressly assumed by Purchaser hereunder).
Purchaser hereby purchases from Seller the Assets in
consideration for the Purchase Price (as hereinafter defined)
payable as set forth in Section 3 below.
<PAGE>
Delivery of Assets and Transfer Documents. At the
Closing (hereinafter defined in Section 2.3), Seller shall have
taken all steps necessary to put Purchaser in possession of the
Assets, free and clear of any liens or encumbrances of any nature
whatsoever (except for liens, encumbrances or obligations, if
any, expressly assumed by Purchaser hereunder), and have
delivered to Purchaser (i) a duly executed general warranty bill
of sale covering the Assets, in the form of and containing the
same terms and provisions as the General Warranty Bill of Sale
attached hereto as Exhibit A, (ii) duly executed assignments for
all accounts receivable, patents, trademarks, trade names and
similar intangible property included in the Assets, in form and
substance acceptable to Purchaser and in recordable form as
appropriate, and (iii) such other duly executed transfer and
release documents which Purchaser has reasonably requested to
evidence the transfer of the Assets to Purchaser free and clear
of any liens or encumbrances of any nature whatsoever (except for
liens, encumbrances or obligations, if any, expressly assumed by
Purchaser hereunder).
Closing; Closing Date. Subject to the terms and
conditions herein contained, the consummation of the transactions
referred to above shall take place (the "Closing") at the offices
of Purchaser's counsel, commencing at 9:00 a.m. local time on
December 31, 1996, or such other date as the parties may mutually
determine (the "Closing Date").
. PURCHASE PRICE.
Price and Payment.
The aggregate consideration for the Assets
and the Non-Competition Agreements (set forth in Section 13
below) shall be an amount equal to $31,000,000, subject to
adjustment as provided in Section 3.2 below, payable by wire
transfer or delivery of other immediately available funds (the
"Purchase Price").
At the Closing, the Purchaser shall cause the
Purchase Price to be paid to Seller or its designee.
Purchase Price Adjustment.
The Purchase Price shall be increased or
decreased on a dollar-for-dollar basis by the amount by which the
Net Working Capital of the Seller is more or less than $3,352,148
on the Closing Date (the "Net Working Capital Adjustment").
The "Net Working Capital of the Seller" shall
mean the sum of all current Assets less all current assumed
liabilities of the Seller as of Closing, determined in accordance
with past practices of Seller (which past practices are in
accordance with generally accepted accounting principles,
consistently applied ("GAAP")).
<PAGE>
The Net Working Capital of the Seller shall
be initially determined at the time of Closing by an estimate of
Seller in good faith and any adjustment as a result thereof shall
reduce or increase the Purchase Price payable pursuant to Section
3.1 above; provided, however, that any increase in the Purchase
Price payable at Closing shall be initially limited to 75% of
such increase (with the full amount of such increase to be
deferred until such time as the E&Y Determination (as defined
below) or the Final Computation (as defined below) has been made.
Following the Closing, the Net Working Capital of the Seller
shall be subsequently determined within forty-five (45) days
after the Closing Date by Ernst & Young, LLP, in accordance with
the terms of this Agreement (at the expense of the Purchaser),
which determination (the "E&Y Determination") shall be submitted
in writing to the Seller and Purchaser no later than forty-five
(45) days after the Closing. If within ten (10) days after
receipt of the E&Y Determination, the Seller delivers written
notice to Purchaser that the Seller disagrees with the E&Y
Determination (the "Disagreement Notice"), then the Seller and
Purchaser shall attempt in good faith to mutually determine the
correct amount of the Net Working Capital of the Seller within
ten (10) days after Seller delivers the Disagreement Notice to
Purchaser. If the Seller and Purchaser cannot in good faith
mutually determine the correct amount of the Net Working Capital
of the Seller within such ten (10) day period, then Seller and
Purchaser will mutually select another accounting firm, to be
considered a "Big Six" accounting firm, to compute the Net
Working Capital of the Seller, which computation (the "Final
Computation") shall be final, conclusive and binding on the
parties.
In the event of a Final Computation, the
Purchaser and Seller shall jointly pay the expense of the Final
Computation. If the Seller does not deliver the Disagreement
Notice on a timely basis to Purchaser, the Seller shall be deemed
to agree with and accept the E&Y Determination, which shall be
final and conclusive against Purchaser and Seller. Any required
payment by the Seller or the Purchaser by virtue of a Net Working
Capital Adjustment (net of any preliminary adjustment made at
Closing) shall be made by the Seller or the Purchaser, as the
case may be, within ten (10) days of the receipt of the E&Y
Determination or the Final Computation.
Excluded Assets. The Purchased Assets shall not
include any of the assets listed on Exhibit A-1 to Schedule 2.1
hereto (collectively, the "Excluded Assets").
Assumed Obligations. Purchaser hereby assumes the
obligations of Seller under all contracts and agreements
transferred by Seller to Purchaser under this Agreement that are
listed and described on Schedule 3.4 hereto (the "Assumed
Liabilities and Obligations"); provided that Purchaser
specifically does not assume any liabilities of Seller under such
contracts or agreements with respect to any breaches of such
contracts or agreements occurring on or before the Closing Date
or any damages to third parties resulting from acts, events or
omissions occurring on or before the Closing Date.
<PAGE>
Excluded Liabilities and Obligations.
Except as expressly set forth in Section 3.4
above, the Purchaser shall not assume and shall not be liable or
responsible for any debt, obligation or liability of the
Business, the Seller, Shareholder or any other Affiliate of the
Seller, or any claim against any of the foregoing parties, of any
kind, whether known or unknown, contingent, absolute or
otherwise.
Except for the Assumed Liabilities and
Obligations expressly provided for in Section 3.4 hereof, the
Seller and Shareholder shall jointly and severally forever
defend, indemnify and hold harmless the Purchaser from and
against any and all liabilities, obligations, losses, claims,
damages (including incidentals and consequential damages), costs
and expenses (including court costs and reasonable attorney's
fees) related to or arising from the Business prior to the
Closing Date.
Transfer Taxes. Purchaser and Seller acknowledge
and agree that the consideration (including, without limitation)
the Purchase Price and any adjustments thereto) is deemed to have
been paid for any sales, use, transfer or other similar tax
purposes by Purchaser to Seller pursuant to this Agreement,
includes and is inclusive of any and all sales, use, transfer or
other similar tax imposed as a result of the consummation of the
transactions contemplated by this Agreement, and Seller and
Shareholder hereby agree to pay and discharge, and to indemnify
Purchaser against, and protect, save and hold Purchaser harmless
from, any liability, obligation, claim, assessment or deficiency
(whether or not ultimately successful) for any and all sales,
use, transfer or other similar taxes (and any and all interest,
penalties, additions to tax and fines thereon or related thereto)
resulting or arising from or incurred in connection with the
consummation of the transactions contemplated by this Agreement.
Allocation of Purchase Price. The Purchase Price
shall be allocated as set forth in Schedule 3.7 attached hereto,
and made a part hereof.
. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller and
Shareholder hereby jointly and severally represent and warrant to
Purchaser as follows:
Organization. Shareholder is a corporation duly
organized, validly existing and in good standing under the laws
of the state of Maryland, and is duly authorized, qualified and
licensed under all applicable Governmental Requirements to carry
on its business in the places and in the manner as now conducted
except where any such failure would not reasonably be expected to
have a material adverse effect on the financial condition,
operating results, assets, or business prospects of the Business.
Seller is a corporation duly organized, validly existing and in
good standing under the laws of the state of California, and is
<PAGE>
duly authorized, qualified and licensed under all applicable
Governmental Requirements to carry on its business in the places
and in the manner as now conducted except where any such failure
would not reasonably be expected to have a material adverse
effect on the financial condition, operating results, assets, or
business prospects of the Business. Seller is qualified to do
business in every jurisdiction in which the failure to so qualify
might reasonably be expected to have a material adverse effect on
the financial condition, operating results, assets, or business
prospects of the Business.
Ownership. The Seller owns all of the Assets
constituting the Business. Except as listed on Schedule 4.2
hereto, there are no options, rights or other grants currently
outstanding for the acquisition or purchase of any of the Assets.
All of the outstanding capital stock of the Seller is owned by
the Shareholder.
Financial Statements. Seller has delivered to
Purchaser copies of the following financial statements for the
Business, all of which financial statements are included in
Schedule 4.3(A) hereto:
Unaudited Balance Sheet of the Business (the
"Reference Balance Sheet") as of September 30, 1996 (the "Balance
Sheet Date") and Internal Operations Summary of the Business for
the nine-month period ended on the Balance Sheet Date;
Internal Operations Summary of the Business
for Seller's two (2) most recent fiscal years; and
Internal Operations Summary of the Business
as of and for the two (2) months ended November 30, 1996.
All financial statements supplied to Purchaser by Seller, whether
or not included in Schedule 4.3(A) hereto, are true and accurate
in all respects and, except as set forth on Schedule 4.3(B)
hereto, have been prepared in accordance with GAAP, and present
fairly the consolidated financial condition of the Business as of
the dates and for the periods indicated thereon. The Reference
Balance Sheet reflects, as of the Balance Sheet Date, all
liabilities, debts and obligations of any nature of Seller
related to the Business and the Assets, whether accrued,
absolute, contingent or otherwise, and whether due, or to become
due, including, but not limited to, liabilities, debts or
obligations on account of taxes or other governmental charges, or
penalties, interest or fines thereon or in respect thereof, to
the extent such items are required to be reflected on such
balance sheet under GAAP.
<PAGE>
Events Since the Balance Sheet Date. Except as
set forth on Schedule 4.4 hereto, since September 30, 1996, there
has not been:
any change in the condition (financial or
otherwise) or in the properties, assets, liabilities, business or
prospects of the Business, except normal and usual changes in the
ordinary course of business, none of which has been adverse and
all of which in the aggregate have not been adverse;
any labor trouble, strike or any other
occurrence, event or condition affecting the employees of the
Business that adversely affects the condition (financial or
otherwise) of the Assets or the Business.
any breach or default by Seller or
Shareholder or, to the Best Knowledge of Seller, by any other
party, under any agreement or obligation included in the Assets
or by which any of the Assets are bound;
any damage, destruction or loss (whether or
not covered by insurance) adversely affecting the Assets or the
Business;
any change in the types, nature, composition
or quality of the services of the Business, any adverse change in
the contributions of any of the service lines of the Business to
the revenues or net income of such Business, or any adverse
change in the sales, revenue or net income of the Business;
any transaction related to or affecting the
Assets or the Business other than transactions in the ordinary
course of business of Seller; or
any other occurrence, event or condition that
has adversely affected (or can reasonably be expected to
adversely affect) the Assets or the Business.
Competing Interests. Except as set forth on
Schedule 4.5 hereto, neither Seller or Shareholder, nor, to the
Best Knowledge of Seller, any shareholder or officer of Seller,
and no Associate (as hereinafter defined) of Seller:
owns, directly or indirectly, any equity
interests in, or is a director, officer or employee of, or
consultant to, any entity which is a competitor, supplier or
customer of the Business, or, to the Best Knowledge of Seller, a
competitor, supplier or customer of Purchaser or an Associate of
Purchaser (except for ownership, if any, of less than one percent
(1%) by value of the outstanding capital stock of any corporation
the capital stock of which is traded on a nationally recognized
securities exchange); or,
owns, directly or indirectly, in whole or in
part, any property, asset or right which is associated with the
Assets or the Business, or which Seller is presently operating or
using in connection with or the use of which is necessary for or
material to the operation of the Business.
<PAGE>
For purposes of this Agreement, the term "Associate"
shall mean with respect to a Person (other than an individual),
any Person Controlling, Controlled by or under common Control
with such Person, and any director or officer of such Person and
any Associate of any such Person.
Notes and Accounts Receivable. All notes and
accounts receivable of the Seller which are part of the Assets
are reflected properly on Seller's books and records, are valid
receivables subject to no setoffs or counterclaims, are presently
current and collectible, and will be collected in accordance with
their terms at their recorded amounts, subject only to a reserve
for bad debts set forth on the face of the Reference Balance
Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the date of Closing in accordance with
the past customs and practices of the Business.
Employee Matters. Schedule 4.7(A) hereto, sets
forth a true and complete list of the names of and current annual
compensation paid by Seller to each corporate or administrative
(non-temporary) employee of Seller utilized in connection with
the operation of the Business. Except as specifically described
on Schedule 4.7(B) hereto, neither Seller nor Shareholder have
any employee benefit plans (including, but not limited to,
pension plans and health or welfare plans), arrangements or
understandings, whether formal or informal relating to any
employees of the Business. Purchaser will have no liability with
respect to any such plans as a result of the transactions
contemplated by this Agreement. Seller does not now and have
never contributed to a "multi-employer plan" as defined in
section 4001(a)(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). Seller is not a party to any
collective bargaining or other union agreements. Seller has not,
within the last five (5) years, had or been threatened with any
union activities, work stoppages or other labor trouble with
respect to its employees engaged in the Business which had or
might have had a material adverse effect on the Business. Other
than wage increases in the ordinary course of business, since the
Balance Sheet Date, Seller has not made any commitment or
agreement to increase the wages or modify the conditions or terms
of employment of any of the corporate or administrative (non-
temporary) employees of Seller used in connection with the
Business.
Contracts and Agreements. Schedule 4.8 hereto,
sets forth a true and complete list of and briefly describes
(including termination date) all of the following contracts,
agreements, leases, licenses, plans, arrangements or commitments,
written or oral, that relate to the Assets or the Business
(including all amendments, supplements and modifications
thereto):
all contracts, agreements, or commitments in
respect of the sale of services;
all offers, tenders or the like outstanding
and capable of being converted into an obligation of Seller by
<PAGE>
the passage of time or by an acceptance or other act of some
other person or entity or both;
all sales or agency agreements or franchises
or legally enforceable commitments or obligations with respect
thereto;
all collective bargaining agreements, union
agreements, employment agreements, consulting agreements or
agreements providing for the services of an independent
contractor;
all profit-sharing, pension, stock option,
severance pay, retirement, bonus, deferred compensation, group
life and health insurance or other employee benefit plans,
agreements, arrangements or commitments of any nature whatsoever,
whether or not legally binding, and all agreements with any
present or former officer or shareholder of Seller;
all loan or credit agreements, indentures,
guarantees (other than endorsements made for collection),
mortgages, pledges, conditional sales or other title retention
agreements, and all equipment financing obligations, lease and
lease-purchase agreements relating to or affecting the Assets or
the Business;
all leases related to the Assets or the
Business, and all other contracts, agreements or legally
enforceable commitments relating to or affecting the Assets or
the Business;
all performance bonds, surety bonds and the
like, all contracts and bids covered by such bonds, and all
letters of credit and guaranties;
all consent decrees and other judgments,
decrees or orders, settlement agreements and agreements relating
to competitive activities, requiring or prohibiting any future
action;
all accounts, notes and other receivables,
and all security therefor, and all documents and agreements
related thereto;
all contracts or agreements of any nature
with any 5% or greater stockholder of Seller, or any Associate
(as defined in Section 4.5 above) of such stockholders; and
all contracts, commitments and agreements
entered into outside the ordinary course of the operation of the
Business.
All of such contracts, agreements, leases, licenses, plans,
arrangements, and commitments and all other such items included
in the Assets, but not specifically described above,
(collectively, the "Contracts") are valid, binding and in full
force and effect in accordance with their terms and conditions
and there is no existing default thereunder or breach thereof by
<PAGE>
Seller, or, to the Best Knowledge of Seller, by any other party
to the Contracts, or any conditions which, with the passage of
time or the giving of notice or both, will constitute such a
default by Seller, or, to the Best Knowledge of Seller, by any
other party to the Contracts, and the Contracts will not be
breached by or give any other party a right of termination as a
result of the transactions contemplated by this Agreement.
Seller is not aware of any reason why any of the Contracts (i)
will result in a loss to Purchaser on completion by performance
or (ii) cannot readily be fulfilled or performed by Purchaser
with the Asset on time without undue or unusual expenditure of
money or effort. Copies of all of the documents (or in the case
of oral commitments, descriptions of the material terms thereof)
relevant to the Contracts listed in Schedule 4.8 hereto, have
been delivered by Seller to Purchaser, and such copies and
descriptions are true, complete and accurate and include all
amendments, supplements or modifications thereto. To the Best
Knowledge of Seller, no purchaser of services under any Contract
will stop or decrease its rate of buying services (on an
annualized basis) from Seller prior to the Closing Date. No one
has advised Seller that any Contract assigned to Purchaser by
Seller pursuant to the transactions contemplated by this
Agreement will be terminated by any customer prior to, on or
after the Closing or that any existing relationship with any
customer will expire upon termination of any existing Contract.
Except as set forth on Schedule 4.8A hereto, all of the Contracts
may be assigned to Purchaser without the approval or consent of
any Person.
Effect of Agreement. Except as set forth on
Schedule 4.9, the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will not
(i) result in any breach of any of the terms or conditions of, or
constitute a default under, the Certificate of Incorporation or
Bylaws of Seller or Shareholder, or any commitment, mortgage,
note, bond, debenture, deed of trust, contract, agreement,
license or other instrument or obligation to which either Seller
or Shareholder is now a party or by which Seller or Shareholder
or any of their properties or assets may be bound or affected;
(ii) result in any violation of any Governmental Requirement;
(iii) cause Purchaser to lose the benefit of any right or
privilege included in the Assets; (iv) relieve any Person of any
obligation (whether contractual or otherwise) or enable any
Person to terminate any such obligation or any right or benefit
enjoyed by Seller or to exercise any right under any agreement in
respect of the Assets or the Business; or (v) require notice to
or the consent, authorization, approval or order of any Person
(except as may be contemplated by the last sentence of Section
4.8 hereof). To the Best Knowledge of Seller, the business
relationships of clients, customers and suppliers of the Business
will not be adversely affected by the execution and delivery of
this Agreement or the consummation of the transactions
contemplated hereby.
Properties, Assets and Leasehold Estates. Seller
has good and marketable title to all the Assets, free and clear
of all mortgages, liens, pledges, conditional sales agreements,
<PAGE>
charges, easements, covenants, assessments, options, restrictions
and encumbrances of any nature whatsoever. All leases to which
real property is leased in connection with the Business are in
good standing, valid and enforceable with respect to their terms.
Intangible Property. Except as set forth on
Schedule 4.11 hereto, the operation of the Business as now
conducted by Seller does not require the use of or consist of any
rights under any patents, inventions, trademarks, trade names,
brand names or copyrights. Seller owns and has the full and
exclusive right to use in connection with the Business all of the
items listed on Schedule 4.11 hereto, which items are in full
force and effect. Seller has not transferred, encumbered or
licensed to any Person any rights to own or use any portion of
the items listed on Schedule 4.11 hereto or any other intangible
property included in the Assets. None of (i) the items listed on
Schedule 4.11, (ii) any other intangible property included in the
Assets, or (iii) the operation of the Business as presently
conducted, violates or infringes upon any patents, inventions,
trademarks, trade names, brand names or copyrights owned by
others. To the Best Knowledge of Seller, none of the items
listed on Schedule 4.11 hereto or any other intangible property
included in the Assets is being infringed upon by any Person.
Suits, Actions and Claims. Except as set forth in
Schedule 4.12 hereto, (i) there are no suits, actions, claims,
inquiries or investigations by any Person, or any legal,
administrative or arbitration proceedings in which the Business
is engaged or which are pending or, to the Best Knowledge of
Seller, threatened against or affecting the Business or Assets or
any of its properties, or which question the validity or legality
of the transactions contemplated hereby, (ii) no basis or grounds
for any such suit, action, claim, inquiry, investigation or
proceeding exists, and (iii) there is no outstanding order, writ,
injunction or decree of any Governmental Authority against or
affecting Seller with respect to the Business or Assets. Without
limiting the foregoing, Seller has no knowledge of any state of
facts or the occurrence of any event forming the basis of any
present or potential claim against Seller or Shareholder with
respect to the Business or the Assets.
Licenses and Permits; Compliance with Governmental
Regulations. Schedule 4.13 hereto, sets forth a true and
complete list of all licenses and permits necessary for the
conduct of the Business. Seller has all such licenses and
permits validly issued to it and in its name, and all such
licenses and permits are in full force and effect. True and
correct copies of all such licenses and permits are included in
Schedule 4.13 hereto. No violations are or have been recorded in
respect of such licenses or permits and no proceeding is pending
or, to the Best Knowledge of Seller, threatened seeking the
revocation or limitation of any of such licenses or permits. All
such licenses and permits that are subject to transfer are
included in the Assets. To the Best Knowledge of Seller, Seller
has complied with all Governmental Requirements applicable to the
Business, and all Governmental Requirements with respect to the
distribution and sale of products and services by the Business.
<PAGE>
Authorization. Each of Seller and Shareholder has
full legal right, power and authority to enter into and deliver
this Agreement and to consummate the transactions set forth
herein and to perform all the terms and conditions hereto to be
performed by it. The execution and delivery of this Agreement by
each of Seller and Shareholder and the performance by them of the
transactions contemplated herein has been duly and validly
authorized by all requisite corporate action of Seller and
Shareholder, and this Agreement has been duly and validly
executed and delivered by Seller and Shareholder and is the
legal, valid and binding obligation of each of Seller and
Shareholder, enforceable against them in accordance with its
terms, except as limited by applicable bankruptcy, moratorium,
insolvency or other similar laws affecting generally the rights
of creditors or by principles of equity.
No Untrue Statements. The statements,
representations and warranties of Seller set forth in this
Agreement and the Schedules hereto and in all other documents and
information furnished to Purchaser and its representatives in
connection herewith do not include any untrue statement of a
material fact or omit to state any material fact necessary to
make the statements, representations and warranties made not
misleading. There is no fact that is not disclosed to Purchaser
in this Agreement or the Schedules hereto that adversely affects
or, so far as Seller can now reasonably foresee, could adversely
affect the condition (financial or otherwise) of any of the
Assets or the Business or the ability of Seller or Shareholder to
perform their obligations under the Agreement.
Records. The books, records and minutes kept by
Seller with respect to the Assets and the Business, including,
but not limited to, all customer files, service agreements
quotations, correspondence and historic revenue data of the
Business since January 1, 1994, have been kept properly and
contain records of all matters required to be included therein by
any Governmental Requirement, and such books, records and minutes
are true, accurate and complete and (except for corporate minute
books and stock records) are included in the Assets. Seller
agrees to store for a period of at least three (3) years from the
Closing Date all of Seller's tax and accounting records (other
than those solely with respect to the Business which are included
in the Assets) for the three (3) year period prior to the Closing
Date. Such records shall be made available for inspection and
copying by Purchaser upon reasonable advance notice and during
reasonable business hours. Seller further agrees that if Seller
intends to destroy any of such tax or accounting records during
the period ending six (6) years after the Closing Date, Seller
will first notify Purchaser and provide Purchaser with an
opportunity to take possession of such records within a period of
not less than thirty (30) days following such notice.
Work-In-Process. Except as set forth on Schedule
4.17 hereto, Seller has not received any payments with respect to
any work-in-process with respect to the Business.
Brokers and Finders. Except as set forth on
Schedule 4.18 hereto, no broker or finder has acted for Seller or
Shareholder in connection with this Agreement or the transactions
<PAGE>
contemplated by this Agreement and no broker or finder is
entitled to any brokerage or finder's fee or to any commission in
respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Seller or Shareholder.
Adverse Facts. Seller is not aware (after having
made all reasonable inquiries) of any fact or matter not
disclosed in this Agreement or in the Schedules hereto which
might be reasonably expected to adversely effect the Assets or
the Business after Closing.
Deposits. Neither Seller nor Shareholder now
hold, nor does either Seller or Shareholder expect to receive
between the date hereof and the Closing Date, any deposits or
prepayments by third parties with respect to any of the Assets or
the Business which are not reflected as liabilities on the
Reference Balance Sheet.
Workers' Compensation Data. All data set forth in
the workers' compensation report of Seller attached hereto as
Schedule 4.21 is true, correct and complete as of the date
thereof.
Customer List. Schedule 4.22 hereto sets forth a
true, correct and complete list of all customers of the Business
to which Seller has sold or provided services in excess of
$50,000 per annum during the three (3) years immediately
preceding the date hereof. This list provides an accurate
statement of the gross revenues received from each such customer
by the Business during the twenty-four (24) month period ended
November 30, 1995 and an estimate of those for the one month
period ended December 31, 1996. To the Best Knowledge of Seller,
no current customer of the Business listed on Schedule 4.22
hereto will stop or decrease its rate of buying services (on an
annualized basis) from Seller prior to the Closing Date, or to
the extent any such customer becomes a customer of Purchaser
pursuant to the transactions contemplated by this Agreement, from
Purchaser after the Closing Date.
No Royalties. No royalty or similar item or
amount is being paid or is owing by Seller, nor is any such item
accruing, with respect to the operation, ownership or use of the
Business or the Assets.
Business. All of the revenues generated by the
Seller from the Business have been earned and received by Seller,
and not through or in any Subsidiary (as hereinafter defined).
Subsidiaries. Except as set forth on Schedule
4.25, the Seller does not own any Subsidiaries. As used in this
Agreement, the word "Subsidiary" means any corporation or other
organization, whether incorporated or unincorporated, of which
such party or any other Subsidiary of such party is a general
partner, or at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization
is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or
<PAGE>
more of its Subsidiaries.
. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to Seller as follows:
Incorporation. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Maryland.
Authorization. Purchaser has full legal right and
corporate power to enter into and deliver this Agreement and to
consummate the transactions set forth herein and to perform all
the terms and conditions hereof to be performed by it. This
Agreement has been duly executed and delivered by Purchaser and
is a legal, valid and binding obligation of Purchaser enforceable
in accordance with its terms, except as limited by applicable
bankruptcy, moratorium, insolvency, or other laws affecting
generally the rights of the creditors or by principals of equity.
The execution and delivery of this Agreement by Purchaser and the
performance by Purchaser of the transactions contemplated herein
have been duly and validly authorized by all requisite corporate
action of Purchaser.
Brokers and Finders. No broker or finder has
acted for Purchaser in connection with this Agreement or the
transactions contemplated by this Agreement and, no broker or
finder is entitled to any brokerage or finder's fee or to any
commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of Purchaser.
. PRE-CLOSING COVENANTS. The parties agree as follows
with respect to the period between the execution of this
Agreement and the Closing.
General. Each of the parties will use its best
efforts to take all action and to do all things necessary,
proper, or advisable to consummate and make effective the
transactions contemplated by this Agreement (including satisfying
the closing conditions set forth in Section 7 below).
Notices and Consents. The Seller will give any
notices to third parties, and the Seller and Shareholder will
each use its best efforts to obtain any third party consents that
the Purchaser may request in connection with the matters
pertaining to the Seller or Shareholder disclosed or required to
be disclosed by this Agreement. Each of the parties will take
any additional action that may be necessary, proper or advisable
in connection with any other notices to, filings with, and
authorizations, consents, and approvals of governments,
governmental agencies, and third parties that it may be required
to give, make or obtain.
Operation of Business. The Seller will not engage
in any practice, take any action, embark on any course of
inaction, or enter into any transaction outside the ordinary
course of business. Without limiting the generality of the
<PAGE>
foregoing, the Seller will not engage in any practice, take any
action, embark on any course of inaction, or enter into any
transaction of the sort described in Section 4.4 hereof.
Preservation of Business. The Seller will keep
the business and properties of the Business substantially intact,
including its present operations, physical facilities, working
conditions, and relationships with lessors, licensors, suppliers,
customers, and employees.
Full Access. The Seller will permit
representatives of the Purchaser to have full access at all
reasonable times, and in a manner so as not to interfere with the
normal business operations of the Seller, to all premises,
properties, books, records, contracts, tax records, and documents
of or pertaining to the Business.
Notice of Developments. The Seller will give
prompt written notice to the Purchaser of any material
development affecting the assets, liabilities, business,
financial condition, operations, results of operations, or future
prospects of the Business. Each party will give prompt written
notice to the other of any material development affecting the
ability of the parties to consummate the transactions
contemplated by this Agreement. No disclosure by any party
pursuant to this Section 6.6, however, shall be deemed to amend
or supplement the Schedules or Exhibits hereto, or to prevent or
cure any misrepresentation, breach of warranty, or breach of
covenant.
Exclusivity. The Seller and Shareholder will not,
with respect to the Business or the Assets, (i) solicit,
initiate, or encourage the submission of any proposal or offer
from any person relating to any (A) liquidation, dissolution, or
recapitalization, (B) merger or consolidation, (C) acquisition or
purchase of securities or assets, or (D) similar transaction or
business combination involving Seller, or (ii) participate in any
discussions or negotiations regarding, furnish any information
with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person to do or seek
any of the foregoing. The Seller will notify the Purchaser
immediately if any person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing.
Updated Schedules. The Purchaser acknowledges
that the preparation and delivery of the Schedules to the
Agreement may not be prepared and/or final at the time of the
execution and delivery of this Agreement. As such, the parties
hereto agree as follows:
(a) The Seller shall have the right to deliver
the Schedules to the Agreement and/or to amend, restate or
supplement the Schedules to the Agreement at any time on or prior
to the Closing Date;
(b) At the Closing, the Seller shall deliver to
the Purchaser two (2) complete copies of the proposed final
Schedules to the Agreement; and
<PAGE>
(c) Purchaser shall notify Seller in writing at
the Closing that either (i) Purchaser accepts such Schedules, in
which case they shall become a part of this Agreement as if such
Schedules were in existence on the date this Agreement was
originally executed and all such disclosures made in such
Schedules shall be deemed to be disclosed as if such Schedules
have been made as of the date of this Agreement or (ii)
Purchaser, in its sole and reasonable discretion, believes that
the information disclosed in such Schedules and/or amended
Schedules would result in a material adverse change or material
adverse affect on the Business, Assets or future prospects of the
Business and therefore elects to terminate this Agreement
pursuant to the provisions of Section 8 of this Agreement without
any liability to Purchaser.
. CONDITIONS TO OBLIGATION TO CLOSE.
Conditions to Obligation of the Purchaser. The
obligations of the Purchaser to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
the representations and warranties set forth
in Section 4 hereof shall be true and correct in all material
respects at and as of the Closing Date;
the Seller and Shareholder shall have
performed and complied with all of their covenants hereunder in
all material respects through the Closing;
the Seller and Shareholder shall have
procured all of the third party consents specified in Section 6
above;
no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction wherein an unfavorable judgment, order, decree,
stipulation, injunction, or charge would (i) prevent consummation
of any of the transactions contemplated by this Agreement, (ii)
cause any of the transactions contemplated by this Agreement to
be rescinded following consummation, or (iii) affect adversely
the right of the Purchaser to own, operate, or control the Assets
(and no such judgment, order decree, stipulation, injunction, or
charge shall be in effect);
the Seller shall have delivered to the
Purchaser a certificate (without qualification as to knowledge or
materiality or otherwise) to the effect that each of the
conditions specified above in Section 7.1(a)-(d) is satisfied in
all respects;
the Purchaser shall have received all other
authorizations, consents, and approvals of governments and
governmental agencies set forth in this Agreement;
<PAGE>
the Purchaser shall have received from Bruce
Eckhoff, Patricia Bailey, Penny Bevier, Neal Jones and each
person listed in Schedule 16.2(b) an executed Employment
Agreement in substantially the form and substance attached hereto
as Exhibit B;
the Purchaser shall have received from each
person listed in Schedule 16.2(c) an executed Non-Competition
Agreement in substantially the form and substance attached hereto
as Exhibit C;
all actions and approvals to be taken by the
Seller or Shareholder in connection with consummation of the
transactions contemplated hereby (including approval of the
Seller's or Shareholder's stockholders if required by law) and
all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
satisfactory in form and substance to the Purchaser;
the Purchaser shall have received from
John B. Connor, P.L.C., counsel for the Seller and Shareholder,
an opinion addressed to Purchaser dated the date of the Closing,
and in form and substance attached hereto as Exhibit D;
Purchaser shall have received from the Seller
all necessary documents to evidence Seller's release of the
persons listed on Schedule 16.2(b) from any and all obligations
regarding confidentiality, non-disclosure, non-solicitation and
non-competition;
the Purchaser shall have obtained the
approval of its Board of Directors for the transactions
contemplated by this Agreement;
the Purchaser shall have received from the
Seller its unaudited financial statements (income statements for
fiscal years 1994 and 1995) and for the nine-month period ended
September 30, 1996 of the Business;
Seller shall have paid all management
incentive bonuses owed to management of the Business for the
fiscal year ending December 31, 1996 and any amounts owed
pursuant to bonuses earned in prior periods;
Since October 31, 1996, except as permitted
by this Agreement, the Seller shall not have made any
distribution or dividend (other than the cash of the Business),
consulting or other payment from the income generated by the
Business to Seller or to Seller's employees, except for
employment salaries (not to exceed current compensation levels);
Seller shall not have experienced any
material adverse change in the Business;
Seller shall not have lost any material
customer or customers representing a significant amount of the
Business nor shall the same have significantly curtailed the
<PAGE>
buying of services from Seller. For purposes of this Section
7.1(r), a "material customer" shall mean a customer to whom
Seller invoiced at least $300,000 of services in calendar year
1996; and
the Purchaser shall have received from Seller
an executed Administrative Services Agreement in form and
substance to be mutually agreed upon by Purchaser and Seller.
The Purchaser may waive any condition specified in this
Section 7 if it executes a writing so stating at or prior to the
Closing.
Conditions to Obligations of the Seller. The
obligations of the Seller and Shareholder to consummate the
transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
the representations and warranties set forth
in Section 5 above shall be true and correct in all material
respects at and as of the Closing Date;
the Purchaser shall have performed and
complied with all of its covenants hereunder in all material
respects through the Closing;
no action, suit, or proceeding shall be
pending before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction
wherein an unfavorable judgment, order, decree, stipulation,
injunction, or charge would (i) prevent consummation of any of
the transactions contemplated by this Agreement or (ii) cause any
of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such judgment, order,
decree, stipulation, injunction, or charge shall be in effect);
the Purchaser shall have delivered to Seller
and Shareholder a certificate (without qualification as to
knowledge or materiality or otherwise) to the effect that each of
the conditions specified above in Section 7.2(a)-(c) is satisfied
in all respects;
the Seller shall have obtained the approval
of its Board of Directors for the transactions contemplated by
this Agreement;
the Seller and Shareholder shall have
received from the General Counsel for COREStaff, Inc., a Delaware
corporation and the parent corporation of Purchaser, an opinion
addressed to Seller and Shareholder and dated as of the Closing
Date in form and substance attached hereto as Exhibit F; and
the Purchaser shall have delivered to Bruce
Eckhoff, Patricia Bailey, Penny Bevier, Neal Jones and each
person listed in Schedule 16.2(b) an executed Employment
Agreement in substantially the form and substance attached hereto
as Exhibit B.
<PAGE>
The Seller or Shareholder may waive any condition
specified in this Section 7 if it executes a writing so stating
at or prior to the Closing.
. TERMINATION.
Termination of Agreement. Certain of the parties
may terminate this Agreement as provided below:
the Purchaser, the Seller and Shareholder may
terminate this Agreement by mutual written consent at any time
prior to the Closing;
the Purchaser may terminate this Agreement by
giving written notice to the Seller at any time prior to the
Closing in the event the Seller is in breach.
the Purchaser may terminate this Agreement by
giving written notice to the Seller on or before December 25,
1996 if the Purchaser is not reasonably satisfied with the
results of its continuing business, legal, and accounting due
diligence regarding the Seller.
the Purchaser may terminate this Agreement by
giving written notice to the Seller at any time prior to the
Closing if the Closing shall not have occurred on or before
December 31, 1996 by reason of the failure of any condition
precedent under Section 7 hereof (unless the failure results
primarily from the Purchaser itself breaching any representation,
warranty, or covenant contained in this Agreement);
the Seller or Shareholder may terminate this
Agreement by giving written notice to the Purchaser at any time
prior to the Closing if the Closing shall not have occurred on or
before December 31, 1996 by reason of the failure of any
condition precedent under Section 7 hereof (unless the failure
results primarily from the Seller or Shareholder breaching any
representation, warranty, or covenant contained in this
Agreement).
the Purchaser shall have the right in its
good faith discretion, to terminate this Agreement at any time if
any material adverse change in the Business or Assets occurs or
if any information is subsequently disclosed in the Schedules to
be delivered by Seller hereunder after the date of execution of
this Agreement which information may reasonably be expected to
have a material adverse effect on the Business or the Assets
following the Closing.
Effect of Termination. If any party terminates
this Agreement pursuant to Section 8.1 above, all obligations of
the parties hereunder shall terminate without any liability of
any party to any other party (except for any liability of any
party then in breach of this Agreement.
. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNIFICATIONS,
GUARANTEES, REPRESENTATIONS AND WARRANTIES OF SELLER AND
SHAREHOLDER. All statements of fact contained in this Agreement
or in any written statement (including financial statements),
<PAGE>
certificate, schedule or other document delivered by or on behalf
of Seller or Shareholder pursuant to this Agreement or in
connection with the transactions contemplated hereby shall be
deemed representations and warranties of Seller and Shareholder
hereunder. All indemnifications, guarantees, covenants,
agreements, representations and warranties made by Seller or
Shareholder hereunder or pursuant hereto or in connection with
the transactions contemplated hereby shall survive the Closing
for a period of 15 months and one day from the Closing Date,
regardless of any investigation at any time made by or on behalf
of Purchaser.
. SPECIAL CLOSING AND POST-CLOSING COVENANTS.
Delivery of Funds and Other Assets Collected by
Purchaser; Power of Attorney. To the extent Purchaser receives
any funds or other assets in payment of receivables or work-in-
process incurred prior to the Closing Date or the other Excluded
Assets, Purchaser shall immediately deliver such funds and assets
to Seller and take all steps necessary to vest title to such
funds and assets in Seller. Purchaser hereby designates Seller
as Purchaser's true and lawful attorney-in-fact, with full power
of substitution, to execute or endorse for the benefit of Seller
any checks, notes or other documents received by Purchaser in
payment of or in substitution or exchange for any of the Excluded
Assets. Purchaser hereby acknowledges and agrees that the power
of attorney set forth in the preceding sentence is coupled with
an interest, and further agrees to execute and deliver to Seller
from time to time any documents or instruments reasonably
requested by Seller to evidence such power of attorney.
Delivery of Funds and Other Assets Collected by
Seller or Shareholder; Power of Attorney. To the extent Seller
or Shareholder receives any funds or other assets in payment of
receivables or work-in-process incurred on or after the Closing
Date, or in connection with any other Assets being sold to
Purchaser hereto, each of Seller and Shareholder shall
immediately deliver such funds and assets to Purchaser and take
all steps necessary to vest title to such funds and assets in
Purchaser. Seller hereby designates Purchaser and its officers
as Seller's true and lawful attorney-in-fact, with full power of
substitution, to execute or endorse for the benefit of Purchaser
any checks, notes or other documents received by Purchaser in
payment of or in substitution or exchange for any of the Assets.
Seller hereby acknowledges and agrees that the power of attorney
set forth in the preceding sentence is coupled with an interest,
and further agrees to execute and deliver to Purchaser from time
to time any documents or instruments reasonably requested by
Purchaser to evidence such power of attorney.
Consents of Landlords. Within 60 days following
the Closing, Seller shall have used its best efforts to obtain
consents from all lessors of real property leased by the Business
to the assignment of such leases to Purchaser without any
amendment, modification or change in the terms of any of such
leases.
<PAGE>
. INDEMNITY BY SELLER.
Indemnity. Seller and Shareholder shall and
hereby do, jointly and severally, indemnify, hold harmless and
defend Purchaser, its Affiliates and their officers, directors,
shareholders, employees, agents, representatives and consultants
(collectively, the "Indemnified Parties") at all times from and
after the date of this Agreement, from and against any and all
penalties, demands, damages, punitive damages, losses, loss of
profits, liabilities, suits, costs, costs of any settlement or
judgment, claims of any and every kind whatsoever, refund
obligations (including, without limitation, interest and
penalties thereon), remediation costs and expenses (including,
without limitation, reasonable attorneys' fees), of or to any of
the Indemnified Parties ("Damages"), which may now or in the
future be paid, incurred or suffered by or asserted against the
Indemnified Parties by any Person resulting or arising from or
incurred in connection with any one or more of the following
(provided that this Section 11 shall not apply to any items that
have been expressly assumed by Purchaser under this Agreement):
any liability or claim for liability (whether
in contract, in tort or otherwise, and whether or not successful)
of or against Seller or Shareholder or related in any way to the
Business or Assets of any of them (including any liability of
Seller or Shareholder under all ERISA laws);
any liability or claim for liability (whether
in contract, in tort or otherwise, and whether or not successful)
related in any way to the Assets or the Business to the extent
such liability arises in connection with any action, omission or
event occurring on or prior to the Closing Date;
any liability or claim for liability (whether
in contract, in tort or otherwise, and whether or not successful)
related to any liens, obligations or encumbrances of any nature
whatsoever against or in any way related to the Assets or the
Business which have not been expressly assumed by the Purchaser
hereunder;
any liability or claim for liability (whether
in contract, in tort or otherwise, and whether or not successful)
related to the Taxes of Seller or Shareholder;
any liability or claim for liability (whether
or not successful) related to any lawsuit or threatened lawsuit
or claim involving the Seller or Shareholder, including but not
limited to, those items listed on Schedule 4.12 hereto;
<PAGE>
any misrepresentation, breach of warranty or
nonfulfillment of any covenant or agreement on the part of the
Seller or Shareholder under this Agreement or from any
misrepresentation in or omission from any list, schedule,
certificate or other instrument furnished or to be furnished to
Purchaser pursuant to the terms of this Agreement;
any liability or claim for liability against
Purchaser or any of the Assets to the extent such liability or
claim for liability arises in connection with the failure of
Purchaser and Seller to comply with any applicable bulk transfer
law; and
all actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including costs of
court and reasonable attorneys' fees) incident to any of the
foregoing.
Limitation of Certain Liability. To the extent
the Indemnified Parties incur or suffer Damages for any matter
for which Seller and Shareholder are obligated to indemnify, hold
harmless and defend Purchaser under Section 11.1(f) above, Seller
and Shareholder shall not be liable for any such Damages (i)
until Purchaser has suffered aggregate losses by reason of all
such misrepresentations, breaches of warranty and/or non-
fulfillments of covenants or agreements on the part of Seller
and/or Shareholder in excess of a $175,000 threshold (at which
point Seller and Shareholder will be obligated to indemnify
Purchaser from and against all such aggregate losses including
losses back to the first dollar), and (ii) in excess of
$4,000,000; provided, however, that the limitations set forth in
(i) and (ii) above specifically shall not apply to Damages (y)
resulting from or attributable to intentional fraud or any
willful misconduct by Seller and Shareholder, or (z) for any
matter or matters (other than those set out in Section 11.1(f)
above) for which Seller or Shareholder is obligated to indemnify,
hold harmless and defend Purchaser. The provisions of this
Section 11 will terminate on the second anniversary of the
Closing Date.
Notice of Claim. Purchaser agrees that upon its
discovery of facts giving rise to a claim for indemnity under the
provisions of this Agreement, including receipt by it or any
Indemnified Party of notice of any demand, assertion, claim,
action or proceeding, judicial or otherwise, by any person with
respect to any matter as to which any of the Indemnified Parties
are entitled to indemnity under the provisions of this Agreement
(such actions being collectively referred to in this Section 11
as the "Claim"), Purchaser will give prompt notice thereof in
writing to the Seller and Shareholder; provided that any delay in
giving or failure to give such notice shall not limit the rights
of Purchaser or any Indemnified Party to indemnity hereunder, and
Purchaser shall have no liability for such delay or failure,
except to the extent that the Seller and Shareholder are shown to
have been materially damaged by such delay or failure.
<PAGE>
Right to Defend. The Seller and Shareholder shall
be entitled at their sole cost and expense to contest and defend
by all appropriate legal proceedings any Claim with respect to
which either Seller or Shareholder is called upon to indemnify
any of the Indemnified Parties under the provisions of this
Agreement; provided, however, that notice of the intention so to
contest shall be delivered by the Seller and Shareholder to
Purchaser within twenty (20) days from the effective date of
notice to the Seller and Shareholder by Purchaser of the
assertion of the Claim, and provided, further that such right to
contest and defend shall exist only if the Seller and Shareholder
have (i) admitted in writing to Purchaser the obligation of the
Seller and Shareholder to pay the indemnified obligations to the
Indemnified Parties with respect to the Claim and (ii) have
provided the Indemnified Parties with satisfactory evidence of
the Seller and Shareholder's ability to pay any indemnity
obligation that reasonably may arise under the Claim. Any such
contest may be conducted in the name and on behalf of Purchaser.
Such contest shall be conducted by reputable attorneys employed
by the Seller and Shareholder and reasonably acceptable to
Purchaser, but Purchaser shall have the right to participate in
such proceedings and to be represented by attorneys of its own
choosing at its cost and expense. If, after such opportunity,
the Seller and Shareholder have not satisfied all requirements
for the contest of a claim by them (i.e., timely election,
admission of liability and proof of ability regarding payment),
then the Seller and Shareholder shall (i) at their expense,
except for travel expenses requested to be incurred by Purchaser,
reasonably cooperate with Purchaser with respect to defense of
the Claim, and (ii) be bound by the result obtained with respect
to the Claim by Purchaser. At any time after the commencement of
defense of any Claim, the Seller and Shareholder may request
Purchaser to accept a bona fide offer from the other parties to
the Claim for a cash settlement payable solely from the Seller
and Shareholder (which places no burdens or restrictions on
Purchaser and does not otherwise prejudice Purchaser), whereupon
such action shall be taken unless Purchaser determines that the
contest should be continued, and so notifies the Seller and
Shareholder in writing within fifteen (15) days of such request
from the Seller and Shareholder. In the event that, after such a
request by the Seller and Shareholder for acceptance of a bona
fide cash settlement offer, Purchaser determines that the contest
should be continued, the Seller and Shareholder shall be liable
for indemnity hereunder only to the extent of the lesser of
(i) the amount which the other party to the contested Claim had
agreed to accept in settlement as of the time the Seller and
Shareholder made its request therefor to Purchaser or (ii) such
amount for which the Seller and Shareholder may be liable with
respect to such Claim by reason of the provisions hereof.
Cooperation by Purchaser. If requested by the
Seller and Shareholder, Purchaser and its officers and employees
shall reasonably cooperate with the Seller and Shareholder and
its counsel in contesting any Claim with respect to which the
Seller and Shareholder have satisfied all requirements for a
contest by them as set forth in Section 11.4 above; provided that
the Seller and Shareholder shall reimburse Purchaser for any
actual out-of-pocket expenses incurred by it in so cooperating.
<PAGE>
Payment. The Seller and Shareholder shall
promptly pay to Purchaser or such other Indemnified Party as may
be entitled to indemnity hereunder in cash the amount of any
Damages to which Purchaser or such Indemnified Party may become
entitled by reason of the provisions of this Agreement.
. LEASE AGREEMENT. Purchaser shall assume the leases for
the office space currently used by Seller in connection with the
operation of the Business and that are listed on Schedule 3.4
hereto. Purchaser will, from and after Closing, hold harmless
Seller from any liability thereunder accruing after Closing.
. NON-COMPETITION AGREEMENTS. As an inducement for
Purchaser to enter into this Agreement and in return for the
payment of $150,000 as provided by Section 3.1(a), the parties
hereby agree to the provisions of this Section 13. For a period
commencing on the date hereof through the third anniversary of
the Closing Date, neither Seller nor Shareholder, shall (i)
within the territorial boundaries of the continental United
States, where the Business of Seller is now conducted, compete
directly or indirectly with the Purchaser's Business, (ii)
solicit directly or indirectly any of the Accounts (as
hereinafter defined) of Seller or of Purchaser or its Affiliates
or services similar to those of/and in the Purchaser's Business,
(iii) be employed by or otherwise render services to, or own any
interest in, any Person that directly or indirectly (a) competes
with the Purchaser's Business or its Affiliates within the States
of the United States in which the Business is currently
conducted, or (b) solicits directly or indirectly any of the
Accounts included in the Assets or of Purchaser or its
Affiliates, or (iv) solicit directly or indirectly for employment
by Seller or Shareholder any of the employees of the Business.
For purposes of this Section 13, the term "Accounts" shall mean
any Person located in the United States of America for which
Seller has performed services with respect to the Business or
Purchaser or its Affiliates does perform services in the
Purchaser's Business during the period beginning three (3) years
prior to the date hereof and ending on the third anniversary of
the Closing Date. Each of Seller and Shareholder agrees that the
limitations set forth herein on the rights of Seller and its
Affiliates to compete with Purchaser and its Affiliates are
reasonable and necessary for the protection of the Purchaser. In
this regard, Seller and Shareholder specifically agree that the
limitations as to period of time and geographic area, as well as
all other restrictions on its activities specified herein, are
reasonable and necessary for the protection of the Purchaser.
<PAGE>
Seller and Shareholder further recognize and agree that violation
of any of the agreements contained in this Section 13 will cause
irreparable damage or injury to Purchaser, the exact amount of
which may be impossible to ascertain, and that, for such reason,
among others, Purchaser and its Affiliates shall be entitled to
an injunction, without the necessity of posting a bond,
restraining any further violation of such agreements. Such
rights to any injunction shall be in addition to, and not in
limitation of, any other rights and remedies Purchaser and its
Affiliates may have against Seller or Shareholder and their
Affiliates, including, but not limited to, the recovery of
damages. Further, it is agreed by Seller and Shareholder that in
the event the provisions of this Agreement should ever be deemed
to exceed the time or geographic limitations permitted by
applicable law, then such provisions shall be reformed to the
maximum time or geographic limitations permitted.
Notwithstanding the foregoing, Purchaser recognizes and hereby
agrees that either Shareholder or Seller's engaging in the
activities described on Schedule 13 hereto shall not be deemed to
be a violation of the provisions of this Section 13.
. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Seller and
Shareholder each recognizes and acknowledges that it has and will
have access to certain confidential information of Seller that is
included in the Assets (including, but not limited to, list of
customers, and costs and financial information) that after the
consummation of the transactions contemplated hereby will be
valuable, special and unique property of Purchaser. Seller and
Shareholder each agree that it will not disclose, and it will use
its best efforts to prevent disclosure by any other Person of,
any such confidential information to any Person, except to
authorized representatives of Purchaser. Seller and Shareholder
recognize and agree that violation of any of the agreements
contained in this Section 14 will cause irreparable damage or
injury to Purchaser, the exact amount of which may be impossible
to ascertain, and that, for such reason, among others, Purchaser
shall be entitled to an injunction, without the necessity of
posting bond, therefor, restraining any further violation of such
agreements. Such rights to any injunction shall be in addition
to, and not in limitation of, any other rights and remedies
Purchaser may have against Seller or Shareholder.
<PAGE>
. ASSIGNMENT OF CONTRACTS. Notwithstanding any other
provision of this Agreement, nothing in this Agreement or any
related document shall be construed as an attempt to assign (i)
any contract which, as a matter of law or by its terms, is
nonassignable without the consent of the other parties thereto
unless such consent has been given, or (ii) any contract or
claims as to which all of the remedies for the enforcement
thereof enjoyed by Seller would not, as a matter of law or by its
terms, pass to Purchaser as an incident of the transfers and
assignments to be made under this Agreement. In order, however,
that the full value of every contract and claim of the character
described in clauses (i) and (ii) above and all claims and
demands on such contracts may be realized for the benefit of
Purchaser, Seller, at the request and expense and under the
direction of Purchaser, shall take all such action and do or
cause to be done all such things as will, in the opinion of
Purchaser, be necessary or proper in order that the obligations
of Seller under such contracts may be performed in such manner
that the value of such contract will be preserved and will inure
to the benefit of Purchaser, and for, and to facilitate, the
collection of the monies due and payable and to become due and
payable thereunder to Purchaser in and under every such contract
and claim incurred after the Closing. Seller shall promptly pay
over to Purchaser all monies collected by or paid to it in
respect of every such contract, claim or demand to the extent
such monies are earned by the Purchaser on or after the Closing
Date. Nothing in this Section 15 shall relieve Seller of its
obligation to obtain any consents required for the transfer of
the Assets and all rights thereunder to Purchaser, or shall
relieve Seller from any liability to Purchaser for failure to
obtain such consents.
. SPECIAL PROVISIONS REGARDING EMPLOYEES OF SELLER.
New Employees of Purchaser. It is the intention
of Purchaser, and Seller hereby acknowledges and agrees with such
position, that any employees of Seller that Purchaser hires will
be new employees of Purchaser as of the Closing Date or the date
of hire, whichever is later. Except as set forth in Section 16.3
below, such new employees shall be entitled only to such
compensation and employee benefits as are agreed to by such
employees and Purchaser, or as are otherwise provided by
Purchaser, in its sole discretion.
Hiring of Employees.
Purchaser will use its reasonable efforts to
hire the existing employees of Seller engaged in the Business in
connection with its purchase of the Assets; provided however,
that Purchaser shall be entitled to review employee records,
conduct employee interviews and employee screening procedures
used by Purchaser in its business, and may refuse to offer
employment to any employee of Seller if such employee fails to
meet the hiring criteria of Purchaser.
<PAGE>
As a condition to their employment by
Purchaser, all existing employees of Seller listed in Schedule
16.2(b) shall execute and deliver to Purchaser an Employment
Agreement, a confidentiality agreement, and a non-competition
agreement, each in form and substance acceptable to Purchaser.
Existing Employee Benefit Plans. Purchaser shall
have no obligation after the Closing to continue any pension
plans or work benefit plans currently offered by Seller to its
employees. Seller agrees to indemnify and hold harmless
Purchaser from and against any claim which may arise because of
the failure to continue such pension plans or work benefit
programs.
Indemnity Concerning Accrued Benefits. Except as
expressly assumed by Purchaser hereunder and as reflected in the
Net Working Capital of Seller, Seller and Shareholder jointly and
severally agree to indemnify and hold harmless Purchaser from and
against any and all accrued and outstanding employee benefits,
salary, vacation pay, bonuses, commissions and other emoluments
of its employees and from any other employee related matters or
liabilities with respect to Seller's employees.
. EXPENSES. Whether or not the transactions contemplated
hereby are consummated, Seller and Shareholder will pay all of
their costs and expenses and Purchaser will pay all of its costs
and expenses, incurred in connection with the preparation of and
execution of this Agreement and the consummation of the
transactions contemplated hereby.
. FURTHER ACTIONS. From time to time, at the request of
any party hereto, the other parties hereto shall execute and
deliver such instruments and take such action as may be
reasonably requested to evidence the transactions contemplated
hereby.
. NOTICES. All notices, requests, demands and other
communications required or permitted to be given hereunder shall
be in writing and shall be deemed to have been duly given if
delivered personally, given by prepaid telex or telegram or by
facsimile or other similar instantaneous electronic transmission
device or mailing first class, postage prepaid, certified United
States mail, return receipt requested, as follows:
If to Purchaser, at:
COMSYS Technical Services, Inc.
c/o COREStaff, Inc.
4400 Post Oak Place Drive, Suite 1130
Houston, Texas 77027-3413
Attention: Mr. Michael T. Willis
Facsimile No.: (713) 627-1059
<PAGE>
With a copy to:
Peter T. Dameris, Esq.
COREStaff, Inc.
4400 Post Oak Parkway, Suite 1130
Houston, Texas 77027-3413
Attention: Peter T. Dameris
Facsimile No.: (713) 627-1059
If to Seller or Shareholder, at:
Telos Corporation
19886 Ashburn
Ashburn, Virginia 20147
Attention: David Aldrich
Facsimile No.: (703) 724-3855
With a copy to
John B. Connor, Esq.
John B. Connor, P.L.C.
1033 N. Fairfax Street, No. 310
Alexandria, Virginia 22314
Facsimile No: (703) 836-1799
provided that any party may change its address for notice by
giving to the other party written notice of such change. Any
notice given under this Section 19 shall be effective (i) if
delivered personally, when delivered, (ii) if sent by telex or
telegram or by facsimile or other similar instantaneous
electronic transmission device, twenty-four (24) hours after
sending, and (iii) if mailed, forty-eight (48) hours after
mailing.
. GENERAL PROVISIONS.
GOVERNING LAW; INTERPRETATION; SECTION HEADINGS.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND, WITHOUT REGARD
TO CONFLICT-OF-LAWS RULES AS APPLIED IN MARYLAND. THE SECTION
HEADINGS CONTAINED HEREIN ARE FOR PURPOSES OF CONVENIENCE ONLY,
AND SHALL NOT BE DEEMED TO CONSTITUTE A PART OF THIS AGREEMENT OR
TO AFFECT THE MEANING OR INTERPRETATION OF THIS AGREEMENT IN ANY
WAY. ANY ACTION OR PROCEEDING ARISING UNDER THIS AGREEMENT SHALL
TAKE PLACE IN THE UNITED STATES DISTRICT COURT (EASTERN DISTRICT)
IN ALEXANDRIA, VIRGINIA.
<PAGE>
Severability. Should any provision of this
Agreement be held unenforceable or invalid under the laws of the
United States of America or the State of Maryland, or under any
other applicable laws of any other jurisdiction, then the parties
hereto agree that such provision shall be deemed modified for
purposes of performance of this Agreement in such jurisdiction to
the extent necessary to render it lawful and enforceable, or if
such a modification is not possible without materially altering
the intention of the parties hereto, then such provision shall be
severed herefrom for purposes of performance of this Agreement in
such jurisdiction. The validity of the remaining provisions of
this Agreement shall not be affected by any such modification or
severance, except that if any severance materially alters the
intentions of the parties hereto as expressed herein (a
modification being permitted only if there is no material
alteration), then the parties hereto shall use their best
reasonable effort to agree to appropriate equitable amendments to
this Agreement in light of such severance, and if no such
agreement can be reached within a reasonable time, any party
hereto may initiate arbitration under the then current rules of
the American Arbitration Association to determine and effect such
appropriate equitable amendments.
Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties hereto with
respect to the transactions contemplated hereby and supersedes
all prior agreements, arrangements and understandings related to
the subject matter hereof. No representation, promise,
inducement or statement of intention has been made by any party
hereto which is not embodied in this Agreement, and no party
hereto shall be bound by or liable for any alleged
representation, promise, inducement or statement of intention not
so set forth.
Binding Effect. All the terms, provisions,
covenants and conditions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties
hereto and their respective heirs, executors, administrators,
representatives, successors and assigns.
Assignment. This Agreement and the rights and
obligations of the parties hereto shall not be assigned or
delegated by any party hereto without the prior written consent
of the other parties hereto.
<PAGE>
Amendment; Waiver. This Agreement may be amended,
modified, superseded or canceled, and any of the terms,
provisions, representations, warranties, covenants or conditions
hereof may be waived, only by a written instrument executed by
all parties hereto, or, in the case of a waiver, by the party
waiving compliance. The failure of any party at any time or
times to require performance of any provision hereof shall in no
manner affect the right to enforce the same. No waiver by any
party of any condition contained in this Agreement, or of the
breach of any term, provisions, representation, warranty or
covenant contained in this Agreement, in any one or more
instances, shall be deemed to be or construed as a further or
continuing waiver of any such condition or breach, or as a waiver
of any other condition or of the breach of any other term,
provision, representation, warranty or covenant.
Gender; Numbers. All references in this Agreement
to the masculine, feminine or neuter genders shall, where
appropriate, be deemed to include all other genders. All plurals
used in this Agreement shall, where appropriate, be deemed to be
singular, and vice versa.
Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement shall be binding
when one or more counterparts hereof, individually or taken
together, shall bear the signatures of the parties reflected
hereon as signatories.
Telecopy Execution and Delivery. A facsimile,
telecopy or other reproduction of this Agreement may be executed
by one or more parties hereto, and an executed copy of this
Agreement may be delivered by one or more parties hereto by
facsimile or similar instantaneous electronic transmission device
pursuant to which the signature of or on behalf of such party can
be seen, and such execution and delivery shall be considered
valid, binding and effective for all purposes. At the request of
any party hereto, all parties hereto agree to execute an original
of this Agreement as well as any facsimile, telecopy or other
reproduction hereof.
[THIS SPACE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
"PURCHASER"
COMSYS TECHNICAL SERVICES, INC.
ATTEST:
By:
Name:
Secretary: Title:
[Corporate Seal]
"SHAREHOLDER"
TELOS CORPORATION
ATTEST:
By:
Name:
Secretary: Title:
[Corporate Seal]
"SELLER"
TELOS CORPORATION
ATTEST:
By:
Name:
Secretary: Title:
[Corporate Seal]
<PAGE>
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT is
made as of December 27, 1996 by and among Telos Corporation, a
California corporation ("Seller"), Telos Corporation, a Maryland
corporation ("Shareholder) and COMSYS Technical Services, Inc., a
Maryland corporation ("Purchaser").
WITNESSETH:
Seller, Shareholder and Purchaser are parties to an
Asset Purchase Agreement dated December 13, 1996 (the "Purchase
Agreement") pursuant to which Purchaser will purchase
substantially all of the assets of Telos Consulting Services, a
division of the Seller. Seller, Shareholder and Purchaser have
agreed to amend the Purchase Agreement in the manner set forth
below.
Certain capitalized terms used herein are defined in
the Purchase Agreement.
The parties hereto agree as follows:
I. . AMENDMENTS TO PURCHASE AGREEMENT.
a. Section 2.3. Section 2.3 of the Purchase
Agreement is hereby amended to add the following sentence at the
end of such Section:
"For purposes of this Agreement, the
Closing shall be deemed to be effective as of
12:01 a.m. on the Closing Date."
b. Section 3.2. Section 3.2(a) of the Purchase
Agreement is hereby amended to delete the number "$3,352,148" in
the third line of such Section and to insert "$3,082,148" in its
place.
c. Section 4.22. Section 4.22 of the Purchase
Agreement is hereby amended to delete the date "November 30,
1995" in the fifth line of such Section and to insert "November
30, 1996" in its place.
<PAGE>
2. EFFECT OF THE AMENDMENT. All references to the
Purchase Agreement in the Purchase Agreement or any related
document shall mean the Purchase Agreement as amended by this
Amendment. Except as specifically amended above, the Purchase
Agreement shall remain in full force and effect, and is hereby
ratified and confirmed.
3. DESCRIPTIVE HEADINGS. The descriptive headings of
this Amendment are inserted for convenience only and do not
constitute a part of this Amendment.
4. GOVERNING LAW. This Amendment shall be governed
by and construed and enforced in accordance with the laws of the
State of Maryland.
5. COUNTERPARTS; FACSIMILE TRANSMISSION. This
Amendment may be executed and delivered in counterparts, each of
which shall constitute an original, and all of which together
shall constitute one Amendment. This Amendment may be executed
and delivered by facsimile transmission.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Amendment No. 1 to Asset Purchase Agreement as of the date first
written above.
TELOS CORPORATION,
a Maryland corporation
By:
Its:
TELOS CORPORATION,
a California corporation
By:
Its:
COMSYS TECHNICAL SERVICES, INC.
a Maryland corporation
By:
Its:
