SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 13, 1998
Date of Report (Date of earliest event reported)
GP Strategies Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware 1-7234 13-1926739
(State or Other Juris- (Commission (I.R.S. Employer
diction of Incorporation) File Number) Identification No.)
9 West 57th Street, New York, New York 10019
(Address of principal executive offices) (Zip Code)
(212) 826-8500
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or, Disposition of Assets.
On July 13, 1998, General Physics Corporation ("General
Physics"), a Delaware corporation and a wholly-owned subsidiary of GP Strategies
Corporation (the "Company"), completed its acquisition of substantially all of
the operations, assets, properties, rights and business of The Deltapoint
Corporation ("Deltapoint") and in connection therewith, assumed certain of the
liabilities of Deltapoint, pursuant to the Asset Purchase Agreement, dated as of
July 13, 1998 between General Physics and Deltapoint. Deltapoint is a Seattle,
Washington based management consulting firm focused on large systems change and
lean-enterprise, with primarily 500 clients operating in the aerospace,
pharmaceutical, manufacturing, health care and telecommunications industries.
General Physics purchased Deltapoint for approximately $6.3 million in cash and
a future earnout, as described in the Asset Purchase Agreement filed as an
exhibit hereto.
The $6.3 million cash consideration of the purchase price was
derived from funds borrowed by the Company and General Physics, pursuant to the
Company's Credit Agreement dated as of June 15, 1998 (the "Credit Agreement"),
with Key Bank, N.A., Mellon Financial Services Corporation, Summit Bank, The
Dime Savings Bank of New York, FSB, and Fleet Bank, National Association, as
Agent, as Issuing Bank and as Arranger. The Credit Agreement provides for a
secured credit facility of $80 million (the "Credit Facility") comprised of a
revolving credit facility of $65 million for the Company, expiring on June 15,
2001, and a five-year term loan of $15 million to General Physics Canada Ltd. At
the option of the Company or GP Canada, as the case may be, the interest rate on
any loan under the Credit Facility may be based on an adjusted prime rate or
Eurodollar rate, as described in the Credit Agreement.
The acquired operations and assets were used by Deltapoint in its
business of providing management consulting services to the manufacturing and
service industry (the "Business"). General Physics intends to use such assets in
operating the Business.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of businesses acquired.
(1) At the present time it is impracticable to file
the financial statements required by this item.
However, such statements will be filed not later than sixty (60) days.
(b) Pro Forma Financial Information.
(1) At the present time it is impracticable to file
the pro forma financial information required by this
item. However, such statements will be filed not later than sixty (60) days.
<PAGE>
(c) Exhibits.
Exhibit No. Exhibit
10 Asset Purchase Agreement, dated as of July 13, 1998,
between General Physics Corporation and The Deltapoint
Corporation.
99 Press Release, dated July 13, 1998.
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
GP STRATEGIES CORPORATION
(Registrant)
Dated: July 27, 1998 By: Scott N. Greenberg
------------------
Executive Vice President
and Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description Page
10 Asset Purchase Agreement, dated as of
July 13, 1998, General Physics Corporation
and The Deltapoint Corporation.
99 Press Release, dated July 13, 1998.
EXHIBIT 10
ASSET PURCHASE AGREEMENT
dated as of July 13, 1998
between
GENERAL PHYSICS CORPORATION
as Purchaser
and
THE DELTAPOINT CORPORATION
as Seller
<PAGE>
TABLE OF CONTENTS
Page
Section No.
ARTICLE I SALE OF ASSETS AND CLOSING 1
1.01 Assets 1
1.02 Liabilities 4
1.03 Purchase Price; Allocation 5
1.04 Additional Consideration 5
1.05 Options 6
1.06 Closing 7
1.07 Passage of Title at Closing 8
1.08 Assignment of Seller's Contracts 8
1.09 Further Assurances; Post-Closing Cooperation 9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER 10
2.01 Organization of Seller 10
2.02 Authority 10
2.03 No Conflicts 10
2.04 Governmental Approvals and Filings 11
2.05 Books and Records 11
2.06 Capitalization; Stock Ownership 11
2.07 Subsidiaries and Other Equity Investments 11
2.08 Financial Statements 11
2.09 No Undisclosed Liabilities 12
2.10 Absence of Changes 12
2.11 Title to and Condition of Properties and Assets 14
2.12 Taxes 14
2.13 Legal Proceedings 15
2.14 Compliance With Laws and Orders 15
2.15 Employee Benefit Plans and Other Arrangements 15
2.16 Real Property 16
2.17 Tangible Personal Property 16
2.18 Intellectual Property Rights 16
2.19 Contracts 17
2.20 Licenses 18
2.21 Insurance 18
2.22 Affiliate Transactions 19
2.23 Employees; Labor Relations 19
2.24 Environmental Matters 19
2.25 Accounts Receivable 19
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2.26 No Guarantees 20
2.27 Title; Entire Business 20
2.28 Brokers 20
2.29 Certain Disclosures 20
2.30 Disclosure 21
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER 21
3.01 Organization 21
3.02 Authority 21
3.03 No Conflicts 22
3.04 Governmental Approvals and Filings 22
3.05 Legal Proceedings 22
3.06 Brokers 22
ARTICLE IV COVENANTS OF SELLER 23
4.01 Access, Information and Documents 23
4.02 Conduct of Business Pending Closing 23
4.03 Approval by Seller's Shareholders 24
4.04 Cooperation with Respect to Financing 24
4.05 Consents and Approvals 24
4.06 No Solicitation of Offers 24
4.07 Delivery of Assets 25
4.08 Noncompetition 25
4.09 Accounts Receivable 26
4.10 Corporate Name 26
ARTICLE V COVENANTS OF PURCHASER 26
5.01 Consents and Approvals 26
5.02 Release of Guarantees 26
5.03 Change of Control 26
5.04 Post-Closing Operation of Business and Business Support 26
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER 27
6.01 Representations and Warranties27
6.02 Performance 27
6.03 Regulatory Consents and Approvals 27
6.04 Third Party Consents 27
6.05 Opinion of Counsel 28
6.06 Deliveries 28
<PAGE>
6.07 Physical Properties 28
6.08 Employment Agreements 28
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER 28
7.01 Representations and Warranties28
7.02 Performance 29
7.03 Regulatory Consents and Approvals 29
7.04 Third Party Consents 29
7.05 Deliveries 29
7.06 Employment Agreements 29
7.07 Opinion of Counsel 29
ARTICLE VIII POST-CLOSING TAX MATTERS 29
8.01 Certain Tax Matters Relating to the Assets 29
8.02 Cooperation 30
ARTICLE IX EMPLOYEE BENEFITS MATTERS 30
9.01 Hiring of Employees 30
9.02 Continuing Compensation and Benefits 30
9.03 Benefit Plans 30
ARTICLE X SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS 33
ARTICLE XI INDEMNIFICATION 33
11.01 Seller's and Shareholders' Indemnification Obligations 33
11.02 Purchaser's Indemnification Obligations 34
11.03 Method of Asserting Claims 34
11.04 Limits on Indemnification 36
11.05 Indemnification as Sole Remedy36
11.06 Interest 36
11.07 Expenses 36
ARTICLE XII TERMINATION 37
12.01 Termination by Purchaser 37
12.02 Termination by Seller 37
12.03 Effect of Termination 37
ARTICLE XIII DEFINITIONS 38
13.01 Definitions 38
ARTICLE XIV MISCELLANEOUS 45
14.01 Notices 45
14.02 Entire Agreement 46
14.03 Expenses 46
14.04 Arbitration of Claims 47
14.05 Public Announcements 48
14.06 Waiver 48
14.07 Payment of Transfer Taxes 48
14.08 Amendment 48
14.09 No Third Party Beneficiary 49
14.10 No Assignment; Binding Effect 49
14.11 Headings; References to Sections, Exhibits and Schedules 49
14.12 ORAL AGREEMENTS 49
14.13 Invalid Provisions 49
14.14 Governing Law 49
14.15 Counterparts 49
SCHEDULES
Disclosure Schedule
EXHIBITS
Exhibit A Option Agreement
Exhibit B General Assignment
Exhibit C Seller's Certificate regarding Representations and
Warranties
Exhibit D Seller's Certificate regarding Corporate Matters
Exhibit E FIRPTA Certificate
Exhibit F Assumption Agreement
Exhibit G Purchaser's Certificate regarding Representations
and Warranties
Exhibit H Purchaser's Certificate regarding Corporate Matters
Exhibit I Opinion of Preston Gates & Ellis LLP
Exhibit J Employment Agreement
Exhibit K Opinion of Morgan, Lewis & Bockius LLP
<PAGE>
This ASSET PURCHASE AGREEMENT, dated as of July 13, 1998, is
made and entered into between GENERAL PHYSICS CORPORATION, a Delaware
corporation ("Purchaser"), and THE DELTAPOINT CORPORATION, a Washington
corporation ("Seller"). Capitalized terms not otherwise defined herein have the
meanings set forth in Section 11.01.
WHEREAS, Seller is engaged in the business of providing
management consulting services to the manufacturing and service industry (the
"Business");
WHEREAS, Seller desires to sell, transfer and assign to
Purchaser, and Purchaser desires to purchase and acquire from Seller,
substantially all of the assets, properties, rights and business of Seller, and
in connection therewith, Purchaser has agreed to assume certain of the
liabilities of Seller, all on the terms and conditions set forth herein; and
WHEREAS, Seller has agreed to sell to Purchaser the Business
in part as a result of assurances from Purchaser that after the Closing (as
defined herein) of the transactions contemplated by this Agreement, Seller's
current management team will be retained and will be permitted to continue to
operate the Business in substantially the same manner as prior to the Closing,
assuming continued profitability of the Business at levels comparable to 1997
and for each of the three years beginning July 1 and ending June 30 after the
Closing Date, and that Purchaser will provide necessary client introductions,
general and administrative and business development support.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE OF ASSETS AND CLOSING
1.01 Assets. (a) Assets Transferred. On the terms and subject to the
conditions set forth in this Agreement, Seller is selling, transferring,
conveying, assigning and delivering to Purchaser, and Purchaser is purchasing
and paying for, at the Closing, free and clear of all Liens other than Permitted
Liens, all of Seller's right, title and interest in, to and under all of the
assets and properties of Seller, as the same shall exist as of the date hereof
but excluding the Excluded Assets described in Section 1.01(b) (collectively,
the "Assets"). The Assets include, without limitation, all of Seller's rights,
title and interests in and to the following:
(i) Real Property Leases. The leases of real property
described in Schedule 1.01(a)(i) hereto to which Seller is the lessee,
together with any options to purchase the underlying property and
<PAGE>
leasehold improvements thereon, and in each case all other rights,
subleases, licenses, permits, deposits and profits appurtenant to or
related to such leases and subleases (the "Real Property Leases");
(ii) Inventory. All inventories of work-in-process,
finished goods, works of authorship or materials under research and
development, demonstration equipment, office and other supplies, raw
materials, parts, mailing and packaging materials and other accessories
related thereto wherever located, which are owned or held for use by
Seller, including any of the foregoing purchased subject to any
conditional sales or title retention agreement in favor of any other
Person, together with all rights of Seller against suppliers of such
inventories (the "Inventory");
(iii) Accounts Receivable. All accounts receivable
and rights to receive payments arising in the conduct of the Business
and any Security Agreements related thereto, including any rights of
Seller with respect to any third party collection procedures or any
other Actions or Proceedings which have been commenced in connection
therewith (the "Accounts Receivable");
(iv) Tangible Personal Property. All furniture,
fixtures, equipment and other tangible personal property, wherever
located, owned or held for use by Seller (including, without
limitation, the items listed in Schedule 1.01(a)(iv) hereto, including
any of the foregoing purchased subject to any conditional sales or
title retention agreement in favor of any other Person (the "Tangible
Personal Property");
(v) Personal Property Leases. The leases or subleases
of tangible personal property described in Schedule 1.01(a)(v) hereto
to which Seller is the lessee or sublessee, together with any options
to purchase the underlying property (the "Personal Property Leases");
(vi) Business Contracts. To the extent their transfer
is permitted under the terms thereof, all Contracts (other than the
Real Property Leases, the Personal Property Leases and the Accounts
Receivable) to which Seller is a party and which are utilized in the
conduct of the Business, including without limitation Contracts
relating to suppliers, sales representatives, distributors, purchase
orders and marketing arrangements (the "Business Contracts");
(vii) Prepaid Expenses. All prepaid expenses relating
to the Business, including, without limitation, the items listed in
Schedule 1.01(a)(vii) hereto (the "Prepaid Expenses");
(viii) Intangible Personal Property. All Intellectual
Property owned or held for use by Seller (including Seller's goodwill
therein) and all rights, privileges, claims, causes of action and
<PAGE>
options relating or pertaining to the Business or the Assets,
including, without limitation, the items listed in Schedule
1.01(a)(viii) hereto (the "Intangible Personal Property");
(ix) Licenses. All Licenses owned or held for use by
Seller, including, without limitation, the Licenses listed in Schedule
1.01(a)(ix) hereto (the "Business Licenses");
(x) Insurance. Life insurance policies of officers
and other employees of Seller;
(xi) Security Deposits. All security deposits
deposited by or on behalf of Seller as lessee or sublessee under the
Real Property Leases (the "Tenant Security Deposits");
(xii) Books and Records. All Books and Records used
or held for use in the conduct of the Business or otherwise relating to
the Assets, other than certain accounting, financial and tax records,
and the minute books, stock transfer books and corporate seal of Seller
(the "Business Books and Records");
(xiii) Customer Lists. All lists of Seller's current,
lapsed and prospective customers, advertisers or subscribers and all
other mailing lists and records, in whatever format (the "Customer
Lists"), and all of Seller's copyrights or other Intellectual Property
rights therein;
(xiv) Goodwill. All of the goodwill related to the
Assets and the Business (the "Goodwill"); and
(xv) Other Assets and Properties. All other assets
and properties of Seller used or held for use in connection with the
Business except as otherwise provided in Section 1.01(b).
(b) Excluded Assets. Notwithstanding anything in this
Agreement to the contrary, the following assets and properties of Seller (the
"Excluded Assets") shall be excluded from and shall not constitute Assets:
(i) Cash. All of Seller's cash, commercial paper,
certificates of deposit and other bank deposits, treasury bills and
other cash equivalents (the "Cash");
(ii) Employee Benefit Plans. All assets owned or
held by any Benefit Plans;
(iii) Tax Refunds. All refunds or credits, if any, of
Taxes due to or from Seller which cannot be assigned by Law (the "Tax
Refunds");
<PAGE>
(iv) Corporate Records. The minute books, stock
transfer books and corporate seal of Seller;
(v) Seller's ownership interest in the capital stock
of Deltapoint International, a Japanese corporation;
(vi) Litigation Claims. Any rights (including
indemnification) and claims and recoveries under litigation of Seller
against third parties arising out of or relating to events prior to the
Closing Date;
(vii) Excluded Obligations. The rights of Seller in,
to and under all Contracts of any nature, the obligations of Seller
under which expressly are not assumed by Purchaser pursuant to Section
1.02(b); and
(viii) Seller's rights under this Agreement.
1.02 Liabilities. (a) Assumed Liabilities. In connection with
the sale, transfer, conveyance, assignment and delivery of the Assets pursuant
to this Agreement, on the terms and subject to the conditions set forth in this
Agreement, upon execution and delivery of this Agreement, Purchaser will assume
and agree to pay, perform and discharge when due the following obligations of
Seller arising in connection with the operation of the Business, as the same
shall exist as of the Closing Date (the "Assumed Liabilities"), and no others:
(i) Real Property Lease Obligations. All
obligations of Seller under the Real Property Leases arising and to be
performed on or after the Closing Date and excluding any such obligations
arising or to be performed prior to the Closing Date;
(ii) Accounts Payable. All obligations of Seller with
respect to accounts payable reflected or reserved against in the
balance sheet included in the Interim Financial Statements or those
arising in the ordinary course of business since the Interim Financial
Statement Date, including but not limited to the items listed in
Schedule 1.02(a)(ii) hereto (the "Accounts Payable");
(iii) Personal Property Lease Obligations. All
obligations of Seller under the Personal Property Leases arising and to
be performed on or after the Closing Date, and excluding any such
obligations arising or to be performed prior to the Closing Date;
(iv) Other Stated Liabilities. All obligations of
Seller otherwise reflected in the Interim Financial Statements,
incurred in the ordinary course of business since then, or as reflected
in Schedule 1.02(iv) hereto, including, without limitation certain
payments due to Colin Fox and Marie Adamson, in the amounts set forth
on Schedule 1.02(iv) hereto;
(v) Obligations under Contracts and Licenses. All
obligations of Seller under the Business Contracts and Business
Licenses arising and to be performed on or after the Closing Date, and
excluding any such obligations arising or to be performed prior to the
Closing Date; and
(vi) Accrued Expenses. All obligations of Seller with
respect to accrued expenses reflected or reserved against in the
balance sheet included in the Interim Financial Statements or those
incurred in the ordinary course of business since the Interim Financial
Statement Date, including without limitation the items listed in
Schedule 1.02(a)(v) hereto (the "Accrued Expenses").
(b) Retained Liabilities. Except for the Assumed Liabilities,
Purchaser shall not assume by virtue of this Agreement or the transactions
contemplated hereby, and shall have no liability for, any Liabilities of Seller
(including, without limitation, those related to the Business) of any kind,
character or description whatsoever (the "Retained Liabilities"). Seller shall
discharge in a timely manner or shall make adequate provision for all of the
Retained Liabilities.
1.03 Purchase Price; Allocation. (a) Purchase Price. The
aggregate purchase price (the "Purchase Price") for the Assets, and for the
covenant of Seller contained in Section 4.08, is US$6,280,000.
(b) Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets and the covenant of Seller contained in Section 4.08
in a manner consistent with values as set forth on Schedule 1.03(b) hereto.
Purchaser and Seller each agree: (i) that any such allocation shall be
consistent with Section 1.03(a) and the requirements of section 1060 of the Code
and the regulations thereunder; (ii) that it shall complete jointly and file
separately Form 8594 with its Federal Income Tax Return consistent with such
allocation for the tax year in which the Closing occurs; and (iii) that, except
as required by Law, no party will take a position on any income, transfer or
gains Tax Return, before any Governmental or Regulatory Authority charged with
the collection of any such Tax or in any judicial proceeding, that is in any
manner inconsistent with the terms of any such allocation without the consent of
the other party.
1.04 Additional Consideration. Seller shall be entitled to
receive additional consideration (the "Additional Consideration") from the
Purchaser for the Assets in each of the three years beginning July 1 and ending
June 30 after the Closing Date in the amounts set forth below, if the conditions
set forth below are satisfied for such years:
(i) In the event that the revenues of the Business
for the subject year are in excess of $5,000,000 and the Business
achieves NIBT of 21% or more for such year, then Seller shall be
entitled to receive $1,333,400 with respect to such year, plus an
amount equal to 7.5% of the revenues in excess of $5,000,000 for such
year;
<PAGE>
(ii) In the event that the revenues of the Business
for the subject year are in excess of $5,000,000 and the Business
achieves NIBT of between 5% and 21% for such year, then Seller shall be
entitled to receive $1,333,400 with respect to such year, plus an
additional amount to be determined by the following formula:
(Actual Annual Revenue - $5,000,000) x (.075 x (Actual NIBT % / 21) )
(iii) In the event the revenues of the Business for
the subject year are in excess of $5,000,000 but the Business achieves
NIBT of 5% or less for such year, then Seller shall be entitled to
receive only $1,333,400 with respect to such year.
Each payment of Additional Consideration, if any, hereunder shall be payable by
Purchaser to Seller in cash on or before August 31 of the subject year ending
June 30.
As used herein, "NIBT" shall mean, for any period, Net Income
Before Tax of the Business. In calculating NIBT for any year: (a) NIBT shall be
calculated as revenue less direct costs, direct and indirect labor, benefits,
indirect expenses, business development costs, group administration and general
and administrative ("G&A") cost allocation of the Business, and shall not
include any allocation of goodwill or finance costs relating to the transactions
contemplated by this Agreement, except as specified below; (b) Purchaser's
allocation of G&A costs to the Business shall be limited to the lesser of (x)
5.5% of total costs of the Business or (y) Purchaser's actual G&A rate; (c)
interest shall be deemed part of G&A and subject to the foregoing cap; (d)
reimbursable expenses from customers shall be included in revenues and (e) the
following shall not be deducted from income: (i) those liabilities incurred and
referred to in Section 1.02 (a)(iv) (except for interest payable to such
individuals) and (ii) depreciation and amortization expense related to the
assets acquired in the transaction contemplated by this Agreement.
Any amounts that are not in dispute and that are not paid on
or within thirty (30) days of the date initially due will bear interest at a
rate of 10% per annum. Interest will accrue on any disputed amounts from the
date on which such dispute arises until its resolution.
1.05 Options. Certain of Seller's employees listed on Schedule
1.05 hereto shall receive as of the Closing Date stock options (the "Options")
to acquire an aggregate of 88,000 shares of common stock, par value $.01 per
share, of GP Strategies Corporation, a Delaware corporation ("GPSC"), at the
closing New York Stock Exchange price of the GPSC common stock on the Closing
Date, pursuant to stock option agreements, a form of which is attached hereto as
Exhibit A (the "Option Agreements"). From time to time following the Closing,
Hope Mathews Wiljanen shall have the right to propose the names of certain
additional employees of Seller who are then employed by Purchaser to receive up
to an aggregate of 37,000 Options pursuant to Option Agreements. Ms. Wiljanen
shall deliver to GPSC a list of the names of such proposed recipients and GPSC
shall consider the list in good faith and shall use its best efforts to cause
such persons to receive Options; provided, however, that the final determination
<PAGE>
of the Option recipients and the exercise price of the Options shall be made by
the Stock Option Committee of the Board of Directors of GPSC in its sole
discretion, pursuant to the GPSC Stock Option Plan.
1.06 Closing. (a) The closing of the purchase and sale of the
Assets (the "Closing") will take place at the offices of Morgan, Lewis & Bockius
LLP, 101 Park Avenue, New York, New York 10178, or at such other place as
Purchaser and Seller mutually agree, at 10:00 A.M. local time, on the second
business day following the satisfaction of each of the conditions set forth in
Articles VI and VII but in no event later than July 13, 1998 (the "Closing
Date"). The Closing Date may be postponed to a later time and date by mutual
agreement of the parties. For the purposes of convenience of the parties, the
transactions contemplated by this Agreement shall be deemed to be effective as
of 12:01 A.M. on July 1, 1998, irrespective of the date of the Closing Date.
(b) Documents to be Delivered by Seller to Purchaser. At the
Closing, Seller will deliver to Purchaser:
(i) a general instrument of sale, conveyance,
assignment, transfer and delivery with full covenants of warranty as to
Seller's good and marketable title to all the Assets, subject, in the
case of non-material contracts and software licenses, to the consent or
approval of third parties, in the form of Exhibit B (the "General
Assignment");
(ii) such specific instruments of sale, conveyance,
assignment, transfer and delivery with full covenants of warranty as to
Seller's good and marketable title to such of the Assets included
within such general instrument of sale, conveyance, assignment,
transfer and delivery as Purchaser shall reasonably request (the
General Assignment and such other instruments being collectively
referred to herein as the "Assignment Instruments");
(iii) all Seller's contracts, books, records and
other data relating to the Assets and Seller's operations (except
Seller's minute and stock books, records relating to Excluded Assets
and Retained Liabilities, and all other records which Seller is
required by law to keep in its possession, as to which Seller will
furnish to Purchaser at any time or from time to time after the Closing
Date, copies or transcripts);
(iv) a certificate of Seller in the form of Exhibit C
certifying as to the accuracy of Seller's representations and
warranties at and as of the Closing and that Seller has performed and
complied with all of the terms, provisions and conditions to be
performed and complied with by Seller at or before the Closing;
(v) a certificate of Seller in the form of Exhibit D
certifying as to certain corporate matters, together with all of the
<PAGE>
attachments referred to therein;
(vi) a certificate of Seller in the form attached
hereto as Exhibit E (the "FIRPTA Certificate"); and
(vii) such other certificates and documents as
Purchaser or its counsel may reasonably request.
(c) Documents to be Delivered by Purchaser to Seller. At the
Closing, Purchaser will deliver to Seller:
(i) the amount of US $6,280,000, by wire
transfer of immediately available funds to such account as Seller has
directed;
(ii) an instrument of assumption of the Assumed
Liabilities in the form of Exhibit F (the "Assumption Agreement");
(iii) a certificate of Purchaser in the form of
Exhibit G certifying as to the accuracy of Purchaser's representations
and warranties at and as of the Closing and that Purchaser has
performed and complied with all of the terms, provisions and conditions
to be performed and complied with by Purchaser at or before the
Closing;
(iv) a certificate of Purchaser in the form of
Exhibit H certifying as to certain corporate matters, together with all
of the attachments referred to therein; and
(v) such other certificates and documents as Seller
or its counsel may reasonably request.
1.07 Passage of Title at Closing. Upon delivery of the
instruments of sale, conveyance, assignment, transfer and delivery, title to the
Assets shall pass to Purchaser at the Closing. At the Closing, Seller will put
Purchaser in full, complete and quiet possession and enjoyment of all of the
Assets and from and after the Closing the ownership and operation of the Assets
and the business of Seller to be sold to Purchaser pursuant to this Agreement
shall be for the account and risk of Purchaser. Purchaser shall be under no
liability for any debt, liability or obligation of Seller incurred after the
Closing or arising out of any transaction by Seller or any event occurring with
respect to Seller after the Closing.
1.08 Assignment of Seller's Contracts. Nothing in this
Agreement shall be deemed to constitute an assignment or an attempt to assign
any contract or other agreement to which Seller is a party if the attempted
assignment thereof without the consent of the other party to such contract or
agreement would constitute a breach thereof or affect in any way the rights of
Seller thereunder. If after Seller has used its best efforts to obtain the
consent of any such other party to such contract or agreement, such consent
shall not be obtained at or prior to the Closing, or an attempted assignment
thereof at the Closing would be ineffective and would affect the rights of
Seller thereunder, Seller will cooperate with Purchaser in any reasonable
arrangement designed to provide for Purchaser the benefits under any such
<PAGE>
contract or agreement, including the enforcement, at the cost and for the
benefit of Purchaser, of any and all rights of Seller against such other party
thereto arising out of the breach or cancellation thereof by such other party or
otherwise.
1.09 Further Assurances; Post-Closing Cooperation. (a) At any
time or from time to time after the Closing, at Purchaser's request and without
further consideration, Seller shall execute and deliver to Purchaser such other
instruments of sale, transfer, conveyance, assignment and confirmation, provide
such materials and information and take such other actions as Purchaser may
reasonably deem necessary or desirable in order more effectively to transfer,
convey and assign to Purchaser, and to confirm Purchaser's title to, all of the
Assets, and, to the full extent permitted by Law, to put Purchaser in actual
possession and operating control of the Assets and to assist Purchaser in
exercising all rights with respect thereto, and otherwise to cause Seller to
fulfill its obligations under this Agreement and the Operative Agreements.
(b) At any time or from time to time after the Closing, at
Seller's request and without further consideration, Purchaser shall execute and
deliver to Seller such other instruments of assumption, provide such materials
and information and take such other actions as Seller may reasonably deem
necessary or desirable in order more effectively to have Purchaser assume, agree
to pay, perform and discharge when due all of the Assumed Liabilities, and
otherwise to cause Purchaser to fulfill its obligations under this Agreement and
the Operative Agreements.
(c) Following the Closing, Purchaser and Seller will each
afford the other, its counsel and its accountants, during normal business hours,
reasonable access to the books, records and other data relating to the Assets in
its possession with respect to periods prior to the Closing and the right to
make copies and extracts therefrom, to the extent that such access may be
reasonably required by the requesting party in connection with: (i) the
preparation of Tax Returns; (ii) the determination or enforcement of rights and
obligations under this Agreement; (iii) compliance with the requirements of any
Governmental or Regulatory Authority; (iv) the determination or enforcement of
the rights and obligations of any Indemnifying Party or Indemnified Party; or
(v) in connection with any actual or threatened Action or Proceeding. Purchaser
and Seller each agree for a period extending six (6) years after the Closing not
to destroy or otherwise dispose of any such books, records and other data unless
such party shall first offer in writing to surrender such books, records and
other data to the other party and such other party shall not agree in writing to
take possession thereof during the thirty (30) day period after such offer is
made.
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as disclosed in a document referring specifically to
the representations and warranties in this Agreement which identifies by section
number the section and subsection to which such disclosure relates and is
delivered by Seller to Purchaser prior to the execution of this Agreement (the
"Disclosure Schedule"), Seller represents and warrants to Purchaser:
2.01 Organization of Seller. Seller is a corporation duly
organized and validly existing under the Laws of the State of Washington, and
has full power and authority to conduct the Business as and to the extent now
conducted and to own, use and lease the Assets. Seller is duly qualified,
licensed or admitted to do business and is in good standing in all jurisdictions
in which the ownership, use or leasing of its assets and properties, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary and in which the failure to be so qualified, licensed or
admitted and in good standing could reasonably be expected to have an adverse
effect on the validity or enforceability of this Agreement or any of the
Operative Agreements to which it is a party or on the ability of Seller to
perform its obligations hereunder or thereunder.
2.02 Authority. Seller has full power and authority to execute
and deliver this Agreement and the Operative Agreements to which it is a party,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby, including, without limitation, to
sell, transfer, convey, assign and deliver (pursuant to this Agreement) the
Assets. The execution and delivery by Seller of this Agreement and the Operative
Agreements to which it is a party, and the performance by Seller of its
obligations hereunder and thereunder, have been duly and validly authorized by
the Board of Directors of Seller, no other corporate action on the part of
Seller being necessary. This Agreement has been duly and validly executed and
delivered by Seller and constitutes, and upon the execution and delivery by
Seller of the Operative Agreements to which it is a party, such Operative
Agreements will constitute, legal, valid and binding obligations of Seller
enforceable against Seller in accordance with their terms.
2.03 No Conflicts. Neither the execution, delivery or
performance of this Agreement nor consummation of any of the transactions
provided for in this Agreement and contemplated hereby (i) will violate or
conflict with the Articles of Incorporation or By-Laws of Seller or (ii) will
result in any material breach of or material default under any provision of any
contract or agreement of any kind to which Seller is a party or by which Seller
is bound or to which any property or asset of any of them is subject, (iii) is
prohibited by or requires Seller to obtain or make any consent, authorization,
approval, registration or filing under any statute, law, ordinance, regulation,
rule, judgment, decree or order of any court or governmental agency, board,
bureau, body, department or authority, or of any other person, (iv) will cause
any acceleration of maturity of any note, instrument or other obligation to
<PAGE>
which Seller is a party or by which Seller is bound or with respect to which
Seller is an obligor or guarantor or (v) will result in the creation or
imposition of any lien, claim, charge, restriction, equity or encumbrance of any
kind whatsoever upon or give to any other person any interest or right
(including any right of termination or cancellation) in or with respect to any
of the properties, assets, business, agreements or contracts of Seller.
2.04 Governmental Approvals and Filings. Except as disclosed
in Section 2.04 of the Disclosure Schedule, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the part of
Seller is required in connection with the execution, delivery and performance of
this Agreement or any of the Operative Agreements to which Seller is a party or
the consummation of the transactions contemplated hereby or thereby.
2.05 Books and Records. The Business Books and Records are in
all material respects complete and correct and have been maintained in
accordance with good business practice.
2.06 Capitalization; Stock Ownership. The authorized capital
stock of Seller consists of 7,500 shares of Series A Common Stock, no par value,
40,000 shares of Series B Common Stock, no par value, and 2,500 shares of Series
C Common Stock, no par value. As of the close of business on the date hereof, 0
Series A shares were issued and outstanding, 4,800 Series B shares were issued
and outstanding and 400 Series C shares were issued and outstanding. All of such
issued shares have been duly authorized and validly issued and are fully paid
and non-assessable and none of them was issued in violation of any preemptive or
other right. The Shareholders own all of such 5,200 outstanding shares of Common
Stock of Seller as set forth in Section 2.06 of the Disclosure Schedule, free
and clear of all liens, claims, charges, restrictions, equities or encumbrances
of any kind.
2.07 Subsidiaries and Other Equity Investments. Other than
Seller's ownership interest in the capital stock of Deltapoint International, a
Japanese corporation, Seller does not own, directly or indirectly any shares of
capital stock of any corporation or any equity investment in any partnership,
association or other business organization (a "Subsidiary").
2.08 Financial Statements. Seller has delivered to Purchaser
true and complete copies of the following financial statements:
(a) The reviewed balance sheets of Seller as at December 31,
1995, 1996 and 1997 and related statements of income and retained earnings and
changes in financial position for the fiscal years ended on those dates,
together with supporting schedules and the reports thereon of Hellam, Varon &
Co. Inc., P.S., certified public accountants (collectively, the " Reviewed
Financial Statements"); and
(b) The unaudited balance sheets of Seller as at April 30,
1997 and 1998 and related statements of income and retained earnings and changes
<PAGE>
in financial position for the four- month periods ended on those dates, together
with supporting schedules, certified by the President and Executive Director of
Seller (collectively, the "Interim Financial Statements").
Except as set forth in the notes thereto, all of such
financial statements are complete and correct and present fairly and accurately
the financial position of Seller as at the respective dates of said balance
sheets and the results of operations and changes in financial position of Seller
for the respective periods then ended in conformity with generally accepted
accounting principles applied on a basis consistent with that of the preceding
periods (subject, in the case of such balance sheets as at April 30, 1997 and
1998 and such related statements of income and retained earnings and changes in
financial position for the four-month periods ended on those dates, to normal
year-end adjustments consistent with prior periods). Except as set forth in
Schedule 2.08(b) hereto, no accounts receivable are reflected on any of said
balance sheets without provision for an adequate reserve for uncollectible
amounts; and as at April 30, 1998 there was no liability of any nature or in any
amount that should properly be reflected or reserved against in a balance sheet
prepared in conformity with generally accepted accounting principles applied on
a basis consistent with that of the preceding periods which is not fully
reflected or reserved against at April 30, 1998.
2.09 No Undisclosed Liabilities. Since April 30, 1998 (except
(i) for the transactions contemplated by this Agreement and (ii) as set forth in
Section 2.09 of the Disclosure Schedule):
(a) Seller has not incurred any material liability or
obligation (absolute, accrued, contingent or otherwise) of any nature, other
than liabilities and obligations incurred in the ordinary course of business,
that would properly be reflected or reserved against in a balance sheet prepared
in conformity with generally accepted accounting principles applied on a basis
consistent with that used in the preparation of the Reviewed Financial
Statements as referred to in Section 2.08(a);
(b) Seller has not acquired any material amount of accounts
receivable that are or are believed to be uncollectible, and the frequency and
amounts of payments received by Seller with respect to the accounts receivable
reflected on the Reviewed Financial Statements referred to in Section 2.08(a),
do not, in retrospect, render inadequate the reserve for uncollectible accounts
set forth on such balance sheet.
2.10 Absence of Changes. Since April 30, 1998 (except for the
execution and delivery of this Agreement, Seller has not:
(a) had any material change in its condition (financial or
otherwise), operations (present or prospective), business (present or
prospective), properties, assets, or liabilities, other than changes in the
ordinary course of business, none of which has been materially adverse;
<PAGE>
(b) suffered any damage, destruction or loss of physical
property (whether or not covered by insurance) materially adversely affecting
its condition (financial or otherwise) or operations (present or prospective);
(c) incurred or agreed to incur any indebtedness for borrowed
money;
(d) paid or obligated itself to pay in excess of $50,000 in
the aggregate for fixed assets;
(e) suffered any substantial loss or waived any substantial
right;
(f) sold, transferred or otherwise disposed of, or agreed to
sell, transfer or otherwise dispose of, any assets having a fair market value at
the time of sale, transfer or disposition of $10,000 or more in the aggregate,
or cancelled, or agreed to cancel, any debts or claims, other than in the
ordinary course of business;
(g) mortgaged, pledged or subjected to any charge, lien, claim
or encumbrance, or agreed to mortgage, pledge or subject to any charge, lien,
claim or encumbrance, any of its properties or assets;
(h) increased, or agreed to increase, the compensation or
bonuses or special compensation of any kind of any of its officers, employees or
agents over the rate being paid to them on April 30, 1998, other than normal
merit and/or cost-of-living increases pursuant to customary arrangements
consistently followed, or adopted or increased any benefit under any insurance,
pension or other employee benefit plan, payment or arrangement made to, for or
with any such officer, employee or agent;
(i) lost any major customer or had any material order
cancelled or knows of any threatened cancellation of any material order;
(j) made or permitted any material amendment or termination of
any material contract, agreement or license to which it is a party other than in
the ordinary course of business;
(k) had any resignation or termination of employment of any of
its key officers or employees or knows of any impending or threatened
resignation or resignations or termination or terminations of employment that
would have a material adverse effect on its operations (present or prospective)
or business (present or prospective);
(l) had any labor trouble or knows of any impending or
threatened labor trouble;
(m) made any change in its accounting methods or practices
with respect to its condition, operations, business, properties, assets or
liabilities; or
<PAGE>
(n) entered into any transaction not in the ordinary course of
its business.
2.11 Title to and Condition of Properties and Assets. Seller
has good and marketable title to, or valid leasehold interests in, all of its
properties and assets, including, without limitation, (i) all those used in
their respective businesses and (ii) those reflected in the balance sheet of
Seller referred to in Section 2.08(a) (except as sold or otherwise disposed of
in the ordinary course of business), subject to no mortgage, pledge, conditional
sales contract, lien, security interest, right of possession in favor of any
third party, claim or other encumbrance, except the lien of current taxes not
yet due and payable. Subsequent to April 30, 1998, Seller has not sold or
disposed of any of its properties or assets or obligated itself to do so except
in the ordinary course of business. The facilities, machinery, furniture, office
and other equipment of Seller that are used in its business are in all material
respects in good operating condition and repair, subject only to the ordinary
wear and tear of those businesses, and neither Seller nor, to Seller's
Knowledge, any of its properties or assets (owned or leased) are in violation of
any applicable ordinance, regulation or building, zoning, environmental or other
law in respect thereof, the violation of which may not have a material adverse
effect on the conduct of the business or the ownership or use of any of the
properties or assets of Seller.
2.12 Taxes. () All Tax Returns required to be filed by Seller
(including any combined, consolidated, unitary or similar return) have been duly
and timely filed and each such Tax Return is complete and correct in all
material respects. All Taxes presently owed by Seller (whether or not shown on
any Tax Return) that, if unpaid, could result in a Lien on the Assets, have been
paid. Seller has duly and timely filed all sales and use, real or personal
property and employment (including, without limitation, wages, bonuses and
benefits) Tax Returns with respect to Seller due through the date hereof and
each such Tax Return is complete and correct in all respects. Seller has paid
all sales and use, property and employment (including, without limitation,
wages, bonuses and benefits) Taxes and assessments that have become due with
respect to any period ended on or prior to the Closing. All monies required by
any Governmental or Regulatory Authority to be collected or withheld by Seller
from employees, independent contractors, creditors or other parties have been
collected or withheld, and either duly and timely paid to the appropriate
Governmental or Regulatory Authority or (if not yet due for payment) set aside
in accounts for such purposes.
(b) No Governmental or Regulatory Authority is now asserting,
or to the Knowledge of Seller, threatening to assert against Seller any
deficiency or claim for Taxes, and there is no reasonable basis for any such
assertion of which Seller is aware. There are no Liens for Taxes presently due
and unpaid upon any of the assets and properties of Seller. Section 2.12 of the
Disclosure Schedule lists those Tax Returns, if any, that have been audited, and
indicates those Tax Returns that currently are the subject of audit.
(c) Purchaser will not be required to deduct or withhold any
amount pursuant to Section 1445(a) of the Code upon the transfer of the Assets
to Purchaser.
<PAGE>
(d) The Assets are not subject to any direct or indirect
liability for Taxes of any other Person.
(e) At all times since January 1, 1992, Seller has elected to
be and qualified as an S corporation within the meaning of Section 1362 of the
Code and any applicable similar election under state or local law, and since
such date, Seller has filed all Tax Returns and paid all Taxes due through the
date hereof in a manner consistent with Seller's status as an S corporation.
2.13 Legal Proceedings. (a) There are no Actions or
Proceedings pending or, to the Knowledge of Seller, threatened against, relating
to or affecting Seller with respect to any of Seller's assets and properties
which (i) if asserted and decided adversely to Seller, could materially and
adversely affect the operations (present or prospective) or the business
(present or prospective) of Seller, or (ii) questions the validity of this
Agreement or (iii) seeks to delay, prohibit or restrict in any manner any action
taken or contemplated to be taken by Seller under this Agreement.
(b) There are no facts or circumstances known to Seller that
could reasonably be expected to give rise to any Action or Proceeding that would
be required to be disclosed pursuant to clause (a) above.
(c) There are no Orders outstanding against Seller with
respect to the Assets.
2.14 Compliance With Laws and Orders. To Seller's Knowledge,
Seller is not, nor has it at any time within the last five years been, nor has
it received any notice that it is or has at any time within the last five years
been, in violation of or in default under, in any material respect, any Law or
Order applicable to the Business or the Assets..
2.15 Employee Benefit Plans and Other Arrangements. All
Benefit Plans are listed in Section 2.15 of the Disclosure Schedule, and copies
of all documentation relating to such Benefit Plans have been delivered or made
available to Purchasers. Except as disclosed in Section 2.15 of the Disclosure
Schedule:
(a) each Benefit Plan has at all times been maintained and
administered in all material respects in accordance with its terms and with the
requirements of all applicable Law, including ERISA and the Code, and no Benefit
Plan is a "defined benefit plan" within the meaning of section 414(j) of the
Code;
(b) no Benefit Plan is a multiemployer plan within the meaning
of section 3(37) of ERISA;
(c) no direct, contingent or secondary liability has been
incurred or is expected to be incurred by Seller or any ERISA Affiliate under
<PAGE>
Title IV of ERISA and neither Seller nor any ERISA Affiliate has incurred any
liability for any tax imposed under section 4971 through 4980B of the Code or
civil liability under section 502(i) or (l) of ERISA;
(d) no benefit under any Benefit Plan, including, without
limitation, any severance or parachute payment plan or agreement, will be
established or become accelerated, vested or payable by reason of any
transaction contemplated under this Agreement, and no Benefit Plan provides
health or death benefit coverage beyond the termination of an employee's
employment, except as required Law.
2.16 Real Property. (a) Seller has no ownership or other
interest in or title to any real property other than its interests in the Real
Property Leases. Seller has a valid and subsisting leasehold estate in and the
right to quiet enjoyment of the real properties subject to the Real Property
Leases for the full term thereof. Each Real Property Lease is a legal, valid and
binding agreement, enforceable in accordance with its terms, of Seller and, to
Seller's Knowledge, of each other Person that is a party thereto, and except as
set forth in Section 2.16(c) of the Disclosure Schedule, there is no, nor has
Seller received any notice of any, default (or any condition or event which,
after notice or lapse of time or both, would constitute a default) by Seller, or
to Seller's Knowledge, by any party thereunder.
(b) Seller has delivered to Purchaser prior to the date hereof
true and complete copies of all Real Property Leases (including any amendments
and renewal letters).
(c) The premises subject to the Real Property Leases are in
all material respects in good operating condition and in a state of good
maintenance and repair, ordinary wear and tear excepted, are adequate and
suitable for the purposes for which they are presently being used and, to the
Knowledge of Seller, there are no condemnation or appropriation proceedings
pending or threatened against any of such.
2.17 Tangible Personal Property. Seller is in possession of
and has good title to, or has valid leasehold interests in or valid rights under
Contract to use, all the Tangible Personal Property, which includes all tangible
personal property reflected on the balance sheet included in the 1997 Annual
Financial Statements and tangible personal property acquired since the date of
the 1997 Annual Financial Statements other than tangible personal property
disposed of since such date in the ordinary course of business consistent with
past practice. All Seller's rights in Tangible Personal Property is free and
clear of all Liens, other than Permitted Liens and is in all material respects
in good working order and condition, ordinary wear and tear excepted (excepting
only miscellaneous items of immaterial value), and, to Seller's Knowledge, its
use complies in all material respects with all applicable Laws.
2.18 Intellectual Property Rights. Section 1.01(a)(viii) of
the Disclosure Schedule lists all material items of Intellectual Property used
by or needed by Seller in the operation of the Business. Seller either has good
and sufficient right, title and interest in or a valid and binding license to
<PAGE>
use the items of Intellectual Property indicated on such Schedule. Except as
disclosed in Section 2.18 of the Disclosure Schedule: (i) Seller has the
exclusive right to use the copyrights disclosed in Section 1.01(a)(viii) of the
Disclosure Schedule; (ii) all registrations with and applications to
Governmental or Regulatory Authorities in respect of such Intellectual Property
are valid and in full force and effect; (iii) there are no restrictions on the
direct or indirect transfer of any interest held by Seller in respect of such
Intellectual Property; (iv) Seller is not, nor has Seller received any notice
that Seller is, in default in any material respect (or with the giving of notice
or lapse of time or both, would be in such default) under any license to use
such Intellectual Property; and (v) Seller has no Knowledge that such
Intellectual Property is being infringed by any other Person. Seller has not
received notice that Seller is infringing any Intellectual Property of any other
Person, no claim is pending or, to the Knowledge of Seller, has been made to
such effect that has not been resolved and, to the Knowledge of Seller, Seller
is not infringing any Intellectual Property Rights of any other Person.
2.19 Contracts. Seller is not a party to any written or oral:
(a) contract with any labor union;
(b) employment or consulting contract or other contract for
services;
(c) lease, whether as lessor or lessee, with respect to any
property, real or personal;
(d) loan agreement or instrument relating to any debt;
(e) contract of purchase or sale involving more than $10,000;
(f) contract with any agent, dealer or distributor;
(g) stand-by letter of credit, guarantee or performance bond;
(h) contract with any Person containing any provision or
covenant prohibiting or limiting in any material respect the ability of Seller
to engage in any business activity or compete with any Person in connection with
the Business or, except as provided in Section 4.08, prohibiting or limiting the
ability of any Person to compete in any material respect with Seller in
connection with the Business;
(i) partnership, joint venture, shareholders' or other similar
Contracts with any Person;
(j) contract not made in the ordinary course of business
involving more than $10,000; or
<PAGE>
(k) other contract, except insubstantial contracts for
supplies or services not involving more than $10,000 and which can be terminated
within one year without cost.
Seller is not a party to any material contract with any
governmental authority. Each contract or other agreement listed in Section 2.19
of the Disclosure Schedule is in full force and effect and is valid and
enforceable by Seller in accordance with its terms. Neither Seller nor, to
Seller's Knowledge, any other party is in material default in the observance or
the performance of any term or obligation to be performed by it under any
contract listed in Section 2.19 of the Disclosure Schedule. To the best of
Seller's Knowledge, no other person is in default in the observance or the
performance of any term or obligation to be performed by it under any material
contract with Seller. Seller does not know of any bid or contract proposal made
by Seller that, if accepted or entered into, might reasonably be expected to
result in a loss to Seller. Seller has delivered to Purchaser true and complete
copies of all contracts listed in Section 2.19 of the Disclosure Schedule as in
effect on the date hereof.
2.20 Licenses. Section 1.01(a)(ix) of the Disclosure Schedule
contains a true and complete list of all Business Licenses owned or held for use
by Seller which are material to the operation of the Business, setting forth the
function and the expiration and renewal date of each. Prior to the date hereof,
Seller has delivered to Purchaser true and complete copies of all such Business
Licenses. Except as disclosed in Section 2.20 of the Disclosure Schedule:
(a) Seller owns or validly holds all such Business Licenses;
(b) each Business License is valid, binding and in full force
and effect;
(c) Seller is not, nor has it received any notice that it is,
in default (or with the giving of notice or lapse of time or both, would be in
default) in any material respect under any Business License; and
(d) the execution, delivery and performance by Seller of this
Agreement and the Operative Agreements to which it is a party, and the
consummation of the transactions contemplated hereby and thereby, will not (A)
result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (B) result in or give to any
Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under or (C) result in the creation or
imposition of any Lien upon Seller or any of its assets and properties under,
any Business License.
2.21 Insurance. All properties and operations of Seller are
insured for their respective benefits, in amounts deemed adequate by their
respective Boards of Directors or managements, against all risks usually insured
against by persons operating similar properties or conducting similar operations
in the localities where such properties are located or such operations are
conducted under valid and enforceable policies issued by insurers of recognized
responsibility. Section 2.21 of the Disclosure Schedule lists all such policies.
<PAGE>
Seller has delivered to Purchaser true and complete copies of all such policies
as in effect on the date hereof.
2.22 Affiliate Transactions. (a) No officer, director,
Affiliate or Associate of Seller or any Associate of any such officer, director
or Affiliate provides or causes to be provided any assets, services or
facilities used or held for use in connection with the Business.
(b) The Business does not provide or cause to be provided any
assets, services or facilities to any such officer, director, Affiliate or
Associate. Each of the transactions, if any, listed in Section 2.22 of the
Disclosure Schedule is engaged in on an arm's-length basis.
2.23 Employees; Labor Relations. (a) Section 2.23 of the
Disclosure Schedule contains a list of the name of each full-time employee of
Seller, together with such employee's position or function, annual base salary
or wages and any incentive or bonus arrangement with respect to such employee in
effect on the date hereof. Seller has not received any information that would
lead it to believe that a material number of Seller's employees will refuse
offers of employment from Purchaser because of the consummation of the
transactions contemplated by this Agreement.
(b) Except as disclosed in Section 2.23 of the Disclosure
Schedule: (i) no employee of Seller is presently a member of a collective
bargaining unit with respect to the Business and, to the Knowledge of Seller,
there are no threatened or pending attempts to organize for collective
bargaining purposes any of Seller's employees; and (ii) no unfair labor practice
complaint or sex or age discrimination claim is threatened or pending has been
brought during the last five (5) years against Seller before the National Labor
Relations Board or any other Governmental or Regulatory Authority. To Seller's
Knowledge, Seller has complied in all material respects with all applicable Laws
relating to the employment of labor, including, without limitation, those
relating to wages, hours and collective bargaining.
2.24 Environmental Matters. To Seller's Knowledge, Seller has
obtained all Licenses which are required in respect of the Business or the
Assets under applicable Environmental Laws. Seller has conducted the Business in
compliance in all material respects with the terms and conditions of all such
Licenses and with any applicable Environmental Law. No Hazardous Material has
been handled, released or disposed of by Seller on or under any real property
during any period that Seller owned or leased such property.
2.25 Accounts Receivable. The Accounts Receivable: (i) arose
from bona fide sales transactions in the ordinary course of business and are
payable on such accounts' ordinary trade terms; (ii) to Seller's Knowledge, are
legal, valid and binding obligations of the respective debtors enforceable in
accordance with their terms; (iii) to Seller's Knowledge, are not subject to any
valid set-off or counterclaim; (iv) do not represent obligations for goods sold
on consignment, on approval or on a sale-or-return basis or subject to any other
repurchase or return arrangement; (v) are collectible in the ordinary course of
<PAGE>
business consistent with past practice in the aggregate recorded amounts
thereof, net of any applicable reserve reflected in the balance sheet included
in the Interim Financial Statements as adjusted thereafter; and (vi) are not the
subject of any Actions or Proceedings brought by or on behalf of Seller.
2.26 No Guarantees. None of the Liabilities of Seller is
guaranteed by or subject to a similar contingent obligation of any other Person,
nor has Seller guaranteed or become subject to a similar contingent obligation
in respect of the Liabilities of any customer, supplier or other Person to whom
Seller sells goods or provides services or with whom Seller otherwise has
significant business relationships.
2.27 Title; Entire Business. Seller has and is conveying to
Purchaser good and valid title to all of the Assets, free and clear of all Liens
other than Permitted Liens, and such Liens with respect to the Assumed
Liabilities. The sale of the Assets by Seller to Purchaser pursuant to this
Agreement effectively conveys to Purchaser the entire Business and all of the
tangible and intangible property used by Seller (whether owned, leased or held
under license by Seller, by any of Seller's Affiliates or Associates or by
others) in connection with the conduct of the Business as heretofore conducted
by Seller (except for the Excluded Assets) including, without limitation, all
tangible assets and properties of Seller reflected in the balance sheet included
in the 1997 Financial Statements and tangible assets and properties acquired
since the date of the balance sheet included in the 1997 Financial Statements,
other than the Excluded Assets and assets and properties disposed of since such
date, consistent with Section 2.10(g). There are no shared facilities or
services which are used in connection with any business or other operations of
Seller or any of Seller's Affiliates or Associates or any other Person.
2.28 Brokers. Purchaser will have no obligation to Commerce
Bank NA or any other Person with respect to any finder's fee, brokerage
commission or similar payment which may arise as a result of the transactions
contemplated by this Agreement, and Seller agrees to indemnify Purchaser against
any claims made against Purchaser with respect to any such payment.
2.29 Certain Disclosures. Section 2.31 of the Disclosure
Schedule contains:
(i) a list of all officers and other employees and consultants
of Seller to whom Seller has loaned $10,000 or more;
(ii) a list of those entities that were the ten largest
customers of Seller in terms of dollar amount of sales during Seller's fiscal
year ended December 31, 1997 and during the period from December 31, 1997
through the date hereof together with a statement for each such customer during
each such period of the dollar amount of such sales;
(iii) a list of all of the outstanding purchase orders
exceeding $1,000 of Seller on the date hereof;
<PAGE>
(iv) a list of all of the outstanding sales orders of Seller
on the date hereof; and
(v) a list of all machinery and equipment owned by Seller on
the date hereof.
2.30 Disclosure. No representation or warranty contained in
this Agreement, and no statement contained in the Disclosure Schedule or in any
certificate or list attached hereto contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
herein or therein, in the light of the circumstances under which they were made,
not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as disclosed in a document referring specifically to
the representations and warranties in this Agreement which identifies by section
number the section and subsection to which such disclosure relates and is
delivered by Seller to Purchaser prior to the execution of this Agreement (the
"Purchaser Disclosure Schedule"), Purchaser represents and warrants to Seller:
3.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware.
Purchaser is duly qualified, licensed and admitted to do business and is in good
standing in all jurisdictions in which the ownership, use or leasing of its
assets and properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary and in which the failure to be
so qualified, licensed or admitted and in good standing could reasonably be
expected to have an adverse effect on the validity or enforceability of this
Agreement or any of the Operative Agreements which it is a party or on the
ability Purchaser to perform its obligations hereunder or thereunder.
3.2 Authority. Purchaser has full power and authority to
execute and deliver this Agreement and the Operative Agreements to which it is a
party, to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby, including, without limitation, to
purchase (pursuant to this Agreement) the Assets, and to assume (pursuant to
this Agreement) the Assumed Liabilities. The execution and delivery by Purchaser
of this Agreement and the Operative Agreements to which it is a party, and the
performance by Purchaser of its obligations hereunder and thereunder, have been
duly and validly authorized by Purchaser. This Agreement has been duly and
validly executed and delivered by Purchaser and constitutes, and upon the
execution and delivery by Purchaser of the Operative Agreements to which it is a
party, such Operative Agreements will constitute, legal, valid and binding
obligations of Purchaser enforceable against Purchaser in accordance with their
terms.
<PAGE>
3.03 No Conflicts. The execution and delivery by Purchaser of
this Agreement does not, and the execution and delivery by Purchaser of the
Operative Agreements to which it is a party, the performance by Purchaser of its
obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the memorandum and articles of
association or other comparable corporate charter documents of Purchaser;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices set forth in the Purchaser Disclosure
Schedule, hereto, conflict with or result in a violation or breach of any term
or provision of any Law or Order applicable to Purchaser or any of its assets
and properties; or
(c) (i) conflict with or result in a violation or breach of,
(ii) constitute (with or without notice or lapse of time or both) a default
under, (iii) require Purchaser to obtain any consent, approval or action of,
make any filing with or give any notice to any Person as a result or under the
terms of, or (iv) result in the creation or imposition of any Lien upon
Purchaser or any of its assets or properties under, any Contract or License to
which Purchaser is a party or by which any of its assets and properties is
bound.
3.04 Governmental Approvals and Filings. No consent, approval
or action of, filing with or notice to any Governmental or Regulatory Authority
on the part of Purchaser is required in connection with the execution, delivery
and performance of this Agreement or the Operative Agreements to which it is a
party or the consummation of the transactions contemplated hereby or thereby.
3.05 Legal Proceedings. There are no Actions or Proceedings
pending or, to the knowledge of Purchaser, threatened against, relating to or
affecting Purchaser or any of its assets and properties which could reasonably
be expected to result in the issuance of an Order restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Operative Agreements.
3.06 Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by Purchaser directly
with Seller without the intervention of any Person on behalf of Purchaser in
such manner as to give rise to any valid claim by any Person against Seller for
a finder's fee, brokerage commission or similar payment.
<PAGE>
ARTICLE IV
COVENANTS OF SELLER
Seller covenants and agrees that Seller will comply with all
covenants and provisions of this Article IV, except to the extent Purchaser may
otherwise consent in writing.
4.01 Access, Information and Documents. Pending the Closing,
Seller will give to Purchaser and to its agents and Representatives (including,
but not limited to, accountants, lawyers and appraisers) full and complete
access during normal working hours to any and all of the properties, assets,
books, records and other documents of Seller to enable Purchaser to make such
examination of the business, properties, assets, books, records and other
documents of Seller as Purchaser may determine, and Seller will furnish to
Purchaser such information and copies of such documents and records as Purchaser
shall reasonably request. As part of such examination and with at least
twenty-four hours prior notice Purchaser may make such inquiries of such persons
having business relationships with Seller (including, but not limited to,
suppliers, licensees, distributors and customers) as Purchaser shall determine
and Seller shall cooperate fully with Purchaser in connection therewith.
4.02 Conduct of Business Pending Closing. From the date
hereof until the Closing, except as consented to by Purchaser in writing:
(a) Seller will maintain itself at all times as a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction under which it is incorporated;
(b) Seller will carry on its business and operations in a good
and diligent manner on an arm's-length basis and substantially in the manner
carried on as of the date hereof and Seller will not engage in any activity or
transaction or make any commitment to purchase or spend other than in the
ordinary course of its business as heretofore conducted; provided, however,
without the written consent of Purchaser, Seller will not make any commitment to
purchase or spend involving $25,000 or more;
(c) Seller will not pay or obligate itself to pay any
compensation, commission or bonus to any director, officer, employee or
independent contractor as such, except for the regular compensation and
commissions payable to such director, officer, employee or independent
contractor at the rate in effect on the date of this Agreement;
(d) Seller will continue to carry insurance insuring its
properties and operations for its benefit, in amounts deemed adequate by its
Board of Directors or management, against all risks usually insured against by
persons operating similar properties or conducting similar operations in the
localities where such properties are located or such operations are conducted
under valid and enforceable policies issued by insurers of recognized
responsibility;
<PAGE>
(e) Seller will use its best efforts to preserve its business
organization intact, to keep available to Purchaser the services of its
employees and independent contractors and to preserve for Purchaser its
relationships with suppliers, licensees, distributors and customers and others
having business relationships with it;
(f) Seller will not, and will not obligate itself to, sell or
otherwise dispose of or pledge or otherwise encumber any of its properties or
assets except in the ordinary course of business and Seller will maintain its
facilities, machinery and equipment in good operating condition and repair,
subject only to ordinary wear and tear;
(g) Seller will not amend its Articles of Incorporation or
By-Laws;
(h) Seller will not engage in any activity or transaction
other than in the ordinary course of its business as heretofore conducted; and
(i) Without limiting the foregoing, Seller will consult with
Purchaser regarding all significant developments, transactions and proposals
relating to its business or the Assets.
4.03 Approval by Seller's Shareholders. Seller shall cause a
meeting of the Shareholders to be called and held for the purpose of voting upon
this Agreement and the transactions contemplated hereby or, in the alternative,
Seller shall obtain a consent of the Shareholders pursuant to Section
23b.07.040(1)(a)(ii) of the Revised Code of Washington, not later than five days
following the date of this Agreement or on such later date as Purchaser and
Seller may agree. Seller shall recommend to its shareholders the approval of,
and shall otherwise use its best efforts to cause its shareholders to approve,
this Agreement and the consummation of the transactions contemplated hereby.
4.04 Cooperation with Respect to Financing. Seller agrees to
cooperate in any reasonable manner with Purchaser in connection with the
obtaining of any financing.
4.05 Consents and Approvals. Seller shall use its reasonable
best efforts to obtain prior to the Closing all consents, authorizations and
approvals under all statutes, laws, ordinances, regulations, rules, judgments,
decrees and orders of any court or governmental agency, board, bureau, body,
department or authority or of any other person required to be obtained by Seller
in connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
4.06 No Solicitation of Offers. Seller shall not, directly or
indirectly, through any officer, director, employee, agent or otherwise, (i)
solicit, initiate or encourage the submission of proposals or offers from any
person relating to any acquisition or purchase of all or a material amount of
the assets of, or any equity interest in, or any merger, consolidation or
business combination with, Seller (an "Acquisition Proposal"), or (ii)
<PAGE>
participate in any discussion or negotiation regarding, or furnish to any other
person any information with respect to, or otherwise cooperate in any way with
or assist, facilitate or encourage, any Acquisition Proposal by any other
person.
4.07 Delivery of Assets. At the Closing, Seller will deliver
or make available to Purchaser at the locations at which the Business is
conducted all of the Assets, and if, at any time after the date hereof, Seller
discovers in its possession or under its control any other Assets, it will
forthwith deliver such other Assets to Purchaser.
4.08 Noncompetition. (a) Seller will, for a period of five (5)
years from the date hereof, refrain from, either alone or in conjunction with
any other Person:
(i) employing, engaging or seeking to employ or
engage any Person who within the prior twelve (12) months had been an
employee of the Business or Purchaser;
(ii) causing or attempting to cause (A) any client,
customer or supplier of the Business or Purchaser to terminate or
materially reduce its business with the Business or Purchaser or (B)
any officer, employee or consultant of the Business or Purchaser to
resign or sever a relationship with the Business or Purchaser;
(iii) disclosing (unless compelled by judicial or
administrative process or as otherwise required by law) or using any
confidential or secret information relating to the Business or
Purchaser or any client, customer or supplier of Purchaser; or
(iv) participating or engaging in (other than through
the ownership of five percent (5%) or less of any class of securities
registered under the Exchange Act), or otherwise lending assistance
(financial or otherwise) to any Person participating or engaged in any
activity or business competitive to the Business within the United
States or elsewhere in the world.
(b) The parties hereto recognize that the Laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in this
Section 4.08. It is the intention of the parties hereto that the provisions of
this Section 4.08 be enforced by the arbitrator chosen pursuant to Section 14.04
of this Agreement applying the Laws chosen by the parties pursuant to Section
14.13 of this Agreement to the fullest extent permissible under the Laws and
policies of such jurisdiction (it being specifically understood that in
enforcing such provisions to the fullest extent permissible under the Laws and
policies applied by such courts, such courts may restrict the geographic scope
or the length of time of the covenants contained in this Section 4.08).
(c) The parties hereto acknowledge and agree that any remedy
at Law for any breach of the provisions of this Section 4.08 would be
<PAGE>
inadequate, and Seller hereby consents to the granting by any court of an
injunction or other equitable relief, without the necessity of actual monetary
loss being proved, in order that the breach or threatened breach of such
provisions may be effectively restrained.
4.09 Accounts Receivable. To the extent that, following the
Closing, Seller, or any Affiliate or Associate of Seller, shall receive any
monies or properties payable to Purchaser in respect of any Assets conveyed to
Purchaser hereunder, Seller shall promptly account for and pay over, or cause to
be paid over, such monies to Purchaser.
4.10 Corporate Name. On or within five days of the Closing
Date, Seller will change its corporate name and will not, directly or
indirectly, use or do business under or allow any of their respective Affiliates
to use or do business under or assist any other Person in using or doing
business under any name or trademark incorporating the words "DELTAPOINT," or
"RAPID IMPROVEMENT" or any other name or trademark confusingly similar to such
names and marks.
ARTICLE V
COVENANTS OF PURCHASER
5.01 Consents and Approvals. Purchaser shall use its best
efforts to obtain prior to the Closing all consents, authorizations and
approvals under all statutes, laws, ordinances, regulations, rules, judgments,
decrees and orders of any court or governmental agency, board, bureau, body,
department or authority or of any other person required to be obtained by
Purchaser in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby.
5.02 Release of Guarantees. Purchaser acknowledges that
individual shareholders (each a "Guarantor," and collectively the "Guarantors")
have previously personally guaranteed certain of the obligations being assumed
by Purchaser pursuant to this Agreement, and agrees to take reasonable measures
and to permit the Guarantors to take reasonable measures to obtain releases of
such guarantees after the Closing Date subject to prior approval by Purchaser.
Purchaser's measures shall include, without limitation, the making of its own
guarantees in the place of the Guarantors and the provision of the financial
statements of Purchaser or GPSC to relevant obligors. After the Closing Date,
Purchaser agrees to indemnify the Guarantors against any claims made against the
Guarantors with respect to such guarantees.
5.03 Change of Control. Purchaser agrees that its obligations
pursuant to this Agreement and the Operative Agreements shall not terminate or
be otherwise affected by any change of control or change of ownership of
Purchaser.
5.04 Post-Closing Operation of Business and Business Support.
After the Closing, Purchaser agrees that for at least three (3) years from the
<PAGE>
Closing, so long as the Business is conducted in a manner as in prior years
(with due regard to change in business conditions), and assuming continued
profitability of the Business during such period at levels comparable to 1997,
Purchaser will retain the current management team of Seller in their positions.
Purchaser further agrees that Seller's management team shall during such period
have operating responsibility and authority for the Business. Following the
Closing, Purchaser shall provide G&A and business development support to the
Business, including without limitation accounting, financial, human resources,
management information and legal services, introductions to Purchaser's major
clients and key personnel in its other business units, corporate sales programs,
market sector programs, advertising and promotional materials.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder are subject to the
fulfillment, at or before the Closing, of each of the following conditions
(unless waived in whole or in part by Purchaser in its sole discretion):
6.01 Representations and Warranties. Each of the
representations and warranties made by Seller in this Agreement (other than
those made as of a specified date earlier than the Closing Date) shall be true
and correct on and as of the Closing Date as though such representation or
warranty was made on and as of the Closing Date, and any representation or
warranty made as of a specified date earlier than the Closing Date shall have
been true and correct on and as of such earlier date.
6.02 Performance. Seller shall have performed and complied
with each agreement, covenant and obligation required by this Agreement to be so
performed or complied with by Seller at or before the Closing.
6.03 Regulatory Consents and Approvals. All consents,
approvals and actions of, filings with and notices to any Governmental or
Regulatory Authority necessary to permit Purchaser and Seller to perform their
obligations under this Agreement and the Operative Agreements and to consummate
the transactions contemplated hereby and thereby (a) shall have been duly
obtained, made or given, (b) shall be in form and substance reasonably
satisfactory to Purchaser, (c) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and (d) shall be in full force
and effect, and all terminations or expirations of waiting periods imposed by
any Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement and the Operative Agreements shall
have occurred.
6.04 Third Party Consents. The consents (or in lieu thereof
waivers) listed in Schedule 6.04 hereto, and all other consents (or in lieu
<PAGE>
thereof waivers) to the performance by Purchaser and Seller of their obligations
under this Agreement and the Operative Agreements or to the consummation of the
transactions contemplated hereby and thereby as are required under any Contract
to which Purchaser or Seller is a party or by which any of their respective
Assets are bound and where the failure to obtain any such consent (or in lieu
thereof waiver) could reasonably be expected, individually or in the aggregate
with other such failures, to materially adversely affect Purchaser, the Assets,
the Assumed Liabilities or the Business or otherwise result in a material
diminution of the benefits of the transactions contemplated by this Agreement
and the Operative Agreements to Purchaser, (a) shall have been obtained, (b)
shall be in form and substance reasonably satisfactory to Purchaser, (c) shall
not be subject to the satisfaction of any condition that has not been satisfied
or waived and (d) shall be in full force and effect.
6.05 Opinion of Counsel. Purchaser shall have received an
opinion, dated as of the Closing Date, of Preston Gates & Ellis LLP, counsel for
Seller and the Shareholders, in form and substance satisfactory to Morgan, Lewis
& Bockius LLP, counsel for Purchaser, substantially as set forth in Exhibit I.
In rendering such opinion, Preston Gates and Ellis LLP shall assume as to all
matters opined upon that the laws of the State of Washington shall apply and
govern.
6.06 Deliveries. Seller shall have delivered to Purchaser the
General Assignment and the other Assignment Instruments.
6.07 Physical Properties. There shall have occurred no
material damage to or destruction or loss of (whether or not covered by
insurance) any of Seller's facilities, machinery, equipment or other assets.
6.08 Employment Agreements. Purchaser shall have entered into
the Employment Agreements (a form of which is attached hereto as Exhibit J) with
certain key personnel of Seller ("Management Employees") listed on Section 6.08
of the Disclosure Schedule.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder are subject to the
fulfillment, at or before the Closing, of each of the following conditions
(unless waived in whole or in part by Seller in its sole discretion):
7.01 Representations and Warranties. Each of the
representations and warranties made by Purchaser in this Agreement shall be true
and correct on and as of the Closing Date as though such representation or
warranty was made on and as of the Closing Date.
<PAGE>
7.02 Performance. Purchaser shall have performed and complied
with each agreement, covenant and obligation required by this Agreement to be so
performed or complied with by Purchaser at or before the Closing.
7.03 Regulatory Consents and Approvals. All consents,
approvals and actions of, filings with and notices to any Governmental or
Regulatory Authority necessary to permit Seller and Purchaser to perform their
obligations under this Agreement and the Operative Agreements and to consummate
the transactions contemplated hereby and thereby (a) shall have been duly
obtained, made or given, (b) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and (c) shall be in full force
and effect, and all terminations or expirations of waiting periods imposed by
any Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement and the Operative Agreements shall
have occurred.
7.04 Third Party Consents. All consents (or in lieu thereof
waivers) to the performance by Seller of its obligations hereunder and to the
consummation of the transactions contemplated hereby as are required under the
Contracts listed in Schedule 6.04 (a) shall have been obtained, (b) shall not be
subject to the satisfaction of any condition that has not been satisfied or
waived and (c) shall be in full force and effect.
7.05 Deliveries. Purchaser shall have delivered to Seller the
Assumption Agreement.
7.06 Employment Agreements. Purchaser shall have entered into
the Employment Agreements (a form of which is attached hereto as Exhibit J) with
the Management Employees listed on Section 6.08 of the Disclosure Schedule.
7.07 Opinion of Counsel. Seller shall have received an
opinion, dated as of the Closing Date, of Morgan, Lewis & Bockius LLP, counsel
for Purchaser, in form and substance satisfactory to Preston Gates & Ellis LLP,
counsel to Seller and the Shareholders, substantially as set forth in Exhibit K.
ARTICLE VIII
POST-CLOSING TAX MATTERS
8.01 Certain Tax Matters Relating to the Assets. (a) Seller
will cause to be prepared and filed all Tax Returns required to be filed with
respect to the operation of the Business for all periods or portions thereof
ending on or prior to the Closing Date and Seller will indemnify and hold
harmless Purchaser from and against any Taxes imposed on Purchaser or any of its
Affiliates with respect to the operation of the Business during such periods,
and (b) Purchaser will cause to be prepared and filed all Tax Returns required
to be filed with respect to the operation of the Business for all periods
<PAGE>
beginning subsequent to the Closing Date and will indemnify and hold harmless
Seller from and against any Taxes imposed on Seller with respect to the
operation of the Business during such periods.
8.02 Cooperation. Each party hereto shall, and shall cause its
Subsidiaries and Affiliates to, provide to each of the other parties hereto such
cooperation and information as any of them reasonably may request in filing any
Return, amended Return or claim for refund, determining a liability for Taxes or
a right to refund of Taxes or in conducting any audit or other proceeding in
respect of Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant Returns, together with relevant
accompanying schedules and relevant workpapers, relevant documents relating to
rulings or other determinations by Taxing Authorities and relevant records
concerning the ownership and Tax basis of property, which any such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided. Subject to the preceding sentence, each party required
to file Returns pursuant to this Article VIII shall bear all costs of filing
such Returns.
ARTICLE IX
EMPLOYEE BENEFITS MATTERS
9.01 Hiring of Employees. Purchaser shall offer employment,
effective as of the Closing, to all employees of Seller who are (i) actively
engaged in the Business immediately prior to the Closing; (ii) would be actively
engaged in the Business as of the Closing but for the fact that such employees
are on paid or unpaid leave from the Business in accordance with applicable
Federal or state law or policies of Seller; or (iii) are Disabled Employees. All
such Employees who accept employment with Purchaser are hereinafter referred to
as the "Transferred Employees." Those employees of Seller that are not actively
engaged in the Business immediately prior to the Closing shall be offered
employment on their return date.
9.02 Continuing Compensation and Benefits. Purchaser agrees
that the Transferred Employees will receive salaries, bonuses and other benefits
that are at least comparable to what they have received previously from Seller
in recent years, assuming (a) the continued profitability of the business at
levels comparable to 1997 and for each of the three years beginning July 1 and
ending June 30 after the Closing Date and (b) the continued performance of the
Transferred Employees consistent with their performance in 1997.
9.03 Benefit Plans. (a) As of the Closing Date, Transferred
Employees shall cease to participate in the employee welfare benefit plans (as
such term is defined in ERISA) maintained or sponsored by Seller or its
Affiliates (the "Prior Welfare Plans") and shall commence to participate in
<PAGE>
welfare benefit plans of Purchaser or its Affiliates (the "Replacement Welfare
Plans"). Purchaser shall (i) waive all limitations as to preexisting condition
exclusions and waiting periods with respect to participation and coverage
requirements applicable to Transferred Employees under the Replacement Welfare
Plans, other than limitations or waiting periods that were in effect with
respect to such employees under the Prior Welfare Plans and that have not been
satisfied as of the Closing Date, and (ii) provide each Transferred Employee
with credit for any copayments and deductibles paid prior to the Closing Date in
satisfying any deductible or out-of-pocket requirements under the Replacement
Welfare Plans. Except as provided in Section 9.03(d) hereof, Purchaser shall be
responsible for any claims by Transferred Employees for benefits relating to
claims incurred but not reported prior to the Closing Date.
(b) Any Transferred Employee who accepts employment with
Purchaser shall be given credit for all service with the Business and Seller
under all employee benefit plans, programs and policies, and fringe benefits of
Purchaser, including, without limitation, Purchaser's 401(k) plan, in which he
becomes a participant for purposes of eligibility, vesting and benefit accrual.
Purchaser shall be responsible and assume all liability for all salary and
benefit continuation and/or severance payments relating to any Transferred
Employee that may be payable (if any) as a result of any termination of
employment of any such Transferred Employee after the Closing Date, and for all
notices, payments, fines or assessments due to any government authority pursuant
to any applicable foreign, federal, state or local law, common law, statute,
rule or regulation with respect to the employment, discharge or layoff of
employees, including, but not limited to, the Worker Adjustment and Retraining
Notification Act and any rules or regulations as have been issued in connection
with any of the foregoing.
(c) Seller shall be responsible for the administration of all
claims, losses, damages and expenses (including, without limitation, reasonable
attorneys' fees) and other liabilities and obligations relating to or arising
out of all workers' compensation claims of Transferred Employees pending as of
the Closing Date, or made after the Closing Date but relating to events
occurring before the Closing Date, and Seller shall bill to Purchaser, and
Purchaser shall pay, within 30 days of Purchaser's receipt from Seller of
written notice or invoice of any such claim, loss, damage or expense, to Seller,
all such costs associated with the foregoing. Purchaser shall have
responsibility for and shall indemnify and hold harmless Seller from and against
any and all claims, losses, damages and expenses (including, without limitation,
reasonable attorneys' fees) and other liabilities and obligations relating to or
arising out of all workers' compensation claims of Transferred Employees pending
as of the Closing Date, or made after the Closing Date but relating to events
occurring before the Closing Date, and Seller shall bill to Purchaser, and
Purchaser shall pay, within 30 days of Purchaser's receipt from Seller of
<PAGE>
written notice or invoice of any such claim, loss, damage or expense, to Seller,
all such costs associated with the foregoing. Purchaser shall have
responsibility for and shall indemnify and hold harmless Seller from and against
any and all claims, losses, damages and expenses (including, without limitation,
reasonable attorneys' fees) and other liabilities and obligations relating to or
arising out of all workers' compensation claims of Transferred Employees made
after the Closing Date and relating to events occurring on or after the Closing
Date. Purchaser shall notify Seller within 30 days of Purchaser's becoming aware
of any activity, including, but not limited to, any applications for benefits of
any kind, including new injuries or occupational diseases, pertaining to any
Transferred Employee.
(d) Purchaser hereby agrees to indemnify Seller and its
Affiliates against, and agrees to hold them harmless from any and all claims,
losses, damages and expenses (including, without limitation, reasonable
attorneys' fees) and other liabilities and obligations incurred or suffered as a
result of any claim by any Transferred Employee that arises under federal, state
or local Statute (including, without limitation, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1990, the Equal Pay Act, the Americans with Disabilities Act of 1990,
ERISA and all other statutes regulating the terms and conditions of employment),
regulation or ordinance, under the common law or in equity (including any claims
for wrongful discharge or otherwise), or under any policy, agreement,
understanding or promise, written or oral, formal or informal, between Seller
and the Transferred Employee, arising out of actions, events or omissions that
occurred (or, in the case of omissions, failed to occur) after the Closing Date.
(e) Effective as of the Closing Date, Seller shall take all
such action as may be necessary to cause all Transferred Employees to cease to
participate in all Benefit Plans, and Purchaser shall neither adopt nor become a
sponsoring employer of, nor have any obligations, duties or liabilities under or
with respect to such Benefit Plans. Except as specifically set forth in this
Article IX, Seller shall be solely responsible for any and all liabilities which
have arisen or may arise in connection with any Benefit Plan (including, but not
limited to, liabilities arising from income or excise tax assessments,
participant benefit claims, fiduciary conduct, or under ERISA or the Code), any
and all liabilities which have arisen or may arise in any way from the
employment, compensation or benefits of any employee or former employee of
Seller or any Affiliate, including but not limited to the Transferred Employees,
or the termination thereof, including, without limitation, any liability or
obligation arising out of or relating to any act or omission by Seller or any
Affiliate, any violation of or non-compliance with or obligation arising under
any applicable law respecting employment, compensation or benefits, and any and
all costs, liabilities and obligations for severance pay (whether or not
triggered by virtue of the transactions contemplated by this Agreement), accrued
vacation pay, sick pay, health and medical claims and requests for
reimbursements, and similar and other benefits, relating to any period of
employment with Seller or any Affiliate, whether arising as a matter of
contract, Law or otherwise.
(f) Except as otherwise provided by Sections 5.04 and 9.02 of
this Agreement, and except as otherwise provided in the Employment Agreement
referenced in Section 7.06, nothing in this Article IX express or implied shall
be construed to prevent Purchaser from (i) terminating or modifying to any
extent the employment or the employment relationship of any Transferred Employee
at any time for any reason, or (ii) terminating or modifying to any extent or in
any respect any employee benefit plan, program or arrangement that Purchaser may
contribute to, maintain, or establish for the benefit of Transferred Employees
<PAGE>
or such other employees, directors, consultants, contractors, or otherwise, at
any time for any reason, subject to the provisions of Sections 5.04 and 9.02
hereof.
ARTICLE X
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
Except as otherwise provided herein, all representations, warranties,
covenants and agreements contained in this Agreement, and any schedule or
certificate delivered at the Closing pursuant to this Agreement shall survive
the Closing for a period of two and one-half years; provided, however, that (i)
the representations, warranties, covenants and agreements with respect to
matters covered by Section 2.12 and Article VIII shall survive until 30 days
after the expiration of any statute of limitation periods applicable to such
matters and (ii) the representations, warranties, covenants and agreements with
respect to Sections 2.11 and 2.29 shall survive indefinitely.
ARTICLE XI
INDEMNIFICATION
11.01 Seller's and Shareholders' Indemnification Obligations.
Subject to the terms and conditions of this Section 11, Seller and each of the
Shareholders (other than the holders of the Company's Series C Common Stock)
shall (on a pro rata basis based on the percentage ownership of each such
Shareholder at the Closing) indemnify and hold Purchaser harmless against and be
liable for any and all losses, costs and expenses (including, without
limitation, legal and other expenses), except as expressly limited by the terms
of Section 11.04, resulting from or relating to:
(a) any misrepresentation or breach of any warranty of Seller
contained in this Agreement or in any Schedule of Seller or any certificate
delivered by Seller at the Closing;
(b) any breach of any covenant of Seller contained in this
Agreement; and
(c) any debt, liability or obligation of Seller other than the
Assumed Liabilities;
and any and all actions, suits, demands, assessments or judgments with respect
to any claim arising out of or relating to the subject matter of the
indemnification.
<PAGE>
11.02 Purchaser's Indemnification Obligations. Subject to the
terms and conditions of this Section 11, Purchaser agrees to indemnify and hold
Seller harmless against any and all losses, costs and expenses (including,
without limitation, legal and other expenses), except as expressly limited by
the terms of Section 11.04, resulting from or relating to:
(a) any misrepresentation or breach of warranty of Purchaser
contained in this Agreement or in any Schedule of Purchaser or in any
certificate delivered by Purchaser at the Closing;
(b) any breach of any covenant of Purchaser contained in this
Agreement; and
(c) any of the Assumed Liabilities;
and any and all actions, suits, demands, assessments or judgments with respect
to any claim arising out of or relating to the subject matter of the
indemnification.
11.03 Method of Asserting Claims. All claims for
indemnification by any Indemnified Party under Sections 11.01 or 11.02 will be
asserted and resolved as follows:
(a) If at any time a claim shall be made or threatened, or an
action or proceeding shall be commenced or threatened, against an Indemnified
Party which could result in liability of the Indemnifying Party under its
indemnification obligations hereunder, the Indemnified Party shall give to the
Indemnifying Party prompt notice of such claim, action or proceeding. Such
notice shall state the basis for the claim, action or proceeding and the amount
thereof (to the extent such amount is determinable at the time when such notice
is given) and shall permit the Indemnifying Party to assume the defense of any
such claim, action or proceeding (including any action or proceeding resulting
from any such claim). Failure by the Indemnifying Party to notify the
Indemnified Party of its election to defend any such claim, action or proceeding
within a reasonable time, but in no event more than fifteen days after notice
thereof shall have been given to the Indemnifying Party, shall be deemed a
<PAGE>
waiver by the Indemnifying Party of its right to defend such claim, action or
proceeding; provided, however, that the Indemnifying Party shall not be deemed
to have waived its right to contest and defend against any claim of the
Indemnified Party for indemnification hereunder based upon or arising out of
such claim, action or proceeding.
(b) If the Indemnifying Party assumes the defense of any such
claim, action or proceeding, the obligation of the Indemnifying Party as to such
claim, action or proceeding shall be limited to taking all steps necessary in
the defense or settlement thereof and, provided the Indemnifying Party is held
to be liable for indemnification hereunder, to holding the Indemnified Party
harmless from and against any and all losses, damages and liabilities caused by
or arising out of any settlement approved by the Indemnifying Party or any
judgment or award rendered in connection with such claim, action or proceeding.
The Indemnified Party may participate, at its expense, in the defense of such
claim, action or proceeding provided that the Indemnifying Party shall direct
and control the defense of such claim, action or proceeding. The Indemnified
Party agrees to cooperate and make available to the Indemnified Party all books
and records and such officers, employees and agents as are reasonably necessary
and useful in connection with the defense. The Indemnifying Party shall not, in
the defense of such claim, action or proceeding, consent to the entry of any
judgment or award, or enter into any settlement, except in either event with the
prior consent of the Indemnified Party, which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party of a release from all liability in respect of such claim,
action or proceeding.
(c) If the Indemnifying Party does not assume the defense of
any such claim, action or proceeding, the Indemnified Party may defend against
such claim, action or proceeding in such manner as it may deem reasonably
appropriate. The Indemnifying Party agrees to cooperate and make available to
the Indemnified Party all books and records and such officers, employees and
agents as are reasonably necessary and useful in connection with the defense. If
the Indemnifying Party, within ten days after notice shall have been given to it
by the Indemnified Party of the latter's intention to effect a settlement of any
such claim, action or proceeding, which notice shall describe with particularity
the terms of any such proposed settlement, shall not deposit with an escrowee
mutually satisfactory to the Indemnified Party and the Indemnifying Party a sum
equivalent to the total amount demanded in such claim, action or proceeding or
deliver to the Indemnified Party a surety bond or an irrevocable letter of
credit for such sum in form and substance reasonably satisfactory to the
Indemnified Party, then the Indemnified Party may settle such claim, action or
proceeding on the terms detailed in its notice to the Indemnifying Party, and
the Indemnifying Party shall be deemed to have agreed to the terms of such
settlement and shall not thereafter in any proceeding by the Indemnified Party
for indemnification question the propriety of such settlement. If the
Indemnifying Party makes an escrow deposit or delivers a surety bond or letter
of credit as aforesaid and thereafter the Indemnified Party settles such claim,
action or proceeding, then in any proceeding by the Indemnified Party for
indemnification in the event the Indemnifying Party is held liable for
indemnification hereunder, the Indemnified Party shall have the burden of
proving the amount of such liability of the Indemnifying Party, and the amount
of the payments made in settlement of any claim, action or proceeding shall not
be determinative as between the Indemnified Party and the Indemnifying Party of
the amount of such indemnification liability, except that the amount of the
settlement payments shall constitute the maximum amount of the indemnification
liability of the Indemnifying Party. Such escrow deposit, surety bond or letter
of credit shall by their respective terms be payable to the Indemnified Party in
an amount determined in accordance with the last sentence of this paragraph (C)
and in the event the Indemnifying Party is held liable for indemnification
hereunder. If the Indemnifying Party neither makes an escrow deposit nor
delivers a surety bond or letter of credit as aforesaid, so that no settlement
of such claim, action or proceeding is effected, in any proceeding by the
Indemnified Party for indemnification in the event the Indemnifying Party is
held liable for indemnification hereunder, such liability shall be for the
amount of any judgment or award rendered with respect to such claim or in such
action or proceeding and of all expenses, legal and otherwise, incurred by the
Indemnified Party in the defense against such claim, action or proceeding.
<PAGE>
(d) In the event an Indemnified Party or Indemnifying Party
shall cooperate in the defense or make available books, records, officers,
employees or agents, as required by the terms of paragraphs (B) and (C),
respectively, of this Section 11.02 the party to which such cooperation is
provided shall pay the out-of-pocket costs and expenses (including legal fees
and disbursements) of the party providing such cooperation and of its officers,
employees and agents reasonably incurred in connection with providing such
cooperation, but shall not be responsible to reimburse the party providing such
cooperation for such party's time or the salaries or costs of fringe benefits or
other similar expenses paid by the party providing such cooperation to its
officers and employees in connection therewith.
11.04 Limits on Indemnification. (a) Except for any claims for
breach of Sections 1.04, 1.05, 2.28 and 5.02 of this Agreement, no
indemnification shall be payable under this Article XI by Seller or Purchaser
unless and until the amount of all claims for indemnification against Seller or
Purchaser exceeds US $50,000 in the aggregate, whereupon indemnification by
Seller or Purchaser shall be payable for such amounts exceeding, in the
aggregate, $50,000.
(b) (i) During the first twelve (12) months after the Closing,
the aggregate liability of any Indemnifying Party (for these purposes the Seller
and the Shareholders (other than the holders of the Company's Series C Common
Stock) as a group shall be deemed an Indemnifying Party) for all claims for
indemnification made against it during such period shall not exceed $3,500,000
and (ii) after the first twelve (12) months, the aggregate liability of any
Indemnifying Party for all claims for indemnification made against it during
such period shall not exceed $2,000,000. Such amounts may be payable, at the
option of Purchaser, to Purchaser in the form of an offset to any Additional
Consideration paid. Any amounts paid for claims made pursuant to (i) above
(i.e., claims made during the first twelve (12) months after the Closing) shall
reduce the limit pursuant to (ii) above; similarly, amounts paid for claims made
pursuant to (ii) above (i.e., claims made after the first twelve (12) months
after the Closing) shall reduce the limit pursuant to (i) above.
11.05 Indemnification as Sole Remedy. The parties hereto agree
that a claim for indemnification made pursuant to this Agreement shall be the
sole remedy for any party which suffers any Loss as a result of, arising out of
or otherwise attributable to this Agreement or the purchase and sale of the
Assets contemplated hereby. Notwithstanding the foregoing, Purchaser shall be
entitled to seek injunctive relief to restrain a breach of Sections 4.08 and
4.10 of this Agreement.
11.06 Interest. Interest on the amount of any indemnification
claim made pursuant to this Agreement will accrue at a rate of 10% per annum
from the date on which the claim is adjudged payable until the date of any
payment against such claim.
11.07 Expenses. Without otherwise affecting the provisions of
Section 14.04(d) of this Agreement, in the event that any Indemnifying Party
<PAGE>
makes a claim for indemnification that is groundless or without merit, the party
against whom such claim is made shall have the opportunity to recover from the
claiming party reasonable attorney's fees and expenses incurred in the defense
of such claim.
ARTICLE XI
TERMINATION
12.01 Termination by Purchaser. Purchaser may, without
liability to Seller, terminate this Agreement by notice to Seller (i) at any
time prior to the Closing if default shall be made by Seller in the observance
or in the due and timely performance of any of the terms hereof to be performed
by Seller that cannot be cured at or prior to the Closing, or (ii) at the
Closing if any of the conditions precedent to the performance of Purchaser's
obligations at the Closing shall not have been fulfilled.
12.02 Termination by Seller. Seller may, without liability to
Purchaser, terminate this Agreement by notice to Purchaser (i) at any time prior
to the Closing if default shall be made by Purchaser in the observance or in the
due and timely performance of any of the terms hereof to be performed by
Purchaser that cannot be cured at or prior to the Closing, or (ii) at the
Closing if any of the conditions precedent to the performance of Seller's
obligations at the Closing shall not have been fulfilled.
12.03 Effect of Termination. If this Agreement is terminated,
this Agreement, shall no longer be of any force or effect and there shall be no
liability on the part of any party or its respective directors, officers or
shareholders except, in the case of termination because of a material default or
material breach resulting from the willful fault of another party, the aggrieved
party or parties may recover from the defaulting party the amount of expenses
incurred by such aggrieved party or parties in connection with this Agreement
and the transactions contemplated hereby which the aggrieved party or parties
would otherwise have to bear pursuant to Section 14.03 of this Agreement. If
this Agreement shall be terminated, each party will (i) redeliver all documents,
work papers and other materials of any other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution of this
Agreement, to the party furnishing the same, and (ii) destroy all documents,
work papers and other materials developed by its accountants, agents and
employees in connection with the transactions contemplated hereby which embody
proprietary information or trade secrets furnished by any party hereto or
deliver such documents, work papers and other materials to the party furnishing
the same or excise such information or secrets therefrom and all information
received by any party hereto with respect to the business of any other party or
any of its subsidiaries (other than information which is a matter of public
knowledge or which has heretofore been or is hereafter published in any
publication for public distribution or filed as public information with any
governmental authority) shall not at any time be used for personal advantage or
<PAGE>
disclosed by such party to any third person to the detriment of the party
furnishing such information or any of its subsidiaries.
ARTICLE XIII
DEFINITIONS
13.01 Definitions. (a) As used in this Agreement, the
following defined terms shall have the meanings indicated below:
"AAA" has the meaning ascribed to it in Section 14.04(c).
"Accounts Payable" has the meaning ascribed to it in Section
1.01(a)(ii).
"Accounts Receivable" has the meaning ascribed to it in
Section 1.01(a)(iii).
"Accrued Expenses" has the meaning ascribed to it in Section
1.02(a)(v).
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"Acquisition Proposal" has the meaning ascribed to it in
Section 4.06.
"Additional Consideration" has the meaning ascribed to it in
Section 1.04(a).
"Affiliate" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is under
common control with the Person specified. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by Contract or
otherwise and, in any event and without limitation of the previous sentence, any
Person owning ten percent (10%) or more of the voting securities of a second
Person shall be deemed to control that second Person.
"Agreement" means this Asset Purchase Agreement and the
Exhibits, the Disclosure Schedule and the Schedules hereto and the certificates
delivered in accordance with Sections 1.06(b) and (c), as the same shall be
amended from time to time.
"Arbitration Notice" has the meaning ascribed to it in Section
14.04(b).
"Assets" has the meaning ascribed to it in Section 1.01(a).
"Assignment Instruments" has the meaning ascribed to it in
Section 1.06(b)(ii).
<PAGE>
"Associate" means, with respect to any Person, any corporation
or other business organization of which such Person is an officer or partner or
is the beneficial owner, directly or indirectly, of ten percent (10%) or more of
any class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
"Assumed Liabilities" has the meaning ascribed to it in
Section 1.02(a).
"Assumption Agreement" has the meaning ascribed to it in
Section 1.06(c)(iii).
"Benefit Plan" means any Plan established by Seller, or any
predecessor or Affiliate of Seller, existing at the Closing or prior thereto, to
which Seller contributes or has contributed on behalf of any employee of Seller,
former employee or director of Seller, or under which any employee, former
employee or director of Seller or any beneficiary thereof is covered, is
eligible for coverage or has benefit rights.
"Books and Records" of any Person means all files, documents,
instruments, papers, books and records relating to the business, operations,
condition of (financial or other), results of operations and assets and
properties of such Person, including, without limitation, financial statements,
Tax Returns and related work papers and letters from accountants, budgets,
pricing guidelines, ledgers, journals, deeds, title policies, minute books,
stock certificates and books, stock transfer ledgers, Contracts, Licenses,
customer and subscription lists, computer files and programs, retrieval
programs, editorial files, operating data and plans and environmental studies
and plans.
"Business" has the meaning ascribed to it in the forepart of
this Agreement.
"Business Books and Records" has the meaning ascribed to it in
Section 1.01(a)(xii).
"Business Contracts" has the meaning ascribed to it in Section
1.01(a)(vi).
"Business Licences" has the meaning ascribed to it in Section
1.01(a)(ix).
"Cash" has the meaning ascribed to it in Section 1.01(b)(i).
"Closing" means the closing of the transactions contemplated
by Section 1.03.
"Closing Date" has the meaning ascribed to it in Section
1.06(a).
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
<PAGE>
"Contract" means any agreement, lease, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract (whether
written or oral).
"Customer Lists" has the meaning ascribed to it in Section
1.01(a)(xiv).
"Disclosure Schedule" has the meaning ascribed to it in
Article II.
"Dispute" has the meaning ascribed to it in Section 14.04(a).
"Employment Agreements" means those employment contracts
entered into by Purchaser with the Management Employees, which contracts shall
provide for compensation, benefits and severance that are, in the aggregate,
substantially comparable to the compensation, benefits and severance received by
the Management Employees prior to the Closing Date, and which shall contain
restrictions on the rights of the Management Employees to compete with the
Business and to solicit or employ Persons employed by Purchaser or any other
Person engaged in the Business, subject to certain exceptions for discharge of
the Management Employees due to lack of work, without cause, or disability.
<PAGE>
"Environmental Law" means any Law relating to human health,
safety or protection of the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants or Hazardous Materials in the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), or otherwise relating to the
treatment, storage, disposal, transport, handling or release of any Hazardous
Material.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any Person who is in the same
controlled group of corporations or who is under common control with Seller
(within the meaning of section 414 of the Code).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Assets" has the meaning ascribed to it in Section
1.01(b).
"FIRPTA Certificate" has the meaning as ascribed to it in
Section 1.06(b)(vi).
"G&A" has the meaning ascribed to it in Section 1.04.
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
<PAGE>
"GPSC" has the meaning ascribed to it in Section 1.05.
"General Assignment" has the meaning ascribed to it in Section
1.05(b)(i).
"Goodwill" has the meaning ascribed to it in Section
1.01(a)(xv).
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision.
"Guarantor" has the meaning ascribed to it in Section 5.02.
"Hazardous Material" means: (A) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation and transformers or other equipment
that contain dielectric fluid containing levels of polychlorinated biphenyls
(PCBs); (B) any chemicals, materials, substances or wastes which are now or
hereafter become defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants"
or words of similar import, under any Environmental Law; and (C) any other
chemical, material, substance or waste, exposure to which is now or hereafter
prohibited, limited or regulated by any Governmental or Regulatory Authority.
"Indebtedness" of any Person means all obligations of such
Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (iv) under capital leases or (v) in the nature of guarantees of the
obligations described in clauses (i) through (iv) above of any other Person.
"Indemnified Party" means any Person claiming indemnification
under any provision of Article XI.
"Indemnifying Party" means any Person against whom a claim for
indemnification are being asserted under any provision of Article XI.
"Initiating Party" has the meaning ascribed to it in Section
14.04(b).
"Intangible Personal Property" has the meaning ascribed to it
in Section 1.01(a)(viii).
"Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, publication
titles, service marks and service mark rights, service names and service name
rights, brand names, inventions, processes, formulae, copyrights and copyright
<PAGE>
rights, trade dress, business and product names, logos, slogans, trade secrets,
industrial models, processes, designs, methodologies, computer programs
(including all source codes) and related documentation, technical information,
manufacturing, engineering and technical drawings, know-how and all pending
applications for and registrations of patents, trademarks, service marks and
copyrights.
"Interim Financial Statement Date" means the last day of the
most recent four- month period of the Seller for which financial statements are
delivered to Purchaser pursuant to Section 2.08.
"Interim Financial Statements" means the Financial Statements
for the most recent four-month period of the Seller delivered to Purchaser
pursuant to Section 2.08.
"Knowledge" shall mean to the actual knowledge of Hope Mathews
Wiljanen, Robert Boehm, Dan Bormann, Joan Wellman, Chris Fosse, Gordon Harter,
Tom Bundy, Kris Box and Michael Rowney.
"Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental or Regulatory Authority.
"Liabilities" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.
"Loss" means any and all damages, fines, Taxes, fees,
penalties, deficiencies, losses and expenses (including, without limitation,
interest, court costs, fees of attorneys, accountants and other experts or other
expenses of litigation or other proceedings or of any claim, default or
assessment).
"Management Employees" has the meaning ascribed to it in
Section 6.09.
"NIBT" has the meaning ascribed to it in Section 1.04.
<PAGE>
"Nondisclosure Agreement" means that nondisclosure agreement,
dated as of February 10, 1998, between Purchaser and Seller.
"Operative Agreements" means, collectively, the General
Assignment and the other Assignment Instruments, the Assumption Agreement and
the other Assumption Instruments.
"Option Agreements" has the meaning ascribed to it in Section
1.05.
"Options" has the meaning ascribed to it in Section 1.05.
"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).
"Permitted Lien" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business by operation of Law
with respect to a Liability that is not yet due or delinquent, (iii) any lease
disclosed in the Disclosure Schedule, and (iv) any minor imperfection of title
or similar Lien which individually or in the aggregate with other such Liens
does not materially impair the value or use of the property subject to such
Lien.
"Person" means any natural person, corporation, general
partnership, limited partnership, limited liability company, limited liability
partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"Personal Property Leases" has the meaning ascribed to it in
Section 1.01(a)(v).
"Plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock option,
stock ownership, stock appreciation rights, phantom stock, leave of absence,
layoff, vacation, day or dependent care, legal services, cafeteria, life,
health, accident, disability, workmen's compensation or other insurance,
severance, separation or other employee benefit plan, practice, policy or
arrangement of any kind, whether written or oral, including, without limitation,
any "employee benefit plan" within the meaning of Section 3(3) of ERISA.
"Prepaid Expenses" has the meaning ascribed to it in Section
1.01(a)(vii).
"Prior Welfare Plans" has the meaning ascribed to it in
Section 9.02(a).
"Purchase Price" has the meaning ascribed to it in Section
1.03(a).
<PAGE>
"Purchaser" has the meaning ascribed to it in the forepart of
this Agreement.
"Purchaser Disclosure Schedule" has the meaning ascribed to it
in Article III.
"Real Property Leases" has the meaning ascribed to it in
Section 1.01(a)(i).
"Replacement Welfare Plans" has the meaning ascribed to it in
Section 9.02(a).
"Representatives" means the officers, directors, employees,
agents, counsel, accountants, financial advisors, consultants and other
representatives of any Person.
"Retained Liabilities" has the meaning ascribed to it in
Section 1.02(b).
"Returns" means any returns, reports or statements (including
any information returns) required to be filed for purposes of a particular Tax.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning ascribed to it in the forepart of
this Agreement.
"Shareholders" means all of the holders of capital stock of
Seller as set forth on Section 2.06 of the Disclosure Schedule.
"Subsidiary" has the meaning ascribed to it in Section 2.07.
"Tangible Personal Property" has the meaning ascribed to it in
Section 1.01(a)(iv).
"Tax Refunds" has the meaning ascribed to it in Section
1.01(b)(iii).
"Tax Returns" means any returns, reports or statements or any
amendment thereto (including any information returns) required to be filed for
purposes of a particular Tax.
<PAGE>
"Taxes" means all Federal, state, local or foreign net or
gross income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, withholding, payroll, employment, excise, property, alternative or
add-on minimum, environmental or other taxes, assessments, duties, fees, levies
or other governmental charges of any nature whatever, whether disputed or not,
together with any interest, penalties, additions to tax or additional amounts
with respect thereto.
"Taxing Authority" means any governmental agency, board,
bureau, body, department or authority of any United States federal, state or
local jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.
"Tenant Security Deposits" has the meaning ascribed to it in
Section 1.01(a)(xii).
"Transfer Tax" means any sales (including, without limitation,
bulk sales) and use Taxes on the sale of the Assets.
"Transferred Employee" has the meaning ascribed to it in
Section 9.01(a).
(b) Unless the context of this Agreement otherwise requires:
(i) words of any gender include each other gender; (ii) words using the singular
or plural number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby", "hereto" and derivative or similar words
refer to this entire Agreement; and (iv) the terms "Article" or "Section" refer
to the specified Article or Section of this Agreement. All accounting terms used
herein and not expressly defined herein shall have the meanings given to them
under GAAP.
ARTICLE XIV
MISCELLANEOUS
14.01 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
If to Purchaser, to:
General Physics Corporation
6700 Alexander Bell Drive
Suite 400
Columbia, Maryland 21046
Attention: John McAuliffe
<PAGE>
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile No.: (212) 309-6273
Attention: David W. Pollak
If to Seller, to:
Robert P. Boehm
Deltapoint Corporation
777 108th Avenue, Suite 1700
Bellevue, WA 98004-5118
Facsimile No.: (425) 454-2773
with a copy to:
Preston Gates & Ellis LLP
701 5th Avenue, Suite 5000
Seattle, WA 98104
Facsimile No.: (206) 623-7322
Attention: Stephan H. Coonrod and James Sherman
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon confirmed receipt, and (iii) if
delivered by mail in the manner described above to the address as provided in
this Section, be deemed given upon receipt (in each case regardless of whether
such notice, request or other communication is received by any other Person to
whom a copy of such notice is to be delivered pursuant to this Section). Any
party from time to time may change its address, facsimile number or other
information for the purpose of notices to that party by giving notice specifying
such change to the other party hereto.
14.02 Entire Agreement. This Agreement and the Operative
Agreements supersede all prior discussions and agreements between the parties
with respect to the subject matter hereof and thereof, except the Nondisclosure
Agreement, and contain the sole and entire agreement between the parties hereto
with respect to the subject matter hereof and thereof.
14.03 Expenses. If the Closing is not consummated, each of the
parties will pay all of its own legal and accounting fees and other expenses
incurred in the preparation of this Agreement and the performance of the terms
and provisions of this Agreement. If the Closing is consummated, and except as
otherwise provided in Section 14.07, Seller will pay out of the proceeds
<PAGE>
received by Seller all of Seller's legal and accounting fees and other expenses
incurred in the preparation of this Agreement and the performance of the terms
and provisions of this Agreement and all sales, real estate transfer, capital
gains and income taxes incurred by Seller as a result of the sale contemplated
by this Agreement, it being intended that Seller shall not make any expenditure
for the same prior to the Closing and that Purchaser shall not assume any
liability with respect to the same. In addition, if the Closing is consummated,
all real estate taxes and personal property taxes and sewer rents and all such
other taxes, charges and assessments if any, relating to the Real Properties
shall be apportioned between Seller and Purchaser on the Closing Date on the
basis of the tax year in which it is payable. If the Closing Date shall occur
before the tax rate for any tax year is fixed, the apportionment of taxes shall
be upon the basis of the tax rate for the next preceding year for which the tax
rate is fixed applied to the latest assessed valuation.
14.04 Arbitration of Claims. (a) Any dispute, claim,
controversy or difference between or among the parties arising out of this
Agreement or the transactions contemplated hereby (a "Dispute"), including
without limitation any dispute between an Indemnified Party and any Indemnifying
Party under Article XI, which the parties are unable to resolve themselves shall
be submitted to and resolved by arbitration as herein provided.
(b) A party demanding arbitration under this Agreement (an
"Initiating Party") shall initiate such arbitration by delivering written notice
(the "Arbitration Notice") to the party with whom arbitration is sought. Any
Arbitration Notice shall contain a statement setting forth the nature of the
Dispute, the amount involved, if any, and the remedy sought.
(c) Any Dispute subject to arbitration shall be arbitrated in
Seattle, Washington if Purchaser is the Initiating Party (assertion of a set-off
to Additional Consideration shall be deemed initiation of arbitration by
Purchaser) or Columbia, Maryland if Seller or a Shareholder is the Initiating
Party under the commercial rules then in effect of the American Arbitration
Association (the "AAA"). Each party to such arbitration agrees that any award of
the arbitrator shall be final, conclusive and binding and that they will not
contest any action by any other party thereto in accordance with an award of the
arbitrator. It is specifically understood and agreed that any party may enforce
any award rendered pursuant to the arbitration provisions of this Section 14.04
by bringing suit in any court of competent jurisdiction. The Initiating Party
shall request the AAA to designate one arbitrator, who shall be qualified as an
arbitrator under the standards of the AAA and who is not affiliated with any
party in interest to such arbitration and who has substantial professional
experience with regard to corporate legal matters. The arbitrator shall consider
the dispute at issue at a mutually agreed upon time within sixty (60) days (or
such longer period as may be acceptable to the parties or as directed by the
arbitrator) of the designation of the arbitrator. The arbitration proceeding
shall include an opportunity for the parties to conduct discovery in advance of
the proceeding. Notwithstanding the foregoing, the parties agree that they will
attempt, and they intend that they and the arbitrator should use their best
efforts in that attempt, to conclude the arbitration proceeding and have a final
decision from the arbitrator within one hundred twenty (120) days from the date
of selection of the arbitrator; provided, however, that the arbitrator shall be
<PAGE>
entitled to extend such 120-day period for a total of two one hundred twenty
(120) day periods. The arbitrator shall immediately deliver a written report
with respect to the dispute to each of the parties who shall promptly act in
accordance therewith.
(d) All fees, costs and expenses (including reasonable
attorneys' fees and expenses) incurred by the party that prevails in any such
arbitration commenced pursuant to this Section 14.04, or any judicial action or
proceeding seeking to enforce the agreement to arbitrate disputes as set forth
in this Section 14.04 or seeking to enforce any order or award of any
arbitration commenced pursuant to this Section 14.04 may be assessed against the
party or parties that do not prevail in such arbitration in such manner as the
arbitrator or the court in such judicial action, as the case may be, may
determine to be appropriate under the circumstances. All costs and expenses
attributable to the arbitrator shall be allocated among the parties to the
arbitration in such manner as the arbitrator shall determine to be appropriate
under the circumstances.
(e) Notwithstanding the foregoing, it is hereby agreed that no
arbitrator shall have any power to add to, alter or modify the terms and
conditions of this Agreement or any other agreement executed and delivered in
connection herewith or to decide any issue which does not arise from the
interpretation or application of the provisions of this Agreement.
14.05 Public Announcements. Seller and Purchaser will obtain
the other party's prior approval of any press release to be issued announcing
the transactions contemplated by this Agreement.
14.06 Waiver. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by Law or otherwise afforded, will be cumulative
and not alternative.
14.07 Payment of Transfer Taxes. Purchaser shall pay all
Transfer Taxes imposed by Law on Seller arising out of or in connection with the
transactions effected pursuant to this Agreement, and Purchaser shall indemnify,
defend and hold harmless Seller with respect to such Transfer Taxes. Seller
shall duly and timely file all Tax Returns with respect to such Transfer Taxes
payable as a result of the consummation of the transactions contemplated by this
Agreement.
14.08 Amendment. This Agreement may be amended, supplemented
or modified only by a written instrument duly executed by or on behalf of each
party hereto.
<PAGE>
14.09 No Third Party Beneficiary. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnification under Article XI.
14.10 No Assignment; Binding Effect. Neither this Agreement
nor any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other parties hereto and any
attempt to do so will be void, except (a) for assignments and transfers by
operation of Law and (b) that Purchaser may assign any or all of its rights,
interests and obligations hereunder (including, without limitation, its rights
under Article XI) to a wholly-owned subsidiary or an Affiliate, provided that
any such subsidiary or Affiliate agrees in writing to be bound by all of the
terms, conditions and provisions contained herein. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
14.11 Headings; References to Sections, Exhibits and
Schedules. The headings of the Sections, paragraphs and subparagraphs of this
Agreement are solely for convenience and reference and shall not limit or
otherwise affect the meaning of any of the terms or provisions of this
Agreement. The references herein to Sections, Exhibits and Schedules, unless
otherwise indicated, are references to sections of and exhibits and schedules to
this Agreement.
14.12 ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.
14.13 Invalid Provisions. If any provision of this Agreement
is held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
14.14 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to a
contract executed and performed in such state without giving effect to the
conflicts of laws principles thereof.
14.15 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties as of the date first above written.
GENERAL PHYSICS CORPORATION
By:
Name: John C. McAuliffe
Title: President
THE DELTAPOINT CORPORATION
By:
Name: Hope Mathews Wiljanen
Title: President
With respect to the
obligations set forth in
Article XI of this
Agreement:
SHAREHOLDERS
By:
Name:
By:
Name:
By:
Name:
By:
Name:
<PAGE>
EXHIBIT A
OPTION AGREEMENT
OPTION AGREEMENT dated _____________ between GP Strategies
Corporation, a Delaware corporation (the "Company") and _____________, an
employee of the Company or one of its subsidiaries, (the "Employee").
Pursuant to the Company's 1973 Non-Qualified Stock Option
Plan, as amended, (the "Plan"), the Company desires to make available shares of
its Common Stock, par value $.01 per share (the "Common Stock"), for purchase by
the Employee, and thereby to provide an additional incentive to him to continue
in the employ of the Company or its subsidiaries and give him a greater interest
as a shareholder in the success of the Company.
NOW, THEREFORE, in accordance of the mutual covenants
hereinafter set forth and for good and valuable consideration the parties hereto
hereby agree as follows:
1. GRANT OF OPTIONS. The Company hereby grants to the Employee
as a matter of separate agreement and not in lieu of salary or any other
compensation for services, the right and option to purchase all or any part of
an aggregate of _______ shares of Common Stock on the terms and conditions
herein set forth (the "Option").
2. PURCHASE PRICE. The purchase price of shares of Common
Stock subject to the option shall be $_____ per share, being not less than 85%
of the fair market value of the Common Stock on the date of the grant of the
Option.
3. TERM OF OPTION. The term of the Option shall be ten years
from the date hereof, subject to the provisions of the Plan with respect to
termination of employment, death or disability of the Employee. Any portion of
the Option not exercised prior to the termination of the Option shall thereupon
become null and void.
<PAGE>
4. ACCRUAL OF OPTION. The Option shall become exercisable as
follows:
10% - _____________ 60% - ______________
20% - _____________ 70% - ______________
30% - _____________ 80% - ______________
40% - _____________ 90% - ______________
50% - _____________ 100%- _____________
5. THE STOCK OPTION PLAN. The Option is subject in all
respects to the terms of the Stock Option Plan, a copy of which is attached
hereto.
6. WITHHOLDING TAX LIABILITY. The Employee agrees to deposit
with the Escrow Agent, if so requested by the Company at its sole discretion, an
amount sufficient to satisfy any withholding tax liability imposed as the result
of the exercise of any option granted hereunder.
7. RIDERS. Riders, if any, annexed hereto form a part of the
terms and conditions of this Agreement.
IN WITNESS WHEREOF, the Company and the Employee have duly
executed this Option Agreement, all as of the day and year first above written.
GP STRATEGIES CORPORATION
BY: _____________________________
Name:
Title:
EMPLOYEE
-----------------------------
Name:
<PAGE>
EXHIBIT B
GENERAL ASSIGNMENT AND BILL OF SALE
THIS ASSIGNMENT AND BILL OF SALE is entered into this ___ day
of July, 1998, by and between GENERAL PHYSICS CORPORATION, a Delaware
corporation ("Purchaser"), and THE DELTAPOINT CORPORATION, a Washington
corporation ("Seller").
WHEREAS, Purchaser and Seller have entered into an Asset
Purchase Agreement, dated as of July ___, 1998 (the "Asset Purchase Agreement";
capitalized terms not defined herein shall have the meanings ascribed to them in
the Asset Purchase Agreement), pursuant to which Seller has agreed to sell,
transfer, convey, assign and deliver to Purchaser and Purchaser has agreed to
purchase from Seller substantially all of the assets used or held for use by
Seller, and Purchaser has agreed, in partial consideration therefor, to assume
certain obligations in connection therewith by executing an Assumption Agreement
of even date herewith;
WHEREAS, Seller desires to transfer and assign to Purchaser
the assets described below pursuant to Section 1.01 of the Asset Purchase
Agreement and Purchaser desires to accept the sale, transfer, conveyance,
assignment and delivery thereof;
NOW, THEREFORE, for and in consideration of the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller hereby
irrevocably sells, transfers, conveys, assigns and delivers to Purchaser free
and clear of all Liens, except for Permitted Liens, all of Seller's right, title
and interest in, to and under the following Assets of Seller used or held for
use in connection with the Business, as the same shall exist on the date hereof:
(i) the Real Property Leases, (ii) the Inventory, (iii) the Accounts Receivable,
(iv) the Tangible Personal Property, (v) the Personal Property Leases, (vi) the
Business Contracts, (vii) the Prepaid Expenses, (viii) the Intangible Personal
Property, (ix) the Business Licenses, (x) the Insurance, (xi) the Security
Deposits, (xii) the Business Books and Records, (xiii) the Customer Lists, (xiv)
the Goodwill and (xv) the Other Assets (collectively, the "Assigned Assets"), TO
HAVE AND TO HOLD the same unto Purchaser, its successors and assigns, forever.
It is specifically understood that under this General Assignment and Bill of
Sale, Seller is not transferring to Purchaser any interest in the Excluded
Assets.
Purchaser hereby accepts the sale, transfer, conveyance,
assignment and delivery of the Assigned Assets.
At any time or from time to time after the date hereof, at
Purchaser's reasonable request and without further consideration, Seller shall
execute and deliver to Purchaser such other instruments of sale, transfer,
<PAGE>
conveyance, assignment and confirmation, provide such materials and information
and take such other actions as Purchaser may reasonably deem necessary or
desirable in order more effectively to transfer, convey and assign to Purchaser,
and to confirm Purchaser's title to, all of the Assigned Assets, and, to the
full extent permitted by Law, to put Purchaser in actual possession and
operating control of the Assigned Assets and to assist Purchaser in exercising
all rights with respect thereto.
Seller hereby constitutes and appoints Purchaser the true and
lawful attorney of Seller, with full power of substitution, in the name of
Seller or Purchaser, but on behalf of and for the benefit of Purchaser: (a) to
demand and receive from time to time any and all of the Assigned Assets and to
make endorsements and give receipts and releases for and in respect of the same
and any part thereof; (b) to institute, prosecute, compromise and settle any and
all Actions or Proceedings that Purchaser may deem proper in order to collect,
assert or enforce any claim, right or title of any kind in or to the Assigned
Assets, (iii) to defend or compromise any or all Actions or Proceedings in
respect of any of the Assigned Assets; and (iv) to do all such acts and things
in relation to the matters set forth in the preceding clauses (i) through (iii)
as Purchaser shall deem desirable. Seller hereby acknowledges that the
appointment hereby made and the powers hereby granted are coupled with an
interest and are not and shall not be revocable by it in any manner or for any
reason. Purchaser shall indemnify and hold harmless Seller and its officers,
directors, employees, agents and Affiliates from any and all Losses caused by or
arising out of any breach of Law by Purchaser in its exercise of the aforesaid
powers.
This General Assignment and Bill of Sale may be executed in
any number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
This General Assignment and Bill of Sale shall be governed by
and construed in accordance with the laws of the State of New York applicable to
a contract executed and performed in such State without giving effect to the
conflicts of laws principles thereof, except that if it is necessary in any
other jurisdiction to have the law of such other jurisdiction govern this
General Assignment and Bill of Sale in order for this General Assignment and
Bill of Sale to be effective in any respect, then the laws of such other
jurisdiction shall govern this General Assignment and Bill of Sale to such
extent.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused their duly
authorized officers to execute this General Assignment and Bill of Sale on the
day and year first above written.
GENERAL PHYSICS CORPORATION
By:____________________________
Name: John C. McAuliffe
Title: President
THE DELTAPOINT CORPORATION
By:____________________________
Name: Hope Mathews Wiljanen
Title: President
<PAGE>
EXHIBIT C
THE DELTAPOINT CORPORATION
Officer's Certificate
I, Hope Mathews Wiljanen, President of THE DELTAPOINT
CORPORATION, a Washington corporation ("Seller"), pursuant to Section
1.06(b)(iv) of the Asset Purchase Agreement dated as of July ___, 1998 (the
"Asset Purchase Agreement"; capitalized terms not defined herein shall have the
meanings ascribed to them in the Asset Purchase Agreement) between GENERAL
PHYSICS CORPORATION, a Delaware corporation, and Seller, DO HEREBY CERTIFY on
behalf of Seller that:
(1) Each of the representations and warranties made
by Seller in the Asset Purchase Agreement (other than those made as of
a specified date earlier than the date hereof) is true and correct on
and as of the date hereof as though made on and as of the date hereof,
and each of the representations and warranties made by Seller as of a
specified date earlier than the date hereof was true and correct as of
such earlier date.
(2) Each of the agreements, covenants and obligations
required by the Asset Purchase Agreement to be performed or complied
with by Seller at or before the Closing has been duly performed or
complied with.
IN WITNESS WHEREOF, Seller has caused this Certificate to be
executed on its behalf by the undersigned on and as of the ____ day of July,
1998.
THE DELTAPOINT CORPORATION
By:___________________________
Name: Hope Mathews Wiljanen
Title: President
<PAGE>
EXHIBIT D
THE DELTAPOINT CORPORATION
Secretary's Certificate
I, Hope Mathews Wiljanen, Secretary of THE DELTAPOINT
CORPORATION, a Washington corporation ("Seller"), pursuant to Section 1.06(b)(v)
of the Asset Purchase Agreement dated as of July ___, 1998 (the "Asset Purchase
Agreement") between GENERAL PHYSICS CORPORATION, a Delaware corporation, and
Seller, DO HEREBY CERTIFY on behalf of Seller as follows:
(1) Attached hereto as Exhibit A is a true, complete
and correct copy of the Amended and Restated Articles of Incorporation
of Seller and all amendments thereto (as so amended, the "Articles of
Incorporation"), and no amendment to the Articles of Incorporation has
been authorized or become effective since the date of the last of such
amendments, no amendment or other document relating to or affecting the
Articles of Incorporation has been filed in the office of the Secretary
of State of the State of Washington since such date and no action has
been taken by Seller, its shareholders, directors or officers in
contemplation of the filing of any such amendment or other document or
in contemplation of the liquidation or dissolution of Seller.
(2) Attached hereto as Exhibit B is a true, complete
and correct copy of the By-Laws of Seller as in full force and effect
on the date hereof and at all times since May 1, 1998.
(3) Attached hereto as Exhibit C is a true, complete
and correct copy of resolutions adopted by the Board of Directors of
Seller with respect to the Asset Purchase Agreement and the Operative
Agreements to which it is a party and the transactions contemplated
thereby, which resolutions were duly and validly adopted at a meeting
of the Board of Directors of Seller on July ___, 1998, at which a
quorum was present and acting throughout. All such resolutions are in
full force and effect on the date hereof in the form in which adopted
and no other resolutions have been adopted by the Board of Directors of
Seller or any committee thereof relating to the Asset Purchase
Agreement and the Operative Agreements to which it is a party and the
transactions contemplated thereby.
(4) Each of the following named individuals is a duly
elected or appointed, qualified and acting officer of Seller who holds,
and at all times since July ___, 1998 has held, the offices set
opposite such individual's name, and the signature written opposite the
name and title of such officer is such officer's genuine signature:
Hope Mathews Wiljanen President ______________________
Hope Mathews Wiljanen Secretary ______________________
Hope Mathews Wiljanen Treasurer ______________________
Robert P. Boehm Assistant Secretary ______________________
IN WITNESS WHEREOF, Seller has caused this Certificate to be
executed on its behalf by the undersigned on and as of the ____ day of July,
1998.
THE DELTAPOINT CORPORATION
By:___________________________
Name: Hope Mathews Wiljanen
Title:President, Secretary and
Treasurer
I, Robert P. Boehm, Assistant Secretary of Seller, DO HEREBY
CERTIFY on behalf of Seller that Hope Mathews Wiljanen is the duly elected or
appointed, qualified and acting President, Secretary and Treasurer of Seller,
and the signature set forth above is the genuine signature of such officer.
-------------------------
Name: Robert P. Boehm
Title: Assistant Secretary
<PAGE>
EXHIBIT E
CERTIFICATION OF NONFOREIGN STATUS
Section 1445 of the Internal Revenue Code provides that a
transferee of a U.S. real property interest must withhold tax if the transferor
is a foreign person. To inform the transferee that withholding of tax is not
required upon the disposition of a U.S. real property interest by The Deltapoint
Corporation (the "Company"), the undersigned hereby certifies the following on
behalf of the Company:
1. The Company is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations);
2. The U.S. employer identification number for the Company is
91-1235393; and
3. The office address for the Company is 777 108th Avenue,
Suite 1700, Bellevue, Washington, 98004-5118.
The Company understands that this certification may be
disclosed to the Internal Revenue Service by the transferee and that any false
statement contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury, I declare that I have examined
this certification and to the best of my knowledge and belief it is true,
correct and complete, and I further declare that I have authority to sign this
document on behalf of the Company.
THE DELTAPOINT CORPORATION
July ___, 1998 By:
Name: Hope Mathews Wiljanen
Title: President
<PAGE>
EXHIBIT F
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT is entered into this ___ day of
July, 1998 by and between GENERAL PHYSICS CORPORATION, a Delaware corporation
("Purchaser"), and THE DELTAPOINT CORPORATION, a Washington corporation
("Seller").
WHEREAS, Purchaser and Seller have entered into an Asset
Purchase Agreement, dated as of July ___, 1998 (the "Asset Purchase Agreement";
capitalized terms not defined herein shall have the meanings ascribed to them in
the Asset Purchase Agreement), pursuant to which Seller has agreed to sell,
transfer, convey, assign and deliver to Purchaser and Purchaser has agreed to
purchase from Seller substantially all of the assets used or held for use by
Seller in connection with the conduct of the business, and Purchaser has agreed,
in partial consideration therefor, to assume certain obligations in connection
therewith by executing an Assumption Agreement of even date herewith;
WHEREAS, pursuant to Section 1.06(c) of the Asset Purchase
Agreement, Purchaser is required to execute and deliver to Seller this Agreement
whereby Purchaser assumes such obligations;
NOW, THEREFORE, for and in consideration of the mutual
covenants contained herein and other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, Purchaser hereby undertakes
and agrees from and after the date hereof, subject to the limitations contained
herein, to assume and to pay, perform and discharge when due the Assumed
Liabilities.
Nothing contained herein shall require Purchaser to pay or
discharge any debts or obligations expressly assumed hereby so long as Purchaser
shall in good faith contest or cause to be contested the amount or validity
thereof.
Other than as specifically stated above or in the Asset
Purchase Agreement, Purchaser assumes no debt, liability or obligation of
Seller, including without limitation the Retained Liabilities, by this
Agreement, and it is expressly understood and agreed that all debts, liabilities
and obligations not assumed hereby by Purchaser shall remain the sole obligation
of Seller, its successors and assigns.
No Person other than Seller, its successors and assigns shall
have any rights under this Agreement or the provisions contained herein.
<PAGE>
This Assumption Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
This Assumption Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to a contract
executed and performed in such State without giving effect to the conflicts of
laws principles thereof, except that if it is necessary in any other
jurisdiction to have the law of such other jurisdiction govern this Assumption
Agreement in order for this Assumption Agreement to be effective in any respect,
then the laws of such other jurisdiction shall govern this Assumption Agreement
to such extent.
IN WITNESS WHEREOF, the undersigned have caused their duly
authorized officers to execute this Assumption Agreement on the day and year
first above written.
GENERAL PHYSICS CORPORATION
By:____________________________
Name: John C. McAuliffe
Title: President
THE DELTAPOINT CORPORATION
By:____________________________
Name: Hope Mathews Wiljanen
Title: President
<PAGE>
EXHIBIT G
GENERAL PHYSICS CORPORATION
Officer's Certificate
I, John C. McAuliffe, President of GENERAL PHYSICS
CORPORATION, a Delaware corporation ("Purchaser"), pursuant to Section
1.06(c)(iii) of the Asset Purchase Agreement dated as of July ___, 1998 (the
"Asset Purchase Agreement"; capitalized terms not defined herein shall have the
meanings ascribed to them in the Asset Purchase Agreement) between Purchaser and
THE DELTAPOINT CORPORATION, a Washington corporation, DO HEREBY CERTIFY on
behalf of Purchaser that:
(1) Each of the representations and warranties made
by Purchaser in the Asset Purchase Agreement is true and correct on and
as of the date hereof as though made on and as of the date hereof.
(2) Each of the agreements, covenants and obligations
required by the Asset Purchase Agreement to be performed or complied
with by Purchaser at or before the Closing has been duly performed or
complied with.
IN WITNESS WHEREOF, Purchaser has caused this Certificate to
be executed on its behalf by the undersigned on and as of the ___ day of July,
1998.
GENERAL PHYSICS CORPORATION
By:___________________________
Name: John C. McAuliffe
Title: President
<PAGE>
EXHIBIT H
GENERAL PHYSICS CORPORATION
Secretary's Certificate
I, Kenneth L. Crawford, Secretary of GENERAL PHYSICS
CORPORATION, a Delaware corporation ("Purchaser"), pursuant to Section
1.06(c)(iv) of the Asset Purchase Agreement dated as of July ___, 1998 (the
"Asset Purchase Agreement") between Purchaser and THE DELTAPOINT CORPORATION, a
Washington corporation, DO HEREBY CERTIFY on behalf of Purchaser as follows:
(1) Attached hereto as Exhibit A is a true, complete
and correct copy of the Restated Certificate of Incorporation of
Purchaser and all amendments thereto (as so amended, the "Certificate
of Incorporation"), and no amendment to the Certificate of
Incorporation has been authorized or become effective since the date of
the last of such amendments, no amendment or other document relating to
or affecting the Certificate of Incorporation has been filed in the
office of the Secretary of State of the State of Delaware since such
date and no action has been taken by Purchaser, its stockholders,
directors or officers in contemplation of the filing of any such
amendment or other document or in contemplation of the liquidation or
dissolution of Purchaser.
(2) Attached hereto as Exhibit B is a true, complete
and correct copy of the By-Laws of Purchaser as in full force and
effect on the date hereof and at all times since ___________.
(3) Attached hereto as Exhibit C is a true, complete
and correct copy of resolutions adopted by the Board of Directors of
Purchaser with respect to the Asset Purchase Agreement and the
Operative Agreements to which it is a party and the transactions
contemplated thereby, which resolutions were duly and validly adopted
by the Board of Directors of Purchaser on July ___, 1998. All such
resolutions are in full force and effect on the date hereof in the form
in which adopted and no other resolutions have been adopted by the
Board of Directors of Purchaser or any committee thereof relating to
the Asset Purchase Agreement and the Operative Agreements to which it
is a party and the transactions contemplated thereby.
(4) Each of the following named individuals is a duly
elected or appointed, qualified and acting officer of Purchaser who
holds, and at all times since July ___, 1998 has held, the office set
opposite such individual's name, and the signature written opposite the
name and title of such officer is such officer's genuine signature:
John C. McAuliffe President _______________________________
Kenneth L. Crawford Secretary _______________________________
IN WITNESS WHEREOF, Purchaser has caused this Certificate to
be executed on its behalf by the undersigned on and as of the ____ day of July,
1998.
GENERAL PHYSICS CORPORATION
By:___________________________
Name: Kenneth L. Crawford
Title: Secretary
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I, John C. McAuliffe, President of Purchaser, DO HEREBY
CERTIFY on behalf of Purchaser that Kenneth L. Crawford is the duly elected or
appointed, qualified and acting Secretary of Purchaser, and the signature set
forth above is the genuine signature of such officer.
-------------------------
Name: John C. McAuliffe
Title: President
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EXHIBIT I
OPINION OF PRESTON GATES & ELLIS LLP
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EXHIBIT J
EMPLOYMENT AGREEMENT
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EXHIBIT K
OPINION OF MORGAN, LEWIS & BOCKIUS LLP
July __, 1998
The Deltapoint Corporation
777 108th Avenue
Suite 1700
Bellevue, Washington 98004-5118
Ladies and Gentlemen:
We have acted as counsel to General Physics Corporation, a
Delaware corporation ("Purchaser"), in connection with the Asset Purchase
Agreement, dated as of July ___, 1998 (the "Asset Purchase Agreement"), between
Purchaser and The Deltapoint Corporation, a Washington corporation. Capitalized
terms not defined herein shall have the meanings ascribed to them in the Asset
Purchase Agreement.
We have examined originals, or copies certified or otherwise
identified to our satisfaction, of such documents, corporate records and other
instruments as we have deemed necessary or appropriate for purposes of this
opinion, including (a) the Asset Purchase Agreement, (b) certain certificates of
officers of Purchaser as to certain factual matters and (c) such other
documents, records and other instruments as we have deemed necessary or
appropriate for the basis of this opinion.
Based upon the foregoing, we are of the opinion that:
1. Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to carry on its business as now conducted and
to acquire the Assets.
2. The Asset Purchase Agreement and the Operative Agreements
have been duly and validly executed and delivered by Purchaser and constitute
legal, valid and binding obligations of Purchaser enforceable against Purchaser
in accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
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3. Purchaser has full corporate power and authority to execute
and deliver the Asset Purchase Agreement and the Operative Agreements, to
perform its obligations thereunder and to consummate the transactions
contemplated thereby. All corporate action required to be taken by the Purchaser
on or before the Closing in connection with the Asset Purchase Agreement and the
Operative Agreements and the transactions contemplated thereby have been duly
taken.
4. The execution and delivery by Purchaser of, and the
performance by Purchaser of its obligations under the Asset Purchase Agreement
and the Operative Agreements, does not conflict with or violate the Certificate
of Incorporation or By-laws of Purchaser.
We render this opinion as members of the Bar of the State of
New York, and we express no opinion as to any matters governed by any laws other
than the laws of the State of New York, the General Corporation Law of the State
of Delaware and the federal laws of the United States of America.
Very truly yours,
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Contact: Scott N. Greenberg John McAuliffe
GP Strategies Corporation GP Strategies Corporation
Executive Vice President Senior Vice President
(212) 230-9529 (410) 290-2708
GP STRATEGIES ACQUIRES THE DELTAPOINT CORPORATION
FOR IMMEDIATE RELEASE:
New York, New York, July 13, 1998, . . . . GP Strategies Corporation (NYSE:GPX)
announced today that its wholly-owned subsidiary, General Physics Corporation
("GP") has acquired substantially all of the operations and assets of The
Deltapoint Corporation ("Deltapoint"), a Seattle, Washington, based management
consulting firm focused on large systems change and lean-enterprise, with
primarily fortune 500 clients operating in the aerospace, pharmaceutical,
manufacturing, health care and telecommunication industries, for approximately
$6.3 million in cash and a future earnout. Deltapoint's annual revenues grew by
more than 300% from 1995 through 1997 to approximately $13 million. Based upon
current performance it is anticipated that the acquisition of Deltapoint will
increase GP Strategies 1999 pretax income by in excess of $1 million after
deducting interest and amortization expense.
Jerome I. Feldman, the Chief Executive Officer and President of GP Strategies
Corporation, said that "The acquisition of The Deltapoint Corporation and its
high caliber cadre of consultants substantially strengthens General Physics
Corporation's capability to provide change management and lean-enterprise
consulting services on a national scale at the highest level of corporate
management, as well as providing immediate diversity into the aerospace industry
in the northwestern United States. We are very excited about the prospects for
this business as it expands into other parts of the country and into GP's
existing client base. This acquisition complements GP's already strong
performance improvement services, and should make GP a stronger competitor in
the performance improvement marketplace."
GP Strategies Corporation's principal operating subsidiary, General Physics
Corporation, now with over 2,100 employees located in more than 75 offices
worldwide, provides performance improvement services to Fortune 500 companies,
manufacturing and process industries, electric power utilities, and other
commercial and governmental customers.
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The forward-looking statements contained herein reflect GP Strategies'
management's current views with respect to future events and financial
performance. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those in
the forward-looking statements, all of which are difficult to predict and many
of which are beyond the control of GP Strategies, including, but not limited to,
the risks that the acquisition of The Deltapoint Corporation will not achieve
the commercial advantages anticipated by GP Strategies, such as the production
of significant revenues or profits for GP Strategies, the successful expansion
of Deltapoint's services to other clients and parts of the country, and those
risks and uncertainties detailed in GP Strategies' periodic reports and
registration statements filed with the Securities and Exchange Commission.
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