<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1998
-------------
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 0-14951
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BUTLER INTERNATIONAL, INC.
--------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 06-1154321
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 Summit Avenue, Montvale, New Jersey 07645
----------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 573-8000
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X . No .
----- -----
As of July 30, 1998, 6,443,543 shares of the registrant's common stock, par
value $.001 per share, were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
--------------------
(A) Consolidated Balance Sheets - June 30, 1998 (Unaudited) and December 31,
1997
(B) Consolidated Statements of Operations (Unaudited) - quarter ended June 30,
1998 and quarter ended June 30, 1997
(C) Consolidated Statements of Operations (Unaudited) six months ended June
30, 1998 and six months ended June 30, 1997
(D) Consolidated Statements of Cash Flows (Unaudited) - six months ended June
30, 1998 and six months ended June 30, 1997
(E) Notes to Consolidated Financial Statements (Unaudited)
2
<PAGE>
BUTLER INTERNATIONAL, INC.
--------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(in thousands except share data)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash $ 615 $ 914
Accounts receivable, net 65,517 54,827
Inventories 1,700 2,196
Other current assets 4,664 4,687
-------- --------
Total current assets 72,496 62,624
Property and equipment, net 16,111 15,613
Other assets and deferred charges 2,211 1,907
Excess cost over net assets of
businesses acquired, net 40,773 24,572
-------- --------
Total assets $131,591 $104,716
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 37,116 $ 28,153
Current portion of long-term debt 1,576 920
-------- --------
Total current liabilities 38,692 29,073
-------- --------
Revolving credit facility 21,183 20,985
Other long-term debt 18,929 6,517
Other long-term liabilities 3,584 3,052
Stockholders' equity:
Preferred stock: par value $.001 per share,
authorized 5,000,000: Series B 7% Cumulative
Convertible, authorized 3,500,000; issued
2,911,818 in 1998 and 2,814,133 in 1997
(Aggregate liquidation preference $2,912
in 1998 and $2,814 in 1997) 3 3
Common stock: par value $.001 per share,
authorized 83,333,333; issued 6,443,543
at June 30, 1998 and 6,380,023 at
December 31, 1997 6 6
Additional paid-in capital 94,948 94,710
Accumulated deficit (45,726) (49,566)
Cumulative foreign currency translation
adjustment (28) (64)
-------- ------------
Total stockholders' equity 49,203 45,089
-------- ------------
Total liabilities and stockholders' equity $131,591 $104,716
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
BUTLER INTERNATIONAL, INC.
--------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(in thousands except per share data)
(Unaudited)
Quarter Ended June 30,
----------------------
1998 1997
---- -----
Net sales $112,948 $108,419
Cost of sales 91,986 91,862
-------- --------
Gross margin 20,962 16,557
Depreciation and amortization 1,011 668
Selling, general and administrative expenses 14,994 12,756
-------- --------
Operating income 4,957 3,133
Interest expense (1,070) (1,118)
-------- --------
Income before income taxes 3,887 2,015
Income taxes 1,178 212
-------- --------
Net income $ 2,709 $ 1,803
======== ========
Net income per share:
Basic $ .41 $ .29
Diluted $ .35 $ .24
Average number of common shares and dilutive
common share equivalents outstanding:
Basic 6,443 6,156
Diluted 7,833 7,462
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
BUTLER INTERNATIONAL, INC.
--------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(in thousands except per share data)
(Unaudited)
Six Months Ended June 30,
-------------------------
1998 1997
-------- --------
Net sales $219,671 $213,116
Cost of sales 180,501 180,975
-------- --------
Gross margin 39,170 32,141
Depreciation and amortization 1,832 1,339
Selling, general and administrative expenses 29,625 25,523
-------- --------
Operating income 7,713 5,279
Interest expense (2,063) (2,319)
-------- --------
Income before income taxes 5,650 2,960
Income taxes 1,712 316
-------- --------
Net income $ 3,938 $ 2,644
======== ========
Net income per share:
Basic $ .60 $ .41
Diluted $ .51 $ .35
Average number of common shares and dilutive
common share equivalents outstanding:
Basic 6,432 6,156
Diluted 7,797 7,468
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
BUTLER INTERNATIONAL, INC.
--------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(in thousands)
(Unaudited)
Six Months Ended June 30,
-------------------------
1998 1997
-------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,938 $ 2,644
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and excess purchase
price amortization 1,831 1,339
Amortization of deferred financing 24 98
Foreign currency translation 36 (70)
(Increase) decrease in assets,
increase (decrease) in liabilities:
Accounts receivable (10,690) (4,411)
Inventories 496 (75)
Other current assets 23 (836)
Other assets (328) (277)
Current liabilities 8,976 9,652
Other long-term liabilities 532 (2,900)
-------- -------
Net cash provided by operating activities 4,838 5,164
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures - net (1,589) (491)
Cost of businesses acquired (16,941) (341)
Expenses paid in conjunction with
discontinued operations (14) (67)
-------- -------
Net cash used in investing activities (18,544) (899)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) under
financing agreements 13,266 (3,415)
Net proceeds from the issuance of
common stock 141 84
-------- -------
Net cash provided by (used in)
financing activities 13,407 (3,331)
-------- -------
Net (decrease) increase in cash (299) 934
Cash at beginning of period 914 229
-------- -------
Cash at end of period $ 615 $ 1,163
======== =======
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
BUTLER INTERNATIONAL, INC.
--------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(Unaudited)
NOTE 1 - PRESENTATION:
The consolidated financial statements include the accounts of Butler
International, Inc. ("the Company") and its wholly-owned subsidiaries.
Significant intercompany balances and transactions have been eliminated.
Certain amounts from prior period consolidated financial statements have been
reclassified in the accompanying consolidated financial statements to conform
with the current period presentation.
The accompanying financial statements are unaudited, but, in the opinion of
management, reflect all adjustments, which include normal recurring accruals,
necessary to present fairly the financial position, results of operations and
cash flows at June 30, 1998 and for all periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in conformity with generally accepted accounting principles
have been condensed or omitted. Accordingly, this report should be read in
conjunction with the Company's annual report on Form 10-K for the year ended
December 31, 1997.
NOTE 2 - EARNINGS PER SHARE:
As required, in the fourth quarter of 1997, the Company adopted the provisions
of Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share". The standard specifies the computation, presentation and disclosure
requirements for earnings per share. The following table presents the
computation of basic and diluted earnings per common share as required by SFAS
No. 128 (in thousands, except per share data).
<TABLE>
<CAPTION>
Quarter ended June 30, Six months ended June 30,
---------------------- -------------------------
1998 1997 1998 1997
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Basic Earnings per Share:
- ------------------------
Income available to common
Shareholders $2,660 $1,758 $3,840 $2,553
------ ------ ------ ------
Weighted average common shares
outstanding 6,443 6,156 6,432 6,156
------ ------ ------ ------
Basic earnings per common share $ .41 $ .29 $ .60 $ .41
====== ====== ====== ======
Diluted Earnings per Share:
- ---------------------------
Income available to common
Shareholders assuming conversio
of preferred stock $2,709 $1,803 $3,938 $2,644
------ ------ ------ ------
Weighted average common shares
outstanding 6,443 6,156 6,432 6,156
Common stock equivalents 560 531 535 537
Assumed conversion of preferred
stock 830 775 830 775
------ ------ ------ ------
Total weighted average common
shares 7,833 7,462 7,797 7,468
------ ------ ------ ------
Diluted earnings per common share $ .35 $ .24 $ .51 $ .35
====== ====== ====== ======
</TABLE>
NOTE 3 - COMMON STOCK:
During the first six months of 1998, the Company issued 65,666 shares of common
stock upon the exercise of common stock options and warrants and retired 2,146
shares of common stock.
7
<PAGE>
NOTE 4 - CONTINGENCIES:
The Company and its subsidiaries are parties to various legal proceedings and
claims incidental to its normal business operations for which no material
liability is expected beyond that which is recorded. While the ultimate
resolution of these matters is not known, management does not expect that the
resolution of such matters will have a material adverse effect on the Company's
financial statements and results of operations.
NOTE 5 - ACQUISITIONS:
On March 3, 1998, the Company acquired the operations of Argos Adriatic
Corporation ("Argos"), a Silicon Valley information technology ("IT") company
headquartered in Fremont, CA. The purchase price includes $5.1 million paid in
cash ($4.1 million charged against the Company's acquisition line and $1.0
million against the revolving credit facility), plus a contingent payout to be
paid over three years based on the future earnings of Argos in excess of certain
annual thresholds. Argos provides a variety of IT support services to a wide
range of clients in Northern California, and generates approximately $10 million
in annual revenues. Argos currently has a staff of approximately 90 full-time
employees. Argos' President and its Chief Operating Officer will continue to
manage the business.
On April 1, 1998, the Company acquired the operations of Norwood Computer
Services, Inc. ("Norwood") an IT services company headquartered in Hicksville,
NY. The purchase price includes $8.4 million paid in cash ($6.7 million drawn
down on the acquisition line and $1.7 charged to the revolving credit facility),
plus a contingent payout to be paid over three years based on the future
earnings of Norwood in excess of certain annual thresholds. Norwood has been
serving a wide range of mid-sized and Fortune 500 companies in the New York
metropolitan area since 1978 and currently generates approximately $17 million
in annual revenues through a staff of approximately 120 consultants.
On June 2, 1998, the Company's Telecommunication Services operation acquired WCC
Telephone Services, Inc. ("WCC") a California based telecommunications services
company. WCC specializes in central office services for customers such as
Pacific Bell and Northern Telecom. It currently generates annual sales of
approximately $2 million. This business will be blended with the existing
Butler Telecom business in Southern California. The purchase price includes
$1.9 million paid in cash ($1.5 million drawn down on the acquisition line and
$0.4 million charged to the revolving credit facility), plus a contingent payout
based on the earnings of WCC for the next year.
Also, on June 2, 1998, the Company's Technology Solutions operation acquired
certain assets of the Reston, VA branch operations of Automated Concepts, Inc.
This business currently has annual sales volume of approximately $3 million.
Its customer base includes MCI, Amtrak and Bell Atlantic. Employees and
consultants of this operations will be merged with the existing Butler office in
McLean, VA. The purchase price was $550,000 of which $440,000 was drawn down on
the acquisition line and $110,000 was charged to the revolving credit facility.
On July 1, 1998, the Company acquired Data Performance, Inc. ("DPI") a Chicago
area IT services business. The transaction will be recorded using the purchase
method of accounting. The purchase price was $10.3 million ($8.2 charged to the
acquisition line and $2.1 charged against the revolving credit facility). DPI
has provided a variety of IT support services to a wide range of customers in
the Chicago marketplace for the past eleven years. Its offerings include
contract programming, software consulting, IT staffing and Year 2000 project
work. DPI currently generates approximately $10 million in annual revenues
through its staff of 80 consultants. This acquisition is not included in the
financial statements as of June 30, 1998.
8
<PAGE>
On August 5, 1998, the Company completed the acquisition of ISL International,
Inc. ("ISL"), an IT services company headquartered in Iselin, NJ. The
transaction will be recorded using the purchase method of accounting. The
purchase price includes $7.4 million paid in cash ($5.9 charged was drawn down
on acquisition line and $1.5 charged to the revolving credit facility), plus a
multi-year contingent payout based on the future earnings of ISL. ISL has
provided services to a wide range of companies in the metropolitan New York area
since 1978. It currently generates approximately $20 million in annual revenues
through a staff of approximately 150 consultants. This acquisition is not
included in the financial statements as of June 30, 1998.
In connection with these 1998 acquisitions, the Company acquired substantially
all of the operating assets and assumed certain liabilities of the acquired
businesses. Excess cost over net assets of businesses acquired has been
recorded as goodwill and is being amortized over forty years. Sales included in
the Company's financial statements from the businesses acquired for the second
quarter and six months ended June 30, 1998 were $7.6 million and $8.4 million,
respectively.
Pro forma results for the Company, assuming the above acquisitions had been made
at the beginning of each period presented, would not be materially different
from the results reported.
NOTE 6 - RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS:
In June of 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
130, "Reporting Comprehensive Income", which requires comprehensive income to be
included in the financial statements for fiscal years beginning December 15,
1997 and SFAS 131, "Disclosures About Segments of an Enterprise and Related
Information", which requires disclosures of certain information about operating
segments and about products and services, the geographic areas in which a
company operates, and their major customers. The Company has adopted both
standards in 1998. Comprehensive income is defined as total change in
stockholders equity during the period, other than from transactions with
shareholders. For the Company, comprehensive income is comprised of net income
and the net change in cumulative foreign currency translation adjustment, which
was an increase of $1,000 and $21,000 for the quarters ended June 30, 1998 and
1997, respectively and an increase of $36,000 and a decrease of $70,000 for the
six months ended June 30, 1998 and 1997, respectively. Total comprehensive
income was $2,710,000 and $1,824,000 for the three months ended June 30, 1998
and 1997, respectively, and $3,974,000 and $2,574,000 for the six months ended
June 30, 1998 and 1997, respectively. As required by SFAS 131, the Company will
begin reporting under the standard in the 1998 annual report.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
-----------------------------------------------------------------
Financial Condition
- -------------------
RESULTS OF OPERATIONS
- ---------------------
Net income for the second quarter of 1998 increased by 50% to $2.7 million, up
from $1.8 million reported in the second quarter of 1997. Diluted earnings per
share were $.35 in 1998, compared with $.24 in the 1997 second quarter,
reflecting an increase of 46%. Revenues for the 1998 quarter were $112.9
million, compared with $108.4 million recorded in the second quarter of 1997.
Improved business mix and increased volume were the driving forces of the
increased earnings. Gross margins in the second quarter of 1998 were 18.6%
versus 15.3% last year. Significant growth in the Technology Solutions
operation contributed strongly to the quarter-on-quarter improvement, due to the
higher margins of this business. The Company also benefited from improved
margins in its Telecommunications Services and Fleet Services operations.
The revenue growth in the quarter continues to be generated by the Company's
high margin Technology Solutions unit, whose sales grew by 130%. This growth
was the result of increased volume provided by recent acquisitions, as well as
strong internal growth. During the second quarter, all business units, with the
exception of the Contract Technical Services ("CTS") operation, experienced an
increase in volume over the prior year. The Company's lower margin CTS business
decreased as had been expected, with revenues declining by 16% from last year.
For the six months ended June 30, 1998, net income increased by 48.9% to $3.9
million from $2.6 million in 1997. Diluted earnings per share for the period
were $.51, a 45.7% increase over the $.35 recorded in the first six months of
1997. This improvement was primarily due to higher margins. Gross margins in
the 1998 period were 17.8% compared with 15.1% in the comparable period in 1997.
Revenues for the year to date period ended June 30, 1998 were $219.7 million, up
from the $213.1 million recorded in the same period of 1997. Significant growth
in the Company's Technology Solutions business was largely offset by a 13%
decrease in the lower margin CTS operation. Consistent with the results of the
current quarter, all business units, except CTS, registered an increase in
volume over last year.
As part of the Company's initiative to expand its higher margin businesses, the
following acquisitions were completed in 1998.
On March 3, 1998, the Company acquired the operations of Argos Adriatic
Corporation ("Argos"), a Silicon Valley information technology ("IT") company
headquartered in Fremont, CA. Argos provides a variety of IT support services
to a wide range of clients in Northern California, and generates approximately
$10 million in annual revenues. Its service offerings include software
consulting, project management and software related training. Argos' value to
its customers is enhanced by its expertise in the offshore recruiting of
experienced IT professionals. Argos currently has a staff of approximately 90
full-time employees.
On April 1, 1998, the Company acquired the operations of Norwood Computer
Services, Inc. ("Norwood") an IT services company headquartered in Hicksville,
NY. Norwood has been serving a wide range of mid-sized and Fortune 500
companies in the New York metropolitan area since 1978 and currently generates
approximately $17 million in annual revenues through a staff of approximately
120 consultants. Its service offerings include IT staffing as well as software
and application consulting. The Company will now have four key branch locations
serving this market.
On June 2, 1998, the Company acquired WCC Telephone Services, Inc. ("WCC") a
California based telecommunications services company. WCC specializes in
central
10
<PAGE>
office services for customers such as Pacific Bell and Northern Telecom.
It currently generates annual sales of approximately $2 million. This business
will be blended with the existing Butler Telecom business in Southern
California.
Also on June 2, 1998, the Company's Technology Solutions operation acquired
certain assets of the Reston, VA branch operations of Automated Concepts, Inc.
This business currently has annual sales volume of approximately $3 million.
Its customer base includes MCI, Amtrak and Bell Atlantic. Employees and
consultants of this operations will be merged with the existing Butler office in
McLean, VA.
On July 1, 1998, the Company acquired Data Performance, Inc. ("DPI") a Chicago
area IT services business. DPI has provided a variety of IT support services to
a wide range of customers in the Chicago marketplace for the past eleven years.
Its offerings include contract programming, software consulting, IT staffing and
Year 2000 project work. DPI currently generates approximately $10 million in
annual revenues through its staff of 80 consultants.
On August 5, 1998, the Company completed the acquisition of ISL International,
Inc. ("ISL"), an IT services company headquartered in Iselin, NJ. The
transaction will be recorded using the purchase method of accounting. The
purchase price includes $7.4 million paid in cash ($5.9 charged was drawn down
on acquisition line and $1.5 charged to the revolving credit facility), plus a
multi-year contingent payout based on the future earnings of ISL. ISL has
provided services to a wide range of companies in the metropolitan New York area
since 1978. It currently generates approximately $20 million in annual revenues
through a staff of approximately 150 consultants. This acquisition is not
included in the financial statements as of June 30, 1998.
These acquisitions are expected to be accretive to earnings in 1998.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's primary sources of funds are generated from operations and
borrowings under its revolving credit facility and acquisition line of credit.
As of June 30, 1998, $21.2 million was outstanding under the credit facility,
with an additional $5.5 million used to collateralize letters of credit and
$12.6 million was outstanding on the acquisition line. Proceeds from the credit
facility are used by the Company to finance its internal business growth,
working capital, capital expenditures and acquisitions.
The Company's revolving credit facility with General Electric Capital
Corporation ("GECC") provides up to $50.0 million in loans, including $9.0
million for letters of credit. The interest rate in effect at the end of the
second quarter of 1998 was 185 basis points above the 30 day commercial paper
rate. Interest reductions are available based upon the Company achieving
certain financial results. The interest rate in effect on June 30, 1998, was
7.35%. As of June 30, 1998, $21.2 million was outstanding under the credit
facility, and an additional $5.5 million was used to collateralize letters of
credit. The Company has guaranteed all obligations incurred or created under
the credit facility. The Company is required to comply with certain affirmative
and financial covenants. The Company is in compliance with the aforementioned
covenants.
In addition to the revolving credit facility, the Company has a $25.0 million
acquisition line of credit with GECC which bears interest at 300 basis points
above the 30 day commercial paper rate. The interest rate in effect on June 30,
1998, was 8.53%. The outstanding balance of the acquisition line at June 30,
1998, was $12.6 million. The total cost of business acquired during the first
six months of 1998 was $16.9 million, of which $12.6 million was drawn against
the acquisition line. On July 1, 1998, an additional $8.2 million was drawn down
on the acquisition line for the DPI acquisition (see Note 5 of the consolidated
financial statements).
11
<PAGE>
The Company believes that its operating cash flow and credit facilities will
provide sufficient liquidity for at least the next twelve months.
In November 1997, the Company closed on a 7 year mortgage for its corporate
office facility. The mortgage consists of a $6.4 million loan that is repayable
based upon a 15 year amortization schedule and a $375,000 loan that is repayable
based on a 4 year schedule. The variable interest rate on these loans is one
month Libor plus 225 basis points. The Company entered into an interest rate
swap agreement with its mortgage holder. The Company makes monthly interest
payments at the fixed rates of 8.6% and 8.42% on the $6.4 million and $375,000
loans, respectively. The Company receives payments based upon the one month
Libor plus 225 basis points. The net gain or loss from the exchange of interest
rate payments is included in interest expense.
Information contained in this Management's Discussion and Analysis of Results of
Operations and Financial Condition, other than historical information, may be
considered forward-looking in nature, as such it is based upon certain
assumptions and is subject to various risks and uncertainties, which may not be
controllable by the Company. To the extent that these assumptions prove to be
incorrect, or should any of these risks or uncertainties materialize, the actual
results may vary materially from those which were anticipated.
12
<PAGE>
PART II - OTHER INFORMATION
Item
1. Legal Proceedings - None
2. Changes in Securities - None
3. Defaults Upon Senior Securities - None
4. Submission of Matters to a Vote of Security Holders At the Annual
Meeting of Stockholders held on May 7, 1998, a quorum, consisting of
approximately 90% of the Company's common and preferred stock
outstanding and entitled to vote at the meeting, was present in person
or by proxy. At the meeting, the following proposals were approved by
the stockholders: Proposal #1 Nikhil S. Nagaswami was re-elected as a
Fifth Class Director. Edward M. Kopko, John F. Hegarty, Frederick H.
Kopko, Jr. and Hugh G. McBreen continue to serve as directors. Proposal
#2 To amend the 1992 Stock Option Plan, 1992 Incentive Stock Option
Plan, and the 1992 Stock Bonus Plan. Proposal #3 To amend the 1992
Stock Option Plan for Non-Employee Directors.
FOR WITHHELD
--------- --------
Proposal #1 8,001,830 270,213
FOR AGAINST ABSTAIN
---------- --------- ---------
Proposal #2 6,868,072 1,363,773 21,581
Proposal #3 7,110,936 1,118,113 24,377
5. Other Information - None
6. Exhibits and Reports on Form 8-K
(a) Exhibit list and exhibits attached
(b) Reports on Form 8-K - None
13
<PAGE>
SIGNATURES
Pursuant to the requirement 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.
BUTLER INTERNATIONAL, INC.
--------------------------
(Registrant)
August 13, 1998 By: /s/ Edward M. Kopko
--------------------------------
Edward M. Kopko
Chairman and Chief Executive
Officer
August 13, 1998 By: /s/ Michael C. Hellriegel
--------------------------------
Michael C. Hellriegel
Senior Vice President and Chief
Financial Officer
14
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
3.1 Articles of Incorporation of the Registrant, as amended, filed as
Exhibit No. 3(a) to the Registrant's Registration Statement on
Form S-4, Registration No. 33-10881 (the "S-4"), and hereby
incorporated by reference.
3.2 By-laws of the Registrant, as amended, filed as Exhibit 3.2 to
the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997 (the "1997 10-K"), and hereby incorporated by
reference.
4.1 Specimen Stock Certificate for the Registrant's common stock, par
value $.001 per share, filed as Exhibit No. 4.1 to the
Registrant's Registration Statement on Form S-1, Registration No.
33-2479 (the "S-1"), and hereby incorporated by reference.
4.2 Articles Supplementary to the Articles of Incorporation of the
Registrant's 7 1/2% Senior Cumulative Convertible Preferred
Stock, filed as Exhibit No. 4.1 to Form 10-Q for the period ended
September 27, 1992, and hereby incorporated by reference.
4.3 Specimen Stock Certificate representing the Registrant's Series B
7% Cumulative Convertible Preferred Stock, par value $.001 per
share, filed as Exhibit No. 4.5 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1992 (the "1992 10-
K"), and hereby incorporated by reference.
10.1* Incentive Stock Option Plan of the Registrant, as amended, filed
as Exhibit No. 10.1 to the 1990 10-K, and hereby incorporated by
reference.
10.2* Stock Option Plan of the Registrant, as amended, filed as Exhibit
No. 10.2 to the 1990 10-K, and hereby incorporated by reference.
10.3* 1989 Directors Stock Option Plan of the Registrant, dated
November 1, 1988, as amended, filed as Exhibit 10.18 to the 1990
10-K, and hereby incorporated by reference.
10.4* Stock Purchase Agreement, dated September 19, 1990, between North
American Ventures, Inc. and Edward M. Kopko, filed as Exhibit
10.31 to the 1990 10-K, and hereby incorporated by reference.
10.5* Plan Pledge Agreement, dated September 19, 1990, between North
American Ventures, Inc. and Edward M. Kopko, filed as Exhibit No.
10.32 to the 1990 10-K, and hereby incorporated by reference.
10.6* Plan Promissory Note, dated January 16, 1991, executed by Edward
M. Kopko, and made payable to the order of North American
Ventures, Inc. in the amount of $445,000, filed as Exhibit No.
10.33 to the 1990 10-K, and hereby incorporated by reference.
10.7* Pledge Agreement, dated January 16, 1991, between North American
Ventures, Inc. and Edward M. Kopko, filed as Exhibit No. 10.34 to
the 1990 10-K, and hereby incorporated by reference.
*Denotes compensatory plan, compensation arrangement, or management contract.
E-1
<PAGE>
Exhibit No. Description
- ----------- -----------
10.8* Promissory Note, dated January 16, 1991, executed by Edward M.
Kopko and made payable to the order of North American Ventures,
Inc. in the amount of $154,999.40, filed as Exhibit No. 10.35 to
the 1990 10-K, and hereby incorporated by reference.
10.9* Form of Plan Pledge Agreement, dated September 19, 1990, between
North American Ventures, Inc. and each of John F. Hegarty, Hugh
G. McBreen, and Frederick H. Kopko, Jr. ("Outside Directors"),
filed as Exhibit No. 10.36 to the 1990 10-K, and hereby
incorporated by reference.
10.10* Form of Plan Promissory Note, dated September 19, 1990, each
executed by an Outside Director and each made payable to the
order of North American Ventures, Inc. in the amount of $185,000,
filed as Exhibit No. 10.37 to the 1990 10-K, and hereby
incorporated by reference.
10.11* Form of Stock Purchase Agreement, dated November 4, 1988, between
North American Ventures, Inc. and each of the Outside Directors,
filed as Exhibit No. 10.38 to the 1990 10-K, and hereby
incorporated by reference.
10.12* Form of Pledge Agreement, dated January 16, 1991, between North
American Ventures, Inc. and each of the Outside Directors, filed
as Exhibit No. 10.39 to the 1990 10-K, and hereby incorporated by
reference.
10.13* Form of Promissory Note, dated January 16, 1991, executed by each
of the Outside Directors and each payable to the order of North
American Ventures, Inc., in the amount of $63,000, filed as
Exhibit 10.40 to the 1990 10-K, and hereby incorporated by
reference.
10.14* Form of Pledge Agreement, dated January 16, 1991, between North
American Ventures, Inc. and each of the Outside Directors, filed
as Exhibit No. 10.41 to the 1990 10-K, and hereby incorporated by
reference.
10.15* Form of Promissory Note, dated January 16, 1991, executed by each
of the Outside Directors and each made payable to the order of
North American Ventures, Inc. in the amount of $54,000, filed as
Exhibit No. 10.42 to the 1990 10-K, and hereby incorporated by
reference.
10.16* Form of Promissory Note, dated January 16, 1991, executed by each
of the Outside Directors and each payable to the order of North
American Ventures, Inc., in the amount of $225,450, filed as
Exhibit No. 10.43 to the 1990 10-K, and hereby incorporated by
reference.
10.17* Form of Pledge Agreement, dated January 16, 1991, between North
American Ventures, Inc. and each of the Outside Directors, filed
as Exhibit No. 10.44 to the 1990 10-K, and hereby incorporated by
reference.
10.18* Form of Security Agreement, dated January 16, 1991, between North
American Ventures, Inc. and each of the Outside Directors, filed
as Exhibit No. 10.45 to the 1990 10-K, and hereby incorporated by
reference.
10.19* 1990 Employee Stock Purchase Plan of the Registrant, as amended,
filed as Exhibit No. 10.46 to the 1990 10-K, and hereby
incorporated by reference.
*Denotes compensatory plan, compensation arrangement, or management contract.
E-2
<PAGE>
Exhibit No. Description
- ----------- -----------
10.20* Employment Agreement, dated December 17, 1991, among North
American Ventures, Inc., Butler Service Group, Inc., and Edward
M. Kopko, filed as Exhibit 10.33 to the Registrant's Annual
Report on Form 10-K for the year ended December 29, 1991 (the
"1991 10-K"), and hereby incorporated by reference.
10.21* Stock Purchase Agreement, dated December 17, 1991, between North
American Ventures, Inc. and Edward M. Kopko, filed as Exhibit No.
10.34 to the 1991 10-K, and hereby incorporated by reference.
10.22* Plan Pledge Agreement, dated December 17, 1991, between North
American Ventures, Inc. and Edward M. Kopko, filed as Exhibit No.
10.35 to the 1991 10-K and hereby incorporated by reference.
10.23* Plan Promissory Note, dated December 17, 1991, executed by Edward
M. Kopko, and made payable to the order of North American
Ventures, Inc. in the amount of $84,000, filed as Exhibit No.
10.36 to the 1991 10-K, and hereby incorporated by reference.
10.24* Form of Stock Purchase Agreement, dated December 17, 1991,
between North American Ventures, Inc. and each of the Outside
Directors, filed as Exhibit 10.37 to the 1991 10-K, and hereby
incorporated by reference.
10.25* Form of Plan Pledge Agreement, dated December 17, 1991, between
North American Ventures, Inc. and each of the Outside Directors,
filed as Exhibit 10.38 to the 1991 10-K, and hereby incorporated
by reference.
10.26* Form of Plan Promissory Note, dated December 17, 1991, each
executed by an Outside Director, and each made payable to the
order of North American Ventures, Inc., in the amount of $42,000,
filed as Exhibit No. 10.39 to the 1991 10-K, and hereby
incorporated by reference.
10.27* 1992 Stock Option Plan, filed as Exhibit 10.40 to the 1992 10-K,
and hereby incorporated by reference.
10.28* 1992 Incentive Stock Option Plan, filed as Exhibit 10.41 to the
1992 10-K, and hereby incorporated by reference.
10.29* 1992 Stock Bonus Plan, filed as Exhibit No. 10.42 to the 1992 10-
K, and hereby incorporated by reference.
10.30* 1992 Stock Option Plan for Non-Employee Directors, filed as
Exhibit 10.43 to the 1992 10-K, and hereby incorporated by
reference.
10.31* Butler Service Group, Inc. Employee Stock Ownership Plan and
Trust Agreement, filed as Exhibit No. 19.2 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1987
(the "1987 10-K"), and hereby incorporated by reference.
10.32 Credit Agreement dated as of May 31, 1994 between Butler Service
Group, Inc. and General Electric Credit Corporation, filed as
Exhibit 10.41 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1994 (the "1994 10-K"), and hereby
incorporated by reference.
*Denotes compensatory plan, compensation arrangement, or management contract.
E-3
<PAGE>
Exhibit No. Description
- ----------- -----------
10.33(a) First Amendment Agreement, dated December 14, 1994 among Butler
Service Group, Inc., the Company, Butler Service Group Canada,
Ltd., and General Electric Capital Corporation, filed as Exhibit
10.42(a) to the 1994 10-K, and hereby incorporated by reference.
10.33(b) Second Amendment Agreement, dated March 21, 1995 and effective as
of December 14, 1994, among Butler Service Group, Inc., the
Company, Butler Service Group Canada, Ltd., and General Electric
Capital Corporation, filed as Exhibit 10.42(b) to the 1994 10-K,
and hereby incorporated by reference.
10.33(c) Third Amendment Agreement, dated May 15, 1995 and effective as of
March 31, 1995, among Butler Service Group, Inc., the Company,
Butler Service Group Canada, Ltd., and General Electric Capital
Corporation, filed as Exhibit 10.42(c) to Form 10-Q for the
period ended September 30, 1995, and hereby incorporated by
reference.
10.33(d) Fourth Amendment Agreement, dated August 3, 1995 and effective as
of June 1, 1995, among Butler Service Group, Inc., the Company,
Butler Service Group Canada, Ltd., and General Electric Capital
Corporation, filed as Exhibit 10.42(d) to Form 10-Q for the
period ended September 30, 1995, and hereby incorporated by
reference.
10.33(e) Fifth Amendment Agreement, dated October 4, 1995 and effective as
of September 30, 1995, among Butler Service Group, Inc., the
Company, Butler Service Group Canada, Ltd., and General Electric
Capital Corporation, filed as Exhibit 10.42(e) to Form 10-Q for
the period ended September 30, 1995, and hereby incorporated by
reference.
10.33(f) Sixth Amendment Agreement, dated November 3, 1995 and effective
as of September 30, 1995, among Butler Service Group, Inc., the
Company, Butler Service Group Canada, Ltd., and General Electric
Capital Corporation, filed as Exhibit 10.39(f) to the 1995 10-K,
and hereby incorporated by reference.
10.33(g) Seventh Amendment Agreement, dated December 6, 1995 and effective
as of November 30, 1995, among Butler Service Group, Inc., the
Company, Butler Service Group Canada, Ltd., and General Electric
Capital Corporation, filed as Exhibit 10.39(g) to the 1995 10-K,
and hereby incorporated by reference.
10.33(h) Eighth Amendment Agreement, dated March 26, 1996 and effective as
of December 31, 1995, among Butler Service Group, Inc., the
Company, Butler Service Group Canada, Ltd., and General Electric
Capital Corporation, filed as Exhibit 10.39(h) to the 1995 10-K,
and hereby incorporated by reference.
10.33(i) Ninth Amendment Agreement, dated May 1, 1996, among Butler
Service Group, Inc., the Company, Butler Service Group Canada,
Ltd., and General Electric Capital Corporation, filed as Exhibit
10.38(i) to the 1996 10-K, and hereby incorporated by reference.
10.33(j) Tenth Amendment Agreement, dated June 1, 1996, among Butler
Service Group, Inc., the Company, Butler Service Group Canada,
Ltd., and General Electric Capital Corporation, filed as Exhibit
10.38(j) to the 1996 10-K, and hereby incorporated by reference.
*Denotes compensatory plan, compensation arrangement, or management contract.
E-4
<PAGE>
Exhibit No. Description
- ----------- -----------
10.33(k) Eleventh Amendment Agreement, dated October 31, 1996 and
effective as of September 30, 1996, among Butler Service Group,
Inc., the Company, Butler Service Group Canada, Ltd., and General
Electric Capital Corporation, filed as Exhibit 10.38(k) to the
1996 10-K, and hereby incorporated by reference.
10.34* Employment Agreement dated May 15, 1994 between Butler Fleet
Services, a division of Butler Services, Inc., and James
VonBampus, filed as Exhibit 10.44 to the 1994 10-K, and hereby
incorporated by reference.
10.35* Employment Agreement dated April 18, 1995 between Butler
International, Inc., and Harley R. Ferguson, filed as Exhibit
10.42 to the 1995 10-K, and hereby incorporated by reference.
10.36* Form of Promissory Note dated May 3, 1995 in the original
principal amount of $142,500 executed by Frederick H. Kopko, Jr.
and Hugh G. McBreen, and made payable to the order of Butler
International, Inc., filed as Exhibit 10.43 to the 1995 10-K, and
hereby incorporated by reference.
10.37* Form Pledge Agreement dated May 3, 1995 between Butler
International, Inc. and each of Frederick H. Kopko, Jr. and Hugh
G. McBreen, filed as Exhibit 10.44 to the 1995 10-K, and hereby
incorporated by reference.
10.38 Amended and Restated Credit Agreement, dated November 7, 1997,
between Butler Service Group, Inc. and General Electric Capital
Corporation, filed as Exhibit 10.38 to the 1997 10-K, and hereby
incorporated by reference.
10.39 Credit Agreement, dated November 12, 1997, between Butler of New
Jersey Realty Corp. and Fleet Bank, National Association, filed
as Exhibit 10.39 to the 1997 10-K, and hereby incorporated by
reference.
10.40 Asset Purchase Agreement, dated August 11, 1997, between Butler
Telecom, Inc. and Jack W. Shoemaker, filed as Exhibit 10.40 to
the 1997 10-K, and hereby incorporated by reference.
10.41 Asset Purchase Agreement, dated February 28, 1998 by and between
Butler Telcom, Inc., Argos Adriatic Corporation, Shashi Mahendru
and Vinod Wadhawan, filed as Exhibit 10.41 to the 1997 10-K, and
hereby incorporated by reference.
10.42 Asset Purchase Agreement, dated March 17, 1998, by and between
Butler Telecom, Inc., Norwood Computer Services Inc., Vassilis
Chaimanis and Henry Piscitelli, filed as Exhibit 10.42 to the
1997 10-K, and hereby incorporated by reference.
10.43 Stock Purchase Agreement, dated May 29, 1998, by and among Butler
Telecom, Inc., Tom Cannon, Ted Connolly, Marianne A. Adams, and
Jacqueline Anne Hirst, filed herewith as Exhibit 10.43
10.44 Acquisition Agreement, dated May 27, 1998, between Butler
Telecom, Inc. and Automated Concepts, Inc. filed herewith as
Exhibit 10.44.
10.45 Stock Purchase Agreement, dated June 30, 1998, by and among
Butler Telecom, Inc., Prem Advani, Sharon K. Advani, and Prem
Advani 1997 Charitable Remainder Trust filed herewith as Exhibit
10.45.
E-5
<PAGE>
10.46 Asset Purchase Agreement, dated July 26, 1998, by and between
Butler Telecom, Inc., ISL International, Inc. and Meryvn Haft,
filed herewith as Exhibit 10.46.
27 Financial Data Schedule.
*Denotes compensatory plan, compensation arrangement, or management contract.
E-6
<PAGE>
EXHIBIT 10.43
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the ____ day of May, 1998 by and between Butler Telecom, Inc., a
Delaware corporation,("Buyer"), Tom Cannon, ("Cannon"), Ted Connolly
("Connolly"), Marianne A. Adams("M. Adams"), and Jacqueline Anne Hirst ("J.
Hirst") (Cannon, Connolly, M. Adams and J. Hirst are collectively referred to as
"Sellers").
R E C I T I A L S
- - - - - - - - -
WHEREAS, WCC Telephone Services Inc., ("WCC"), a California
corporation, is engaged in the business of engineering, installing, removing,
testing and auditing of telecommunication systems (the "Business"): and
WHEREAS, Cannon owns 24% of the issued and outstanding shares of WCC;
and
WHEREAS, Connolly owns 24% of the issued and outstanding shares of
WCC; and
WHEREAS, Adams & Hirst, Inc., a California corporation ("Adams &
Hirst"), owns 52% of the issued and outstanding shares of WCC; and
WHEREAS, M. Adams owns 50% of the issued and outstanding shares of
Adams & Hirst; and
WHEREAS, J. Hirst owns 50% of the issued and outstanding shares of
Adams & Hirst; and
WHEREAS, Buyer wishes to purchase and Cannon and Connolly wish to sell
to Buyer, all of the issued and outstanding shares of WCC owned by them on the
terms and conditions set forth below; and
WHEREAS, Buyer wishes to purchase and M. Adams and J. Hirst wish to
sell to Buyer, all of the issued and outstanding shares of stock of Adams &
Hirst owned by them on the terms and conditions set forth below:
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, for and in consideration of the mutual promises herein
made, and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto do hereby agree as follows:
<PAGE>
ARTICLE I
PURCHASE AND SALE OF SHARES
---------------------------
1.1 Purchase and Sale. Subject to the terms and conditions of this
-----------------
Agreement, effective as of 11:59 p.m. Pacific Daylight Time on May 29, 1998 (the
"Closing Date"), (a) Buyer agrees to purchase from Cannon and Connolly, and
Cannon and Connolly agree to sell, assign, transfer and deliver to Buyer, 4,800
of the issued and outstanding shares of stock of WCC, comprising 48% of the
total issued and outstanding shares of stock of WCC (the "WCC Stock"), and (b)
Buyer agrees to purchase from M. Adams and J.Hirst, and M. Adams and J. Hirst
agree to sell, assign, transfer and deliver to Buyer, all of the issued and
outstanding shares of stock of Adams & Hirst, consisting of 10,000 shares of
stock of Adams & Hirst (the "Adams & Hirst Stock").
1.2 Acquired Assets. The Business shall include, without limitation,
-----------------
all of the following assets (the "Assets") of WCC:
(a) Office furniture and equipment, computers, leasehold improvements
and deposits pursuant to leases, as set forth in Schedule 1.2(a).
(b) Computer software owned or licensed by WCC as set forth in
Schedule 1.2(b).
(c) Equipment leases and other agreements, contracts and instruments
as set forth in Schedule 1.2(c).
(d) All subcontractor agreements and agreements with suppliers to
provide consultants to WCC, including, but not limited to, those
set forth in Schedule 1.2(d).
(e) All Client Agreements including, but not limited to, those forth
in Schedule 1.2(e).
1.3 Excluded WCC Assets and Excluded WCC Liabilities.
-------------------------------------------------
(a) Prior to the Closing Date, all receivables or notes from Sellers
or affiliated parties, including, without limitation, the
receivables and notes set forth in Schedule 1.3 (a) ("Excluded
WCC Assets") to the Disclosure Schedules attached hereto (the
"Disclosure Schedules") will be paid off.
(b) Prior to the Closing Date, Sellers and WCC shall pay off the debt
set forth in Schedule 1.3 (b) to the Disclosure Schedules
("Excluded WCC Liabilities").
1.4 Excluded Adams & Hirst Assets and Excluded Adams & Hirst
--------------------------------------------------------
Liabilities.
------------
2
<PAGE>
(a) Prior to the Closing Date, all assets of any kind or nature held
or owned by Adams & Hirst (except for the stock of WCC) ("Excluded
Adams & Hirst Assets") shall be transferred out of Adams & Hirst.
(b) Prior to the Closing Date, all liabilities of any kind or nature
owed by Adams & Hirst ("Excluded Adams & Hirst Liabilities") shall be
paid off.
1.5 Purchase Price. Subject to the Net Equity requirement set forth
--------------
below, Buyer shall pay the Sellers, in full payment for the WCC Stock
and the Adams & Hirst Stock, as follows:
(a) The "Unadjusted Purchase Price." The Unadjusted Purchase Price
-------------------------------
shall be $1,890,000 paid in cash, by cashier's check or wire transfer
at the closing.
(b) Payment of "Net Equity." Within 90 days after the Closing Date,
-----------------------
Buyer will provide to Sellers a balance sheet as of the Closing Date,
prepared on an accrual basis in accordance with general accepted
accounting principles ("GAAP") (the "Closing Date Balance Sheet"),
which Closing Date Balance Sheet shall include, without limitation, a
liability account for income taxes payable. Sellers will work in good
faith with Buyer in providing Buyer the necessary information for
Buyer to prepare the Closing Date Balance Sheet. The Closing Date
Balance Sheet will set forth the Net Equity, as defined below. Buyer
will pay to the Sellers the Net Equity in excess of $240,000, if any,
within 120 days after the Closing Date. Sellers will pay to Buyer the
Net Equity below $240,000, if any, within 120 days after the Closing
Date.
(c) Earnout Payment. Buyer will pay to Sellers on or before August 31,
---------------
1999, an amount equal to 60% (sixty percent) of the Gross Profit, as
defined below for the twelve month period ending May 29, 1999. In the
event that the closing takes place on a date different from May 29,
1998, the date of the Earnout Payment will be adjusted accordingly.
(d) Allocation. All payments hereunder shall be allocated as
----------
follows:24% to Cannon, 24% to Connolly, 26% to M. Adams and 26% to J.
Hirst.
(e) Definitions.
------------
(i) "Net Equity." The term "Net Equity" shall be defined as all assets
----------
less all liabilities of WCC , calculated on an accrual basis in
accordance with GAAP. Excluded WCC Assets and Excluded WCC Liabilities
will not be included
3
<PAGE>
in the determination of Net Equity.
(ii) "Gross Profits". The term "Gross Profits" shall be defined as
all revenues from the Business less all Direct Costs, calculated
on an accrual basis in accordance with GAAP.
(iii) "Direct Costs". The term "Direct Costs" shall be defined as set
------------
forth on Exhibit A. Amounts attributable to each account
described in Exhibit A shall be categorized consistent with
other similar jobs for which the Buyer accounts and any costs
associated with training shall not be taken into account in the
calculation of Direct Costs.
1.6 Stock Free of Liens. The WCC Stock and the Adams & Hirst Stock
-------------------
(collectively, the "Stock") to be transferred hereunder shall be transferred
free and clear of all liens, claims, encumbrances, mortgages, pledges,
restrictions or rights of others or every kind and description.
1.7 Escrow . Notwithstanding any other provision contained herein,
-------
$150,000 of the Earnout Payment referred to in paragraph 1.5(c) hereof shall, to
the extent not previously set off pursuant to the provisions of Section 7.5
hereof, be placed in an escrow (the "Escrow Account") with a mutually acceptable
escrow agent (the "Escrow Agent") until May 31, 2001, or if any claims are
pending with respect to the Escrow Account prior to such date, the date on which
such claims are resolved. Claims may be made against the Escrow Account in the
manner set forth in paragraph 7.5 hereof.
1.8 Dispute Resolution. If the Sellers have any objections to the Closing
--------------------
Date Balance Sheet or the determination of Gross Profits described in Section
1.5(b) and 1.5(c), they shall deliver a statement describing their objections
("Statement of Objections") to Buyer within 20 business days after receiving the
Closing Date Balance Sheet/Gross Profits determination. Within 20 business days
of receipt by the Buyer of the Statement of Objections, Buyer's independent
accountants shall review the determination to which the objection relates and
supply Sellers with a reasonably detailed response. If the Sellers continue to
have any objections to the Closing Date Balance Sheet/Gross Profits
determination, they shall confirm in writing such objections within five
business days after receipt of the response ("Objection Confirmation"). The
Sellers and Buyer shall use reasonable efforts to resolve any objections to the
calculation of the Closing Date Balance Sheet/Gross Profits determination. If an
Objection Confirmation is given and the parties fail to reach an agreement with
respect to the Closing Date Balance Sheet/Gross Profits determination within 20
business days after Buyer's receipt of the Objection Confirmation, the parties
shall submit the dispute for resolution to the Orange County Office of one of
the six largest firms of independent certified public accountants (the
"Accountant"), other than Buyer's or the Sellers
4
<PAGE>
accountants as of the Closing, within five business days after the end of the
20-business-day period. Each of the Sellers and the Buyer may submit such
information to the Accountant as such party deems relevant on or before the
expiration of such period. If the Sellers and the Buyer do not agree upon the
selection the Accountant, the selection will be made by the Orange County office
of the American Arbitration Association ("AAA") in accordance with the criteria
specified above, or if no such Accountant is available or willing to resolve the
dispute, the AAA shall select the next largest accounting firm from which a
qualified accountant is available in Orange County, California. The Accountant
shall, within 20 business days after appointment as provided herein, render its
determination as to the Closing Date Balance Sheet/Gross Profits determination
and the amount so selected shall be final and binding on the parties. Any such
amount shall be payable with simple interest thereon at 8 percent from the due
date of such payment. The fees and expenses of the Accountant shall be paid by
the party whose determination was not selected, and if neither party's
determination is selected, shall be allocated between the parties based upon the
proportion in which the final determination was reflective of their respective
positions.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
In order to induce Buyer to enter into this Agreement, each of the Sellers,
jointly and severally, represents and warrants to the Buyer that the statements
contained in this Article II are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article II).
2.1 Authority Relative to this Agreement. The Sellers have the full power
------------------------------------
and authority to execute, deliver and perform this Agreement and any agreement
or document contemplated hereby, and to consummate the transactions contemplated
hereby or thereby. The obligations imposed on Sellers by this Agreement, or by
any agreement or document contemplated hereby, constitute the valid and binding
obligations and agreements of Sellers, enforceable against each of them in
accordance with their respective terms except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights; and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
2.2 Compliance of Transaction With Laws and Other Instruments. Except as
---------------------------------------------------------
set forth in Schedule 2.2 of the Disclosure
5
<PAGE>
Schedules, the execution, delivery and performance by Sellers of this Agreement
and any agreement or document contemplated hereby, and the performance and
consummation of the transactions contemplated hereby or thereby by Sellers (i)
do not require on behalf of Sellers, WCC, or Adams & Hirst any approval, consent
or waiver of, or filing with, any governmental agency, court or other authority
which has not been obtained and which is not in full force and effect as of the
date hereof; (ii) will not conflict with or constitute a breach or violation of
the charter or bylaws of WCC or Adams & Hirst; (iii) will not result in a
violation of any law, regulation, judgment, writ, injunction, order or decree of
any court or governmental or regulatory authority (federal, local or otherwise)
to which WCC or Adams & Hirst is subject; and (iv) will not require the
approval, consent or waiver of, or filing with any party to, violate or conflict
with or result in a breach of, or constitute a default or acceleration of or
give rise to a right of termination (or an event which with notice or lapse of
time or both would become a default) under, any provision of any contract,
indenture, mortgage, lease, agreement or other instrument to which Sellers, WCC,
or Adams & Hirst are a party or to which any of its or their assets are subject.
2.3 Capitalization. The entire authorized capital stock of WCC consists of
--------------
10,000 shares of common stock, no par value ("Common Shares of WCC"), of which
10,000 Common Shares of WCC are issued and outstanding. All of the issued and
outstanding Common Shares have been duly authorized, are validly issued, fully
paid, and nonassessable. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require WCC to issue, sell,
or otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to WCC. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of the capital stock of WCC. No debt instrument issued by WCC has or
could have voting rights.
2.4 Stock. Cannon and Connolly each hold of record and owns beneficially
-----
2,400 Common Shares of WCC, and Adams & Hirst owns beneficially 5,200 Common
Shares of WCC, in each case free and clear of any restrictions on transfer
(other than any restrictions under federal or state securities laws), taxes,
security interests, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. Neither the Sellers, nor Adams & Hirst, is a
party to any option, warrant, purchase right, or other contract or commitment
that could require the Sellers to sell, transfer, or otherwise dispose of any
capital stock of WCC (other than this Agreement). Neither the Sellers, nor Adams
& Hirst, is a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any capital stock of WCC.
6
<PAGE>
2.5 Organization and Qualification. WCC is a corporation duly organized,
------------------------------
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own, lease
and operate its assets and properties and to conduct the Business in the manner
and in the places where such assets and properties are owned, leased or operated
or the Business is conducted by it. WCC has no subsidiaries and does not own,
directly or indirectly, any equity interest in any corporation, partnership,
joint venture or other business entity. Sellers have delivered to the Buyer
correct and complete copies of the charter and bylaws of WCC (as amended to
date). The minute book (containing the records of meetings of the stockholders,
the board of directors, and any committees of the board of directors), the stock
certificate book and the stock record book of WCC are correct and complete. WCC
is not in default under or in violation of any provision of its charter or
bylaws.
2.6 Financial and Other Statements. Schedule 2.6 of the Disclosure
------------------------------
Schedules contains true and complete copies of (i) WCC's cash basis financial
statements for the year ended December 31, 1997, and (ii) WCC's cash basis
interim financial statements for the period ended March 31, 1998 (collectively
the "Financial Statements"). Except as set forth in Schedule 2.6 , the Financial
Statements fairly present in all material respects the financial position and
results of operation of WCC as of the indicated dates and for the period
indicated therein.
2.7 Title to Properties; Liens; Condition of Properties. WCC has good and
---------------------------------------------------
marketable title to or a valid leasehold in, the properties and assets used by
it, located on its premises, or shown in the Financial Statements or acquired
after the date thereof (the "Acquired Assets"), which shall exclude the
"Excluded WCC Assets" as defined in Section 1.3. None of such assets are subject
to any mortgage, pledge, lien, conditional sale agreement, security interest,
encumbrance, title defect or other charge, except for liens for taxes not yet
due and payable. Schedule 2.7 of the Disclosure Schedules sets forth the
addresses or locations of all facilities (whether leased or owned) of WCC.
2.8 No Undisclosed Liabilities. There are no contractual or non-
--------------------------
contractual obligations, debts or liabilities of any nature of WCC whether
accrued or unaccrued, contingent or absolute, direct or indirect, recorded or
unrecorded, potential or realized (the "Liabilities") as of December 31, 1997,
which are not otherwise disclosed in the Financial Statements. WCC has not
incurred any Liabilities since December 31, 1997, except for those Liabilities
incurred in the ordinary course of business and consistent with past practice
and which, in any event, would not, in the aggregate, have a material adverse
effect. WCC is not directly or indirectly (i) liable, by guaranty, surety or
otherwise, upon or with respect to, or (ii) obligated in any way to provide
funds in respect of, or (iii) obligated to guaranty or assume any debt, dividend
or
7
<PAGE>
other obligation of any person, corporation, association, partnership or
other entity.
2.9 Tax Matters. Except as set forth on Schedule 2.9 of the Disclosure
-----------
Schedules, WCC has filed (i) all federal, state, municipal and local tax returns
(whether relating to income, sales, franchise, withholding, real or personal
property, employment or otherwise) ("tax returns") required to be filed; (ii)
all federal, state, municipal and local tax returns (whether relating to income,
sales, franchise, withholding, real or personal property, employment of
otherwise) ("taxes") which are due, pursuant to such returns, or claimed to be
due by any taxing authority, or otherwise due and owing, and any penalties or
other charges due with respect to the late filing of any such return have been
fully paid, and shall be fully paid at the time of closing; (iii) each such tax
return heretofore filed by WCC correctly and accurately reflects the amount of
its tax liability thereunder; (iv) WCC is not currently the beneficiary of any
extension of time within which to file any tax return; (v) no claim has ever
been made by an authority in a jurisdiction where WCC does not file tax returns
that it is or may be subject to taxation by that jurisdiction; (vi) there are no
security interests on any of the assets of WCC that arose in connection with any
failure (or alleged failure) to pay any tax; (vii) WCC has withheld and paid all
taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, creditor, independent contractor, or other third party
and all such taxes shall be withheld or paid by Closing and all such taxes
accrued but not due as of Closing shall be escrowed with Buyer; and (viii) to
the knowledge of the Seller, there is no dispute or claim concerning any tax
liability of WCC.
2.10 Absence of Certain Changes. Since March 31, 1998, there has not been:
--------------------------
(a) any material adverse change in the financial condition, properties,
assets, liabilities, personnel or operations of WCC;
(b) any obligation or liability incurred by WCC, including the obligation to
perform services normally conducted by the Business, other than obligations and
liabilities incurred in the ordinary course of business;
(c) any purchase, sale or other disposition, or any agreement or other
arrangement for the purchase, sale or other disposition, of any of the services,
properties or assets of the Business, except in the ordinary course of business;
(d) any damage, destruction or loss, whether or not covered by insurance,
affecting the Business;
(e) any loss or threatened loss of any permit, license, qualification or
certificate of authority held or enjoyed by WCC
8
<PAGE>
which loss has had, or could in the future have, a material adverse effect
("Material Adverse Effect") on the business, properties, financial condition or
results of operation of the Business or Buyer's free and unencumbered ownership
and use of any of the assets or properties of the Business, whether owned or
leased, and whether or not carried or reflected on the books and records of WCC
(the "Assets");
(f) any pending or threatened labor disputes or strikes, labor union
organizational activity, claim or threatened claim of unfair labor practices, or
any material adverse change in relations with WCC's employees generally;
(g) any action taken by WCC outside of the ordinary course of business;
(h) any written notice of termination of, or default under, any contract;
(i) any loan or advance to or any investment in any person, firm or
corporation, except for normal business advances to employees consistent with
past practice;
(j) any increase in the compensation payable or to become payable to any of
its officers or employees (other than nonmaterial increases in the ordinary
course of business) and there has been no establishment, adoption, entering
into, or making of any new grants or awards under, acceleration of payment or
vesting, or any obligation to grant any awards under, or any amendment to any
collective bargaining, bonus, profit sharing, thrift, compensation, stock option
or other equity, pension, retirement, incentive or deferred compensation,
employment, retention, termination, severance, health, life or other welfare,
fringe, Employee Benefit Plan, or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any current or former directors, officers or
employees, or any granting or paying of any benefit not required by any existing
WCC Benefit Plan or other plan or arrangement;
(k) any commitment for any addition to property, plant or equipment not in
the ordinary course of business;
(l) any payment, loan or advance of any amount to, or sale, transfer or
lease of Assets to, or any agreements or arrangements with, any of WCC's
officers, directors or "affiliates," as such term is defined in the rules and
regulations of the Securities and Exchange Commission ("Affiliate");
(m) any charitable or other capital contribution;
(n) any declaration, set aside or payment of any dividend, any distribution
with respect to its capital stock, or any redemption, repurchase, or other
acquisition of any of its capital
9
<PAGE>
stock;
(o) any failure to pay current liabilities, including accounts payable and
accrued expenses in the ordinary course of business and otherwise in accordance
with their terms; or
(p) any agreement or understanding by WCC to do any of the foregoing.
2.11 Patents, Trademarks, Trade Names and Similar Rights. WCC does not own
---------------------------------------------------
any trademarks, logos, service marks, trade names, copyrights or other similar
proprietary rights ("Intangibles") used in the Business, and, to the Seller's
knowledge, has no obligation to any third party with respect thereto.
2.12 Trade Secrets and Customer Lists. WCC has the right to use, without
--------------------------------
liability to others, all trade secrets and customer lists, if any, required and
used in the Business within the last five years and has not disclosed, sold,
licensed, sublicensed or otherwise granted to any third party the right to use
such trade secrets and information. To the Seller's knowledge, WCC is not using
or in any way making use of any confidential information or trade secrets of any
third party, including, without limitation, a former employer of any present or
past employee of WCC.
2.13 Client and Other Agreements. With respect to Client Agreements and the
---------------------------
agreements set forth in Schedule 1.2(e) of the Disclosure Schedules: (i) all
such agreements are legal, valid, binding, enforceable, in full force and
effect, and subject to customer consent of the other party to such agreement,
are fully transferable to Buyer subject to no governmental or regulatory
requirement or impediment; (ii) all such agreements will be legal, valid,
binding and enforceable, and in full force and effect on the same terms and
conditions on the Closing Date; (iii) no party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default, or permit termination, modification or acceleration under said
agreements; (iv) no party has repudiated any provision of said agreements; (v)
the list of agreements set forth in the Disclosure Schedules is a complete and
accurate list of all agreements between WCC and its customers; (vi) to the
knowledge of the Sellers, the relationship of WCC with the customers that are
parties to the agreements are good and Sellers know of no set of facts, and have
not received any notice or information from any of the listed customers
indicating an intention to decrease the level of services WCC provides to any
such customer, or to reduce the rates at which WCC is being compensated from
said customers, and no illegal or other payment or consideration has been given
by WCC to secure or maintain any business with its customers; (vii) WCC has not
received any notice of claims from any of the listed customers relating to WCC's
performance of service for such customers; and (viii) no material amount claimed
to be payable to WCC under any of the agreements is
10
<PAGE>
being disputed by any client.
2.14 Employee Agreements and Plans.
-----------------------------
(a) Neither WCC, nor any ERISA Affiliate maintained, contributed to, or had
(or may have) any liability under any Employee Benefit Plan with respect to its
employees, former employees, or independent contractors. For purposes of this
Section 2.14 and the Agreement:
(i) "Employee Benefit Plan" means (a) any bonus, incentive compensation,
profit sharing, retirement, pension, group insurance, death benefit,
group health, medical expense reimbursement, dependent care, legal
services, flexible benefits or cafeteria, stock option, stock purchase,
stock appreciation rights, phantom stock, savings, deferred
compensation, consulting, severance pay or termination pay, vacation
pay, leave of absence, layoff, life insurance, accident, disability,
workers' compensation, welfare or other employee benefit or fringe
benefit plan, program, arrangement practice or policy which is an
"employee pension benefit plan" as such term is defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or an "employee welfare benefit plan" as defined in Section
3(1) of ERISA, whether written or unwritten; and
(ii) "ERISA Affiliate" means each person (as defined in Section 3(9) of
ERISA) that, together with WCC (or any person whose liabilities WCC has
assumed or is otherwise subject to, whether directly or indirectly,
including as a result of indemnification) would be or has been treated
as a single employer under Section 4001(b) of ERISA or Section 414 of
the Internal Revenue Code of 1986, as amended ("Code").
(b) WCC is not a party to any employment agreement, whether written or oral,
or agreement with change in control or similar provisions, or collective
bargaining agreement or contract with any labor union relating to any employees
or former employees of WCC. Except as set forth in Schedule 2.14 of the
Disclosure Schedules, the execution, delivery or performance of this Agreement
or the consummation of the transactions contemplated by this Agreement will not
entitle any individual to severance pay or accelerate the time of payment or
vesting, or increase the amount of any compensation or benefits due to any
individual nor result in the imposition of any federal excise tax with respect
to any Employee Benefit Plan. WCC does not currently have outstanding any loan
or loans to any current or former employees, nor has WCC guaranteed such loans.
(c) Schedule 2.14 of the Disclosure Schedules sets forth, as
11
<PAGE>
of the date of this Agreement, with respect to each employee employed by WCC,
his or her name, position, salary or hourly wage, his or her date of employment
and any applicable significant employee benefits or entitlement not available
generally to WCC's employees.
(d) WCC has complied in all respects with all applicable laws relating to
the employment of labor or consultants or independent contractors in connection
with the operation of the Business, including, without limitation, those
relating to wages, hours, collective bargaining, unemployment insurance,
workers' compensation, immigration and naturalization, equal employment
opportunity and the payment and withholding of taxes.
(e) WCC is not a party to any contract with any labor organization, nor has
it agreed to recognize any union or other collective bargaining unit, nor has
any union or other collective bargaining unit been certified as representing any
of its employees. WCC has not experienced any strikes, work stoppages,
significant grievance proceedings or claims of unfair labor practices filed or,
to WCC's or Seller's knowledge, threatened to be filed with respect to the
operation of the Business.
2.15 Litigation, Proceedings, Etc. Except for matters described in Schedule
----------------------------
2.15 of the Disclosure Schedules, (i) to the best knowledge of the Sellers,
there is no pending claim, action, litigation, suit or proceeding against, or
investigation of WCC; (ii) WCC has not received any notice of any claim, action,
litigation, suit or proceeding against it or investigation of it, and no such
claim, action, suit, proceeding or investigation is pending or threatened
against WCC and (iii) there are no outstanding court, arbitration or agency
orders, decrees or stipulations to which WCC is a party or which are directed to
WCC.
2.16 Compliance With Law and Other Instruments: Permits. WCC is not (and
--------------------------------------------------
has not been for the past twelve months) in violation of, or default under: (i)
any term or provision of its charter or by-laws; (ii) any term or provision of
any financial covenant or any indenture, mortgage, contract, commitment or other
agreement or instrument to which it is a party, or by which it or any of its
properties or business is or may be bound or affected, or (iii) any applicable
law (including, without limitation, the Fair Labor Standards Act and all other
federal and state wage and hour laws), any and all Federal immigration laws,
regulations and promulgations, rule, regulation, judgment, order or decree of
any governmental agency or court, domestic or foreign, having jurisdiction over
it or any of its properties or business, or WCC's employees, consultants or
independent contractors, (iv) WCC owns, possesses, or has obtained licenses,
permits, certifications, registrations, approvals or consents and other
authorizations necessary to own or lease, as the case may be, its business or
operations as presently conducted and all such governmental and
12
<PAGE>
other licenses, permits, certifications, registrations, approvals, consents and
other authorizations are in good standing, and there are no proceedings pending
or, to the best knowledge of WCC's officers and directors, threatened, or any
basis therefor existing, seeking to cancel, terminate or limit such licenses,
permits, certifications, registrations, approvals, or consents or
authorizations, or related to the breach or failure to comply with any law,
rule, regulation, judgment or decree.
2.17 Transactions with Affiliates. Except as set forth in Schedule 2.17 of
----------------------------
the Disclosure Schedules there is no lease, sublease, indebtedness, contract,
agreement, commitment, understanding or other arrangement of any kind whatsoever
entered into by WCC with Sellers, officers or directors or any Affiliate of any
of them. At Closing, WCC shall cancel all arrangements with any Affiliate.
2.18 Insurance. Set forth in Schedule 2.18 of the Disclosure Schedules is a
---------
list of insurance in force with respect to the Business, which list is true,
complete and accurate in all material respects. WCC has paid all premiums due
under such policies and, to its knowledge, such policies are each outstanding
and in full force and effect on the date hereof. To Sellers' knowledge, no
insurance carrier has refused any application for insurance by WCC.
2.19 Books and Records. All books and records pertaining to the Business
-----------------
have been, or prior to the Closing shall have been, made available for review by
Buyer and its representatives and are correct and complete in all material
respects, have been maintained in accordance with good business practice and
fairly reflect the basis for the financial condition and results of operations
of WCC set forth in the Financial Statements.
2.20 Powers of Attorney; Bank Accounts. There are no outstanding powers of
---------------------------------
attorney executed on behalf of WCC. Set forth in Schedule 2.20 of the Disclosure
Schedules is an accurate and complete list of the name and address of each bank
or other institution where WCC has an account or safe deposit box, the number of
such account, and the names of all persons authorized to draw thereon or have
access thereto.
2.21 Broker's Fees. With the exception of Benefit Capital Financial
-------------
Services, Inc., which shall be paid by WCC at the Closing, WCC has no obligation
or liability to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
2.22 Miscellaneous. All compensation payments including vacation, per diem,
-------------
holiday and sickness payments, required to be paid to WCC's personnel for any
period prior to the Closing, will be paid in full at the time of Closing. WCC
has not entered into
13
<PAGE>
any employment agreement and/or arrangement with nonexempt personnel
guaranteeing a minimum number of work hours during any predetermined time
period. Except as is necessary to close the Business and pay off obligations,
Sellers agree not to use the name WCC Telephone Services, Inc., or any similar
name for any purpose. All Field Personnel who are classified as "independent
contractors" are correctly classified as such, and all employees who are non-US
citizens have valid, legal and current visas, are in compliance with applicable
United States Immigration Laws, and have properly executed Employment
Eligibility Verification Forms (I-9).
2.23 Year 2000. To the best of Seller's knowledge, all software used in
---------
the Business, or provided to WCC, whether licensed, owned, or used by vendors,
is Year 2000-compliant.
2.24 Disclosure. The statements contained in this Agreement, and in any
----------
written documents or Schedules attached hereto prepared and delivered by or on
behalf of WCC or Sellers pursuant to the terms hereof are true and correct in
all material respects, and such statements, documents or Schedules do not omit
any material fact required by the terms hereof or thereof to be stated herein or
therein or necessary to make the statements contained herein or therein not
misleading. There is no fact known to Sellers or WCC which would have a material
adverse effect on the Business, other than those which have been set forth in
this Agreement or in the Disclosure Schedules attached hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF M. ADAMS AND J. HIRST
-------------------------------------------------------
In order to induce Buyer to enter into this Agreement, each of M. Adams and
J. Hirst, jointly and severally, represent and warrant to the Buyer that the
statements contained in this Article III are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article III).
3.1 Capitalization. The entire authorized capital stock of Adams & Hirst
--------------
consists of 100,000 shares of common stock, no par value (Common Shares of
Adams & Hirst"), 10,000 of which Common Shares of Adams & Hirst are issued and
outstanding. All of the issued and outstanding Common Shares of Adams & Hirst
have been duly authorized, and are validly issued, fully paid, and
nonassessable. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require Adams & Hirst to issue, sell,
or otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation,
14
<PAGE>
or similar rights with respect to Adams & Hirst. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of Adams & Hirst. No debt instrument issued by
Adams & Hirst has or could have voting rights.
3.2 Stock. M. Adams and J. Hirst each hold of record and own beneficially
-----
5,000 Common Shares of Adams & Hirst, free and clear of any restrictions on
transfer (other than any restrictions under federal or state securities laws),
taxes, security interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. Neither M. Adams nor J. Hirst is a
party to any option, warrant, purchase right, or other contract or commitment
that could require M. Adams or J. Hirst to sell, transfer, or otherwise dispose
of any capital stock of Adams & Hirst (other than this Agreement). Neither M.
Adams nor J. Hirst is a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any capital stock of Adams & Hirst.
3.3 Organization and Qualification. Adams & Hirst is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and operate its assets and properties and to conduct its
Business in the manner and in the places where such assets and properties are
owned, leased or operated or the business is conducted by it. Except for its
interest in WCC, Adams & Hirst has no subsidiaries and does not own, directly or
indirectly, any equity interest in any corporation, partnership, joint venture
or other business entity. Sellers have delivered to the Buyer correct and
complete copies of the charter and bylaws of Adams & Hirst (as amended to date).
The minute book (containing the records of meetings of the stockholders, the
board of directors, and any committees of the board of directors), the stock
certificate book and the stock record book of Adams & Hirst are correct and
complete. Adams & Hirst is not in default under or in violation of any provision
of its charter or bylaws.
3.4 No Undisclosed Liabilities. Except as set forth on Schedule 3.4 of
--------------------------
the Disclosure Schedules, there are no contractual or non-contractual
obligations, debts or liabilities of any nature of Adams & Hirst whether accrued
or unaccrued, contingent or absolute, direct or indirect, recorded or
unrecorded, potential or realized (the "Adams & Hirst Liabilities") as of the
date hereof. Adams & Hirst is not directly or indirectly (i) liable, by
guaranty, surety or otherwise, upon or with respect to, or (ii) obligated in any
way to provide funds in respect of, or (iii) obligated to guaranty or assume any
debt, dividend or other obligation of any person, corporation, association,
partnership or other entity.
15
<PAGE>
3.5 Business. The business of Adams & Hirst consists solely of the
--------
purchase and resale of telecommunications installation related material.
Revenues for the calendar year 1997 and the first quarter of 1998 were $67,773
and $16,811, respectively.
3.6 Tax Matters. Except as set forth on Schedule 3.6 of the Disclosure
-----------
Schedules, Adams & Hirst has filed (i) all federal, state, municipal and local
tax returns (whether relating to income, sales, franchise, withholding, real or
personal property, employment or otherwise) ("tax returns") required to be
filed; (ii) all federal, state, municipal and local tax returns (whether
relating to income, sales, franchise, withholding, real or personal property,
employment or otherwise) ("taxes") which are due, pursuant to such returns, or
claimed to be due by any taxing authority, or otherwise due and owing, and any
penalties or other charges due with respect to the late filing of any such
return have been fully paid, and shall be fully paid at the time of closing;
(iii) each such tax return heretofore filed by Adams & Hirst correctly and
accurately reflects the amount of its tax liability thereunder; (iv) Adams &
Hirst is not currently the beneficiary of any extension of time within which to
file any tax return; (v) no claim has ever been made by an authority in a
jurisdiction where Adams & Hirst does not file tax returns that it is or may be
subject to taxation by that jurisdiction; (vi) there are no security interests
on any of the assets of Adams & Hirst that arose in connection with any failure
(or alleged failure) to pay any tax; (vii) Adams & Hirst has withheld and paid
all taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, creditor, independent contractor, or other third
party and all such taxes shall be withheld or paid by Closing and all such taxes
accrued but not due as of Closing shall be escrowed with Buyer; and (viii) to
the knowledge of M. Adams and J. Hirst, there is no dispute or claim concerning
any tax liability of Adams & Hirst.
3.7 Employee Agreements and Plans.
-----------------------------
(a) Neither Adams & Hirst, nor any Adams & Hirst ERISA Affiliate maintained,
contributed to, or had (or may have) any liability under any Employee Benefit
Plan with respect to its employees, former employees, or independent
contractors. For purposes of this Section 3.7:
(i) "Employee Benefit Plan" means (a) any bonus, incentive compensation,
profit sharing, retirement, pension, group insurance, death benefit,
group health, medical expense reimbursement, dependent care, legal
services, flexible benefits or cafeteria, stock option, stock purchase,
stock appreciation rights, phantom stock, savings, deferred
compensation, consulting, severance pay or termination pay, vacation
pay, leave of absence, layoff, life insurance, accident, disability,
workers'
16
<PAGE>
compensation, welfare or other employee benefit or fringe
benefit plan, program, arrangement practice or policy which is an
"employee pension benefit plan" as such term is defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or an "employee welfare benefit plan" as defined in Section
3(1) of ERISA, whether written or unwritten; and
(ii) "Adams & Hirst ERISA Affiliate" means each person (as defined in
Section 3(9) of ERISA) that, together with Adams & Hirst (or any person
whose liabilities Adams & Hirst has assumed or is otherwise subject to,
whether directly or indirectly, including as a result of
indemnification) would be or has been treated as a single employer
under Section 4001(b) of ERISA or Section 414 of the Internal Revenue
Code of 1986, as amended ("Code").
(b) Adams & Hirst is not a party to any employment agreement, whether
written or oral, or agreement with change in control or similar provisions, or
collective bargaining agreement or contract with any labor union relating to any
employees or former employees of Adams & Hirst. The execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated by this Agreement will not entitle any individual to severance pay
or accelerate the time of payment or vesting, or increase the amount of any
compensation or benefits due to any individual nor result in the imposition of
any federal excise tax with respect to any Employee Benefit Plan. Adams & Hirst
does not currently have outstanding any loan or loans to any current or former
employees, nor has Adams & Hirst guaranteed such loans.
(c) Adams & Hirst currently has no employees, and has had only one employee
during the period of its operations. Such employee commenced employment on
October 1, 1995 and terminated employment on December 31, 1997.
(d) Adams & Hirst has complied in all respects with all applicable laws
relating to the employment of labor or consultants or independent contractors in
connection with the operation of its business, including, without limitation,
those relating to wages, hours, collective bargaining, unemployment insurance,
workers' compensation, immigration and naturalization, equal employment
opportunity and the payment and withholding of taxes.
(e) Adams & Hirst is not a party to any contract with any labor
organization, nor has it agreed to recognize any union or other collective
bargaining unit, nor has any union or other collective bargaining unit been
certified as representing any of its employees. Adams & Hirst has not
experienced any strikes, work stoppages, significant grievance proceedings or
claims of unfair labor practices filed or, to Adams & Hirst's knowledge,
threatened
17
<PAGE>
to be filed with respect to the operation of its business.
3.8 Litigation Proceedings, Etc. (i) There is no pending claim, action,
---------------------------
litigation, suit or proceeding against, or investigation of Adams & Hirst; (ii)
Adams & Hirst has not received any notice of any claim, action, litigation, suit
or proceeding against it or investigation of it, and no such claim, action,
suit, proceeding or investigation is pending or threatened against Adams &
Hirst; and (iii) there are no outstanding court, arbitration or agency orders,
decrees or stipulations to which Adams & Hirst is a party or which are directed
to Adams & Hirst.
3.9 Compliance With Law and Other Instruments; Permits. Adams & Hirst is
--------------------------------------------------
not (and has not been for the past twelve months) in violation of, or default
under: (i) any term or provision of its charter or by-laws; (ii) any term or
provision of any financial covenant or any indenture, mortgage, contract,
commitment or other agreement or instrument to which it is a party, or by which
it or any of its properties or business is or may be bound or affected, or (iii)
any applicable law.
3.10 Transactions with Affiliates. There is no lease, sublease,
----------------------------
indebtedness, contract, agreement, commitment, understanding or other
arrangement of any kind whatsoever entered into by Adams & Hirst with Sellers,
officers or directors or any Affiliate of any of them. At Closing, Adams & Hirst
shall cancel all arrangements with any Affiliate.
3.11 Insurance. There is no insurance in force with respect to Adams &
---------
Hirst.
3.12 Books and Records. All books and records pertaining to Adams & Hirst
-----------------
have been, or prior to the Closing shall have been, made available for review by
Buyer and its representatives and are correct and complete in all material
respects, have been maintained in accordance with good business practice and
fairly reflect the basis for the financial condition and results of operations
of Adams & Hirst.
3.13 Powers of Attorney. There are no outstanding powers of attorney
------------------
executed on behalf of Adams & Hirst.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
In order to induce Sellers to enter into this Agreement, the Buyer
represents and warrants to the Sellers that the statements contained in this
Article IV are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date
18
<PAGE>
were substituted for the date of this Agreement through this Article IV).
4.1 Authority Relative to this Agreement. The Buyer has the full corporate
------------------------------------
power and authority, and has taken all necessary and proper action, corporate
and otherwise, to execute, deliver and perform this Agreement and any other
agreement or document contemplated hereby, and to consummate the transactions
contemplated hereby or thereby. All action on the part of Buyer necessary for
the authorization, execution, delivery and performance of this Agreement and any
other agreement or document contemplated hereby, and the consummation of the
transactions contemplated hereby or thereby, has been taken. The obligations
imposed on Buyer by this Agreement, or by any agreement or document contemplated
hereby, constitute the valid and binding obligations and agreements of Buyer,
enforceable against it in accordance with their respective terms, except that
(i) such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights; and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
4.2 Compliance of Transaction With Laws and Other Instruments. The
---------------------------------------------------------
execution, delivery and performance by Buyer of this Agreement and any agreement
or document contemplated hereby, and the performance and consummation of the
transactions contemplated hereby or thereby by Buyer (i) do not require on
behalf of Buyer any approval, consent or waiver of, or filing with, any
governmental agency, court or other authority which has not been obtained and
which is not in full force and effect as of the date hereof; (ii) will not
result in a violation of any law, regulation, judgment, writ, injunction, order
or decree of any court or governmental or regulatory authority (federal, local
or otherwise) to which Buyer is subject; (iii) will not conflict with or
constitute a breach or violation of the charter or bylaws of Buyer; and (iv)
will not require the approval, consent or waiver of, or filing with any party
to, violate or conflict with or result in a breach of, or constitute a default
or acceleration of or give rise to a right of termination (or an event which
with notice or lapse of time or both would become a default) under, any
provision of any contract, indenture, mortgage, lease, agreement or other
instrument to which Buyer is a party or to which any of its assets are subject.
4.3 Organization and Qualification. Buyer is a corporation duly organized,
------------------------------
validly existing and in good standing under the laws of its state of
incorporation.
4.4 Consents. Buyer is not subject to any law, ordinance, regulation,
--------
rule, order, judgment, injunction, decree, contract,
19
<PAGE>
commitment, lease, agreement, instrument or other restriction of any kind, which
by its provisions would prevent the consummation of this Agreement or any of the
transactions contemplated hereby, without the consent, filing with or
notification of any third party which has not already been obtained or made or
will not be obtained prior to the Closing.
4.5 Broker's Fees. Buyer has no liability or obligation except to Elite
-------------
Investment Group, LLC, to pay any fees or commissions to any broker, investment
bankers, finder or agent with respect to the transactions contemplated by this
Agreement.
4.6 Status of Stock. Buyer is purchasing the Stock for its own account,
---------------
for investment purposes only, and not with a view to or for sale in connection
with any distribution of such Stock.
ARTICLE V
BUYER'S CONDITIONS TO CLOSING
-----------------------------
The obligations of Buyer to purchase the WCC Stock and the Adams & Hirst
Stock and to consummate the transactions contemplated hereby, are subject to the
fulfillment in all respects on or prior to the Closing Date of each of the
following conditions:
5.1 Representations and Warranties. The representations and warranties
------------------------------
made by Sellers in Articles II and III hereof shall be true and correct when
--------------------
made, and shall be true and correct in all material respects on the Closing Date
with the same force and effect as if they had been made on and as of the Closing
Date, except for changes permitted or contemplated by this Agreement and except
that representations which are specifically made as of a specified date shall be
true and correct as of such earlier date.
5.2 Performance. All covenants, agreements and conditions contained in
-----------
this Agreement to be performed or complied with by Seller on or prior to the
Closing Date shall have been performed or complied with in all material
respects.
5.3 Closing Deliveries. Buyer shall have received all documents and
------------------
instruments required pursuant to Section 6.2 hereof.
------------
5.4 Absence of Litigation. No action, suit or proceeding before any court
---------------------
or any governmental body or authority shall be pending against either Sellers,
WCC, Adams & Hirst, or Buyer which seeks to impose substantial damages in
connection with, or to restrain or invalidate the transactions contemplated by,
this Agreement, and no preliminary or permanent injunction or order that would
prohibit or restrain such transactions shall be in effect.
5.5 Absence of Certain Changes. There shall not have occurred
--------------------------
20
<PAGE>
prior to the Closing Date (a) any material adverse change in the Business, or
any event or condition which, with the passage of time or the filing of notice,
may cause or create any such adverse change, or (b) the legal inability of
Sellers to convey, assign and transfer to Buyer the WCC Stock or the Adams &
Hirst Stock.
5.6 Further Assurances. All actions to be taken by the Sellers in
------------------
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be satisfactory in form and substance to
the Buyer. The Buyer may waive any condition specified in this Article V if it
executes a writing so stating at or prior to the Closing Date.
5.7 Miscellaneous. (a) Cannon shall have executed and delivered to Buyer
-------------
the employment agreement attached hereto, (b) Sellers shall have delivered to
Buyer, from or with respect to the State of California, a good standing
certificate, letter of good standing, and tax release certificate with respect
to WCC and Adams & Hirst, and, with respect to Adams & Hirst, a Certificate of
Payment (tax release) from the State Board of Equalization, (c) Buyer shall have
received an opinion from Counsel for Sellers, dated the Closing Date,
satisfactory in form and substance to counsel for Buyer and (d) Buyer shall have
received the Articles of Incorporation and the By-Laws of WCC and Adams & Hirst
as amended to the date hereof, and a certification by an officer of WCC that
same are true and complete copies of such documents as in effect at the time of
certification.
5.8 Workers' Compensation. Seller shall deliver to Buyer workers'
---------------------
compensation certificates in all states requested by Buyer.
5.9 Excluded Liabilities. Sellers shall have provided Buyer with evidence
--------------------
of payment or satisfaction of all Excluded WCC Liabilities and Excluded Adams &
Hirst Liabilities.
5.10 Excluded Assets. Sellers shall have provided Buyer with evidence of
---------------
transfer of all Excluded WCC Assets out of WCC and all Excluded Adams & Hirst
Assets out of Adams & Hirst.
5.11 Employees. At the Closing Date, WCC shall have no fewer than 35
-----------
employees that have agreed to be employed by Buyer.
ARTICLE VI
SELLERS' CONDITIONS TO CLOSING
------------------------------
The obligations of Sellers to sell the Stock and the obligation of Sellers
to consummate the transactions contemplated hereby are
21
<PAGE>
subject to the fulfillment in all respects on or prior to the Closing of each of
the following conditions:
6.1 Representations and Warranties. The representations and warranties
------------------------------
made by Buyer in Article IV hereof shall be true and correct when made, and
-----------
shall be true and correct in all respects on the Closing with the same force and
effect as if they had been made on and as of the Closing, except for changes
permitted or contemplated by this Agreement and except that representations
which are specifically made as of a specified date shall be true and correct as
of such earlier date.
6.2 Performance. All covenants, agreements and conditions contained in
-----------
this Agreement to be performed or complied with by Buyer on or prior to the
Closing shall have been performed or complied with in all respects.
6.3 Closing Deliveries. Sellers shall have received all documents and
------------------
instruments required pursuant to Section 8.2 hereof.
------------
6.4 Absence of Litigation. No action, suit or proceeding before any court
---------------------
or any governmental body or authority shall be pending against either Sellers,
WCC, Adams & Hirst, or Buyer which seeks to impose substantial damages in
connection with, or to restrain or invalidate the transactions contemplated by
this Agreement and no preliminary or permanent injunction or order that would
prohibit or restrain such transactions shall be in effect.
ARTICLE VII
FURTHER AGREEMENTS
------------------
7.1 Expenses. Sellers shall pay their costs incurred in connection with
--------
the preparation, negotiation, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby including, without
limitation, the fees of the attorneys and accountants of Sellers. Buyer shall
pay its costs incurred in connection with the preparation, negotiation,
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby including, without limitation, the fees of its
attorneys and accountants.
7.2 Press Releases. Buyer may prepare and issue press releases regarding
--------------
this transaction, but will provide advance notice to Sellers thereof.
7.3 Survival of Representations. The representations and warranties
---------------------------
contained herein are and will be deemed and construed to be continuing
representations and warranties and will survive the Closing and, other than
fraudulent misrepresentations made by Sellers and breach of the representations
set forth in Section 2.9,
22
<PAGE>
continue in full force and effect thereafter, for fifteen (15) months after the
Closing Date. All fraudulent misrepresentations and breach of the representation
set forth in Section 2.9 made by Sellers shall continue in full force and effect
until expiration of the applicable statute of limitations. If a notice of breach
is given within any applicable time period, the Sellers shall be responsible for
all Damages (as defined below) resulting from, arising out of, or related to
such breach, including all Damages suffered after the date notice has been
given.
7.4 Indemnification.
---------------
(a) From and after the Closing Date, Sellers, jointly and severally,
shall defend, indemnify and hold harmless Buyer from and against any and all
claims, actions, causes of action, lawsuits, losses, costs, damages, liabilities
and expenses, including reasonable attorneys' fees and expenses (collectively,
"Damages"), incurred by Buyer that arise out of:
(i) a breach of the representations, warranties, covenants and
agreements given or made by Sellers in this Agreement, any of the Disclosure
Schedules or under or pursuant to any document, certificate, schedule or
instrument delivered by or on behalf of Sellers in connection herewith;
(ii) all matters arising out of or in connection with the operation
of the Business or of Adams & Hirst before the Closing including, without
limitation, all matters referred to in Section 2.23 hereof;
(iii) all Excluded WCC Liabilities and Excluded WCC Assets;
(iv) all Excluded Adams & Hirst Liabilities and Excluded Adams &
Hirst Assets;
(v) any claim, action, suit or proceeding asserted or instituted on
the basis of any matter described in clauses (i), (ii), (iii) or (iv) of this
Section 7.4(a).
(b) From and after the Closing Date, Buyer shall defend, indemnify and hold
harmless Sellers from and against any and all Damages incurred by Sellers
arising out of (i) a breach of the representations, warranties, covenants and
agreements given or made by Buyer in this Agreement, any of the Disclosure
Schedules, or under or pursuant to any document, certificate, schedule or
instrument delivered by or on behalf of Buyer in connection herewith; (ii) all
matters arising solely out of or solely in connection with the operation of the
Business after the Closing, and (iii) any claim, action, suit or proceeding
asserted or instituted on the basis of any matter described in clauses (i) or
(ii) of this Section 7.4(b).
23
<PAGE>
(c) No claim, demand, suit or cause of action shall be brought under clauses
(i), (ii) or (iii) or this paragraph 7.4 against the Sellers (except for claims,
demands, suits and causes of action arising out of: (i) a breach of the
representations and warranties set forth in Article III, (ii) any matter arising
out of or in connection with the operation of Adams & Hirst before the Closing;
(iii) any excluded Adams & Hirst Liabilities; and (iv) the matter referred to in
Schedule 2.15 of the Disclosure Schedules) unless and until the aggregate amount
of Damages under such clauses exceeds $25,000, in which event the Buyer shall be
entitled to indemnification from the Sellers for all Damages under such clauses,
including damages not in excess of $25,000, up to a maximum aggregate liability
of $1,800,000.
7.5 Procedures; Third Party Claims. If a claim to which the
------------------------------
indemnification provisions of Section 7.4 apply, arises out of any suit, claim
------------
or other assertion of liability by a third party (hereinafter collectively, the
"Claims" and individually, a "Claim"), the indemnified party agrees to give
written notice within a reasonable time to the indemnifying party of the
existence of such Claim, it being understood that the failure to give such
notice shall not affect the indemnified party's right to indemnification and the
indemnifying party's obligation to indemnify as set forth in this Agreement,
unless the indemnifying party's ability to contest, defend or settle with
respect to such Claim is thereby demonstrated and materially prejudiced.
The obligations and liabilities of the parties hereto with respect to their
respective indemnities pursuant to Section 7.4 resulting from any Claim, shall
------------
be subject to the following additional terms and conditions:
(a) The indemnifying party shall have the right to undertake, by
counsel or other representatives of its own choosing, the defense
or opposition to such Claim, subject to the right of approval by
indemnified party, which right shall not be unreasonably withheld.
(b) In the event that the indemnifying party shall elect not to
undertake such defense or opposition, or within 30 days after
notice of any such Claim from the indemnified party shall fail to
defend or oppose, the indemnified party (upon further written
notice to the indemnifying party) shall have the right to
undertake the defense, opposition, compromise or settlement of
such Claim, by counsel or other representatives of its own
choosing, on behalf of and for the account and risk of the
indemnifying party (subject to the right of the indemnifying party
to assume the defense of or opposition to such Claim at any time
prior to
24
<PAGE>
settlement, compromise or final determination thereof).
(c) Anything in this Section 7.5 to the contrary notwithstanding, (i)
------------
if there is a reasonable probability that a Claim may adversely
affect the indemnified party, the indemnified party shall have the
right, at its own cost and expense, to participate in the defense,
opposition, compromise or settlement of the Claim, (ii) the
indemnifying party shall not, without the indemnified party's
written consent, settle or compromise any Claim or consent to
entry of any judgment 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, and (iii) in the event that the indemnifying party
undertakes defense of or opposition to any Claim, the indemnified
party, by counsel or other representative of its own choosing and
at its sole cost and expense, shall have the right to consult with
the indemnifying party and its counsel or other representatives
concerning such Claim and the indemnifying party and the
indemnified party and their respective counsel or other
representatives shall cooperate in good faith with respect to such
Claim.
(d) No undertaking of defense or opposition to a Claim shall be
construed as an acknowledgment by such party that it is liable to
the party claiming indemnification with respect to the Claim at
issue or other similar Claims.
7.6 Set-Off. In the event the indemnifying party is required to make any
-------
payments under Section 7.4 hereof, or in the event the indemnifying party is
required to reimburse the Indemnified Party pursuant to Section 7.4 hereof, the
indemnified party, may, in lieu of seeking such payments from the indemnifying
party or in lieu of seeking reimbursement from the indemnifying party, set-off
such amounts from amounts due to the indemnifying party pursuant to paragraph
1.5 hereof, or if the payment set forth in paragraph 1.5 has already been made
and has been placed in the Escrow Account, the indemnified party may make a
claim against the Escrow Account, whereupon the matter shall be referred to
binding arbitration in such manner as the parties may agree or shall be
determined by a court of competent jurisdiction.
7.7 Conduct of Business Pending Closing.
-----------------------------------
(a) Except as set forth in the Disclosure Schedules, during the period
from the date of this Agreement to the date of
25
<PAGE>
Closing (the "Closing Date"), WCC and Adams & Hirst shall conduct the Business
according to their ordinary and usual course of business, consistent with past
practice. Without limiting the generality of the foregoing, prior to the Closing
Date, neither WCC nor Adam & Hirst will, without the prior written consent of
Buyer, engage in any of the following transactions:
(i) enter into any new employment agreement with officers,
directors or employees;
(ii) grant any increase in the compensation payable or to become
payable to the Sellers or any other officers or employees or establish, adopt,
enter into, or make any new grants or awards under, accelerate payment or
vesting, become obligated to grant any awards under, or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option or other
equity, pension, retirement, incentive or deferred compensation, employment,
retention, termination, severance, health, life or other welfare, fringe,
Employee Benefit Plan, or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any current or former directors, officers or
employees, or grant or pay any benefit not required by an existing Employee
Benefit Plan or other plan or arrangement.
(iii) make a commitment for any significant investment of a
capital nature;
(iv) enter into any waiver, release or relinquishment of any
contract rights, except, in each case, in the ordinary course of business and
consistent with past practice;
(v) enter into any new leases for property except in the ordinary
course of business, or terminate any of the Client Agreements;
(vi) acquire the assets of any business or any corporation,
partnership or other business organization or otherwise acquire any assets which
are material in the aggregate to the Business;
(vii) sell, lease or otherwise dispose of any Asset except in the
ordinary course of business consistent with past practice;
(viii) create, assume or incur any encumbrance on any of the Assets;
(ix) amend, terminate or waive any right of substantial value
arising under any of the Client Agreements or otherwise relating to the
Business;
(x) fail to pay current liabilities, including
26
<PAGE>
accounts payable and accrued expenses, in the ordinary course of business and
otherwise in accordance with their terms;
(xi) collect any accounts receivable outside of the ordinary course
and in advance of their due dates;
(xii) take or perform any action which would or might cause any
representation or warranty made by Sellers herein to be rendered inaccurate, in
whole or in part, and/or which would prevent, inhibit or preclude the
satisfaction, in whole or in part, of any covenant required to be performed or
satisfied by Sellers at or prior to the Closing and/or the implementation of the
within transaction;
(xiii) agree in writing or otherwise take any of the foregoing actions
or any action which would make any representation or warranty in this Agreement
to be untrue or incorrect; or
(xiv) otherwise engage in any practice, take any action, or enter into
any transaction of the sort described in Section 2.10 above.
(b) During the period from the date of this Agreement to the Closing Date,
Sellers will:
(i) take and perform any and all actions necessary to render accurate
and/or maintain the accuracy of, all of the representations and warranties of
Sellers and WCC herein contained and satisfy each covenant or condition required
to be performed or satisfied by Sellers prior to the Closing and/or cause or
permit the implementation of the within transaction;
(ii) carry on and maintain the Business in substantially the same
form, style and manner as operated by Sellers prior to this Agreement and use
their best efforts to preserve its business organization and its relationships
with its customers, all employees and others having business relations with
Sellers, and not voluntarily engage in any transaction not in the ordinary
course of business without the prior consent of Buyer;
(iii) use their best efforts in good faith to cause each of WCC's
customers including, but not limited to those listed on Schedule 1.2(e) of the
Disclosure Schedules, to indicate their intention to continue to be bound by the
terms and conditions of the Client Agreements;
(iv) use their best efforts in good faith to cause each of its
employees to continue employment with Seller following the Closing Date; and
(v) give prompt written notice to Buyer of any material development
affecting WCC's or Adams & Hirst's assets,
27
<PAGE>
clients, liabilities, business, financial condition, operations, results of
operations, or future prospects; and give prompt written notice to Buyer of any
material development affecting Seller's ability to consummate the transactions
contemplated by this Agreement. No disclosure, pursuant to this paragraph "7.7
(b)(v)", however, shall cure any misrepresentation, breach of warranty, or
breach of covenant.
7.8 Continued Disclosure. If any event or state of facts occurs or arises
--------------------
between the earlier of the date hereof (or the date as of which disclosure has
been made with respect to such type of event or state of facts) and the Closing
Date that, had it occurred or arisen prior to or on such date, would have been
required by the terms hereof to be disclosed herein, Seller shall give notice
thereof in writing to Buyer within five days of the happening of such event or
state of facts. The giving of such notice and the disclosure of such event or
state of facts shall in no way change the conditions precedent to the
obligations of Buyer as set forth in Article VII.
-----------
7.9 Full Access. Sellers will permit representatives of the Buyer to have
-----------
full access to all premises, properties, personnel, books, records, contracts
and documents of or pertaining to WCC and Adams & Hirst.
7.10 Exclusivity. WCC and Adams & Hirst will not and Sellers will not cause
-----------
or permit WCC or Adams & Hirst to: (i) solicit, initiate, or encourage the
submission of any proposal or offer from any person or entity relating to the
acquisition of any capital stock or other voting securities, or any substantial
portion of the assets of, WCC or Adams & Hirst (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any person or entity to do or seek any of the foregoing. The Sellers
will not vote the WCC Stock or the Adams & Hirst Stock in favor of any such
acquisition structured as a merger, consolidation, or share exchange. The
Sellers will notify the Buyer immediately if any person or entity makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
7.11 Tax Returns. Sellers will provide to Buyer, within 45 days following
-----------
the Closing Date, draft federal and state tax returns and draft cash basis
financial statements for WCC and Adams & Hirst covering, in each instance, the
period from January 1, 1998 to the Closing Date.
28
<PAGE>
ARTICLE VIII
CLOSING DELIVERIES
------------------
8.1 Closing. Subject to the conditions contained in this Agreement, the
-------
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place at a location mutually agreeable to Buyer and Seller at 10:00 a.m.
Pacific Coast Time on May 29, 1998. The effective time for purposes of
apportionments and other matters involving allocations for the Closing shall be
11:59 p.m., Pacific Daylight Time, on May 29, 1998.
8.2 Deliveries.
----------
(a) At the Closing, Buyer shall deliver to Sellers:
(i) The Purchase Price pursuant to Section 1.4 hereof;
-----------
(ii) Certified copies of the resolutions of the Board of
Directors of Buyer authorizing Buyer to execute and deliver this Agreement, any
agreement or document contemplated hereby, and to consummate the transactions
contemplated hereby and thereby;
(iii) A certificate of an executive officer of Buyer, dated the
Closing Date, certifying that: (A) all representations and warranties made by
Buyer in Article III hereof were true and correct when made, and are true and
correct on the Closing Date, except for changes permitted or contemplated by
this Agreement and except that representations which are specifically made as of
a specified date shall be true and correct as of such earlier date; and (B) all
covenants, agreements and conditions contained in this Agreement to be performed
or complied with by Buyer on or prior to the Closing Date have been performed or
complied with;
(iv) A duly executed Employment Agreement, in substantially the
form attached as Exhibit A-1 hereto; and
(v) Opinion of Buyer's counsel.
(b) At the Closing, Sellers shall deliver to Buyer:
(i) for the WCC Stock and the Adams & Hirst Stock
accompanied by executed assignment documents or endorsed in blank;
(ii) Possession of all assets used in the Business, except for
Excluded WCC Assets;
(iii) All contracts, leases, agreements or other
29
<PAGE>
documents, books, financial and accounting records of WCC not previously
delivered or not located on the premises of WCC, to the extent such items are
used in the Business, and are not Excluded Assets or items related to Excluded
Assets and all documents, books, financial and accounting records of Adams and
Hirst not previously delivered to Buyer;
(iv) A duly executed Employment Agreement, in substantially the
form attached as Exhibit A-1 hereto;
(v) A certificate of the Sellers, dated as of the Closing Date,
certifying that: (i) all representations and warranties made by Sellers in
Article II and Article III hereof were true and correct when made, and are true
and correct on the Closing Date except for changes permitted or contemplated by
this Agreement and except that representations which are specifically made as of
a specified date shall be true and correct as of such earlier date; and (ii) all
covenants, agreements and conditions contained in this Agreement to be performed
or complied with by Sellers on or prior to the Closing Date have been performed
or complied with;
(vi) An opinion of Sellers' counsel in a form to be mutually
agreed by the parties;
(vii) Evidence satisfactory to the Buyer of payment of all payroll,
payroll withholding taxes and vacation accrued but not due as of the end of
business as of the date of Closing;
(viii) All documents required by Article V hereof; and
(ix) All other documents required by this Agreement.
ARTICLE IX
POST-CLOSING COVENANTS AND AGREEMENTS
-------------------------------------
9.1 Further Assurances. If at any time and from time to time after the
------------------
Closing, Buyer determines that any further assignment, consent to assignment or
other document or any further action is necessary or desirable to carry out the
purposes of and to make effective the transactions contemplated by this
Agreement, Sellers agree to execute and deliver all such instruments and to take
such actions as may be reasonably necessary or advisable for such purpose.
9.2 Covenant Not to Compete; Nondisclosure and Confidentiality.
----------------------------------------------------------
(a) Non-Compete. During the later of (i) the employment of Cannon with
Buyer, and one (1) year thereafter, or (2) for a
30
<PAGE>
period of five (5) years from the date of this Agreement (provided that with
respect to Sellers other than Cannon, the period of this covenant not to compete
shall terminate five (5) years from the date of this Agreement), Sellers shall
not directly or indirectly through representatives agents or otherwise (i)
engage in competition with the Business sold hereunder, its successors or
assigns within 150 miles from Brea, California, and within 150 miles from any
office currently or for the next twelve months under the management or direction
of Cannon (hereafter the "Territory") or with respect to WCC's or Buyer's
"customers" as defined in this paragraph; or (ii) provide information, solicit
or sell for, own, or organize any interest in, either directly or through any
affiliate or subsidiary corporation, partnership or other entity, or become
engaged by, act as agent for, or in any manner assist, any person, corporation
or other entity that is directly or indirectly in competition with Buyer or
Sellers' Business, or their successors or assigns in the Territory or with
respect to Buyer's or WCC's "customers" as defined in this paragraph. Sellers
further agree that within the restrictive period, they will not in any way
attempt to divert from Buyer or WCC any business whatsoever and Sellers further
agree that during said restrictive period they will not influence or attempt to
influence any of the customers of Buyer or Sellers not to do business with Buyer
or WCC; Sellers further agree that they will not make or permit the making of
any public announcement or statement of any kind that they were formerly
employed or connected with Buyer or WCC, which announcement has as its purpose
directly or indirectly the intent to violate the provisions of this Agreement.
The term "customer", as used herein, shall mean any person or entity which
Sellers have contact with and do business with for Buyer or WCC at any time
while employed by WCC or Buyer. None of the foregoing restrictions upon Sellers
shall restrict their investment in up to 2 percent of the outstanding stock of
any publicly-traded corporation.
(b) Confidential Information. During the term set forth in paragraph (a)
and thereafter, Sellers shall not divulge any of Buyer's or WCC's business
contacts, customers, suppliers, technology, know-how, trade secrets, marketing
techniques, books and records, computer programs, lists, plans, databases, or
any other confidential or proprietary information or make available to any other
persons any documents, files or other papers concerning the foregoing or the
Business or financial affairs of WCC or Buyer. During the term set forth in
paragraph (a) Seller shall not solicit the employment of any employee or
consultant currently or provisionally employed or retained by Buyer or WCC.
(c) Sellers have carefully considered the nature and extent of the
restrictions upon them and the rights and remedies conferred upon Buyer under
this Agreement and hereby acknowledge and agree that the same are reasonable in
time and territory.
(d) It is stipulated that a breach by Sellers of the
31
<PAGE>
restrictive covenants set forth herein will cause irreparable damage to Buyer
and that in the event of any breach of the provisions under this Section, Buyer,
in addition to any other remedies it has, shall be entitled to an injunction
restraining Sellers from violating or continuing a violation of the restrictive
covenants herein contained. It is further stipulated that the existence of any
claim or cause of action on the part of Sellers against Buyer, whether arising
from this Agreement or otherwise shall in no way constitute a defense to the
enforcement of the restrictive covenants contained herein, and the restrictive
periods in which Buyer is entitled to an injunction shall be extended in an
amount which equals the time period which the Sellers are or have been in
violation of the restrictive covenants contained herein. In the event of a
breach of the restrictive covenants contained in the Agreement, Sellers, jointly
and severally, agree to the payment of or reimbursement of, Buyer's reasonable
attorney's fees and disbursements incurred in enforcing any such provision. The
provisions of this Section shall survive the Closing Date. If any of the
provisions of this Section shall be held invalid, illegal, or unenforceable by
the final decision of a court of competent jurisdiction and all appeals
therefrom shall have failed or the time for such appeals shall have expired the
provision or provisions shall be deemed eliminated from this Agreement to such
jurisdiction but the remaining provisions shall nevertheless be given full
effect. In the event this Agreement or any portion hereof is more restrictive
than permitted by the law of the jurisdiction in which enforcement is sought,
this Agreement or such portion shall be limited in that jurisdiction only to the
extent required by the law of that jurisdiction. If a court of competent
jurisdiction shall determine that the terms of this Section are partially or
wholly inoperative, unenforceable or invalid in a particular case because of
their time or geographic scope or for any other reason such court shall have the
power to limit such time or geographic scope or otherwise to recast the terms of
this Agreement in such case so as to permit its enforcement to the greatest
extent permitted by applicable law.
(e) Nothing in this Section 9.2 shall be interpreted as restricting the
ability of the Sellers to continue to conduct the business previously conducted
by Adams & Hirst involving the purchase and resale of telecommunications
installation-related materials.
9.3 Resignations. Immediately following Closing, Cannon and Connolly shall
------------
resign as directors, and Connolly shall resign as an officer and employee of
WCC.
ARTICLE X
TERMINATION; WAIVER
-------------------
10.1 Termination. This Agreement may be terminated at any time
-----------
32
<PAGE>
prior to the Closing as follows:
(a) the Buyer and the Sellers may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving written notice to
the Sellers at any time prior to the Closing (i) in the event the Sellers have
breached any representation, warranty, or covenant contained in this Agreement
in any material respect, the Buyer has notified the Seller of breach, and the
breach has continued without cure for a period of 10 days after the notice of
breach, or (ii) if the Closing shall not have occurred on or before June 30,
1998, by reason of Sellers being unable or unwilling to effect a Closing on or
before, June 30, 1998, or by reason of the failure of any condition precedent
under Article V hereof (unless the failure results primarily from the Buyer
itself breaching any representation, warranty, or covenant contained in this
Agreement), or (iii) if Buyer in its sole discretion is not satisfied with the
results of its continuing legal, business and accounting due diligence regarding
Seller; and
(c) the Sellers may terminate this Agreement by giving written notice to the
Buyer at any time prior to the Closing (i) in the event the Buyer has breached
any representation, warranty, or covenant contained in this Agreement in any
material respect, any of the Sellers has notified the Buyer of the breach, and
the breach has continued without cure for a period of 10 days after the notice
of breach, or (ii) if the Closing shall not have occurred on or before June 30,
1998, by reason of Buyer being unable or unwilling to effect a Closing on or
before June 30, 1998, or by reason of the failure of any condition precedent
under Article VI hereof (unless the failure results primarily from the Sellers
itself breaching any representation, warranty, or covenant contained in this
Agreement).
10.2 Effect of Termination; Specific Performance.
-------------------------------------------
(a) In the event of the termination of this Agreement pursuant to
Section 10.1 hereof, notice thereof shall be promptly given by the terminating
party to the other party and thereafter this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, except that (i) the provisions of Section
7.1 hereof shall remain in effect and (ii) nothing in this Section 10.2 shall
relieve any party to this Agreement from liability for breach of this Agreement
or any misrepresentation hereof, including pursuant to paragraph (b) hereof.
(b) In the event of a breach or threatened breach by Sellers or Buyer
of any of the agreements and obligations set forth herein, monetary damages or
the other remedies at law that may be
33
<PAGE>
available to the non-breaching party for such breach or threatened breach will
be inadequate and, without prejudice to the nonbreaching party's right to pursue
any remedies at law or in equity available to it for such breach or threatened
breach, including without limitation the recovery of damages, the non-breaching
party will be entitled to injunctive relief as a means of having the breaching
party comply with the provisions herein.
10.3 Extension; Waiver. At any time prior to the Closing, the parties
-----------------
hereto may (i) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein by the other party or in any
document, certificate or writing delivered pursuant hereto by the other party,
or (iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of either party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. No waiver of any breach of a provision of this Agreement
shall constitute or be deemed a waiver of any other breach of the same or any
other provision of this Agreement, and no delay or failure to take action with
respect to any breach or provision of this Agreement shall constitute or be
deemed a waiver of the right to enforce this Agreement and to take action
against such breach or any subsequent breach of the same or any other provision.
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
11.1 Entire Agreement; Amendment. Except with respect to those documents
---------------------------
signed in connection with the Closing of the transactions contemplated by this
Agreement and those documents that, by their terms, modify or supersede this
Agreement, this Agreement (including the Disclosure Schedules), contains the
entire agreement between the parties hereto and supersedes all prior oral or
written agreements, promises, representations, commitments or understandings
with respect to the matters provided for herein. This Agreement may be modified
or amended only by a writing duly executed by Buyer and Sellers, which
modification or amendment shall be binding upon all of the parties hereto.
11.2 Assignment and Binding Effect. This Agreement and the rights and
-----------------------------
obligations of any party hereunder may not be assigned by any party without the
prior written consent of the other party hereto. All covenants, agreements,
statements, representations, warranties and indemnities in this Agreement by and
on behalf of either of the parties hereto shall bind and inure to the benefit of
their respective heirs, successors and permitted assigns of the parties hereto.
34
<PAGE>
11.3 Waivers. No waiver of any of the provisions of this Agreement shall be
-------
deemed or shall constitute a continuing waiver, and no waiver shall be binding
unless executed in writing by the party making the waiver.
11.4 Notices. All notices, demands or other communications which may be or
-------
are required to be given by any party to any other party pursuant to this
Agreement, shall be in writing and shall be mailed by certified mail, return
receipt requested, postage prepaid, or transmitted by hand delivery, national
overnight express, telegram or facsimile transmission, addressed as follows:
(a) If to Buyer:
Butler International, Inc.
110 Summit Avenue
Montvale, New Jersey 07645
Attention: Michael C. Hellriegel
Sr. Vice President-Finance
Facsimile: (201) 573-9773
with a copy (which shall not constitute notice) to:
McBreen, McBreen & Kopko
20 North Wacker Drive
Suite 2520
Chicago, Illinois 60606
Attention: Frederick H. Kopko, Jr.
Facsimile: (312) 332-2657
(b) If to Sellers:
c/o WCC Telephone Services, Inc.
615 North Berry Street, Suite G
Brea, CA 92821
with a copy to: Doug Schaaf
Paul, Hastings, Janofsky & Walker LLP
695 Town Center Drive
Costa Mesa, California 92626-1924
until such time as either party notifies the other of a change of address. Each
notice or other communication which shall be mailed, delivered or transmitted in
the manner described above shall be deemed sufficiently given and received for
all purposes at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, or the affidavit of messenger or telefax
transmission log being deemed conclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
35
<PAGE>
11.5 Governing Law; Jurisdiction and Venue. This Agreement shall be
-------------------------------------
governed by and construed in accordance with the laws of the State of
California, without giving effect to the principles of conflicts of laws
thereof. Each party hereby submits to the personal jurisdiction of the United
States District Court for the District of New Jersey or any court of the State
of New Jersey, and hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
court. In addition, each party hereby irrevocably and unconditionally waives, to
the fullest extent permitted by law, (i) any objection which it may now have or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any related matter in such court, (ii)
the defense of an inconvenient forum to the maintenance of any suit, action or
proceeding in any such court, and (iii) trial by jury in any such suit, action
or proceeding.
11.6 Counterparts; Execution. To facilitate execution, this Agreement may
-----------------------
be executed in as many counterparts as may be required, and each such
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but a single agreement.
11.7 Effective Time of Closing. Notwithstanding the time at which Closing
-------------------------
takes place, the Closing shall be deemed to be effective as of 11:59 p.m.
Pacific Daylight Time on the Closing Date.
11.8 Severability. Any provision of this Agreement which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11.9 No Third Parties Benefited. This Agreement is made and entered into
--------------------------
for the sole protection and benefit of the parties hereto, their successors and
assigns, and no other person or persons shall have any right of action under
this Agreement.
11.10 Recitals, Schedules and Exhibits. The recitals, schedules, and
--------------------------------
exhibits to this Agreement are incorporated herein and, by this reference, made
a part hereof as if fully set forth at length herein.
11.11 Section Headings. The section headings used herein are inserted for
----------------
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
36
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement,
or caused this Agreement to be executed on its behalf, as of the date first
above written.
BUYER:
BUTLER TELECOM, INC.
By:________________________________
Its:_______________________________
SELLERS:___________________________
-----------------------------------
Tom Cannon
-----------------------------------
Ted Connolly
-----------------------------------
Marianne A. Adams
-----------------------------------
Jacqueline Anne Hirst
<PAGE>
EXHIBIT 10.44
ACQUISITION AGREEMENT
---------------------
THIS IS AN ACQUISITION AGREEMENT ("Agreement") dated May 21, 1998 by and
among Butler Telecom, Inc., a corporation organized under the laws of the State
of Delaware ("Buyer"), and Automated Concepts, Inc., a corporation organized
under the laws of New York ("Seller").
BACKGROUND
----------
Seller has been engaged principally in the following businesses in the
Northern Virginia and Washington, DC metro area (the "Business"): recruiting
and supplying technical personnel, who are employed by Seller or contracted by
Seller, to customers on a temporary or project basis ("Temporary Technical
Services"). Seller desires to sell and transfer to Buyer, and Buyer desires to
purchase from Seller, the ongoing employee and customer relationships and the
other assets of the Business described in Section 1.1 below, upon the terms set
forth in this Agreement.
TERMS
-----
In consideration of the mutual covenants, representations and warranties
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
THE TRANSACTION
---------------
1.1 SALE AND PURCHASE OF ASSETS. Seller hereby sells, transfers and
----------------------------
assigns to Buyer and Buyer hereby buys, has transferred and assigned to it from
Seller:
1.1.1 Seller's contracts, arrangements or rights to provide Temporary
Technical Services to all current and past customers of the Business as attached
in Schedule D (past customers include any customers during a one (1) year period
prior to the effective date);
1.1.2 the right, but not the obligation, to employ without
interference by Seller, all of the current employees of Seller's Reston, VA
branch who are on the bench or assigned to such customers of the Business
(attached to this Agreement as Schedule A is a list of all such employees, who
will be referred to in this Agreement as the "Transferred Billable Employees";
Schedule A also sets forth the name of the customer to whom each employee is
assigned, if applicable, the employee's pay rate and the billing rate with
respect to each employee);
1.1.3 the rights, but not the obligation, to employ, without
interference by Seller, all of the recruiters, salespeople, and administrative
staff of the Seller's Reston, VA branch, (attached to this Agreement as Schedule
B is a list of all such employees who will be referred to in this Agreement as
the "Transferred Staff Employees"; Schedule B also sets forth the hire date,
salary, and commission or bonus plan).
1.1.4 all Independent Contractor Agreements currently in force in the
Seller's Reston, VA branch and listed in Schedule C attached ("Independent
Contractors"); and
<PAGE>
1.1.5 all current files and records (in paper and electronic form)
which deal with (a) all current, past and prospective customers of the Business,
and (b) all current, past and prospective employees of the Business (including
all resume files) and; (c) all current, past and prospective independent
contractors of the Business.
All of the foregoing are referred to herein collectively as the "Assets".
Assets expressly exclude all assets not listed in this Section 1.1. The
effective date and time of the sale, transfer and assignment of the Assets shall
be the close of business on May 29, 1998 (the "Effective Date").
1.2 ASSUMPTION OF LIABILITIES. Buyer does not assume and will not
--------------------------
discharge or be liable for any debts, liabilities or obligations of Seller
whether due or to become due, absolute, contingent, known or unknown, or
otherwise, including, without limitation, any: (a) liabilities or obligations
of Seller to its creditors, landlords, customers or stockholders, (b) sales or
income tax or other liabilities or obligations of Seller, or (c) wages,
benefits, payroll taxes withholdings, accrued vacation, workers' compensation
awards or rate adjustments, severance benefits or any other payment or
obligation due to or in respect of any employee of Seller attributable to the
period of time prior to the Effective Date.
1.3 PURCHASE PRICE. The aggregate purchase price for the Assets (the
---------------
"Purchase Price") will be equal to the sum of the following amounts: (a) Twenty
Five Thousand ($25,000.00) Dollars multiplied by the number of Successfully
Transferred Billable Employees and Independent Contractors. A "Successfully
Transferred Billable Employee" shall be a person who (i) is a Transferred
Billable Employee identified on Schedule A, (ii) assigned and billable to a
customer on the Effective Date, or for whom there is an agreement with a
customer pursuant to which the employee will become assigned and billable within
one week of the Effective Date and (iii) remains a billable employee of Buyer
as of July 15, 1998; (b) forty (40%) percent of the Gross Profit for each
Successfully Transferred Billable Employee and Independent Contractor for the
first year after the Effective Date; and (c) sixty (60%) percent of the Gross
Profit for each employee who is on the bench at the Effective Date and becomes
employed by Buyer (these employees do not qualify as a Successfully Transferred
Billable Employees), for the first year after the Effective Date. The Purchase
Price will be paid by Buyer to Seller as follows:
(A) Wire transfer at closing for the estimated amount of clause 1.3(a)
above (Transferred Employees who have signed up with Buyer and Independent
Contractors multiplied by Twenty Five ($25,000.00) Dollars).
(B) Final adjustment for clause 1.3(a) above settled on July 15, 1998.
(C) Twelve (12) monthly payments by check within thirty (30) days of
month end for clause 1.3(b) and clause 1.3(c) above.
1.4 CLOSING. The closing under this Agreement will take place at an agreed
--------
upon time and place. At such closing: (a) the Purchase Price required at
Closing per clause 1.3 above will be wire transferred from Buyer to Seller; (b)
Seller will deliver to Buyer the items described in Section 1.1.5 above; (c)
the parties will provide executed copies of the Federal Predecessor/Successor
Election, in the form attached hereto as Exhibit A; and (d) eeach party will
deliver such other documents as may be reasonably required to be delivered by
the parties hereto pursuant to this Agreement or reasonably necessary to carry
out the intent of this Agreement.
<PAGE>
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
As a material inducement to Buyer to enter into and perform this Agreement)
Seller hereby represents and warrants to Buyer as follows:
2.1 ORGANIZATION AND EXISTENCE. Seller is a corporation duly incorporated,
---------------------------
validly existing and in good standing under the laws of New York and is duly
authorized to do business in Virginia.
2.2 CORPORATE POWER AND AUTHORITY: DUE EXECUTION. AUTHORIZATION AND
----------------------------------------------------------------
ENFORCEABILITY. Seller has all requisite power and authority to own the Assets
- ---------------
and to enter into this Agreement and perform Seller's obligations hereunder.
This Agreement has been duly executed and delivered) on behalf of Seller, by a
duly elected officer of Seller. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action on the
part of Seller, and this Agreement constitutes the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
2.3 THIS AGREEMENT DOES NOT VIOLATE LAWS OR OTHER AGREEMENTS. The
---------------------------------------------------------
execution, delivery and performance of this Agreement does not and will not (a)
contravene any provision of the certificate of incorporation or bylaws of
Seller, or (b) to the best of Seller's knowledge, conflict with, result in a
breach of, constitute a default under, or permit a termination of, any contract
or commitment of Seller or any judgment or order of any governmental or
regulatory authority or any applicable law, rule or regulation.
2.4 TITLE: ABILITY TO TRANSFER: CONSENTS. To the best of its knowledge,
--------------------------------------
Seller has good and marketable title to all the Assets, subject to no security
interests, mortgages, pledges, liens, encumbrances or charges. There are no
restrictions on Seller's ability to transfer to Buyer all of the Assets, and
Seller's execution of this Agreement will fully effect such transfer, except any
required consents by customers to transfer currently active customer contracts.
No consent, approval or authorization of, or registration or filing with, any
person or governmental or regulatory authority is required in connection with
the execution of this Agreement or the consummation of the transactions
contemplated hereby.
2.5 OBLIGATIONS TO EMPLOYEES. Seller has paid to its employees all wages,
-------------------------
compensation, vacation pay, holiday pay, accrued paid leave or time off and
benefits due or owing, or which shall become due or owing, for services rendered
to Seller and its customers for the period up to and including the Effective
Date.
2.6 ABSENCE OF UNDISCLOSED LIABILITIES. As of the date hereof, Seller has
-----------------------------------
no liability or obligation of any nature relating to the Business or the Assets,
whether due or to become due, absolute, contingent or otherwise, including
liabilities for or in respect of taxes or penalties, except for liabilities
which are disclosed on Schedule E attached hereto.
2.7 FILES AND RECORDS. The files and records of Seller which are being
------------------
transferred hereunder are complete and accurate, and reflect all those entries
and matters which are customarily set forth in such files and records.
2.8 DISCLOSURE. No representation or warranty by Seller in this Agreement,
-----------
nor any schedule or document furnished or to be furnished to Buyer by Seller
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or fails or
will fail to state a material fact necessary to make the statements contained
therein not misleading.
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
3.1 ORGANIZATION AND EXISTENCE. Buyer is a corporation duly incorporated,
--------------------------
validly existing and in good standing under laws of the State of Delaware.
3.2 CORPORATE POWER AND AUTHORITY: DUE EXECUTION. AUTHORIZATION AND
---------------------------------------------------------------
ENFORCEABILITY. Buyer has all requisite corporate power and authority to enter
- --------------
into this Agreement and perform Buyer's obligations hereunder. This Agreement
has been duly executed and delivered, on behalf of Buyer, by a duly elected
officer of Buyer. The execution, delivery and performance of this Agreement by
Buyer have been duly authorized by all necessary corporate action on the part of
Buyer, and this Agreement constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms.
ARTICLE 4
CERTAIN ADDITIONAL COVENANTS
----------------------------
4.1 RELEASE OF BUYER FROM RESTRICTIVE COVENANTS IN SELLER'S EMPLOYMENT AND
----------------------------------------------------------------------
CONSULTING AGREEMENTS. The employment and consulting agreements between Seller
- ----------------------
and its employees and consultants typically contain covenants restricting such
persons from directly or indirectly becoming employed by or acting as a
consultant for Seller's customers for a period of time following the termination
of their employment or consulting arrangement with Seller. Seller hereby
releases, and agrees not to enforce such provisions against, Buyer or any of its
present and past employees and consultants in the event that any such employee
or consultant is hired or retained by Buyer.
4.2 RESTRICTIVE COVENANTS. For a period of one (1) year from and after the
----------------------
Effective Date, Seller will not, directly or indirectly: (a) solicit, employ or
in any other fashion hire any of the Transferred Billable Employees or any other
person who was a billable employee of Seller's Reston, VA office during the year
prior to the Effective Date, or any of the Transferred Staff Employees, or (b)
solicit, interfere with or attempt to entice away from Buyer any person, firm or
corporation which was a customer of Seller's Reston, VA office during the one-
(1) year period prior to the Effective Date including those listed in Schedule
D, or (c) own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or be connected as a stockholder, partner
or otherwise with, any entity which at any relevant time during such period
engages in either of the Businesses within ninety (90) miles from downtown
Washington, DC. Notwithstanding the foregoing, this Section 4.2 shall not apply
to Seller's Systems Integration Services performed in the restricted territory
that arise as a result of Systems Integration Services performed by Seller in
other regions.
4.3 SELLER'S ACKNOWLEDGEMENT. Seller specifically acknowledges and agrees
-------------------------
that the restrictive covenants contained in this Section are reasonable and
necessary to protect the legitimate interests of Buyer and that Buyer would not
have entered into this Agreement in the absence of such restrictive covenants.
Seller agrees that Buyer's remedies at law for any breach or threat of breach by
Seller of the provisions of this Section will be inadequate, and that Buyer
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Section and to enforce specifically the terms and provisions
hereof, in addition to any other remedy to which Buyer may be entitled at law or
equity. In the event of litigation regarding the covenant not to compete, the
prevailing party in such litigation shall, in addition to any other remedies the
prevailing party may obtain in such litigation, be entitled to recover from
<PAGE>
the other party its reasonable legal fees and out of pocket costs incurred by
such party in enforcing or defending its rights hereunder. The length of time
for which this covenant not to compete shall be in force shall not include any
period of violation or any other period required for litigation during which
Buyer seeks to enforce this covenant.
Provided that the Purchase Price is paid by Buyer the restrictive covenants
contained in this Section are covenants independent of any other provision of
this Agreement and the existence of any claim which Seller may allege against
Buyer whether based on this Agreement or otherwise, will not prevent the
enforcement of this covenant. Should any provision of this Section be adjudged
to any extent invalid by any competent tribunal, such provision will be deemed
modified to the extent necessary to make it enforceable.
4.4 RETENTION PROGRAM. Buyer will implement a Retention Program for all
------------------
Transferred Billable Employees whereby a $3,000 (three thousand dollar) bonus
will be paid within six months after the Effective Date for all such employees
remaining employed by Buyer, at such time. The Buyer will be responsible for
one hundred (100%) percent of the cost.
4.5 COSTS AND EXPENSES; SALES AND TRANSFER TAXES AND FEES. Buyer will pay
-------------------------------------------------------
all of its own expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including all accounting and legal fees and
settlement charges. All applicable sales, transfer, documentary, use, filing
and other taxes and fees that may be due or payable as a result of this
conveyance, assignment, transfer or delivery of the Assets, whether levied on
Seller or Buyer, shall be borne by Seller.
4.6 FORWARDING OF RECEIPTS RELATING TO SERVICES PROVIDED BY OTHER
-------------------------------------------------------------
PARTY. Seller will promptly forward to Buyer all payments received from any
- ------
customer for services provided to such customer by Buyer on and after the
Effective Date. Buyer will promptly forward to Seller all payments received
from any customer for services provided to such customer by Seller prior to the
Effective Date. Buyer will take all reasonable action requested by Seller to
assist Seller in collecting all accounts receivable arising prior to the
closing.
4.7 FORWARDING OF MAIL AND TELEPHONE CALLS. With respect to mail or faxes
---------------------------------------
received at Seller's offices and telephone calls made to Seller's offices during
the ninety (90) day period following the Effective Date, Seller will arrange for
such communications to be forwarded to Buyer, at the location to be furnished by
Buyer, if such communications (a) relate to the Assets and (b) are from
customers concerning new business or relate to Transferred Billable or
Transferred Staff Employees or other existing or prospective employees of Buyer.
4.8 BROKERAGE. If in connection with this Agreement or the transactions
----------
contemplated hereunder any claims are made for a broker's commission or finder's
fee arising directly or indirectly by, through or on account of any act or
agreement of Seller, or Buyer, the party whose act or agreement gives rise to
such claim will defend, indemnify and hold the other harmless from any and all
liabilities and expenses arising therefrom.
4.9 FURTHER ASSURANCES: COOPERATION. On and after the date hereof, either
--------------------------------
party will execute and deliver such further instruments of conveyance and
transfer and take such further action as the other party may reasonably request
to effectively and smoothly convey and transfer the Assets and Seller's Business
to Buyer.
4.10 CONTINUED OCCUPANCY. Transferred Staff and Transferred Billable
--------------------
Employees will be allowed to occupy the Seller's Washington, DC branch current
office space and will be provided with telephones and computers in the same
manner as they are today for a period not to exceed thirty (30) days after the
Effective Date. Seller will bear such Occupancy Cost.
<PAGE>
4.11 CLIENT CONSULTS. Prior to the Effective Date, the Seller will notify
----------------
the current customers of the Business and present them with an Assignment
Agreement. Prior to and subsequent to the Effective Date, Seller will assist
Buyer in obtaining consent of customers to the transfer of such customer
contracts to Buyer.
4.12 TRANSITION ASSISTANCE. Mark Silverstein, technical manager of Seller's
----------------------
Reston, VA branch will be available full time until July 10, 1998 to assist the
Buyer in the acquisition and transition of the Business. Stacy Campbell,
Administrative Manager of Seller's Reston, VA branch will also be available as
needed until July 31, 1998 to assist the Buyer in the acquisition and transition
of the Business. Any costs related to this Section 4.12 will be borne solely ny
Seller.
4.13 EARNOUT PAYMENT. Gross Profit for purposes of Purchase Price payment
----------------
under Section 1.3 is defined as Net Revenue less all direct costs of a billable
consultant. Direct Cost includes salary, bonus paid in ordinary course of
business, benefits, payroll taxes, travel expenses, vacation, and subcontractor
fees for supplying technical consultants, but shall exclude any retention bonus
paid pursuant to paragraph 4.4. Thirty (30) days after each month end for a one
(1) year period after the Effective Date, Buyer will supply the Seller with a
schedule which indicates monthly and cumulative net revenue, direct cost, Gross
Profit, and the Purchase Price payable to the Seller for each Consultant
pursuant to 1.3(b) and 1.3(c) monthly payment. The monthly payments will be
calculated by multiplying the cumulative Gross Profit less the previous months
cumulative Gross Profit by the applicable earnout percentages of forty (40%)
percent or sixty (60%) percent. Buyer shall make Earnout Payments related to
any Successfully Transferred Billable Employee of Independent Contractor if the
employee is terminated by Buyer and then re-hired during the 12 month period
following the effective date. Should a dispute arise concerning an Earnout
Payment, Buyer shall provide to Seller documentation and reasonable access to
recors to substantiate the Earnout Payment calculation.
4.14 PAYROLL REGISTER Seller will provide to Buyer, within 2 weeks after
----------------
Closing, the year-to-date payroll register through the Closing Date.
4.15 ENFORCEMENT OF STAFF NON-COMPETE AGREEMENTS. Seller agrees to
--------------------------------------------
enforce, for the benefit of Buyer, all non-compete provisions contained in
employment agreement of the staff employees at Seller's Reston, VA branch who
are not being hired by Buyer.
4.16 SETTLEMENT OF DISPUTES. Any controversy or claim arising out of or
-----------------------
related to the Purchase Price shall be finally resolved by arbitration pursuant
to the commercial arbitration rules of the American Arbitration Association.
Any such arbitration shall take place in Newark, New Jersey, before three (3)
arbitrators, one (1) of which shall be appointed by Buyer, one (1) by Seller,
and the third by the arbitrators; provided, however, that the parties may by
mutual agreement designate a single arbitrator. The parties further agree that
(I) the arbitrators shall be empowered to include arbitration costs and attorney
fees in the award to the prevailing parties in such proceedings and (ii) the
award in such proceedings shall be final and binding on the parties. The
arbitrators shall apply the law of the State of New Jersey exclusive of
conflicts of laws principles, to any dispute. Judgment on the arbitrators'
award may be entered in any court having the requisite jurisdiction. Nothing in
this Agreement shall require the arbitration of disputes between the parties
that arise from actions, suits or proceedings instituted by third parties. Each
party irrevocably submits to the jurisdiction and venue of the arbitration
described in the foregoing and to the jurisdiction and venue of the Federal and
State courts sitting in New Jersey for the enforcement of any judgment on
<PAGE>
arbitrators' award and waives any objection it may have with respect to the
jurisdiction of such arbitration's or such courts or the inconvenience of such
forums or venues.
ARTICLE 5
INDEMNIFICATION
---------------
5.1 INDEMNIFICATION BY SELLER. Seller hereby jointly and severally agrees
-------------------------
to indemnify and hold harmless Buyer and its officers, directors, employees and
affiliates from and against:
(a) any loss, liability, claim, obligation, damage or deficiency
arising out of or resulting from any misrepresentation, breach of warranty or
nonfulfillment of any agreement on the part of Seller contained in this
Agreement or in any document furnished or to be furnished to Buyer evidencing
the transfer of the Assets hereunder;
(b) any and all liabilities of any nature relating to any of the Assets
or Transferred Billable and Transferred Staff Employees (whether such
liabilities are due or to become due, whether accrued, absolute, contingent or
otherwise) existing on the Effective Date or arising out of any transactions
entered into, or any state of facts existing, prior to such date; and
(c) any actions, judgments, fines, penalties, costs and expenses
(including reasonable attorneys' fees and all other expenses incurred in
investigating, preparing or defending any litigation or proceeding, commenced or
threatened) incident to any of the foregoing or the enforcement of this Section.
5.1.2 Seller agrees that Buyer shall have the right to set-off any claim for
indemnification it may have hereunder against Seller against any obligation
Buyer may have to Seller hereunder.
5.2 INDEMNIFICATION BY BUYER. Buyer hereby agrees to indemnify and hold
-------------------------
harmless Seller and its respective officers, directors, employees and affiliates
from and against: (limit to Purchase Price)
5.2.1 any loss, liability, claim, obligation, damage or deficiency arising
out of or resulting from any misrepresentation, breach of warranty or
nonfulfillment of any agreement on the part of Buyer contained in this Agreement
or in any document furnished or to be furnished to Seller in connection with the
transactions contemplated hereby;
5.2.2 any and all liabilities of any nature relating to any of the Assets or
Transferred Billable and Transferred Staff Employees if such liabilities arise
out of a transaction entered into following the Effective Date; and
5.2.3 any actions judgments, fines, penalties, costs and expenses (including
reasonable attorneys' fees and all other expenses incurred in investigating,
preparing or defending any litigation or proceeding, commenced or threatened)
incident to any of the foregoing or the enforcement of this Section.
ARTICLE 6
MISCELLANEOUS
-------------
6.1 NATURE AND SURVIVAL OF REPRESENTATIONS. All statements contained in
---------------------------------------
any certificate or other document delivered by or on behalf of Seller pursuant
hereto, or in connection with the transactions contemplated hereby, shall be
deemed representations and warranties by the party which delivered or furnished
the certificate or document. All representations, warranties and agreements
made by
<PAGE>
any party to this Agreement, or pursuant hereto, shall survive the closing of
this transaction for a period of two (2) years with respect to all matters
except for taxes, for which such representations, warranties and agreements
shall survive for a period equal to the statute of limitations applicable
thereto, plus sixty days. Seller acknowledges that its representations and
warranties in this Agreement shall not be affected or mitigated by any
investigation conducted by Buyer or its representatives prior to the date
hereof.
6.2 NOTICES. All notices, requests, demands and other communications
--------
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or, if mailed, when mailed by Federal Express or comparable
overnight courier service, to the other party at the following addresses (or to
such other address as shall be given in writing by any party to the other):
6.2.1 If to Seller:
Butler International, Inc.
110 Summit Avenue
Montvale, NJ 07645
Attention: Mr. Michael C. Hellriegel
6.2.2 If to Buyer:
Automated Concepts, Inc.
1500 Broadway, 30th Floor
New York, NY 10036
Attention: Mr. Fred Harris
6.3 SUCCESSORS AND ASSIGNS. This Agreement, and all rights and powers
-----------------------
granted hereby, will bind and inure to the benefit of the parties hereto and
their respective successors and assigns. No party hereto may assign any of its
rights or obligations hereunder.
6.4 GOVERNING LAW. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of New Jersey.
6.5 AMENDMENT AND WAIVER. The parties hereto may by mutual agreement amend
---------------------
this Agreement in any respect, and any party, as to such party, may (a) extend
the time for the performance of any of the obligations of any other party, (b)
waive any inaccuracies in representations by any other party, and (c) waive
compliance by any other party with any of the agreements contained herein and
performance of any obligations by such other party. To be effective, any such
amendment or waiver must be in writing and be signed by all parties to this
Agreement.
6.6 HEADINGS. The headings preceding the text of the articles and sections
---------
hereof are inserted solely for convenience of reference, and shall not
constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
6.7 COUNTERPARTS. This Agreement may be executed simultaneously in two or
-------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument
6.8 ENTIRE AGREEMENT. This Agreement and the Schedules hereto, each of
-----------------
which is incorporated herein, set forth all of the promises, covenants,
representations, warranties, agreements, conditions and undertakings among the
parties hereto with respect to the subject matter hereof, and supersede all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Acquisition Agreement on
the date first set forth above.
AUTOMATED CONCEPTS, INC. BUTLER TELECOM, INC.
By: ______________________________ By: _________________________________
Stuart Gottlieb Michael C. Hellriegel
Title: CFO Title: Sr. Vice President-Finance, and
Treasurer, Chief Financial Officer
<PAGE>
EXHIBIT 10.45
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 30th day of June, 1998 by and among Butler Telecom, Inc., a
Delaware corporation,("Buyer"), Prem Advani ("P. Advani") Sharon K. Advani ("S.
Advani"), and Prem Advani 1997 Charitable Remainder Trust (the "Trust") (P.
Advani, S. Advani and the Trust are collectively referred to as "Sellers").
R E C I T I A L S
- - - - - - - - -
WHEREAS, Data Performance Inc. ("DPI"), an Illinois corporation, is
engaged in the business of providing information technology staffing and project
services (the "Business"): and
WHEREAS, Butler International, Inc. ("Butler"), a Maryland
corporation, is the parent company of Buyer; and
WHEREAS, P. Advani owns 45.9% of the issued and outstanding shares of
Common Stock of DPI; and
WHEREAS, S. Advani owns 49.0% of the issued and outstanding shares of
Common Stock of DPI; and
WHEREAS, the Trust owns 5.1% of the issued and outstanding shares of
Common Stock of DPI; and
WHEREAS, Buyer wishes to purchase and Sellers wish to sell to Buyer,
all of the issued and outstanding shares of DPI owned by them on the terms and
conditions set forth below:
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, for and in consideration of the mutual promises herein
made, and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
---------------------------
1.1 Purchase and Sale. Subject to the terms and conditions of this
-----------------
Agreement, effective as of 12:01 a.m. Central Daylight Time on June 29, 1998
(the "Closing Date"), Buyer agrees to purchase from Sellers and Sellers agrees
to sell, assign, transfer and deliver to Buyer, 1,000 of the issued and
outstanding shares of common stock of DPI, comprising 100% of the total issued
and outstanding shares of stock of DPI (the "DPI Stock").
1
<PAGE>
1.2 Acquired Assets. The Business shall include, without limitation,
-----------------
all of the following assets (the "Assets") of DPI:
(a) Office furniture and equipment, computers, equipment leases, real
estate leases, and leasehold improvements, as set forth in
Schedule 1.2(a) of the Disclosure Schedules attached hereto
("Disclosure Schedules").
(b) Computer software owned or licensed by DPI as set forth in
Schedule 1.2(b), along with DPI's interest in any other computer
software licensed by it from others.
(c) Other agreements, contracts and instruments as set forth in
Schedule 1.2(c).
(d) All subcontractor agreements and agreements with suppliers to
provide consultants to DPI, including, but not limited to, those
set forth in Schedule 1.2(d) ("Subcontractor Agreements").
(e) The client agreements, purchase orders, requests, requirements,
correspondence, memoranda, and inquiries with past, present and
potential customers, including, but not limited to, those forth in
Schedule 1.2(e)("Client Agreements").
(f) All prepayments and deposits, including, without limitation,
security deposits under leases.
(g) The corporate name Data Performance, Inc., all assumed names
relating thereto, logos, trademarks, service marks, domain names,
trade names, copyrights, registrations, applications for
registration of any of them, and any other intellectual property
rights of Seller, including, but not limited to, those listed in
Schedule 1.1(g).
(h) Originals of all books and records of DPI pertaining to the
Assets, including customer lists and credit files, and all those
pertaining to DPI's employees who are retained by Buyer pursuant
to the Agreement.
(i) All permits, licenses, approvals and other governmental
authorizations relating to the Business including, but not limited
to, those listed in Schedule 1.1 (i).
(j) Any other asset not referred to in Section 1.3 which is used by
DPI in connection with the Business, including, without
limitation, all telephone and facsimile numbers and e-mail
addresses used by DPI in connection with the Business.
(k) All goodwill pertaining to the Business.
(l) All agreements, rights to employ and information for or with
respect to DPI's
2
<PAGE>
current or former employees including, without limitation, all
tangible and electronic manifestations, files, resumes, payroll
employee information and other such information relating to
employees and consultants.
1.3 Excluded Assets and Excluded Liabilities.
-----------------------------------------
(a) Prior to the Closing Date, Sellers and DPI shall collect all
receivables or notes from Sellers or affiliated parties,
including, without limitation, the receivables and notes set
forth in Schedule 1.3 (a) ("Excluded Assets").
(b) Prior to the Closing Date, Sellers and DPI shall pay off all
debts or liabilities to affiliated parties, including, without
limitation, the debt set forth in Schedule 1.3 (b) ("Excluded
Liabilities").
1.4 Purchase Price. Subject to the Net Equity requirement set forth
--------------
below, Buyer shall pay the Sellers, in full payment for the
Stock, as follows:
(a) The "Unadjusted Purchase Price." The Unadjusted Purchase Price
-------------------------------
shall be $10,300,000, $750,000 of which shall be paid by wire
transfer of immediately available funds at the Closing to an
account designated by Sellers in writing, and $9,550,000 of which
shall be held in escrow pursuant to the provisions of Section 1.6
hereof.
(b) Payment of Net Equity. Within 90 days after the Closing Date,
----------------------
Buyer will provide to Sellers a balance sheet as of the Closing
Date, prepared on an accrual basis in accordance with generally
accepted accounting principles, as consistently applied, ("GAAP")
(the "Closing Date Balance Sheet"), which Closing Date Balance
Sheet shall: (i) include, without limitation, a liability account
for income taxes payable, and (ii) exclude Excluded Assets and
Excluded Liabilities. Sellers will work in good faith with Buyer
in providing Buyer the necessary information for Buyer to prepare
the Closing Date Balance Sheet. The Closing Date Balance Sheet
will set forth the Net Equity, as defined below. Sellers will pay
to Buyer the Net Equity below $950,000, if any, within 120 days
after the Closing Date. Buyer will pay to Sellers the Net Equity
above $950,000, if any, within 120 days after the Closing Date.
The term "Net Equity" shall be defined as all assets less all
liabilities of DPI, calculated on an accrual basis in accordance
with GAAP. Excluded Assets and Excluded Liabilities will not be
included in the determination of Net Equity. The term "Final
Purchase Price" shall be defined as the Unadjusted Purchase
Price, as adjusted pursuant to the terms of this paragraph. In
the event Buyer fails to deliver the Closing Date Balance Sheet
within 90 days after the Closing Date, the Unadjusted Purchase
Price shall be deemed the Final Purchase Price.
3
<PAGE>
1.5 Stock Free of Liens. The Stock to be transferred hereunder shall
-------------------
be transferred free and clear of all liens, claims, encumbrances, mortgages,
pledges, restrictions or rights of others of every kind and description.
1.6 Escrow . $750,000 of the Unadjusted Purchase Price shall be
-------
placed in an escrow (the "Escrow Account") with a mutually acceptable escrow
agent (the "Escrow Agent") pursuant to the Escrow Agreement attached hereto as
Exhibit A
1.7 Dispute Resolution. If the Sellers have any objections to the
-------------------
Closing Date Balance Sheet determination defined in Section 1.4(b) Sellers shall
deliver a statement describing their objections ("Statement of Objections") to
the Buyer within 20 business days after receipt thereof. Within 20 business
days of receipt by the Buyer of the Statement of Objections, the Buyer shall
review the determination to which the objection relates and supply the Sellers
with a reasonably detailed response. If the Sellers continues to have any
objections to the Closing Date Balance Sheet/ determination, the Sellers shall
confirm in writing such objections within five business days after receipt of
the response ("Objection Confirmation"). The Sellers and Buyer shall use
reasonable efforts to resolve any objections to the Closing Date Balance
Sheet/determination. If an Objection Confirmation is given and the parties fail
to reach an agreement with respect to the Closing Date Balance Sheet/
determination within 20 business days after Buyer's receipt of the Objection
Confirmation, the parties shall submit the dispute for resolution to the Cook
County Office of one of the six largest firms of independent certified public
accountants (the "Accountant"), other than Buyer's or the Sellers' accountants
as of the Closing, within five business days after the end of the 20-business-
day period. Each of the Sellers and the Buyer may submit such information to the
Accountant as such party deems relevant on or before the expiration of such
period. If the Sellers and the Buyer do not agree upon the selection of the
Accountant, the selection will be made by the Cook County office of the American
Arbitration Association ("AAA") in accordance with the criteria specified above,
or if no such Accountant is available or willing to resolve the dispute, the AAA
shall select the next largest accounting firm from which a qualified accountant
is available in Cook County, Illinois. The Accountant shall, within 20 business
days after appointment as provided herein, render its determination as to the
Closing Date Balance Sheet determination and the amount so selected shall be
final and binding on the parties. Any such amount shall be payable with simple
interest thereon at 8 percent from the due date of such payment. The fees and
expenses of the Accountant shall be paid by the party whose determination was
not selected, and if neither party's determination is selected, shall be
allocated between the parties based upon the proportion in which the final
determination was reflective of their respective positions.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CERTAIN SELLERS
-------------------------------------------------
In order to induce Buyer to enter into this Agreement, P. Advani and
S. Advani (collectively, the "Individual Sellers") , jointly and severally,
represent and warrant to the Buyer
4
<PAGE>
that the statements contained in this Article II are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Article II).
2.1 Authority Relative to this Agreement. The Sellers have the full
------------------------------------
power and authority to execute, deliver and perform this Agreement and any
agreement or document contemplated hereby, and to consummate the transactions
contemplated hereby or thereby. The obligations imposed on Sellers by this
Agreement, or by any agreement or document contemplated hereby, constitute the
valid and binding obligations and agreements of Sellers, enforceable against
each of them in accordance with their respective terms except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights;
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. Each person
whose signature appears on the signature page of this Agreement as a trustee is
a trustee of the trust on behalf of which such person has signed this Agreement
and such person has full power and authorization, acting alone and without the
joinder of any other person, to legally bind such trust.
2.2 Compliance of Transaction With Laws and Other Instruments. Except
---------------------------------------------------------
as set forth in Schedule 2.2 of the Disclosure Schedules, the execution,
delivery and performance by Sellers of this Agreement and any agreement or
document contemplated hereby, and the performance and consummation of the
transactions contemplated hereby or thereby by Sellers (i) do not require on
behalf of Sellers or DPI, any approval, consent or waiver of, or filing with,
any governmental agency, court or other authority which has not been obtained
and which is not in full force and effect as of the date hereof; (ii) will not
conflict with or constitute a breach or violation of the charter or bylaws of
DPI; (iii) will not result in a violation of any law, regulation, judgment,
writ, injunction, order or decree of any court or governmental or regulatory
authority (federal, local or otherwise) to which DPI is subject; and (iv) will
not require the approval, consent or waiver of, or filing with any party to,
violate or conflict with or result in a breach of, or constitute a default or
acceleration of or give rise to a right of termination (or an event which with
notice or lapse of time or both would become a default) under, any provision of
any contract, indenture, mortgage, lease, agreement or other instrument to which
Sellers or DPI are parties or to which any of their or its assets are subject.
2.3 Capitalization. The entire authorized capital stock of DPI
--------------
consists of 1,000 shares of common stock, $1.00 par value ("Common Shares"), of
which 1,000 Common Shares are issued and outstanding. All of the issued and
outstanding Common Shares have been duly authorized, are validly issued, fully
paid, and nonassessable. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require DPI to issue, sell,
or otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to DPI.
5
<PAGE>
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of the capital stock of DPI. No debt instrument issued by
DPI has or could have voting rights.
2.4 Stock. P. Advani, S. Advani and the Trust hold of record and own
-----
beneficially 459, 490 and 51 Common Shares of DPI, respectively, free and clear
of any restrictions on transfer (other than any restrictions under federal or
state securities laws), taxes, security interests, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands. No Seller is a
party to any option, warrant, purchase right, or other contract or commitment
that could require such Seller to sell, transfer, or otherwise dispose of any
capital stock of DPI (other than this Agreement). No Seller is a party to any
voting trust, proxy, or other agreement or understanding with respect to the
voting of any capital stock of DPI.
2.5 Organization and Qualification. DPI is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and operate its assets and properties and to conduct the
Business in the manner and in the places where such assets and properties are
owned, leased or operated or the Business is conducted by it. DPI has no
subsidiaries and does not own, directly or indirectly, any equity interest in
any corporation, partnership, joint venture or other business entity. Sellers
have delivered to the Buyer correct and complete copies of the charter and
bylaws of DPI (as amended to date). The minute book (containing the records of
meetings of the stockholders, the board of directors, and any committees of the
board of directors), the stock certificate book and the stock record book of DPI
are correct and complete. DPI is not in default under or in violation of any
provision of its charter or bylaws.
2.6 Financial and Other Statements. Schedule 2.6 of the Disclosure
------------------------------
Schedules contains true and complete copies of (i) DPI's balance sheet and
income statement (excluding notes) the year ended December 31, 1997, and (ii)
DPI's balance sheet and income statement (excluding notes) for the twelve month
period ended March 31, 1998 (collectively the "Financial Statements"), in both
cases compiled by an independent public accountant. Except as set forth in
Schedule 2.6 , the Financial Statements (i) have been prepared in accordance
with generally accepted accounting principles on a consistent basis, and (ii)
fairly present in all material respects the financial position and results of
operation of DPI as of the indicated dates and for the period indicated therein.
2.7 Title to Properties; Liens; Condition of Properties. DPI has good
---------------------------------------------------
and marketable title to or a valid leasehold in, the properties and assets used
by it, located on its premises, or shown in the Financial Statements or acquired
after the date thereof, which shall exclude the "Excluded DPI Assets" as defined
in Section 1.3. None of such assets are subject to any mortgage, pledge, lien,
conditional sale agreement, security interest, encumbrance, title defect or
other charge, except for liens for taxes not yet due and payable. Schedule 2.7
of the Disclosure Schedules sets forth the addresses or locations of all
facilities (whether leased or owned) of DPI.
6
<PAGE>
2.8 No Undisclosed Liabilities. There are no contractual or non-
--------------------------
contractual obligations, debts or liabilities of any nature of DPI whether
accrued or unaccrued, contingent or absolute, direct or indirect, recorded or
unrecorded, potential or realized (the "Liabilities") as of the date of the
Financial Statements, which are not otherwise disclosed in the Financial
Statements or in the Schedules to this Agreement. DPI has not incurred any
Liabilities since March 31, 1998, except for those Liabilities incurred in the
ordinary course of business and consistent with past practice and which, in any
event, would not, in the aggregate, have a material adverse effect on the
Business. DPI is not directly or indirectly (i) liable, by guaranty, surety or
otherwise, upon or with respect to, or (ii) obligated in any way to provide
funds in respect of, or (iii) obligated to guaranty or assume any debt, dividend
or other obligation of any person, corporation, association, partnership or
other entity.
2.9 Tax Matters. Except as set forth on Schedule 2.9 of the
-----------
Disclosure Schedules, DPI has filed (i) all federal, state, municipal and local
tax returns (whether relating to income, sales, franchise, withholding, real or
personal property, employment or otherwise) ("tax returns") required to be
filed; (ii) all federal, state, municipal and local tax returns (whether
relating to income, sales, franchise, withholding, real or personal property,
employment of otherwise) ("taxes") which are due, pursuant to such returns, or
claimed to be due by any taxing authority, or otherwise due and owing, and any
penalties or other charges due with respect to the late filing of any such
return have been fully paid, and shall be fully paid at the time of closing;
(iii) each such tax return heretofore filed by DPI correctly and accurately
reflects the amount of its tax liability thereunder; (iv) DPI is not currently
the beneficiary of any extension of time within which to file any tax return;
(v) no claim has ever been made by an authority in a jurisdiction where DPI does
not file tax returns that it is or may be subject to taxation by that
jurisdiction; (vi) there are no security interests on any of the assets of DPI
that arose in connection with any failure (or alleged failure) to pay any tax;
(vii) DPI has withheld and paid all taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, creditor,
independent contractor, or other third party and all such taxes shall be
withheld or paid by Closing and all such taxes accrued but not due as of Closing
shall be escrowed with Buyer; (viii) Sellers do not expect any authority to
assess any additional taxes for any period for which tax returns have been
filed; and (ix) there is no dispute or claim concerning any tax liability of
DPI.
2.10 Absence of Certain Changes. Except as set forth in Schedule
--------------------------
2.10, since March 31, 1998, there has not been:
(a) any material adverse change in the financial condition,
properties, assets, liabilities, personnel or operations of DPI;
(b) any obligation or liability incurred by DPI, including the
obligation to perform services normally conducted by the Business, other than
obligations and liabilities incurred in the ordinary course of business;
7
<PAGE>
(c) any purchase, sale or other disposition, or any agreement or other
arrangement for the purchase, sale or other disposition, of any of the services,
properties or assets of the Business, except in the ordinary course of business;
(d) any damage, destruction or loss, whether or not covered by
insurance, affecting the Business;
(e) any loss or threatened loss of any permit, license, qualification
or certificate of authority held or enjoyed by DPI which loss has had, or could
in the future have, a material adverse effect on the business, properties,
financial condition or results of operation of the Business or Buyer's free and
unencumbered ownership and use of any of the assets or properties of the
Business, whether owned or leased, and whether or not carried or reflected on
the books and records of DPI;
(f) any pending or threatened labor disputes or strikes, labor union
organizational activity, claim or threatened claim of unfair labor practices, or
any material adverse change in relations with DPI's employees generally;
(g) any action taken by DPI outside of the ordinary course of
business;
(h) any written notice of termination of, or default under, any
contract;
(i) any loan or advance to or any investment in any person, firm or
corporation, except for normal business advances to employees consistent with
past practice;
(j) any increase in the compensation payable or to become payable to
any of DPI's officers or employees (other than nonmaterial increases in the
ordinary course of business) and there has been no establishment, adoption,
entering into, or making of any new grants or awards under, acceleration of
payment or vesting, or any creation of any obligation to grant any awards under,
or any amendment to any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option or other equity, pension, retirement, incentive or
deferred compensation, employment, retention, termination, severance, health,
life or other welfare, fringe, Employee Benefit Plan (as defined in this Section
2.14), or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any current or former directors, officers or employees, or any
granting or paying of any benefit not required by any existing DPI Benefit Plan
(as defined in this Section 2.14) or other existing plan or arrangement;
(k) any commitment for any addition to property, plant or equipment
not in the ordinary course of business by DPI;
(l) any payment, loan or advance of any amount to, or sale, transfer
or lease of assets to, or any agreements or arrangements with, any of DPI's
officers, directors or "affiliates," as such term is defined in the rules and
regulations of the Securities and Exchange Commission ("Affiliate");
8
<PAGE>
(m) any charitable or other capital contribution of DPI;
(n) any declaration, set aside or payment of any dividend, any
distribution with respect to its capital stock, or any redemption, repurchase,
or other acquisition of any of its capital stock;
(o) any failure to pay current liabilities, including accounts
payable and accrued expenses in the ordinary course of business and otherwise in
accordance with their terms; or
(p) any agreement or understanding by DPI to do any of the
foregoing.
2.11 Patents, Trademarks, Trade Names and Similar Rights. Except as
---------------------------------------------------
set forth in Schedule 2.11, DPI does not own any trademarks, logos, service
marks, trade names, copyrights or other similar proprietary rights
("Intangibles") used in the Business, and, to the Sellers' knowledge, has no
obligation to any third party with respect thereto.
2.12 Trade Secrets and Customer Lists. DPI has the right to use,
--------------------------------
without liability to others, all trade secrets and customer lists, if any,
required and used in the Business within the last five years and has not
disclosed, sold, licensed, sublicensed or otherwise granted to any third party
the right to use such trade secrets and information. DPI is not using or in any
way making use of any confidential information or trade secrets of any third
party, including, without limitation, a former employer of any present or past
employee of DPI.
2.13 Client and Other Agreements. With respect to the Client
---------------------------
Agreements and the agreements set forth in Schedule 1.2(e) of the Disclosure
Schedules: (i) all such agreements are legal, valid, binding, enforceable, in
full force and effect, and subject to customer consent of the other party to
such agreement, are fully transferable to Buyer subject to no governmental or
regulatory requirement or impediment; (ii) all such agreements will be legal,
valid, binding and enforceable, and in full force and effect on the same terms
and conditions on the Closing Date; (iii) no party is in breach or default, and
no event has occurred which with notice or lapse of time would constitute a
breach or default, or permit termination, modification or acceleration under
said agreements; (iv) no party has repudiated any provision of said agreements;
(v) the list of agreements set forth in the Disclosure Schedules is a complete
and accurate list of all agreements between DPI and its customers; (vi) the
relationship of DPI with the customers that are parties to the agreements are
good and Sellers know of no set of facts, and have not received any notice or
information from any of the listed customers indicating an intention to decrease
the number or consultants (both employees and independent contractors placed
with DPI's customers ("Field Personnel")) or to decrease the level of services
DPI provides to any such customer, or to reduce the rates at which DPI is being
compensated from said customers, and no illegal or other payment or
consideration has been given by DPI to secure or maintain any business with its
customers; (vii) DPI has not received any notice of claims from any of the
listed customers relating to DPI's performance of service for such customers;
(viii) no material amount claimed to be payable to DPI under any of the
agreements is being disputed by any client; and (ix) none of such agreements
were awarded or are in any way based upon or related
9
<PAGE>
to the status of DPI as a minority business, small business, woman-owned
business, veteran-owned business or disadvantaged business enterprise or
individual.
2.14 Employee Agreements and Plans.
-----------------------------
(a) Except as set forth in Schedule 2.14 of the Disclosure
Schedules, neither DPI, nor any ERISA Affiliate presently maintains, contributes
to or has maintained, contributed to, or had (or may have) any liability under
any Employee Benefit Plan with respect to its employees, former employees, or
independent contractors. For purposes of this Section 2.14 and the Agreement:
(i) "DPI Benefit Plans" means the plans, programs and arrangements
set forth in Schedule 2.14 of the Disclosure Schedules.
(ii) "Employee Benefit Plan" means (a) any bonus, incentive
compensation, profit sharing, retirement, pension, group
insurance, death benefit, group health, medical expense
reimbursement, dependent care, legal services, flexible benefits
or cafeteria, stock option, stock purchase, stock appreciation
rights, phantom stock, savings, deferred compensation,
consulting, severance pay or termination pay, vacation pay,
leave of absence, layoff, life insurance, accident, disability,
workers' compensation, welfare or other employee benefit or
fringe benefit plan, program, arrangement practice or policy
which is an "employee pension benefit plan" as such term is
defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or an "employee
welfare benefit plan" as defined in Section 3(1) of ERISA,
whether written or unwritten; and
(iii) "ERISA Affiliate" means each person (as defined in Section 3(9)
of ERISA) that, together with DPI (or any person whose
liabilities DPI has assumed or is otherwise subject to, whether
directly or indirectly, including as a result of
indemnification) would be or has been treated as a single
employer under Section 4001(b) of ERISA or Section 414 of the
Internal Revenue Code of 1986, as amended ("Code").
Except with respect to DPI Benefit Plans, DPI does not have (nor
may have) any liability under any Employee Benefit Plan which an
ERISA Affiliate presently maintains, contributes to or has (or
may have) liability under.
(b) With respect to all employees and former employees of DPI,
neither DPI nor any ERISA Affiliate presently maintains,
contributes to or has or may have any liability under any funded
or unfunded medical, health or life insurance plan or
arrangement or other employee welfare benefit plan as defined in
Section 3(1) of ERISA for present or future retirees or present
or future terminated employees, except as required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA") or state continuation coverage laws.
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(c) Favorable determination letters have been received by both DPI
and any master or prototype plan sponsor from the Internal
Revenue Service with respect to each DPI Benefit Plan which is
intended to comply with the provisions of Section 401(a) of the
Code, evidencing compliance with the relevant provisions of the
Tax Equity and Fiscal Responsibility Act of 1982, the Tax Reform
Act of 1984, the Retirement Equity Act of 1984, the Tax Reform
Act of 1986 and other applicable laws and governmental
regulations for which amendment is required by the Closing. Each
such DPI Benefit Plan complies in form and in operation with the
requirements of the Code and meets the requirements of a
"qualified plan" under Section 401(a) of the Code and each
related trust is exempt from federal income tax under Code
Section 501(a). No event has occurred or circumstance exists
that will or could give rise to disqualification or loss of tax-
exempt status of any such DPI Benefit Plan or trust.
(d) DPI, the ERISA Affiliates and all of their respective directors,
officers, employees and any other "fiduciary" (as such term is
defined in Section 3(21) of ERISA) have complied with and
performed all of their contractual obligations and all
obligations under the Code, ERISA and all applicable federal,
state and local laws, rules and regulations (domestic and
foreign) required to be performed by them under or with respect
to all of the DPI Benefit Plans and any related agreements and
there has been no "prohibited transaction" as defined by Section
4975 of the Code or Section 406 of ERISA with respect to any DPI
Benefit Plan. Any bonding required by ERISA with respect to the
DPI Benefit Plans has been obtained and is in full force and
effect .
(e) No DPI Benefit Plan has any unfunded liability and all accruals
with respect to the DPI Benefit Plans have been made. No DPI
Benefit Plan is subject to Section 412 of the Code, Section 302
of ERISA or Title IV of ERISA. All applicable contributions and
premium payments for all periods ending prior to the Closing
(including periods from the first day of the then current plan
year to the Closing) shall be made prior to the Closing Date in
accordance with past practice. No event has occurred or
circumstance exists that could result in a material increase in
premium costs of the DPI Benefit Plans that are insured or a
material increase in the benefit costs of such DPI Benefit Plans
that are self-insured.
(f) Neither DPI nor any ERISA Affiliate maintains, contributes to or
has or may have any liability (including current or potential
withdrawal liability) with respect to any "multi-employer plan"
as such term is defined in Section 3(37) or 4001(a)(3) of ERISA.
(g) Neither DPI nor any ERISA Affiliate has maintained an "employee
pension benefit plan", as such term is defined in Section 3(2)
of ERISA, that has been the subject of a "reportable event", as
such term is defined in Section 4043 of
11
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ERISA, as to which notices would be required to be filed with
the Pension Benefit Guaranty Corporation ("PBGC"), or any event
requiring disclosure under Section 4063(a) of ERISA. Neither DPI
nor any ERISA Affiliate has incurred any outstanding liability
under Section 4062 of ERISA to the PBGC or engaged in any
transaction described in Section 4069 of ERISA and all premiums
or other amounts due and payable to the PBGC have been paid.
Neither DPI nor any ERISA Affiliate has terminated any employee
pension benefit plan subject to Title IV of ERISA and no
proceeding by the PBGC to terminated any employee pension
benefit plan pursuant to Title IV of ERISA has ever been
instituted or threatened, no notice of any such termination has
been received and no condition exists which presents a material
risk of termination of a DPI Benefit Plan.
(h) There is no pending, threatened or anticipated legal action,
proceeding, investigation, dispute, grievance, charge,
complaint, restraining or injunctive order or claim against or
involving any DPI Benefit Plan maintained by DPI or any ERISA
Affiliate (other than routine claims for benefits) or the assets
of any such DPI Benefit Plan and to the best of Sellers'
knowledge and belief there is no basis for or any facts which
could give rise to any such legal action, proceeding,
investigation, dispute, grievance, charge, complaint,
restraining or injunctive order or claim. No DPI Benefit Plan is
presently under audit or examination (nor has notice been
received of a potential audit) by the Internal Revenue Service,
Department of Labor or the PBGC, nor are there any matters
pending with respect to any DPI Benefit Plan with the Internal
Revenue Service under its Voluntary Compliance Resolution
program, its Closing Agreement Program or similar programs.
(i) There has been no act or acts which would result in a
disallowance of a deduction or the imposition of a tax pursuant
to Code Section 4980B or any predecessor provision of the Code,
or any related regulations. No event has occurred with respect
to which DPI or any of its affiliates could be liable for a tax
imposed by any of Code Sections 4972, 4976, 4977, 4979 or 4980,
or for a civil penalty under Section 502(c) of ERISA.
(j) With respect to each of the DPI Benefit Plans, to the extent
applicable, DPI has delivered to Buyer true and complete copies
of: (i) the plan documents (or, if there is none, a written
summary of the plan's terms and conditions), including any
amendments, related trust agreements, insurance contracts and
other funding arrangements; (ii) the most recent determination
letters received by DPI and any master and prototype plan
sponsor from the Internal Revenue Service; (iii) the three most
recent IRS Form 5500 annual reports, including all schedules and
attachments thereto; (iv) the three most recent actuarial
valuations; (v) the most recent financial statement; (vi) all
correspondence with the Internal Revenue Service, the Department
of Labor and the PBGC with respect to the past three plan years,
other than IRS Form 5500 filings and PBGC premium payments; and
12
<PAGE>
(vii) the most recent summary plan description and any summaries
of material modifications not reflected therein (or other
summaries and descriptions furnished to participants and
beneficiaries, if a summary plan description is not required).
Each DPI Benefit Plan can be unilaterally amended, terminated or
otherwise discontinued, in whole or part, by DPI at any time
without liability to DPI. Neither DPI nor any ERISA Affiliate
has any formal plan or commitment, or has communicated to any
current or former employee any intention, whether legally
binding or not, to increase any benefits or create new benefits
under any DPI Benefit Plan or to create any additional Employee
Benefit Plan. Neither DPI nor any ERISA Affiliate maintains or
contributes to a trust, organization or association described in
any of Sections 501(c)(9), 501 (c)(17) or 501 (c)(20) of the
Code.
(k) Neither DPI nor any of its affiliates is a party to any
employment agreement, whether written or oral, or agreement with
change in control or similar provisions, or collective
bargaining agreement or contract with any labor union relating
to any employees or former employees of DPI. The execution,
delivery or performance of this Agreement or the consummation of
the transactions contemplated by this Agreement will not entitle
any individual to severance pay or accelerate the time of
payment or vesting, or increase the amount of any compensation
or benefits due to any individual nor result in the imposition
of any federal excise tax with respect to any CIS Benefit Plan.
All contributions and payments made or accrued with respect to
all DPI Benefit Plans are deductible currently under Code
Section 162 or 404 and no amount payable to an employee or
former employee of DPI will be an "excess parachute payment"
which is non-deductible or subject to tax under Section 280G or
4999 of the Code. DPI nor any of its affiliates has currently
outstanding any loan or loans to any current or former employees
of DPI, nor have DPI or any of its affiliates guaranteed such
loans
(l) Schedule 2.14 of the Disclosure Schedules sets forth, as of the
date of this Agreement, with respect to each employee employed
by DPI, his or her name, position, salary or hourly wage, his or
her date of employment and any applicable significant employee
benefits or entitlement not available generally to DPI's
employees.
(m) DPI has complied in all respects with all applicable laws
relating to the employment of labor or consultants or
independent contractors in connection with the operation of the
Business, including, without limitation, those relating to
wages, hours, collective bargaining, unemployment insurance,
workers' compensation, immigration and naturalization, equal
employment opportunity and the payment and withholding of taxes.
13
<PAGE>
(n) DPI is not a party to any contract with any labor organization,
nor has it agreed to recognize any union or other collective
bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of its
employees. DPI has not experienced any strikes, work stoppages,
significant grievance proceedings or claims of unfair labor
practices filed or, to DPI's or Sellers' knowledge, threatened
to be filed with respect to the operation of the Business.
2.15 Litigation, Proceedings, Etc. Except for matters described in
----------------------------
Schedule 2.15 of the Disclosure Schedules, (i) there is no pending claim,
action, litigation, suit or proceeding against, or investigation of DPI; (ii)
DPI has not received any notice of any claim, action, litigation, suit or
proceeding against it or investigation of it, and no such claim, action, suit,
proceeding or investigation is pending or, to Sellers' knowledge threatened
against DPI, and there are no facts existing which would be a proper basis for
any such claim; and (iii) there are no outstanding court, arbitration or agency
orders, decrees or stipulations to which DPI is a party or which are directed to
DPI.
2.16 Compliance With Law and Other Instruments: Permits. DPI is not
--------------------------------------------------
(and has not been for the past twelve months) in violation of, or default under:
(i) any term or provision of its charter or by-laws; (ii) any term or provision
of any financial covenant or any indenture, mortgage, contract, commitment or
other agreement or instrument to which it is a party, or by which it or any of
its properties or business is or may be bound or affected, or (iii) any
applicable law (including, without limitation, the Fair Labor Standards Act and
all other federal and state wage and hour laws), any and all Federal immigration
laws, regulations and promulgations, rule, regulation, judgment, order or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over it or any of its properties or business, or DPI's employees, consultants or
independent contractors. DPI owns, possesses, or has obtained licenses,
permits, certifications, registrations, approvals or consents and other
authorizations necessary to own or lease, as the case may be, its business or
operations as presently conducted and all such governmental and other licenses,
permits, certifications, registrations, approvals, consents and other
authorizations are in good standing, and there are no proceedings pending or, to
the best knowledge of DPI's officers and directors, threatened, or any basis
therefor existing, seeking to cancel, terminate or limit such licenses, permits,
certifications, registrations, approvals, or consents or authorizations, or
related to the breach or failure to comply with any law, rule, regulation,
judgment or decree.
2.17 Transactions with Affiliates. Except as set forth in Schedule
----------------------------
2.17 of the Disclosure Schedules, there is no lease, sublease, indebtedness,
contract, agreement, commitment, understanding or other arrangement of any kind
whatsoever entered into by DPI with Sellers, officers or directors or any
Affiliate of any of them. At Closing, DPI shall cancel all arrangements with
any Affiliate.
2.18 Insurance. Set forth in Schedule 2.18 of the Disclosure
---------
Schedules is a list of insurance in force with respect to the Business, which
list is true, complete and accurate in all
14
<PAGE>
material respects. DPI has paid all premiums due under such policies and, to its
knowledge, such policies are each outstanding and in full force and effect on
the date hereof. No insurance carrier has refused any application for insurance
by DPI.
2.19 Books and Records. All books and records pertaining to the
-----------------
Business have been, or prior to the Closing shall have been, made available for
review by Buyer and its representatives and are correct and complete in all
material respects, have been maintained in accordance with good business
practice and fairly reflect the basis for the financial condition and results of
operations of DPI set forth in the Financial Statements.
2.20 Powers of Attorney; Bank Accounts. There are no outstanding
---------------------------------
powers of attorney executed on behalf of DPI. Set forth in Schedule 2.20 of the
Disclosure Schedules is an accurate and complete list of the name and address of
each bank or other institution where DPI has an account or safe deposit box, the
number of such account, and the names of all persons authorized to draw thereon
or have access thereto.
2.21 Broker's Fees. DPI has no obligation or liability to pay any
-------------
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
2.22 Miscellaneous. All compensation payments including vacation, per
-------------
diem, holiday and sickness payments, required to be paid to DPI's personnel for
any period prior to the Closing, will be paid in full at the time of Closing.
DPI has not entered into any employment agreement and/or arrangement with
nonexempt personnel guaranteeing a minimum number of work hours during any
predetermined time period. Except as is necessary to close the Business and pay
off obligations, Sellers agree not to use the name Data Performance Inc., or any
similar name for any purpose. All Field Personnel who are classified as
"independent contractors" are correctly classified as such, and all employees
who are non-US citizens have valid, legal and current visas, are in compliance
with applicable United States Immigration Laws, and have properly executed
Employment Eligibility Verification Forms (I-9).
2.23 Year 2000. To the knowledge of the Sellers, all software
---------
owned or licensed by DPI is Year 2000-Compliant. For purpose of this Agreement,
Year 2000-Compliant shall mean:
a) The software includes year 2000 date conversion capabilities,
including without limitation date and century recognition; and
b) The software includes calculations that accommodate same
century/multi-century formulas and date values; and
c) The software will correct sort ordering and date data interface
values that reflect the century and will automatically compensate
for and manage and manipulate data involving dates, including
single-century formulas and multi-century formulas, and not cause
any abnormal event or abort within the application or result in
the generation of incorrect values or invalid outputs involving
such
15
<PAGE>
dates.
2.24 Disclosure. The statements contained in this Agreement, and in
----------
all written documents or Schedule attached hereto prepared and delivered by or
on behalf of DPI or Sellers pursuant to the terms hereof are true and correct in
all material respects, and such statements, documents or Schedules do not omit
any material fact required by the terms hereof or thereof to be stated herein or
therein or necessary to make the statements contained herein or therein not
misleading. There is no fact known to Sellers or DPI which would have a material
adverse effect on the Business, other than those which have been set forth in
this Agreement or in the Disclosure Schedules attached hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
In order to induce Sellers to enter into this Agreement, the Buyer
represents and warrants to the Sellers that the statements contained in this
Article III are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement through
this Article III).
3.1 Authority Relative to this Agreement. The Buyer has the full
------------------------------------
corporate power and authority, and has taken all necessary and proper action,
corporate and otherwise, to execute, deliver and perform this Agreement and any
other agreement or document contemplated hereby, and to consummate the
transactions contemplated hereby or thereby. All action on the part of Buyer
necessary for the authorization, execution, delivery and performance of this
Agreement and any other agreement or document contemplated hereby, and the
consummation of the transactions contemplated hereby or thereby, has been taken.
The obligations imposed on Buyer by this Agreement, or by any agreement or
document contemplated hereby, constitute the valid and binding obligations and
agreements of Buyer, enforceable against it in accordance with their respective
terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights; and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
3.2 Compliance of Transaction With Laws and Other Instruments. The
---------------------------------------------------------
execution, delivery and performance by Buyer of this Agreement and any agreement
or document contemplated hereby, and the performance and consummation of the
transactions contemplated hereby or thereby by Buyer (i) do not require on
behalf of Buyer any approval, consent or waiver of, or filing with, any
governmental agency, court or other authority which has not been obtained and
which is not in full force and effect as of the date hereof; (ii) will not
result in a violation of any law, regulation, judgment, writ, injunction, order
or decree of any court or
16
<PAGE>
governmental or regulatory authority (federal, local or otherwise) to which
Buyer is subject; (iii) will not conflict with or constitute a breach or
violation of the charter or bylaws of Buyer; and (iv) will not require the
approval, consent or waiver of, or filing with any party to, violate or conflict
with or result in a breach of, or constitute a default or acceleration of or
give rise to a right of termination (or an event which with notice or lapse of
time or both would become a default) under, any provision of any contract,
indenture, mortgage, lease, agreement or other instrument to which Buyer is a
party or to which any of its assets are subject.
3.3 Organization and Qualification. Buyer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of its state of
incorporation.
3.4 Consents. Buyer is not subject to any law, ordinance, regulation,
--------
rule, order, judgment, injunction, decree, contract, commitment, lease,
agreement, instrument or other restriction of any kind, which by its provisions
would prevent the consummation of this Agreement or any of the transactions
contemplated hereby, without the consent, filing with or notification of any
third party which has not already been obtained or made or will not be obtained
prior to the Closing.
3.5 Broker's Fees. Buyer has no liability or obligation except to
-------------
Elite Investment Group, LLC, to pay any fees or commissions to any broker,
investment bankers, finder or agent with respect to the transactions
contemplated by this Agreement.
3.6 Status of Stock. Buyer is purchasing the Stock for its own
---------------
account, for investment purposes only, and not with a view to or for sale in
connection with any distribution of such Stock.
3.7 Financial Resources. Subject to Section 4.11, Buyer has adequate
-------------------
resource to complete the transactions as contemplated hereunder.
ARTICLE IV
BUYER'S CONDITIONS TO CLOSING
-----------------------------
The obligations of Buyer to purchase the Stock and to consummate the
transactions contemplated hereby, are subject to the fulfillment in all respects
on or prior to the Closing Date of each of the following conditions:
4.1 Representations and Warranties. The representations and
------------------------------
warranties made by Sellers in Article II hereof shall be true and correct when
----------
made, and shall be true and correct in all material respects on the Closing Date
with the same force and effect as if they had been made on and as of the Closing
Date, except for changes permitted or contemplated by this Agreement and except
that representations which are specifically made as of a specified date shall be
true and correct as of such earlier date.
17
<PAGE>
4.2 Performance. All covenants, agreements and conditions contained in
-----------
this Agreement to be performed or complied with by Sellers on or prior to the
Closing Date shall have been performed or complied with in all material
respects.
4.3 Closing Deliveries. Buyer shall have received all documents and
------------------
instruments required pursuant to Section 7.2 hereof.
------------
4.4 Absence of Litigation. No action, suit or proceeding before any court
---------------------
or any governmental body or authority shall be pending against Sellers, DPI, or
Buyer which seeks to impose substantial damages in connection with, or to
restrain or invalidate the transactions contemplated by, this Agreement, and no
preliminary or permanent injunction or order that would prohibit or restrain
such transactions shall be in effect.
4.5 Absence of Certain Changes. There shall not have occurred prior to the
--------------------------
Closing Date (a) any material adverse change in the Business, or any event or
condition which, with the passage of time or the filing of notice, may cause or
create any such adverse change, or (b) the legal inability of Sellers to convey,
assign and transfer to Buyer the Stock.
4.6 Further Assurances. All actions to be taken by the Sellers in
------------------
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be satisfactory in form and substance to
the Buyer. The Buyer may waive any condition specified in this Article IV if it
executes a writing so stating at or prior to the Closing Date.
4.7 Miscellaneous. (a) Advani shall have executed and delivered to Buyer
-------------
the employment agreement attached hereto, (b) Sellers shall have delivered to
Buyer, from or with respect to the State of Illinois, a good standing
certificate, a broad form general liability certificate, a letter of clearance
from the Illinois Department of Employment Security, a workman's compensation
certificate, and a tax clearance certificate , (c) Buyer shall have received an
opinion from Counsel for Sellers, dated the Closing Date, satisfactory in form
and substance to counsel for Buyer and (d) Buyer shall have received the
Articles of Incorporation and the By-Laws of DPI as amended to the date hereof,
and a certification by an officer of DPI that same are true and complete copies
of such documents as in effect at the time of certification.
4.8 Excluded Liabilities. Sellers shall have provided Buyer with evidence
--------------------
of payment or satisfaction of all Excluded Liabilities.
4.9 Excluded Assets. Sellers shall have provided Buyer with evidence of
---------------
transfer of all Excluded Assets out of DPI.
4.10 GE Approval. General Electric Capital Corporation ("GE Capital")
-----------
shall have approved of the consummation of the transactions contemplated by this
Agreement.
18
<PAGE>
4.11 401(k) and SEP Plans. Without any liability to Buyer or DPI, DPI and
--------------------
the Sellers will take all steps necessary or appropriate to terminate all of
DPI's retirement plans and arrangements that comply or are intended to comply
with Code Section 401(k), 408(k) and 408(p) prior to the Closing, including the
Data Performance, Inc. 401(k) Plan, the Data Performance, Inc. SEP, and the Data
Performance, Inc. SAR-SEP, and take all other necessary or appropriate actions
to ensure that distributions can be made from the Data Performance, Inc. 401(k)
Plan to its participants and beneficiaries within a reasonable period after its
termination.
ARTICLE V
SELLERS' CONDITIONS TO CLOSING
------------------------------
The obligations of Sellers to sell the Stock and the obligation of Sellers
to consummate the transactions contemplated hereby are subject to the
fulfillment in all respects on or prior to the Closing of each of the following
conditions:
5.1 Representations and Warranties. The representations and warranties
------------------------------
made by Buyer in Article III hereof shall be true and correct when made, and
-----------
shall be true and correct in all respects on the Closing with the same force and
effect as if they had been made on and as of the Closing, except for changes
permitted or contemplated by this Agreement and except that representations
which are specifically made as of a specified date shall be true and correct as
of such earlier date.
5.2 Performance. All covenants, agreements and conditions contained in
-----------
this Agreement to be performed or complied with by Buyer on or prior to the
Closing shall have been performed or complied with in all respects.
5.3 Closing Deliveries. Sellers shall have received all documents and
------------------
instruments required pursuant to Section 7.2 hereof.
------------
5.4 Absence of Litigation. No action, suit or proceeding before any court
---------------------
or any governmental body or authority shall be pending against Sellers, DPI, or
Buyer which seeks to impose substantial damages in connection with, or to
restrain or invalidate the transactions contemplated by this Agreement and no
preliminary or permanent injunction or order that would prohibit or restrain
such transactions shall be in effect.
ARTICLE VI
FURTHER AGREEMENTS
------------------
6.1 Expenses. Sellers shall pay their costs incurred in connection with
--------
the preparation, negotiation, execution and delivery of this Agreement and the
consummation of the transactions
19
<PAGE>
contemplated hereby including, without limitation, the fees of the attorneys and
accountants of Sellers. Buyer shall pay its costs incurred in connection with
the preparation, negotiation, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby including, without
limitation, the fees of its attorneys and accountants.
6.2 Press Releases. Buyer may prepare and issue press releases regarding
--------------
this transaction, but will provide advance notice to Sellers thereof.
6.3 Survival of Representations. The representations and warranties
---------------------------
contained herein are and will be deemed and construed to be continuing
representations and warranties and will survive the Closing and (other than the
representations and Warranties set forth in Sections 2.9 and 2.14 and fraudulent
misrepresentations made by Sellers) continue in full force and effect
thereafter, provided that a notice is given as to a breach of such
representations or warranties within three years of the Closing Date. The
representations and warranties set forth in Sections 2.9 and 2.14 and all
fraudulent misrepresentations made by Sellers shall continue in full force and
effect at all times thereafter until expiration of the applicable statute of
limitations. If a notice of breach is given within the applicable time period,
the Individual Sellers shall, jointly and severally, be responsible for all
Damages (as defined below) resulting from, arising out of, or related to such
breach, including all Damages suffered after the date notice has been given.
6.4 Indemnification.
---------------
(a) From and after the Closing Date, the Individual Sellers shall,
jointly and severally, defend, indemnify and hold harmless Buyer from and
against any and all claims, actions, causes of action, lawsuits, actual losses,
costs, actual damages, actual liabilities and expenses, including reasonable
attorneys' fees and expenses (collectively, "Damages"), incurred by Buyer that
arise out of:
(i) a breach of the representations, warranties, covenants and
agreements given or made by Sellers in this Agreement, any of the Disclosure
Schedules or under or pursuant to any document, certificate, schedule or
instrument delivered by or on behalf of Sellers in connection herewith;
(ii) all matters arising out of or in connection with the
operation of the Business before the Closing including, without limitation, all
services provided by the Business prior to the Closing Date and including,
without limitation, all matters referred to in Section 2.23 hereof;
(iii) all Excluded DPI Liabilities and Excluded DPI Assets; and
(iv) any claim, action, suit or proceeding asserted or instituted
on the basis of any matter described in clauses (i), (ii), or (iii) of this
paragraph (a) of Section 6.4.
20
<PAGE>
(b) From and after the Closing Date, Buyer shall defend, indemnify and hold
harmless Sellers from and against any and all Damages incurred by Sellers
arising out of (i) a breach of the representations, warranties, covenants and
agreements given or made by Buyer in this Agreement, any of the Disclosure
Schedules, or under or pursuant to any document, certificate, schedule or
instrument delivered by or on behalf of Buyer in connection herewith; (ii) all
matters arising solely out of or solely in connection with the operation of the
Business after the Closing, and (iii) any claim, action, suit or proceeding
asserted or instituted on the basis of any matter described in clauses (i) or
(ii) of this Section 7.4(b).
(c) Limitations. Notwithstanding the foregoing,
-----------
(i) Sellers shall have no obligation to indemnify the Buyer from and
against any Damages resulting from, arising out of, or relating to or caused by
the breach of any representation, warranty, indemnity or covenant under, or
arising in connection with this Agreement, until the Buyer has suffered Damages
by reason of all such breaches in excess of $25,000 (after which point the
Individual Sellers will be obligated, subject to paragraph (ii) below, to
indemnify Buyer from all Damages, including Damages not in excess of $25,000);
(ii) In no event shall the amount of liability of Individual Sellers
to Buyer for breach of any representation, warranty, indemnity or covenant or
otherwise under, or arising in connection with, this Agreement exceed an amount
equal to 94.9% of the sum of the Unadjusted Purchase Price; and
(iii) All Damages to which any party would otherwise be entitled to
indemnification under this Agreement shall be determined net of any: (a) tax
benefit or economic benefit to such party arising in respect of or as a result
of the matters for which the indemnification is claimed and (b) insurance
proceeds derived (or reasonably expected to be derived) by such party in respect
thereof; and
(iv) In addition to the limitation set forth in paragraphs (i), (ii)
and (iii), Sellers' obligation to indemnify the Buyer from and against any
Damages resulting from, arising out of, related to or caused by the breach of
the representation and warranty set forth in paragraph 2.14(m) shall not exceed
the amount of Damages arising out of, related to, or caused by such breach prior
to the Closing.
6.5 Procedures; Third Party Claims. If a claim to which the
------------------------------
indemnification provisions of Section 6.4 apply, arises out of any suit, claim
------------
or other assertion of liability by a third party (hereinafter collectively, the
"Claims" and individually, a "Claim"), the indemnified party agrees to give
written notice within a reasonable time to the indemnifying party of the
existence of such Claim, it being understood that the failure to give such
notice shall not affect the indemnified party's right to indemnification and the
indemnifying party's obligation to indemnify as set forth in this Agreement,
unless the indemnifying party's ability to contest, defend or settle with
respect to such Claim is thereby demonstrated and materially prejudiced.
21
<PAGE>
The obligations and liabilities of the parties hereto with respect to their
respective indemnities pursuant to Section 6.4 resulting from any Claim, shall
------------
be subject to the following additional terms and conditions:
(a) The indemnifying party shall have the right to undertake, by
counsel or other representatives of its own choosing, the defense
or opposition to such Claim, subject to the right of approval by
indemnified party, which right shall not be unreasonably withheld.
(b) In the event that the indemnifying party shall elect not to
undertake such defense or opposition, or within 30 days after
notice of any such Claim from the indemnified party shall fail to
defend or oppose, the indemnified party (upon further written
notice to the indemnifying party) shall have the right to
undertake the defense, opposition, compromise or settlement of
such Claim, by counsel or other representatives of its own
choosing, on behalf of and for the account and risk of the
indemnifying party (subject to the right of the indemnifying party
to assume the defense of or opposition to such Claim at any time
prior to settlement, compromise or final determination thereof).
(c) Anything in this Section 6.5 to the contrary notwithstanding, (i)
------------
if there is a reasonable probability that a Claim may adversely
affect the indemnified party, (x) the indemnified party shall have
the right, at its own cost and expense, either through its own
counsel or through counsel of the indemnifying party, to
participate in the defense, opposition, compromise or settlement
of the Claim, and (y) if the indemnified party elects to
participate in the defense through counsel of the indemnifying
party, each party shall bear its share of all legal costs and
expenses incurred by counsel for the indemnifying party in the
proportion by which its share of the total Claim bears to the
total Claim, (ii) the indemnifying party shall not, without the
indemnified party's written consent, settle or compromise any
Claim or consent to entry of any judgment 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, and (iii) in the event that the
indemnifying party undertakes defense of or opposition to any
Claim, the indemnified party, by counsel or other representative
of its own choosing and at its sole cost and expense, shall have
the right to consult with the indemnifying party and its counsel
or other representatives concerning such Claim and the
indemnifying party and the indemnified party and their respective
counsel or other representatives shall cooperate in good faith
with respect to such Claim.
22
<PAGE>
(d) No undertaking of defense or opposition to a Claim shall be
construed as an acknowledgment by such party that it is liable to
the party claiming indemnification with respect to the Claim at
issue or other similar Claims.
6.6 Claims Against Escrow Account. In the event the indemnifying party is
-----------------------------
required to make any payments under Section 6.4 hereof, or in the event the
indemnifying party is required to reimburse the indemnified party pursuant to
Section 6.4 hereof, the indemnified party must first, to the extent of any funds
remaining in the Escrow Account, make a claim against the Escrow Account,
whereupon the parties may agree that the matter shall be referred to binding
arbitration or be determined by a court of competent jurisdiction.
6.7 Conduct of Business Pending Closing.
-----------------------------------
(a) Except as set forth in the Disclosure Schedules, during the period
from the date of this Agreement to the date of Closing (the "Closing Date"), DPI
shall conduct the Business according to its ordinary and usual course of
business, consistent with past practice. Without limiting the generality of the
foregoing, prior to the Closing Date, DPI will not, without the prior written
consent of Buyer, engage in any of the following transactions:
(i) enter into any new employment agreement with officers,
directors or employees;
(ii) grant any increase in the compensation payable or to become
payable to the Individual Sellers or any other officers or employees or
establish, adopt, enter into, or make any new grants or awards under, accelerate
payment or vesting, become obligated to grant any awards under, or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock option
or other equity, pension, retirement, incentive or deferred compensation,
employment, retention, termination, severance, health, life or other welfare,
fringe, Employee Benefit Plan, or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any current or former directors, officers or
employees, or grant or pay any benefit not required by an existing Employee
Benefit Plan or other plan or arrangement.
(iii) make a commitment for any significant investment of a
capital nature;
(iv) enter into any waiver, release or relinquishment of any
contract rights, except, in each case, in the ordinary course of business and
consistent with past practice;
(v) enter into any new leases for property except in the
ordinary course of business, or terminate any of the Client Agreements;
(vi) acquire the assets of any business or any corporation,
partnership or other business organization or otherwise acquire any assets which
are material in the aggregate to the Business;
23
<PAGE>
(vii) sell, lease or otherwise dispose of any Asset except in
the ordinary course of business consistent with past practice;
(viii) create, assume or incur any encumbrance on any of the
Assets;
(ix) amend, terminate or waive any right of substantial value
arising under any of the Client Agreements or otherwise relating to the
Business;
(x) fail to pay current liabilities, including accounts
payable and accrued expenses, in the ordinary course of business and otherwise
in accordance with their terms;
(xi) collect any accounts receivable outside of the ordinary
course and in advance of their due dates;
(xii) take or perform any action which would or might cause any
representation or warranty made by Sellers herein to be rendered inaccurate, in
whole or in part, and/or which would prevent, inhibit or preclude the
satisfaction, in whole or in part, of any covenant required to be performed or
satisfied by Sellers at or prior to the Closing and/or the implementation of the
within transaction;
(xiii) agree in writing or otherwise take any of the foregoing
actions or any action which would make any representation or warranty in this
Agreement to be untrue or incorrect; or
(xiv) otherwise engage in any practice, take any action, or
enter into any transaction of the sort described in Section 2.10 above.
(b) During the period from the date of this Agreement to the Closing
Date, Individual Sellers will:
(i) take and perform any and all actions necessary to render
accurate and/or maintain the accuracy of, all of the representations and
warranties of Individual Sellers and DPI herein contained and satisfy each
covenant or condition required to be performed or satisfied by Sellers prior to
the Closing and/or cause or permit the implementation of the within transaction;
(ii) carry on and maintain the Business in substantially the
same form, style and manner as operated by Sellers prior to this Agreement and
use their best efforts to preserve DPI's business organization and its
relationships with its customers, all employees and others having business
relations with DPI, and not voluntarily engage in any transaction not in the
ordinary course of business without the prior consent of Buyer;
24
<PAGE>
(iii) use their best efforts in good faith to cause each of DPI's
customers including, but not limited to those listed on Schedule 1.2(e) of the
Disclosure Schedules, to indicate their intention to continue to be bound by the
terms and conditions of the Client Agreements;
(iv) use their best efforts in good faith to cause each of DPI's
employees to continue employment with DPI following the Closing Date; and
(v) give prompt written notice to Buyer of any material
development affecting DPI's, clients, liabilities, business, financial
condition, operations, results of operations, or future prospects; and give
prompt written notice to Buyer of any material development affecting Sellers'
ability to consummate the transactions contemplated by this Agreement. No
disclosure, pursuant to this paragraph "6.7 (b)(v)", however, shall cure any
misrepresentation, breach of warranty, or breach of covenant.
6.8 Continued Disclosure. If any event or state of facts occurs or arises
--------------------
between the earlier of the date hereof (or the date as of which disclosure has
been made with respect to such type of event or state of facts) and the Closing
Date that, had it occurred or arisen prior to or on such date, would have been
required by the terms hereof to be disclosed herein, Sellers shall give notice
thereof in writing to Buyer within five days of the happening of such event or
state of facts. The giving of such notice and the disclosure of such event or
state of facts shall in no way change the conditions precedent to the
obligations of Buyer as set forth in Article IV.
----------
6.9 Full Access. Sellers will permit representatives of the Buyer to have
-----------
full access to all premises, properties, personnel, books, records, contracts
and documents of or pertaining to DPI.
6.10 Exclusivity. DPI will not and Sellers will not cause or permit DPI to:
-----------
(i) solicit, initiate, or encourage the submission of any proposal or offer from
any person or entity relating to the acquisition of any capital stock or other
voting securities, or any substantial portion of the assets of, DPI (including
any acquisition structured as a merger, consolidation, or share exchange) or
(ii) participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person or entity to do or seek any of
the foregoing. The Sellers will not vote the Stock in favor of any such
acquisition structured as a merger, consolidation, or share exchange. The
Sellers will notify the Buyer immediately if any person or entity makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
6.11 Tax Returns. Sellers will provide to Buyer, within 45 days following
-----------
the Closing Date, draft federal and state tax returns and draft cash basis
financial statements for DPI covering, in each instance, the period from January
1, 1998 to the Closing Date.
25
<PAGE>
ARTICLE VII
CLOSING DELIVERIES
------------------
7.1 Closing. Subject to the conditions contained in this Agreement, the
-------
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place at a location mutually agreeable to Buyer and Sellers at 10:00 a.m.
Central Daylight Time on June 29, 1998. The effective time for purposes of
apportionments and other matters involving allocations for the Closing shall be
12:01 a.m., Central Daylight Time, on June 29, 1998.
7.2 Deliveries.
----------
(a) At the Closing, Buyer shall deliver to Sellers:
(i) $9,550,000 of the Unadjusted Purchase Price pursuant to
Section 1.4 hereof;
- -----------
(ii) Certified copies of the resolutions of the Board of
Directors of Buyer authorizing Buyer to execute and deliver this Agreement, any
agreement or document contemplated hereby, and to consummate the transactions
contemplated hereby and thereby;
(iii) A certificate of an executive officer of Buyer, dated the
Closing Date, certifying that: (A) all representations and warranties made by
Buyer in Article III hereof were true and correct when made, and are true and
correct on the Closing Date, except for changes permitted or contemplated by
this Agreement and except that representations which are specifically made as of
a specified date shall be true and correct as of such earlier date; and (B) all
covenants, agreements and conditions contained in this Agreement to be performed
or complied with by Buyer on or prior to the Closing Date have been performed or
complied with;
(iv) A duly executed Escrow Agreement, in substantially the form
as attached as Exhibit A hereto;
(v) A duly executed Employment Agreement, in substantially the
form attached as Exhibit B-1 hereto; and
(vi) Opinion of Buyer's counsel.
(b) At the Closing, Buyer shall deliver to the Escrow Agent $750,000
of the Unadjusted Purchase Price.
(c) At the Closing, Sellers shall deliver to Buyer:
(i) Certificates for the Stock accompanied by executed assignment
documents or endorsed in blank;
26
<PAGE>
(ii) Possession of all assets used in the Business, except for
Excluded Assets;
(iii) All contracts, leases, agreements or other documents,
books, financial and accounting records of DPI not previously delivered or not
located on the premises of DPI, to the extent such items are used in the
Business, and are not Excluded Assets;
(iv) A duly executed Escrow Agreement, in substantially the
form attached as Exhibit A hereto;
(v) A duly executed Employment Agreement, in substantially the
form attached as Exhibit B-1 hereto;
(vi) A certificate of the Individual Sellers, dated as of the
Closing Date, certifying that: (i) all representations and warranties made by
Individual Sellers in Article II hereof were true and correct when made, and are
true and correct on the Closing Date except for changes permitted or
contemplated by this Agreement and except that representations which are
specifically made as of a specified date shall be true and correct as of such
earlier date; and (ii) all covenants, agreements and conditions contained in
this Agreement to be performed or complied with by Individual Sellers on or
prior to the Closing Date have been performed or complied with;
(vii) An opinion of Sellers' counsel in a form to be mutually
agreed by the parties ;
(viii) All documents required by Article IV hereof; and
(ix) All other documents required by this Agreement.
ARTICLE VIII
POST-CLOSING COVENANTS AND AGREEMENTS
-------------------------------------
8.1 Further Assurances. If at any time and from time to time after the
------------------
Closing, Buyer determines that any further assignment, consent to assignment or
other document or any further action is necessary or desirable to carry out the
purposes of and to make effective the transactions contemplated by this
Agreement, Sellers agree to execute and deliver all such instruments and to take
such actions as may be reasonably necessary or advisable for such purpose.
8.2 Covenant Not to Compete; Nondisclosure and Confidentiality.
----------------------------------------------------------
(a) Non-Compete. For a period of five (5) years from the date of this
27
<PAGE>
Agreement, Individual Sellers shall not directly or indirectly through
representatives, agents or otherwise (i) engage in competition with the Business
sold hereunder, its successors or assigns within 150 miles from Rolling Meadows,
Illinois, (hereafter the "Territory") or with respect to DPI's or Buyer's
"customers" as defined in this paragraph; or (ii) provide information, solicit
or sell for, own, or organize any interest in, either directly or through any
affiliate or subsidiary corporation, partnership or other entity, or become
engaged by, act as agent for, or in any manner assist, any person, corporation
or other entity that is directly or indirectly in competition with Buyer or the
Business, or their successors or assigns in the Territory or with respect to
Buyer's or DPI's "customers" as defined in this paragraph. Individual Sellers
further agree that within the restrictive period, they will not in any way
attempt to divert from Buyer or DPI any business whatsoever and Individual
Sellers further agree that during said restrictive period they will not
influence or attempt to influence any of the customers of Buyer or Sellers not
to do business with Buyer or DPI; Individual Sellers further agree that they
will not make or permit the making of any public announcement or statement of
any kind that they were formerly employed or connected with Buyer or DPI, which
announcement has as its purpose directly or indirectly the intent to violate the
provisions of this Agreement. The term "customer", as used herein, shall mean
any person or entity which either Individual Seller has contact with and does
business with for Buyer or DPI at any time while employed by DPI or Buyer.
(b) Confidential Information. During the term set forth in paragraph (a)
and thereafter, Individual Sellers shall not divulge any of Buyer's or DPI's
business contacts, customers, suppliers, technology, know-how, trade secrets,
marketing techniques, books and records, computer programs, lists, plans,
databases, or any other confidential or proprietary information or make
available to any other persons any documents, files or other papers concerning
the foregoing or the Business or financial affairs of DPI or Buyer. During the
term set forth in paragraph (a) Individual Sellers shall not solicit the
employment of any employee or consultant currently or provisionally employed or
retained by Buyer or DPI.
(c) Individual Sellers have carefully considered the nature and extent of
the restrictions upon them and the rights and remedies conferred upon Buyer
under this Agreement and hereby acknowledge and agree that the same are
reasonable in time and territory.
(d) It is stipulated that a breach by Sellers of the restrictive covenants
set forth herein will cause irreparable damage to Buyer and that in the event of
any breach of the provisions under this Section, Buyer, in addition to any other
remedies it has, shall be entitled to an injunction restraining Sellers from
violating or continuing a violation of the restrictive covenants herein
contained. It is further stipulated that the existence of any claim or cause of
action on the part of Sellers against Buyer, whether arising from this Agreement
or otherwise shall in no way constitute a defense to the enforcement of the
restrictive covenants contained herein, and the restrictive periods in which
Buyer is entitled to an injunction shall be extended in an amount which equals
the time period which the Sellers are or have been in violation of the
restrictive covenants contained herein. In the event of a breach of the
restrictive covenants contained in the Agreement, Sellers agree to the payment
of or reimbursement of Buyer's reasonable attorney's fees and disbursements
incurred in enforcing any such provision. The provisions of this Section
28
<PAGE>
shall survive the Closing Date. If any of the provisions of this Section shall
be held invalid, illegal, or unenforceable by the final decision of a court of
competent jurisdiction and all appeals therefrom shall have failed or the time
for such appeals shall have expired the provision or provisions shall be deemed
eliminated from this Agreement in such jurisdiction but the remaining provisions
shall nevertheless be given full effect. In the event this Agreement or any
portion hereof is more restrictive than permitted by the law of the jurisdiction
in which enforcement is sought, this Agreement or such portion shall be limited
in that jurisdiction only to the extent required by the law of that
jurisdiction. If a court of competent jurisdiction shall determine that the
terms of this Section are partially or wholly inoperative, unenforceable or
invalid in a particular case because of their time or geographic scope or for
any other reason such court shall have the power to limit such time or
geographic scope or otherwise to recast the terms of this Agreement in such case
so as to permit its enforcement to the greatest extent permitted by applicable
law.
8.3 Resignations; Bank Authorizations. Immediately following Closing, P.
---------------------------------
Advani and the other directors and officers of DPI shall resign as such
directors and officers of DPI. Immediately following Closing, Sellers shall
take all actions required to change the authorized signatories on all DPI bank
accounts to those persons designated by Buyer.
ARTICLE IX
TERMINATION; WAIVER
-------------------
9.1 Termination. This Agreement may be terminated at any time prior to the
-----------
Closing as follows:
(a) the Buyer and the Sellers may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving written notice to
the Sellers' Representative at any time prior to the Closing (i) in the event
any Seller has breached any representation, warranty, or covenant contained in
this Agreement in any material respect, the Buyer has notified the Sellers'
Representative of breach, and the breach has continued without cure for a period
of 10 days after the notice of breach, or (ii) if the Closing shall not have
occurred on or before July 31, 1998, by reason of Sellers being unable or
unwilling to effect a Closing on or before, July 31, 1998, or by reason of the
failure of any condition precedent under Article IV hereof (unless the failure
results primarily from the Buyer itself breaching any representation, warranty,
or covenant contained in this Agreement); and
(c) the Sellers may terminate this Agreement by giving written notice
to the Buyer at any time prior to the Closing (i) in the event the Buyer has
breached any representation, warranty, or covenant contained in this Agreement
in any material respect, the Sellers have notified the Buyer of the breach, and
the breach has continued without cure for a period of 10
29
<PAGE>
days after the notice of breach, or (ii) if the Closing shall not have occurred
on or before July 31, 1998, by reason of Buyer being unable or unwilling to
effect a Closing on or before July 31, 1998, or by reason of the failure of any
condition precedent under Article V hereof (unless the failure results primarily
from the Sellers themselves breaching any representation, warranty, or covenant
contained in this Agreement).
9.2 Effect of Termination; Specific Performance.
-------------------------------------------
(a) In the event of the termination of this Agreement pursuant to
Section 9.1 hereof, notice thereof shall be promptly given by the terminating
party to the other party and thereafter this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, except that (i) the provisions of Section
6.1 hereof shall remain in effect and (ii) nothing in this Section 9.2 shall
relieve any party to this Agreement from liability for breach of this Agreement
or any misrepresentation hereof, including pursuant to paragraph (b) hereof.
(b) In the event of a breach or threatened breach by Sellers or Buyer
of any of the agreements and obligations set forth herein, monetary damages or
the other remedies at law that may be available to the non-breaching party for
such breach or threatened breach will be inadequate and, without prejudice to
the nonbreaching party's right to pursue any remedies at law or in equity
available to it for such breach or threatened breach, including without
limitation the recovery of damages, the non-breaching party will be entitled to
injunctive relief as a means of having the breaching party comply with the
provisions herein.
9.3 Extension; Waiver. At any time prior to the Closing, the parties
-----------------
hereto may (i) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein by the other party or in any
document, certificate or writing delivered pursuant hereto by the other party,
or (iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of either party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. No waiver of any breach of a provision of this Agreement
shall constitute or be deemed a waiver of any other breach of the same or any
other provision of this Agreement, and no delay or failure to take action with
respect to any breach or provision of this Agreement shall constitute or be
deemed a waiver of the right to enforce this Agreement and to take action
against such breach or any subsequent breach of the same or any other provision.
ARTICLE X
MISCELLANEOUS PROVISIONS
------------------------
10.1 Entire Agreement; Amendment. Except with respect to those documents
---------------------------
signed in connection with the Closing of the transactions contemplated by this
Agreement and those
30
<PAGE>
documents that, by their terms, modify or supersede this Agreement, this
Agreement (including the Disclosure Schedules), contains the entire agreement
between the parties hereto and supersedes all prior oral or written agreements,
promises, representations, commitments or understandings with respect to the
matters provided for herein. This Agreement may be modified or amended only by a
writing duly executed by Buyer and Sellers, which modification or amendment
shall be binding upon all of the parties hereto.
10.2 Assignment and Binding Effect. This Agreement and the rights and
-----------------------------
obligations of any party hereunder may not be assigned by any party without the
prior written consent of the other party hereto. All covenants, agreements,
statements, representations, warranties and indemnities in this Agreement by and
on behalf of either of the parties hereto shall bind and inure to the benefit of
their respective heirs, successors and permitted assigns of the parties hereto.
10.3 Waivers. No waiver of any of the provisions of this Agreement shall be
-------
deemed or shall constitute a continuing waiver, and no waiver shall be binding
unless executed in writing by the party making the waiver.
10.4 Notices. All notices, demands or other communications which may be or
-------
are required to be given by any party to any other party pursuant to this
Agreement, shall be in writing and shall be mailed by certified mail, return
receipt requested, postage prepaid, or transmitted by hand delivery, national
overnight express, telegram or facsimile transmission, addressed as follows:
(a) If to Buyer:
Butler Telecom, Inc.
110 Summit Avenue
Montvale, New Jersey 07645
Attention: Michael C. Hellriegel
Sr. Vice President-Finance
Facsimile: (201) 573-9773
with a copy (which shall not constitute notice) to:
McBreen, McBreen & Kopko
20 North Wacker Drive
Suite 2520
Chicago, Illinois 60606
Attention: James R. Stern
Facsimile: (312) 332-2657
31
<PAGE>
(b) If to Sellers:
Prem Advani
265 N. Bay Court
Barrington, Illinois 60010
Sharon Advani
525 Oak Knoll Road
Barrington, Illinois 60010
with a copy to:
Childress & Zdeb, Ltd.
6 W. Hubbard Street, 5th Floor
Chicago, Illinois 60610
Attention: Susan Reedy Williams
until such time as either party notifies the other of a change of address. Each
notice or other communication which shall be mailed, delivered or transmitted in
the manner described above shall be deemed sufficiently given and received for
all purposes at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, or the affidavit of messenger or telefax
transmission log being deemed conclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
10.5 Governing Law; Jurisdiction and Venue. This Agreement shall be
-------------------------------------
governed by and construed in accordance with the laws of the State of Illinois,
without giving effect to the principles of conflicts of laws thereof. Each party
hereby submits to the personal jurisdiction of the United States District Court
for the Northern District of Illinois or any court of the State of Illinois, and
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such court. In
addition, each party hereby irrevocably and unconditionally waives, to the
fullest extent permitted by law, (i) any objection which it may now have or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any related matter in such court, (ii)
the defense of an inconvenient forum to the maintenance of any suit, action or
proceeding in any such court, and (iii) trial by jury in any such suit, action
or proceeding.
10.6 Counterparts; Execution. To facilitate execution, this Agreement may
-----------------------
be executed in as many counterparts as may be required, and each such
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but a single agreement.
10.7 Severability. Any provision of this Agreement which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of
32
<PAGE>
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10.8 No Third Parties Benefited. This Agreement is made and entered into
--------------------------
for the sole protection and benefit of the parties hereto, their successors and
assigns, and no other person or persons shall have any right of action under
this Agreement.
10.9 Recitals, Schedules and Exhibits. The recitals, schedules, and
--------------------------------
exhibits to this Agreement are incorporated herein and, by this reference, made
a part hereof as if fully set forth at length herein.
10.10 Section Headings. The section headings used herein are inserted for
----------------
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
33
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement,
or caused this Agreement to be executed on its behalf, as of the date first
above written.
BUYER:
BUTLER TELECOM, INC.
By:________________________________
Its:_______________________________
SELLERS:
-----------------------------------
Prem Advani
-----------------------------------
Sharon K. Advani
Prem Advani 1997
Charitable Remainder Trust
By: _______________________________
Trustee
As Guarantor of the Payment set forth in Section
1.4(a)
BUTLER INTERNATIONAL, INC.
By: _______________________________
Its: _______________________________
<PAGE>
EXHIBIT 10.46
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 26th day of July, 1998 by and between Butler Telecom, Inc., a
Delaware corporation ("Buyer"), ISL International, Inc., a New Jersey
corporation ("Seller"), and Mervyn Haft ("Haft" or the "Stockholder").
R E C I T A L S
- - - - - - - -
WHEREAS, Seller is engaged in the business of providing information
technology staffing services (the "Business"); and
WHEREAS, Haft is the owner of 100% of the outstanding common stock of
Seller; and
WHEREAS, Buyer is a wholly-owned subsidiary of Butler International,
Inc. a Maryland corporation ("BI"); and
WHEREAS, Buyer wishes to purchase and Seller wishes to sell the assets
and business of Seller specified in this Agreement;
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, for and in consideration of the mutual promises herein
made, and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ACQUIRED ASSETS
------------------------------------
1.1 Acquired Assets. Subject to the terms and conditions of this
---------------
Agreement and in reliance on the representations, warranties and agreements set
forth herein, effective as of 11:59 p.m. on August 2, 1998 (the "Closing
Date"), Seller shall sell, convey, transfer, assign and deliver to Buyer, and
Buyer shall purchase from Seller all of Seller's right, title and interest in
and to all of the assets of Seller of every kind, tangible and intangible,
wherever located, excepting only those assets specifically excluded in Section
1.2 hereof, and including, without limitation, the following :
(a) the office furniture and equipment, computers, leasehold
improvements, and deposits pursuant to equipment leases, all as
listed in Schedule 1.1 A;
(b) all computer software owned by Seller and Seller's interest in any
other computer software licensed by it from others;
(c) all office supplies;
(d) the client agreements, purchase orders, request requirements,
correspondence, memoranda and inquiries from or with past, present
and potential customers, including, but not limited to, those set
forth in Schedule 1.1 B ("Client Agreements");
<PAGE>
(e) the office leases, equipment leases, and other agreements,
contracts and instruments listed in Schedule 1.1C;
(f) all prepayments and deposits, including, without limitation,
security deposits under leases;
(g) the corporate name ISL International, Inc., all assumed names
relating thereto, logos, trademarks, service marks, domain names,
trade names, copyrights, registrations, applications for
registration of any of them, and any other intellectual property
rights of Seller, including, but not limited to, those listed in
Schedule 1.1 E;
(h) originals of all books and records of Seller pertaining to the
assets referred to in this Agreement, including customer lists and
credit files, and all those pertaining to Seller's employees who
are hired by Buyer pursuant to the Agreement;
(i) all permits, licenses, approvals and other governmental
authorizations relating to the Business which are transferable to
Buyer including, but not limited to, those listed in Schedule 1.1
F;
(j) any other assets not referred to in Section 1.2 which are used by
Seller in connection with the Business, including, without
limitation, all telephone and facsimile numbers and e-mail
addresses used by Seller in connection with the Business;
(k) all goodwill pertaining to the Business; and
(l) all information for or with respect to Seller's current or former
employees, independent contractors, and consultants supplied by
secondary suppliers including, without limitation, all tangible
and electronic manifestations, files, resumes, payroll employee
information and other such information relating to employees,
independent contractors and consultants, (excluding employee and
independent contractor agreements, which shall not be assumed by
Buyer, it being the intention of this Agreement that Buyer may
newly-employ or retain all employees, independent contractors, and
consultants supplied by secondary suppliers).
All as the same exist on the date hereof and shall exist on the
Closing Date subject only to changes occurring in the ordinary course of
business of Seller. All such assets to be acquired are referred together as the
"Acquired Assets".
1.2 Excluded Assets. The following assets of Seller are excluded from
---------------
the Acquired Assets:
(a) the consideration payable to Seller by Buyer hereunder;
(b) any cash, cash equivalents, or securities owned by Seller;
(c) Seller's accounts receivables, including receivables from
affiliates;
(d) any tax refund due or to become due to Seller;
(e) any of Seller's unbilled revenue;
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(f) all rights in and with respect to the ISL International Inc.
401(k) Plan;
(g) the office lease for the Morganville office;
(h) any treasury stock held by Seller;
(i) the corporate stock certificate books, ledger, minute books and
similar corporate records of Seller;
(j) the automobiles identified on Schedule 1.2A; and
(k) all records and correspondence relating to the foregoing excluded
assets.
1.3 Purchase Price. As consideration for the sale, conveyance,
--------------
transfer, assignment and delivery to Buyer of the Acquired Assets, Buyer shall
pay to Seller the unadjusted purchase price of Seven Million Four Hundred
Thousand Dollars ($7,400,000) (the "Unadjusted Purchase Price"), plus the
Earnout Payments hereinafter defined, as follows:
(i) on the Closing Date, Seven Million Four Hundred Thousand
Dollars ($7,400,000), in immediately available funds.
(ii) the earnout payments payable by Buyer to Seller shall be
made as follows:
(a) on October 31, 1999, for the twelve month period ending
July 31, 1999, an amount equal to 82% of the first
$2,300,000 of EBITA and 30% of EBITA in excess of
$2,300,000, provided that if EBITA is not in excess of
$1,700,000, the amount of the earnout payment (the
"Minimum Payment") shall equal $50,000;
(b) on October 31, 2000, for the twelve month period ending
July 31, 2000, an amount equal to 82% of the first
$2,300,000 of EBITA and 30% of EBITA in excess of
$2,300,000, provided that if EBITA is not in excess of
$1,700,000, the amount of the earnout payment (the
"Minimum Payment") shall equal $50,000; and
(c) on October 31, 2001, for the twelve month period ending
July 31, 2001, an amount equal to 82% of the first
$2,300,000 of EBITA and 30% of EBITA in excess of
$2,300,000, provided that if EBITA is not in excess of
$1,700,000, the amount of the earnout payment (the
"Minimum Payment") shall equal $50,000.
Each of the payments referred to above in subsections (a), (b), and
(c), is referred to as an "Earnout Payment", and each of the dates upon which an
Earnout Payment is made is referred to as an "Earnout Payment Date." Each of the
three consecutive 12 month periods is referred to herein as an "Earnout Period".
If the Closing Date is other than August 2, 1998, the Earnout Periods and
Earnout Payment Dates shall be adjusted accordingly.
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Each of the Earnout Payments will be paid 75% in cash and 25% in such
number of shares of BI common stock ("BI Common Stock") as is determined by
dividing the 25% amount of said Earnout Payment by the Average Price (such BI
Common Stock shall be called "Earnout Shares"). The "Average Price" is defined
as the average of the closing prices of the BI Common Stock on the NASDAQ
National Market System for the twenty (20) trading days immediately prior to the
Earnout Payment Dates (the "Measurement Period"). Earnout Shares will be
subject to restrictions on resale under the Securities Act of 1933 as amended
(the "Act"), the rules and regulations promulgated thereunder and applicable
state laws. The Seller will be required to hold the Earnout Shares for a
minimum of 1 year from the date of issue. Notwithstanding anything to the
contrary contained herein, all Earnout Payments for Earnout Periods where the
Minimum Payment is in effect shall be made 100% in cash. Each of the Earnout
Payments will be guaranteed by BI.
For purposes of this Agreement, "EBITA" means the revenue from the
Business and from other Butler operations which will be under the direct control
of Haft, less all direct branch expenses incurred in connection with such
revenue such as staff, compensation and related fringes, payroll taxes,
commissions, office expense, advertising, telephone, travel, postage, lease
expense, H1 processing, all consultant related costs, litigation and related
costs (net of any insurance proceeds) pertaining directly to the operations of
such business (excluding any litigation costs related to disputes between or
among Buyer and Seller or Buyer and the Stockholder), workers compensation,
government penalties, and interest on accounts receivable greater than 55 days
outstanding, except for accounts receivable from Merrill Lynch, with respect to
which interest will be deducted on accounts receivable greater than 80 days
outstanding, and accounts receivable from the City of Bridgeport, with respect
to which interest will not be deducted on accounts receivable. The interest
rate applied to accounts receivable greater than 55 days outstanding (or on 80
days with respect to receivables from Merrill Lynch) will be the interest rate
Buyer is charged on its credit facility with General Electric Capital
Corporation ("GE Capital") or any successor organization providing credit
facilities similar to the credit facility provided by GE Capital to Buyer.
Amortization of goodwill and income taxes shall be excluded from the EBITA
calculation. EBITA will be calculated in accordance with generally accepted
accounting principles. EBITA will not include any Butler corporate charges for
accounting and human resource functions, including the processing of payroll,
billing and accounts payable, the generating of financial reports, and the
administering of benefits plans.
1.4 Earnout Payment Calculations. Each Earnout Payment shall be
----------------------------
accompanied by a statement from an officer of Buyer setting forth (i) a detailed
itemization of EBITA for the applicable Earnout Period, and (ii) the
calculation of the payment due to Seller. Such officer's statement shall state
that such computations are accurate and have been prepared in accordance with
this Agreement. Buyer shall prepare and maintain, in accordance with generally
accepted accounting principles, complete and accurate records from which the
computation of EBITA shall be made. Until all Earnout Payments have been made,
Buyer shall provide Seller with monthly and year to date income statements with
respect to the Business. Not more than one time in each calendar year, Seller
(or its duly authorized representative) shall have the right to review and
audit, if necessary, the underlying books and records of Buyer for the purpose
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<PAGE>
verifying all calculations of EBITA. Reasonable notice shall be given to Buyer
of any such audit. Each audit shall be conducted at the sole cost and expense
of Seller. If, as a result of an audit, it is determined that an additional
payment is due from Buyer to Seller in excess of any Earnout Payment, as
originally calculated, Buyer shall pay Seller interest at the rate of 10% per
annum on such additional payment, calculated from the time of the original
Earnout Payment to the time of the additional payment.
1.5 Acquired Assets Free of Liens. The Acquired Assets to be
-----------------------------
transferred hereunder shall be transferred free and clear of all liens, claims,
encumbrances, mortgages, pledges, restrictions or rights of others of every kind
and description, including, without limitation, tax liens, environmental liens,
and obligations under the Employee Retirement Income Security Act of 1974, as
amended.
1.6 Assumption of Liabilities. As additional consideration for the
-------------------------
purchase of the Acquired Assets, Buyer shall assume and agree to pay, perform
and discharge in full the following debts, contracts, obligations and
liabilities of Sellers ("Assumed Liabilities"), and no others, as and when due,
and to indemnify, defend and hold Seller and the Stockholder harmless from and
against all obligations and liabilities (including reasonable attorneys' fees)
accruing and arising after the Closing Date under the Acquired Leases, client
agreements and arrangements set forth in Schedule 1.1 B, the leases and other
agreements, contracts and instruments set forth in Schedule 1.1 C, the
intellectual property items set forth in Schedule 1.1 E, and the licenses and
related items set forth in Schedule 1.1 F.
1.7 Liabilities Not Assumed. Other than the Assumed Liabilities
-----------------------
referred to in the foregoing Section 1.6, Buyer shall not assume or be deemed to
have assumed any of the liabilities or obligations of Seller (the "Unassumed
Liabilities"), including, without limitation:
(a) any public or other liability claims with respect to the Business
and affairs of Seller, and the acts and omission of its officers,
directors, employees, and agents either before or after the
Closing Date ;
(b) any obligation or liability of Seller to the Stockholder or any
other officer or director of Seller;
(c) any obligation or liability for Federal, State, local, foreign
income or other taxes;
(d) any obligation or liability arising out of or relating, directly
or indirectly, to the operation of the Business prior to the
Closing Date, including any rebates, discounts, offsets or
concessions attributable to amounts invoiced to Seller's clients
prior to the Closing Date;
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<PAGE>
(e) any obligation or liability to Seller's employees for salary,
wages or other compensation or benefits including, but not limited
to, vacation, sick and holiday time and pay;
(f) any obligation or liability (including, but not limited to, any
liability with respect to the Consolidated Omnibus Reconciliation
Act of 1985, as amended, or state continuation coverage law) with
respect to any pension, retirement, 401(k), savings, profit
sharing or other Employee Benefit Plan (as defined in Section
2.12), including, but not limited to, any Employee Benefit Plan of
the Seller or a member of the Controlled Group of Corporations (as
defined in Section 2.12) or any "multiemployer plan" as such term
is defined in Section 3(37) of the Employee Retirement Income
Security Act of 1974, as amended;
(g) any liability arising out of, and any expenses relating to, any
claim, action, dispute, or litigation involving the operation of
the Business before the Closing Date;
(h) any liability of Seller for fines, penalties, damages or other
amounts payable to any government or governmental agency or
instrumentality, including, but not limited to, any liability of
Seller for fines, penalties, damages or amounts payable to any
government or governmental agency or instrumentality arising out
of any violation of 8 U.S.C. 1101 et. seq.; and
--- ----
(i) any obligation or liability of Seller or the Stockholder for the
expenses incurred in preparing or negotiating this Agreement and
consummating the transactions contemplated hereunder.
Seller, and Stockholder, jointly and severally, agree to discharge and
indemnify, defend and hold Buyer and their respective affiliates, officers,
directors, employees, agents, and stockholders harmless from all Unassumed
Liabilities (including reasonable attorneys' fees), whether or not known,
liquidated or contingent.
1.8 Allocation Of Purchase Price. The purchase price for the
----------------------------
Acquired Assets shall be allocated as described on Schedule 1.8. No party to
this Agreement will take a position on any federal or state tax return, before
any governmental agency charged with the collection of any income tax, or in any
judicial proceeding that is in any way inconsistent with Schedule 1.8.
1.9 Restriction on Transfer Of Shares Of BI Common Stock.
----------------------------------------------------
(a) Subject to the provisions of this Agreement, Seller understands
that Buyer and BI have no obligation to register the Earnout Shares
under the Securities Act and accordingly, the shares shall be subject
to restrictions under the Act, and the rules and regulations
promulgated thereunder and applicable state securities laws. At each
Earnout Payment Date, Buyer shall deliver to Seller one or more
certificates in proper form in the name of Seller evidencing the
shares being issued on such
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<PAGE>
dates. Each certificate shall bear an appropriate legend as to the
lack of registration of the shares and the resulting restrictions on
transfer.
(b) Subject to the provisions of this Agreement, no shares shall be
transferable except in compliance with the provisions of this Section
1.9 (b). Seller agrees that prior to any proposed transfer of any
shares, it will give Buyer notice of its intention to effect such
transfer. Such notice shall describe briefly the manner and
circumstance of the proposed transfer in sufficient detail, and shall
include such information as is reasonably necessary to enable counsel
for Buyer to render the opinion contemplated by this paragraph. If,
in the opinion of such counsel, the proposed transfer of such shares
may be effected without registration or qualification thereof under
the act or applicable state securities laws, Buyer, as promptly as
practical, shall notify Seller of such opinion, whereupon Seller
shall be entitled to transfer such shares in accordance with the
terms of its notice.
1.10 Apportionments. To the extent necessary, the following items
--------------
will be apportioned as of 11:59 p.m. on the Closing Date:
(a) real estate and personal property taxes, and other state, county
and municipal taxes and assessments and charges affecting the Acquired Assets;
(b) rents and other payments under any of the contracts and leases
assigned hereunder;
(c) charges for water, electricity, and all other utilities (except
to the extent disposed of by final billing to Seller); and
(d) vacation, sick and holiday time and pay.
All such items, prior to such time, being for the account of Seller
and all such items, after such time, being for the account of Buyer. At the
Closing, Seller or Buyer, as the case may be, shall deliver to the other a check
for the net amount owing under this Section 1.10. If any such item cannot be
accurately apportioned at the Closing or if it is incorrectly apportioned at the
Closing or subsequent thereto, such items shall be apportioned or reapportioned,
as the case may be, as soon as practicable after the Closing Date or the date on
which the apportionment error is discovered, as applicable.
1.11 Settlement of Disputes. Any controversy or claim arising out of
----------------------
or related to the Earnout Payments shall be finally resolved by arbitration
pursuant to the commercial arbitration rules of the American Arbitration
Association; provided, however, that this Section 1.11 shall not in any way
affect the rights of Buyer to seek injunctive relief or any other remedies
pursuant to Section 8.2 hereof. Any such arbitration shall take place in
Montvale, New Jersey, before three arbitrators one of which shall be appointed
by Buyer, one by Seller and the Stockholder and the third by the arbitrators;
provided, however, that the parties may by mutual agreement
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<PAGE>
designate a single arbitrator. The parties further agree that (i) the
arbitrators shall be empowered to include arbitration costs and attorney fees in
the award to the prevailing parties in such proceedings and (ii) the award in
such proceedings shall be final and binding on the parties. The arbitrators
shall apply the law of the State of New Jersey exclusive of conflicts of laws
principles, to any dispute. Judgment on the arbitrators' award may be entered in
any court having the requisite jurisdiction. Nothing in this Agreement shall
require the arbitration of disputes between the parties that arise from actions,
suits or proceedings instituted by third parties. Each party irrevocably submits
to the jurisdiction and venue of the arbitration described in the foregoing and
to the jurisdiction and venue of the Federal and State courts sitting in New
Jersey for the enforcement of any judgment on arbitrators' award and waives any
objection it may have with respect to the jurisdiction of such arbitrations or
such courts or the inconvenience of such forums or venues.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDER
--------------------------------------------------------
In order to induce Buyer to enter into this Agreement, each of the
Seller and the Stockholder, jointly and severally, represents and warrants to
the Buyer that the statements contained in this Article II are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article II).
2.1 Authority Relative to this Agreement. The Seller and Stockholder
------------------------------------
have the full power and authority to execute, deliver and perform this Agreement
and any agreement or document contemplated hereby, and to consummate the
transactions contemplated hereby or thereby. The obligations imposed on Seller
and Stockholder by this Agreement, or by any agreement or document contemplated
hereby, constitute the valid and binding obligations and agreements of Seller
and Stockholder, enforceable against each of them in accordance with their
respective terms except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights; and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
2.2 Compliance of Transaction With Laws and Other Instruments.
---------------------------------------------------------
Except as set forth in Section 2.2 of the disclosure schedules attached hereto
(the "Disclosure Schedules"), the execution, delivery and performance by Seller
and the Stockholder of this Agreement and any agreement or document contemplated
hereby, and the performance and consummation of the transactions contemplated
hereby or thereby by Seller and Stockholder (i) do not require on behalf of
Seller and Stockholder any approval, consent or waiver of, or filing with, any
governmental agency, court or other authority which has not been obtained and
which is not in
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full force and effect as of the date hereof; (ii) will not conflict with or
constitute a breach or violation of the charter or bylaws of Seller; (iii) will
not result in a material violation of any law, regulation, judgment, writ,
injunction, order or decree of any court or governmental or regulatory authority
(federal, local or otherwise) to which Seller or Stockholder are subject; and
(iv) will not require the approval, consent or waiver of, or filing with any
party to, violate or conflict with or result in a material breach of, or
constitute a default or acceleration of or give rise to a right of termination
(or an event which with notice or lapse of time or both would become a default)
under, any provision of any contract, indenture, mortgage, lease, agreement or
other instrument to which Seller or Stockholder is a party or to which any of
his or its assets are subject.
2.3 Organization and Qualification. Seller is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and operate its assets and properties and to conduct the
Business in the manner and in the places where such assets and properties are
owned, leased or operated or the Business is conducted by it. Seller has no
subsidiaries and does not own, directly or indirectly, any equity investment in
any corporation, partnership, joint venture or other business entity.
2.4 Financial and Other Statements. Section 2.4 of the Disclosure
------------------------------
Schedules contains true and complete copies of Seller's financial statements and
the notes thereto compiled by a certified public accountant for the year ended
December 31, 1997, (the "Financial Statements"). Except as set forth in the
Disclosure Schedules, the Financial Statements (i) have been prepared in
accordance with generally accepted accounting principles on a consistent basis
and (ii) fairly present in all material respects the financial position and
results of operation of Seller as of the indicated dates and for the periods
indicated therein.
2.5 Title to Properties; Liens; Condition of Properties. Except as
---------------------------------------------------
set forth on Section 2.5 of the Disclosure Schedules, Seller has good and
marketable title to or a valid leasehold in, the Acquired Assets. Except as set
forth on Section 2.5 of the Disclosure Schedules, none of the Acquired Assets
are subject to any mortgage, pledge, lien, conditional sale agreement, security
interest, encumbrance, title defect or other charge, except for liens for taxes
not yet due and payable. Section 2.5 of the Disclosure Schedules sets forth the
addresses or locations of all facilities (whether leased or owned) of Seller and
the addresses or locations of all places where Seller operates the Business.
2.6 No Undisclosed Liabilities. Except with respect to the Assumed
--------------------------
Liabilities, there are no material contractual or non-contractual obligations,
debts or liabilities of any nature of Seller whether accrued or unaccrued,
contingent or absolute, direct or indirect, recorded or unrecorded, potential or
realized (the "Liabilities") as of December 31, 1997, which are not otherwise
disclosed in the Financial Statements. Seller has not incurred any Liabilities
since December 31, 1997, except for those Liabilities incurred in the ordinary
course of Seller's business and consistent with past practice and which, in any
event, would not, in the aggregate, have a material adverse effect on the
Business.
9
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2.7 Taxes. (i) Seller has filed all federal, state, municipal and
-----
local tax returns (whether relating to income, sales, franchise, withholding,
real or personal property, employment or otherwise) ("tax returns") required to
be filed; (ii) Seller has paid all federal, state, municipal and local taxes
(whether relating to income, sales, franchise, withholding, real or personal
property, employment of otherwise) ("taxes") which are due, pursuant to such
returns, or claimed to be due by any taxing authority, or otherwise due and
owing, and any penalties or other charges due with respect to the late filing of
any such return have been fully paid, and shall be fully paid at the time of
closing; (iii) each such tax return heretofore filed by Seller correctly and
accurately reflects the amount of its tax liability thereunder; (iv) Seller
currently is not the beneficiary of any extension of time within which to file
any tax return; (v) no claim has ever been made by an authority in a
jurisdiction where Seller does not file tax returns that it is or may be subject
to taxation by that jurisdiction; (vi) there are no security interests on any of
the assets of Seller that arose in connection with any failure (or alleged
failure) to pay any tax; (vii) Seller has withheld and paid all taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other third party and all such
taxes shall be withheld or paid by Closing and all such taxes accrued but not
due as of Closing shall be escrowed with Buyer; (viii) Seller does not expect
any authority to assess any additional taxes for any period for which tax
returns have been filed; (ix) There is no dispute or claim concerning any tax
liability of Seller claimed or raised by any authority or as to which Seller has
knowledge based upon personal contact with any agent of such authority.
2.8 Absence of Certain Changes. Except as set forth on Schedule 2.8,
--------------------------
since December 31, 1997, there has not been:
(a) any material adverse change in the financial condition,
properties, assets, liabilities, personnel or operations of Seller which
materially affects or may materially affect the Acquired Assets;
(b) any obligation or liability incurred by Seller which affects
or may affect the Acquired Assets, including the obligation to perform services
normally conducted by the Business, other than obligations and liabilities
incurred in the ordinary course of business;
(c) any purchase, sale or other disposition, or any agreement of
other arrangement for the purchase, sale or other disposition, of any of the
services, properties or assets of the Business, except in the ordinary course of
business;
(d) any damage, destruction or loss, whether or not covered by
insurance, affecting the Acquired Assets;
(e) any loss or threatened loss of any permit, license,
qualification or certificate of authority held or enjoyed by Seller which loss
has had, or could in the future have, a material adverse effect on the business,
properties, financial condition or results of operation
10
<PAGE>
of the Business or Buyer's free and unencumbered ownership and use of any of the
Acquired Assets;
(f) any pending or threatened labor disputes or strikes, labor union
organizational activity, claim or threatened claim of unfair labor practices, or
any material adverse change in relations with Seller's employees generally;
(g) any action taken by Seller outside of the ordinary course of
business;
(h) any written notice of termination of, or default under, any Client
Agreement;
(i) any loan or advance to or any investment in any person, firm or
corporation, except for normal business advances to employees consistent with
past practice;
(j) any increase in the compensation payable or to become payable to
any of its officers or employees (other than non-material increases in the
ordinary course of business) and there has been no establishment of, adoption
of, entering into of, making of any new grants or awards under, acceleration of
payment or vesting under, creation of any obligation to grant any awards under,
or any amendment to any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option or other equity, pension, retirement, incentive or
deferred compensation, employment, retention, termination, severance, health,
life or other welfare, fringe, Employee Benefit Plan, or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any current or former
directors, officers or employees, or any granting or paying of any benefit not
required by any existing Seller Benefit Plan (as defined in Section 2.12) or
other plan or arrangement.
(k) any commitment for any addition to property, plant or equipment
not in the ordinary course of business;
(l) any payment, loan or advance of any amount to, or sale, transfer
or lease of Assets to, or any agreements or arrangements with, any of Seller's
officers, directors or "affiliates," as such term is defined in the rules and
regulations of the Securities and Exchange Commission ("Affiliate"), except for
(i) normal business advances to employees consistent with past practice and (ii)
compensation to officers permitted by subparagraph (j) above;
(m) any failure to pay current liabilities, including accounts payable
and accrued expenses, except in the ordinary course of business or consistent
with past practice; or
(n) any agreement or understanding by Seller to do any of the
foregoing.
2.9 Patents, Trademarks, Trade Names and Similar Rights. Seller owns
---------------------------------------------------
all trademarks, logos, service marks, trade names, copyrights or other similar
proprietary rights (the "Intangibles") used in the Business, has no obligation
to any third party with respect thereto, and
11
<PAGE>
has not sold, licensed, sublicensed or otherwise granted to any third party the
right to use such Intangibles. All Intangibles of Seller are based on statutory
or common law usage rights (not registration) and are listed in Section 2.9 of
the Disclosure Schedules. Except as set forth in Section 2.9 of the Disclosure
Schedules, to the best of Seller's knowledge none of the Intangibles, and none
of the products or services sold or processes used by Seller, conflict with the
patents, trademarks, logos, service marks, trade names, copyrights or other
similar proprietary rights of any person or entity, and Seller has not received
notice of the possibility of any such conflict.
2.10 Trade Secrets and Customer Lists. Seller has the right to use,
--------------------------------
without liability to others, all trade secrets and customer lists, if any,
required and used in the Business within the last five years and has not
disclosed, sold, licensed, sublicensed or otherwise granted to any third party
the right to use such trade secrets and information. Seller is not using or in
any way making use of any confidential information or trade secrets of any third
party, including, without limitation, a former employer of any present or past
employee of Seller.
2.11 Client and Other Agreements. With respect to the Client
---------------------------
Agreements : (i) all such agreements are legal, valid, binding, enforceable, in
full force and effect, and subject to customer consent of the other party to
such agreement, are fully transferable to Buyer subject to no governmental or
regulatory requirement or impediment; (ii) all such agreements will be legal,
valid, binding and enforceable and in full force and effect on the same terms
and conditions on the Closing Date; (iii) no party is in breach or default, and
no event has occurred which with notice or lapse of time would constitute a
breach or default, or permit termination, modification or acceleration, under
said agreements; (iv) no party has repudiated any provision of said agreements;
(v) the list of agreements set forth in Sections 1.1B of the Disclosure
Schedules is a complete and accurate list of all agreements between Seller and
its customers; (vi) the relationship of Seller with the customers that are
parties to the agreements are good and Seller and Stockholder know of no set of
facts, and have not received any notice or information from any of the listed
customers indicating an intention to decrease the number of consultants (both
employees and independent contractors placed with Seller's customers ("Field
Personnel")), or to decrease the level of services Seller provides to any such
customer, or to reduce the rates at which Seller is being compensated for the
placement of any Field Personnel with said customers, and no illegal or other
payment or consideration has been given by Seller to secure or maintain any
business with its customers; and (vii) Seller and Stockholder have not received
any notice of claims from any of the listed customers relating to Seller's
performance of services for such customers; (viii) no material amount claimed to
be payable to Seller under any of the agreements is being disputed by any
client; and (ix) none of such agreements were awarded or are in any way based
upon or related to the status of Seller or its principals as a minority
business, small business, woman-owned business, veteran-owned business or
disadvantaged business enterprise or individual.
2.12 Employee Benefit Plans.
----------------------
12
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(a) The Seller nor any of its subsidiaries or affiliates
presently maintains, contributes to, or has (or may have) any Liability
(including current or potential withdrawal liability) with respect to (i) any
Employee Benefit Plan with respect to employees, former employees, directors or
independent contractors of Seller or their dependents or beneficiaries, or (ii)
any "multiemployer plan" as such term is defined in Section 3(37) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), except as
set forth in Section 2.12 of the Disclosure Schedules ("Seller Benefit Plans").
For purposes of this Section 2.12 and this Agreement, "Employee Benefit Plan"
means (1) any bonus, incentive compensation, profit sharing, retirement,
pension, group insurance, death benefit, group health, medical expense
reimbursement, dependent care, legal services, flexible benefits or cafeteria,
stock option, stock purchase, stock appreciation rights, phantom stock, savings,
deferred compensation, consulting, severance pay or termination pay, vacation
pay, leave of absence, layoff, life insurance, accident, disability, workers'
compensation, welfare or other employee benefit or fringe benefit plan, program,
arrangement practice or policy, or (2) any plan, program, arrangement, practice
or policy which is an "employee pension benefit plan" as such term is defined in
Section 3(2) of ERISA or an "employee welfare benefit plan" as defined in
Section 3(1) of ERISA, whether written or unwritten. A description of all
Employee Benefit Plans is set forth in Section 2.12 of the Disclosure Schedules.
For purposes of this Section 2.12 and this Agreement, "Liability" means any
obligation or liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for taxes.
(b) There has been no act or acts which would result in a disallowance
of a deduction or the imposition of a tax pursuant to Section 4980B of the
Internal Revenue Code of 1986, as amended, or any predecessor statute, or any
regulations promulgated thereunder, whether final, temporary, or proposed with
respect to the Seller or any other member of the Controlled Group of
Corporations or any Employee Benefit Plan which the Seller or any member of the
Controlled Group of Corporations maintains, has ever maintained, contributes to,
has ever contributed to, or has any Liability under. For purposes of this
Section 2.12 and this Agreement, "Controlled Group of Corporations" means all
persons (as defined in Section 3(9) of ERISA) that together with the Seller (and
any person whose liabilities the Seller has assumed or is otherwise subject to,
whether directly or indirectly) would be or has been treated as a single
employer under ERISA Section 4001(b) or Internal Revenue Code Section 414.
(c) The Seller nor any other member of the Controlled Group of
Corporations presently maintains, contributes to, or has any Liability
(including current or potential withdrawal liability) with respect to any
"multiemployer plan" as such term is defined in Section 3(37) of ERISA.
(d) With respect to all employees and former employees of the Seller,
neither the Seller or any of its subsidiaries or affiliates presently maintains,
contributes to, or has any Liability under any funded or unfunded medical,
health, or life insurance plan, or arrangement for present or future retirees or
present or future terminated employees except as required by
13
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the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or a
state continuation of coverage law.
(e) Neither the Seller nor any of its subsidiaries or affiliates is a
party to any employment agreement, whether written or oral, or agreement with
change in control or similar provisions, or collective bargaining agreement or
contract with any labor union relating to any employees or former employees of
Seller, or any agreement, plan or arrangement which provides for severance or
termination of employment benefits in cash or some other form.
(f) Section 2.12 of the Disclosure Schedules sets forth, as of the
date of this Agreement, with respect to each employee employed by Seller, his or
her name, position, salary or hourly wage, his or her date of employment and any
applicable significant employee benefits or entitlement not available generally
to Seller's employees.
(g) Section 2.12 of the Disclosure Schedules also sets forth, as of
the date of this Agreement, with respect to each consultant supplied by a
secondary supplier, his or her name, position, salary or hourly wage, the date
such consultant was first supplied by a secondary supplier.
2.13 Litigation, Proceedings, Etc. Except for matters described in
----------------------------
Section 2.13 of the Disclosure Schedules, (i) there is no pending claim, action,
litigation, suit or proceeding against, or investigation of, Seller; (ii) Seller
has not received any notice of any claim, action, litigation, suit or proceeding
against it or investigation of it, and no such claim, action, suit, proceeding
or investigation is pending or, to Seller's and Stockholder's knowledge,
threatened against Seller, and, to Seller's knowledge, there are no facts
existing which would be a proper basis for any such claim; and (iii) there are
no outstanding court, arbitration or agency orders, decrees or stipulations to
which Seller is a party or which are directed to Seller.
2.14 Compliance with Law and Other Instruments; Permits. Seller is
--------------------------------------------------
not (and has not been for the past twelve months) in violation of, or default
under: (i) any term or provision of its charter or by-laws; (ii) any term or
provision of any financial covenant or any indenture, mortgage, contract,
commitment or other agreement or instrument to which it is a party, or by which
it or any of its properties or business is or may be bound or affected, or (iii)
any applicable law (including, without limitation, the Fair Labor Standards Act
and all other federal and state wage and hour laws), any and all Federal
immigration laws, regulations and promulgations, rule, regulation, judgment,
order or decree of any governmental agency or court, domestic or foreign, having
jurisdiction over it or any of its properties or business, or Seller's employees
or Seller's consultants or independent contractors. Seller owns, possesses, or
has obtained all governmental and other licenses, permits, certifications,
registrations, approvals or consents and other authorizations necessary to own
or lease, as the case may be, its business or operations as presently conducted
and all such governmental and other licenses, permits, certifications,
registrations, approvals, consents and other authorizations are in good
standing, and there are no proceedings pending or, to the best knowledge of
Seller's officers and directors, threatened, or any basis therefor existing,
seeking to cancel, terminate or limit such licenses,
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permits, certifications, registrations, approvals, or consents or
authorizations, or related to the breach or failure to comply with any law,
rule, regulation, judgment or decree.
2.15 Insurance. Set forth in Schedule 2.15 of the Disclosure
---------
Schedules is a list of insurance in force with respect to the Business, which
list is true, complete and accurate in all material respects. Seller has paid
all premiums due under such policies and such policies are each outstanding and
in full force and effect on the date hereof. Seller will continue to maintain
said insurance in effect until and including the Closing Date. No insurance
carrier has refused any application for insurance by Seller.
2.16 Transactions with Affiliates. Except as set forth in the
----------------------------
Disclosure Schedule, there is no lease, sublease, indebtedness, contract,
agreement, commitment, understanding or other material arrangement of any kind
whatsoever entered into by Seller with Seller or any of its other stockholders,
officers or directors or any Affiliate of any of them.
2.17 Books and Records. All books and records pertaining to the
-----------------
Business have been, or prior to the Closing shall have been, made available for
review by Buyer and its representatives and are correct and complete in all
material respects, have been maintained in accordance with good business
practice and fairly reflect the basis for the financial condition and results of
operations of Seller set forth in the Financial Statements.
2.18 Powers of Attorney. There are no outstanding powers of attorney
------------------
executed on behalf of Seller.
2.19 Broker's Fees. Neither Seller nor Stockholder has any
-------------
obligation or liability to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
2.20 Miscellaneous. Seller is not a guarantor or otherwise liable
-------------
for any liability or obligation of third parties (including indebtedness of any
other person). Seller has no subsidiary, parent or affiliate organizations. All
compensation payments including vacation, per diem, holiday and sickness
payments, required to be paid to Seller's personnel for any period prior to the
Closing, will be paid in full or provided for at the time of Closing. Seller
has not entered into any employment agreement and or arrangement with nonexempt
personnel guaranteeing a minimum number or work hours during any predetermined
time period. Except as is necessary to close the Business, collect accounts
receivable, and pay off obligations, Seller and the Stockholder agree not to use
the name ISL International, Inc. or any similar name for any purpose.
2.21 Year 2000. All software, equipment, systems, services,
---------
products, deliverables and processes used in the Business, or provided to
Seller, whether licensed, owned, or used by vendors, is Year 2000-Compliant. In
addition, all software, equipment, systems, services, products, deliverables,
and processes provided to customers of the Business are Year 2000-Compliant.
For purposes of this Agreement, Year 2000-Compliant shall mean:
15
<PAGE>
a) The capabilities, functions, calculations, and other mechanical
and/or computing processes of such equipment, systems, services,
products, deliverables, and processes perform and will perform
timely, correctly, accurately, as intended and in accordance with
all applicable standards regardless of the date on which data
were input into the products or services, whether before, on or
after January 1, 2000, and whether or not the dates are affected
by leap years; and
b) The equipment, systems, services, products, deliverables, and
processes accept, calculate, compare, sort, extract, sequence and
otherwise process date inputs and date values, and return and
display date values timely, correctly, accurately, as intended
and in accordance with all applicable standards, regardless of
the dates used, whether before, on, or after January 1, 2000.
2.22 Disclosure. The statements contained in this Agreement, and in
----------
any written documents or Schedules attached hereto prepared and delivered by or
on behalf of Seller pursuant to the terms hereof are true and correct in all
material respects, and such statements, documents or Schedules do not omit any
material fact required by the terms hereof or thereof to be stated herein or
therein or necessary to make the statements contained herein or therein not
misleading. There is no fact known to Seller which would have a material
adverse effect on the Business, other than those which have been set forth in
this Agreement or in the Disclosure Schedules attached hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER AND BI
----------------------------------------------
In order to induce Seller to enter into this Agreement, the Buyer and
BI represent and warrant to the Seller that the statements contained in this
Article III are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement through
this Article III).
3.1 Authority Relative to this Agreement. The Buyer and BI have the
------------------------------------
full corporate power and authority, and have taken all necessary and proper
action, corporate and otherwise, to execute, deliver and perform this Agreement
and any other agreement or document contemplated hereby, and to consummate the
transactions contemplated hereby or thereby. All action on the part of Buyer
and BI necessary for the authorization, execution, delivery and performance of
this Agreement and any other agreement or document contemplated hereby, and the
consummation of the transactions contemplated hereby or thereby, has been taken.
The obligations imposed on Buyer and BI by this Agreement, or by any agreement
or document contemplated hereby, constitute the valid and binding obligations
and agreements of Buyer and BI, enforceable against them in accordance with
their respective terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other
16
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similar laws now or hereafter in effect relating to creditors' rights; and (ii)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
3.2 Compliance of Transaction with Laws and Other Instruments. The
---------------------------------------------------------
execution, delivery and performance by Buyer and BI of this Agreement and any
agreement or document contemplated hereby, and the performance and consummation
of the transactions contemplated hereby or thereby by Buyer and BI (i) do not
require on behalf of Buyer or BI any approval, consent or waiver of, or filing
with, any governmental agency, court or other authority which has not been
obtained and which is not in full force and effect as of the date hereof; (ii)
will not result in a violation of any law, regulation, judgment, writ,
injunction, order or decree of any court or governmental or regulatory authority
(federal, local or otherwise) to which Buyer or BI are subject; (iii) will not
conflict with or constitute a breach or violation of the charter or bylaws of
Buyer or BI; and (iv) except for GE Capital, will not require the approval,
consent or waiver of, or filing with any party to, violate or conflict with or
result in a breach of, or constitute a default or acceleration of or give rise
to a right of termination (or an event which with notice or lapse of time or
both would become a default) under, any provision of any contract, indenture,
mortgage, lease, agreement or other instrument to which Buyer or BI are parties
or to which any of their assets are subject.
3.3 Organization and Qualification. Buyer and BI are corporations
------------------------------
duly organized, validly existing and in good standing under the laws of their
respective states of incorporation.
3.4 Consents. Neither Buyer nor BI are subject to any law,
--------
ordinance, regulation, rule, order, judgment, injunction, decree, contract,
commitment, lease, agreement, instrument or other restriction of any kind, which
by its provisions would prevent the consummation of this Agreement or any of the
transactions contemplated hereby, except for consents, filings with or
notifications which will be obtained prior to the Closing.
3.5 Broker's Fees. Neither Buyer nor BI have no liability or
-------------
obligation except to Elite Investment Group, LLC to pay any fees or commissions
to any broker, investment bankers, finder or agent with respect to the
transactions contemplated by this Agreement. Buyer and BI agree to pay all fees
and commissions due to Elite Investment Group, LLC.
ARTICLE IV
BUYER'S CONDITIONS TO CLOSING
-----------------------------
The obligations of Buyer to purchase the Acquired Assets and to
consummate the transactions contemplated hereby, are subject to the fulfillment
in all material respects on or prior to the Closing Date of each of the
following conditions:
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4.1 Representations and Warranties. The representations and
------------------------------
warranties made by Seller and Stockholders in Article II hereof shall be true
----------
and correct when made, and shall be true and correct in all material respects on
the Closing Date with the same force and effect as if they had been made on and
as of the Closing Date, except for changes permitted or contemplated by this
Agreement and except that representations which are specifically made as of a
specified date shall be true and correct as of such specified date.
4.2 Performance. All covenants, agreements and conditions contained
-----------
in this Agreement to be performed or complied with by Seller on or prior to the
Closing Date shall have been performed or complied with in all material
respects.
4.3 Closing Deliveries. Buyer shall have received all documents and
------------------
instruments required pursuant to Section 7.2 hereof.
-----------
4.4 Absence of Litigation. No action, suit or proceeding before any
---------------------
court or any governmental body or authority shall be pending against either
Seller or Buyer which seeks to impose substantial damages in connection with, or
to restrain or invalidate the transactions contemplated by, this Agreement, and
no preliminary or permanent injunction or order that would prohibit or restrain
such transactions shall be in effect.
4.5 Absence of Certain Changes. There shall not have occurred prior
--------------------------
to the Closing Date (a) any material adverse change in the Business, or any
event or condition which, with the passage of time or the filing of notice, may
cause or create any such material adverse change, or (b) the legal inability of
Seller to convey, assign and transfer to Buyer the Business, or to convey,
assign and transfer to Buyer the Acquired Assets.
4.6 Miscellaneous. (A) The Stockholder shall have executed and
-------------
delivered to Buyer the employment agreement attached hereto. (B) Seller shall
have delivered to Buyer good standing certificates for New Jersey, and such
other documents from such states as requested by counsel for Buyer. (C) Buyer
shall have received from Seller, in such form as shall be requested by counsel
for Buyer, such corporate documents, duly executed by the appropriate corporate
officers attesting to the enactment of resolutions authorizing Seller to enter
into and consummate this transaction; (D) Buyer shall have received an opinion
of Howard J. Kerker, P.C., counsel for Seller and the Stockholder, dated the
Closing Date, satisfactory in form and substance to counsel for Buyer; and (E)
Buyer shall receive from Seller certified copies of amendments to its
certificate of incorporation to effect a change of its corporate name consistent
herewith.
4.7 Workmen's Compensation. Seller shall deliver to Buyer evidence
----------------------
of workmen's compensation coverage for the state of New Jersey.
4.8 Employment Eligibility Verification Forms. Each of the Seller's
-----------------------------------------
employees shall have completed Employment Eligibility Verification Forms (Form
I-9), and any other employee forms required by Buyer and the information in, and
contents of such documents is, to the best of Seller's knowledge and belief,
true and accurate.
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4.9 GE Capital Consent. GE Capital shall have consented to the
------------------
consummation of this transaction.
4.10 Client Consents. Merrill Lynch, Prudential and ConEdison shall
---------------
have agreed, in writing, in form and substance satisfactory to counsel for
Buyer, to continue to utilize the services of the Field Personnel.
4.11 401(k) Plan. Seller and Stockholder shall have terminated the
-----------
ISL International Inc. 401(k) Plan and any other retirement plans and
arrangements described in paragraph 6.12(d) prior to the Closing Date in
accordance with paragraph 6.12(d).
4.12 Health Plan Coverage Seller and Stockholder shall have arranged
--------------------
for the health plan coverage described in paragraph 6.12(c) in accordance with
paragraph 6.12(c).
4.13 Further Assurances. All actions to be taken by the Seller in
------------------
connection with consummation of the transactions contemplated hereby and all
certificates, opinion, instruments, and other documents required to effect the
transactions contemplated hereby will be satisfactory in form and substance to
the Buyer. The Buyer may waive any condition specified in this Article IV if it
executes a writing so stating at or prior to the Closing Date.
ARTICLE V
SELLER'S CONDITIONS TO CLOSING
------------------------------
The obligations of Seller to sell the Acquired Assets at the Closing,
and the obligation of Seller to consummate the transactions contemplated hereby
are subject to the fulfillment in all material respects on or prior to the
Closing of each of the following conditions:
5.1 Representations and Warranties. The representations and
------------------------------
warranties made by Buyer in Article III hereof shall be true and correct when
-----------
made, and shall be true and correct in all material respects on the Closing with
the same force and effect as if they had been made on and as of the Closing,
except for changes permitted or contemplated by this Agreement and except that
representations which are specifically made as of a specified date shall be true
and correct as of such specified date.
5.2 Performance. All covenants, agreements and conditions contained
-----------
in this Agreement to be performed or complied with by Buyer on or prior to the
Closing shall have been performed or complied with in all material respects.
5.3 Closing Deliveries. Seller and Stockholder shall have received
------------------
all documents and instruments required pursuant to Section 7.2 hereof.
-----------
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5.4 Absence of Litigation. No action, suit or proceeding before any
---------------------
court or any governmental body or authority shall be pending against either
Seller, Stockholder or Buyer which seeks to impose substantial damages in
connection with, or to restrain or invalidate the transactions contemplated by
this Agreement and no preliminary or permanent injunction or order that would
prohibit or restrain such transactions shall be in effect.
5.5 Miscellaneous. (A) Seller shall have received from Buyer and BI,
-------------
in such form as shall be requested by counsel for Seller, such corporate
documents, duly executed by the appropriate corporate officers attesting to the
enactment of resolutions authorizing Buyer and BI to enter into and consummate
this transaction; (B) Seller shall have received an opinion of McBreen, McBreen
& Kopko, counsel for Buyer and BI, dated the Closing Date, satisfactory in form
and substance to counsel for Seller.
5.6 Sales Tax. Buyer shall have paid or made provision for the
---------
payment of any sales tax due with respect to tangible personal property
purchased by Buyer hereunder.
ARTICLE VI
FURTHER AGREEMENTS
------------------
6.1 Expenses. Seller and Stockholder shall pay their costs incurred
--------
in connection with the preparation, negotiation, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
including, without limitation, the fees of the attorneys and accountants of
Seller. Buyer shall pay its costs incurred in connection with the preparation,
negotiation, execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby including, without limitation, the fees of
its attorneys and accountants.
6.2 News Releases. Upon execution of this Agreement and thereafter
-------------
upon Closing, Buyer may prepare and issue, subject to Seller's reasonable
approval, press release(s) regarding the transaction contemplated hereby and
upon doing same will provide advance notice to Seller and will review and
consider Seller's comments on same.
6.3 Survival of Representations. The representations and warranties
---------------------------
contained herein are and will be deemed and construed to be continuing
representations and warranties and will survive the Closing and (other than the
representations and warranties set forth in Section 2.7) continue in full force
and effect thereafter, provided that a notice is given as to a breach of such
representations or warranties within two years of the Closing Date. The
representations and warranties set forth in Section 2.7 shall continue in full
force and effect at all times thereafter. If a notice of breach is given within
any applicable time period, the other party shall be responsible for all Damages
(as defined below) resulting from, arising out of, or related to such breach,
including all Damages suffered after the date notice has been given.
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<PAGE>
6.4 Indemnification.
---------------
(a) From and after the Closing, Seller and Stockholder, jointly
and severally, shall defend, indemnify and hold harmless Buyer from and against
any and all claims, actions, causes of action, lawsuits, losses, costs, damages,
liabilities and expenses, including reasonable attorneys' fees and expenses
(collectively, "Damages"), incurred by Buyer that arise out of or related to:
(i) material inaccuracy or material breach of the
representations, warranties, covenants and agreements given or made by Seller or
Stockholder in this Agreement, any of the Disclosure Schedules or under or
pursuant to any document, certificate, schedule or instrument delivered by or on
behalf of Seller or Stockholders in connection herewith;
(ii) all matters arising out of or in connection with the
operation of the Business on or before the Closing;
(iii) (x) the employment or termination by the Seller of any
employee employed by the Seller on or prior to the Closing Date, (y) any
Employee Benefit Plan that the Seller or any other member of the Controlled
Group of Corporations maintains or ever maintained, contributes to or ever
contributed to or has any Liability thereunder and (z) the transaction
contemplated by this Agreement under Code Section 4980B or Part 6 of Subtitle B
of Title I of ERISA or any predecessor statutes or any state continuation
coverage law (or any regulations promulgated thereunder, whether final,
temporary or proposed) and any Damages under these laws arising on, prior to or
after the Closing Date with respect to employees, former employees, qualified
beneficiaries or any other individuals (e.g., directors or independent
contractors) of the Seller or any other member of the Controlled Group of
Corporations; and
(iv) all Unassumed Liabilities and Excluded Assets.
(b) From and after the Closing, Buyer shall defend, indemnify and
hold harmless Seller and Stockholder from and against any and all Damages
incurred by Seller and/or Stockholder that arise out of:
(i) a material breach of the representations, warranties,
covenants and agreements given or made by Buyer in this Agreement, any of the
Disclosure Schedules or under or pursuant to any document, certificate, schedule
or instrument delivered by or on behalf of Buyer in connection herewith;
(ii) all matters arising out of or in connection with the
operation of the Business after the Closing; and
(iii) all Assumed Liabilities and Acquired Assets.
(c) Limitations. Notwithstanding the foregoing,
-----------
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(i) Seller and Stockholder shall have no obligation to indemnify the
Buyer from and against any damages resulting from, arising out of, or relating
to or caused by the breach of any representation, warranty, indemnity or
covenant under, or arising in connection with this Agreement, until the Buyer
has suffered Damages by reason of all such breaches in excess of $25,000 (after
which point the Seller and Stockholder will be obligated, subject to paragraph
(ii) below, to indemnify Buyer from all Damages, including Damages not in excess
of $25,000); and
(ii) In no event shall the amount of liability of Seller and
Stockholder to Buyer for breach of any representation, warranty, indemnity or
covenant or otherwise under, or arising in connection with, this Agreement
exceed an amount equal to the sum of the Unadjusted Purchase Price and the total
amount (in cash and stock) of the Earnout Payments.
(d) In the event the indemnified party is or becomes dissatisfied
with the defense and indemnification being provided hereunder then the
indemnified party, as it may deem appropriate, may undertake the defense of such
claim but the indemnifying party will remain responsible for all Damages the
indemnified party may suffer resulting from, arising from, relating to, in the
nature of or caused by such claims to the fullest extent provided in this
Agreement; provided, however, the indemnified party will not consent to the
entry of any judgment or enter into any settlement with respect to such claim
without the prior written consent of the indemnifying party (which consent shall
not be unreasonably withheld).
(e) In the event the Seller or Stockholder is required to make any
indemnification payments to the Buyer pursuant to paragraph (b) hereof, Buyer,
may, in lieu of seeking such payments from the Seller or Stockholder, set-off
such amounts from amounts due to Seller pursuant to paragraph 1.3 (ii) hereof
and place the amount of the set-off payment in a mutually acceptable escrow
account, to be subject to binding arbitration in accordance with the provisions
of Section 1.11 hereof.
(f) The foregoing indemnification provisions are in addition to and
not in derogation of, any statutory, equitable, or common law remedy either
party may have for breach of any of the provisions of this Agreement.
6.5 Conduct of Business Pending Closing.
-----------------------------------
(a) Except as set forth in the Disclosure Schedules, during the
period from the date of this Agreement to the Closing, Seller shall conduct the
Business according to its ordinary and usual course of business, consistent with
past practice. Without limiting the generality of the foregoing, prior to the
Closing, Seller will not, except in the ordinary course of business and
consistent with past practice, without the prior written consent of Buyer,
engage in any of the following transactions:
(i) enter into any new employment agreement with Stockholders
or any other officer, director or employee of Seller (other than Field
Employees);
22
<PAGE>
(ii) make any change in the salary or commission structure or
benefits of any of Seller's employees or consultants, except in the ordinary
course of business and consistent with past practice;
(iii) enter into any waiver, release or relinquishment of any
material contract rights, except, in each case, in the ordinary course of
business and consistent with past practice;
(iv) terminate any of the Client Agreements;
(v) acquire the assets of any business or any corporation,
partnership or other business organization or otherwise acquiring any assets
which are material in the aggregate to Seller or the Business;
(vi) sell, lease or otherwise dispose of any Acquired Asset
except in the ordinary course of business consistent with past practice;
(vii) create, assume or incur any encumbrance on any of the
Acquired Assets;
(viii) amend, terminate or waive any right of substantial value
arising under any of the Client Agreements or otherwise relating to the
Business;
(ix) fail to pay current liabilities, including accounts
payable and accrued expenses, in the ordinary course of business, consistent
with past practice, and otherwise in accordance with their terms;
(x) collect any accounts receivable in advance of their due
dates, outside of the ordinary course of business, and not consistent with past
practice;
(xi) take or perform any action which would or might cause
any representation or warranty made by Seller herein to be rendered inaccurate,
in whole or in part, and/or which would prevent, inhibit or preclude the
satisfaction, in whole or in part, of any covenant required to be performed or
satisfied by Seller at or prior to the Closing and/or the implementation of the
within transaction;
(xii) agree in writing or otherwise take any of the foregoing
actions or any action which would make any representation or warranty in this
Agreement to be untrue or incorrect; or
(xiii) otherwise engage in any practice, take any action, or
enter into any transaction of the sort described in Section 2.8 above.
-----------
23
<PAGE>
(b) During the period from the date of this Agreement to the Closing
Date, Seller and Stockholder will:
(i) take and perform any and all actions necessary to render
accurate and/or maintain the accuracy of, all of the representations and
warranties of Seller and Stockholders herein contained and satisfy each covenant
or condition required to be performed or satisfied by Seller prior to the
Closing and/or cause or permit the implementation of the within transaction;
(ii) carry on and maintain the Business in substantially the same
form, style and manner as operated by Seller prior to this Agreement and use
their reasonable best efforts to preserve the Business and its relationships
with its customers, all employees and others having business relations with
Seller, and not voluntarily engage in any material transaction not in the
ordinary course of business without the prior consent of Buyer;
(iii) use their reasonable best efforts in good faith to cause
each of Seller's customers including, but not limited to those listed on Section
1.1B to the Disclosure Schedules, to indicate their intention to continue to be
bound by the terms and conditions of the Client Agreements; and
(iv) use their reasonable best efforts in good faith to cause
each of Seller's employees to continue employment with Buyer following the
Closing Date; and
(v) give prompt written notice to Buyer of any material
development affecting Seller's assets, clients, liabilities, business, financial
condition, operations, results of operations, or future prospects; and give
prompt written notice to Buyer of any material development affecting Seller's
ability to consummate the transactions contemplated by this Agreement.
6.6 Continued Disclosure. If any event or state of facts occurs or
--------------------
arises between the date hereof and the Closing Date that, had it occurred or
arisen prior to or on such date, would have been required by the terms hereof to
be disclosed herein, Seller shall give notice thereof in writing to Buyer within
five days of the happening of such event or state of facts. The giving of such
notice and the disclosure of such event or state of facts shall in no way change
the conditions precedent to the obligations of Buyer as set forth in Article VI.
----------
6.7 Full Access. Prior to the Closing, Seller will permit
-----------
representatives of the Buyer to have full access, upon reasonable notice, to all
premises, properties, personnel, books, records, contracts and documents of or
pertaining to Seller.
6.8 Notices and Consents. Seller will use its reasonable best
--------------------
efforts to obtain the consent of the lessor of the office lease listed on
Schedule 1.C to the Disclosure Schedules whereby such lessor shall have
consented and agreed to (i) the assignment to and assumption by
24
<PAGE>
Buyer of such lease; and (ii) that all obligations, of whatever nature, kind or
description arising or occurring prior to Closing have been paid or satisfied by
Seller.
6.9 Exclusivity. Until the termination of this Agreement, the Seller
-----------
will not (and Stockholder will not cause or permit Seller to): (i) solicit,
initiate, or encourage the submission of any proposal or offer from any person
or entity relating to the acquisition of any capital stock or other voting
securities, or any substantial portion of the assets of, Seller (including any
acquisition structured as a merger, consolidation, or share exchange) or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person or entity to do or seek any of
the foregoing.
6.10 Buyer's Non-Disclosure. Until the Closing (as hereinafter
----------------------
defined), Buyer agrees to keep confidential and not to disclose any information
obtained from or otherwise regarding Seller, unless such information was
independently obtained by Buyer or is a matter of public record or in Buyer's
prior possession or required to be disclosed pursuant to law, regulation or
court order. Notwithstanding the foregoing, Buyer shall be entitled to disclose
such information as required in any documents necessary to help affect the
financing of this transaction, as well as to its representatives who are
involved in the consummation of this transaction and who need to have such
information, provided that such representatives are advised and agree that the
information is to be held confidential by them.
6.11 Seller's and Stockholder Non-Disclosure. Seller and Stockholder
---------------------------------------
agree to keep confidential and not to disclose any information obtained from or
otherwise regarding Buyer, unless such information was independently obtained by
Seller or Stockholder or is a matter of public record or in Seller's or
Stockholder's prior possession or required to be disclosed pursuant to law,
regulation or court order. Notwithstanding the foregoing, Seller shall be
entitled to disclose such information to its representatives who are involved in
the consummation of this transaction contemplated hereby and who need to have
such information, provided that such representatives are advised and agree that
the information is to be held confidential by them.
6.12 Employee Benefit Matters.
------------------------
(a) Seller and Stockholder acknowledge that to the extent any of the
employees, former employees or other qualified beneficiaries of the Seller or
any other member of the Controlled Group of Corporations or any other
individuals (e.g., independent contractors of the Seller or any member of the
Controlled Group of Corporations) are entitled to notices, health care
continuation coverages or any other rights or benefits under Code Section 4890B
of the Internal Revenue Code of 1986, as amended, or Part 6 of Subtitle B of
Title I of ERISA or any predecessor statutes or any state continuation coverage
law (or any regulation promulgated thereunder whether final, temporary or
proposed), including but not limited to any entitlement created by the
transaction contemplated by this Agreement, Seller and Stockholder and not the
25
<PAGE>
Buyer nor any of Buyer's affiliates shall be responsible for providing such
notices, coverages or other rights or benefits.
(b) Stockholder agrees to use his best efforts expeditiously to cause
the Seller to provide to the Buyer and Seller agrees to provide to the Buyer all
information that the Buyer deems necessary to determine whether there have been
any failures to comply with the continuation health care requirements of Section
4980B of the Internal Revenue Code of 1986, as amended, and Part 6 of Subtitle B
of Title I of ERISA or any predecessor statutes as such requirements have
applied to any group health plan maintained by or for the Seller or any other
member of the Controlled Group of Corporations which failure occurred with
respect to any current or former employee, director or independent contractor of
the Seller or any other member of the Controlled Group of Corporations or any
spouse, former spouse, dependent child, or former dependent child of any such
employee, director or independent contractor on or prior to the Closing Date.
Stockholder further agrees to use his best efforts expeditiously to cause the
Seller to provide to the Buyer and Seller agrees to provide to the Buyer all
information that the Buyer deems necessary to correct any failures to comply
with such continuation health care coverage requirements. Such information
shall include, without limitation, the identification of all covered employees
and their qualified beneficiaries, the identification of all qualifying events
with respect to such covered employees or qualified beneficiaries, and
information otherwise demonstrating compliance with all of the continuation
health care coverage requirements of Code Section 4980B of the Internal Revenue
Code of 1986, as amended, and Part 6 of Subtitle B of Title I of ERISA or any
predecessor statutes.
(c) Prior to the Closing Date, Seller and Stockholder shall arrange
for Oxford Health Plans Inc. to provide to Buyer on and after the Closing Date
an identical health plan to the Oxford Health Plans Inc. health plan that the
Seller has maintained for its employees and qualified beneficiaries under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") for
the same annual per person cost paid by the Seller for the calendar year 1997,
or such other cost as is acceptable to the Buyer, for the benefit of those
employees of the Seller that Buyer hires on or after the Closing Date. Although
Seller and Stockholder are responsible for providing any applicable COBRA and
state continuation coverage law coverages to Seller's employees, former
employees, COBRA qualified beneficiaries and certain other individuals pursuant
to paragraphs (a) and (b) hereof, to the extent Buyer, pursuant to a written
agreement, agrees to provide coverage under the aforementioned health plan (or
any other health plan of the Buyer or its affiliates) to any such individuals,
the Seller and Stockholder shall still be liable pursuant to this Agreement for
providing any applicable COBRA and state continuation coverage law coverages to
such individuals and the related Liabilities pursuant to this Agreement and
Buyer shall only provide what is required by the written agreement with
Stockholder and/or Seller and shall be entitled to receive from the Stockholder
and/or Seller such amounts as are provided thereof.
(d) Without any liability to Buyer or its affiliates, the Seller and
Stockholder will take all steps necessary or appropriate prior to the Closing
Date to terminate effective as of a date prior to the Closing Date, all of the
Seller's retirement plans and arrangements that comply with
26
<PAGE>
or are intended to comply with section 401(a) or 401(k) of the Internal Revenue
Code of 1986, as amended, including the ISL International Inc. 401(k) Plan, and
take all other necessary or appropriate actions prior to, on and after the
Closing Date to ensure that such plans shall be terminated effective as of the
aforementioned date and distributions can be made from such plans to their
participants and beneficiaries within a reasonable period of time after the
termination of such plans.
ARTICLE VII
CLOSING DELIVERIES
------------------
7.1 Closing. Subject to the conditions contained in this Agreement,
-------
the Closing shall take place at a location mutually agreeable to Buyer and
Seller at 10:00 a.m. local time on the Closing Date. The effective time for
purposes of apportionments and other matters involving allocations for the
Closing shall be 11:59 p.m. on the Closing Date.
7.2 Deliveries.
----------
(a) At the Closing, Buyer shall deliver to Seller:
(i) The Unadjusted Purchase Price pursuant to paragraph
1.3(i) hereof;
(ii) Certified copies of the resolutions of the Board of
Director of Buyer authorizing Buyer to execute and deliver this Agreement, any
agreement or document contemplated hereby, and to consummate the transactions
contemplated hereby and thereby;
(iii) A certificate of an executive officer of Buyer, dated
the Closing Date, certifying that: (i) all representations and warranties made
by Buyer in Article III hereof were true and correct when made, and are true and
-----------
correct on the Closing Date, except for changes permitted or contemplated by
this Agreement and except that representations which are specifically made as of
a specified date shall be true and correct as of such specified date; and (ii)
all covenants, agreements and conditions contained in this Agreement to be
performed or complied with by Buyer on or prior to the Closing Date have been
performed or complied with;
(iv) An executed employment agreement for Haft, in
substantially the form attached as Exhibit A-1 hereto;
(v) An executed employment agreement for Celeste Mazzuca;
(vi) An opinion of McBreen, McBreen & Kopko, counsel for
Buyer, dated the Closing Date;
27
<PAGE>
(vii) Assignment and Assumption of the lease with respect to
the Iselin, New Jersey facility;
(viii) A subcontracting agreement between Buyer and Seller,
in substantially the form attached as Exhibit B-1, with respect to the
independent contractors set forth on Exhibit A attached to such agreement; and
(ix) Certificate from Buyer attesting to the consent of GE
Capital.
(b) At the Closing, Seller and Stockholder, as the case may be,
shall deliver to Buyer:
(i) General Assignment and Bill of Sale conveying title,
free and clear of any encumbrances to the Acquired Assets from Seller to Buyer;
(ii) Possession of all Acquired Assets;
(iii) All contracts, leases, agreements or other documents,
books, financial and accounting records of Seller not previously delivered or
not located on the premises of Seller, to the extent such items are Acquired
Assets;
(iv) An executed employment agreements for Haft, in
substantially the form attached as Exhibits A-1 hereto;
(v) An executed employment agreement for Celeste Mazzuca;
(vi) Certificates of Good Standing in New Jersey;
(vii) The Federal Predecessor/Successor Election, in the
form attached hereto as Exhibit B;
(viii) Certified copies of the resolution of the Board of
Directors of Seller authorizing Seller to execute and deliver this Agreement,
any agreement or document contemplated hereby, and to consummate the
transactions contemplated hereby or thereby;
(ix) Assignment and Assumption of the lease with respect to
the Iselin, New Jersey facility, in form satisfactory to counsel to the Buyer.
(x) Consent by the clients referred to in Section 4.12
here of, in form and substance satisfactory to Buyer;
(xi) An opinion of Howard J. Kerker, P.C., counsel for
Seller and Stockholders, dated the Closing Date;
28
<PAGE>
(xii) Certified copies of amendments to Seller's Certificate
of incorporation to effect a change in Seller's corporate name;
(xiii) Evidence of payment of all liens, along with UCC-3
termination statements with respect to the Acquired Assets;
(xiv) A subcontracting agreement between Buyer and Seller,
in substantially the form attached as Exhibit B-1, with respect to the
independent contractors set forth on Exhibit A attached to such Agreement; and
(xv) Evidence of compliance with paragraphs 6.12(c) and
(d); and
(xvi) A certificate of the Seller, dated the Closing Date,
certifying that: (i) all representations and warranties made by Seller in
Article II hereof were true and correct when made, and are true and correct on
- ----------
the Closing Date except for changes permitted or contemplated by this Agreement
and except that representations which are specifically made as of a specified
date shall be true and correct as of such specified date; and (ii) all
covenants, agreements and conditions contained in this Agreement to be performed
or complied with by Seller on or prior to the Closing Date have been performed
or complied with.
ARTICLE VIII
POST-CLOSING COVENANTS AND AGREEMENTS
-------------------------------------
8.1 Further Assurances. If at any time and from time to time after
------------------
the Closing, Buyer determines that any further conveyance, assignment, consent
to assignment or other document or any other further action is necessary or
desirable to carry out the purposes of and to make effective the transactions
contemplated by this Agreement, Seller agrees to execute and deliver all such
instruments and to take such actions as may be reasonably necessary or advisable
for such purpose.
8.2 Settlement for Cash Collections and Disbursements. For each
-------------------------------------------------
calendar month commencing with the month in which the Closing Date occurs and
continuing until reasonably determined by the parties no longer to be necessary,
the Buyer and the Seller shall cause all cash collections and cash disbursements
received or made by the Buyer for the benefit of the Seller or by the Seller for
the benefit of the Buyer during the relevant month to be remitted or reimbursed,
as the case may be, to the party entitled to the benefit thereof as promptly as
possible. Any collections received from a particular customer after the Closing
Date which do not otherwise specifically relate to a particular invoice shall be
applied against the oldest invoices outstanding for that particular customer.
8.3 Covenant Not to Compete.
-----------------------
29
<PAGE>
(a) Until the last to occur of: (i) five (5) years from the
Closing Date of this Agreement, or (ii) 1 year from the end of employment of
Stockholder pursuant to the Employment Agreement, Seller and Stockholder shall
not directly or indirectly through representatives, agents or otherwise (i)
engage in competition with Buyer or the Business in the "Territory" or with
respect to the "Customers", both as defined in this paragraph; or (ii) provide
information, solicit or sell for, own, or organize any interest in, either
directly or through any affiliate or subsidiary corporation, partnership or
other entity, or become engaged by, act as agent for, or in any manner assist,
any person, corporation or other entity that is directly or indirectly in
competition with Buyer or the Business, in the "Territory" or with respect to
the "Customers", both as defined in this paragraph. Seller and Stockholder
further agree that within the restrictive period, Seller and Stockholder will
not in any way divert or attempt to divert from Buyer or Seller any business
whatsoever and Seller and Stockholder further agree that during said restrictive
period they will not influence or attempt to influence any of the customers of
Buyer or Seller not to do business with Buyer or Seller. Seller and Stockholder
further agree that they will not make or permit the making of any public
announcement or statement of any kind, which announcement has as its purpose
directly or indirectly the intent to violate the provision of this Agreement.
The term "Customer", as used herein, shall mean any person or entity to which
Seller does business with at or within 12 months prior to Closing. The term
"Territory", as used herein, shall mean the following: (i) any location within
150 miles of Iselin, New Jersey; and (ii) any location within 150 miles of any
other office, either now existing or hereinafter opened, where Seller or
Stockholder exerts any management control with respect to the Business.
(b) During the term set forth in paragraph (a) and thereafter,
Seller and Stockholder shall not divulge any of Buyer's or Seller's business
contacts, customers, suppliers, technology, know-how, trade secrets, marketing
techniques, books and records, computer programs or any other confidential or
proprietary information or make available to any other persons any documents,
files or other papers concerning the foregoing or the Business or financial
affairs of Seller or Buyer. During the term set forth in paragraph (a) Seller or
Stockholder shall not solicit the employment of, or hire any employee or
consultant currently or provisionally employed or retained by Buyer or Seller.
(c) Seller and Stockholder have carefully considered the nature
and extent of the restrictions upon them and the rights and remedies conferred
upon Buyer under this Agreement and hereby acknowledge and agree that the same
are reasonable in time and territory.
(d) It is stipulated that a breach by Seller and/or Stockholder
of the restrictive covenants set forth herein will cause irreparable damage to
Buyer and that in the event of any breach of the provisions under this Section,
Buyer, in addition to any other remedies it has, shall be entitled to an
injunction restraining Seller and the Stockholder from violating or continuing a
violation of the restrictive covenants herein contained. It is further
stipulated that the existence of any claim or cause of action on the part of
Seller and/or Stockholder against Buyer, whether arising from this Agreement or
otherwise shall in no way constitute a defense to the enforcement of the
restrictive covenants contained herein, and the restrictive periods which Buyer
is entitled
30
<PAGE>
to an injunction shall be extended in an amount which equals the time period
which the Seller or Stockholder are or have been in violation of the restrictive
covenant contained herein. In the event of a breach of the restrictive covenants
contained in the Agreement, Seller and Stockholder, jointly and severally, agree
to the payment of or reimbursement of Buyer's reasonable attorney's fees and
disbursements incurred in enforcing any such provision. The provisions of this
Section shall survive the Closing Date. If any of the provisions of this Section
shall be held invalid, illegal, or unenforceable by the final determination of a
court of competent jurisdiction and all appeals therefrom shall have failed or
the time for such appeals shall have expired, the provision or provisions shall
be deemed eliminated from this Agreement to such jurisdiction but the remaining
provisions shall nevertheless be given full effect. In the event this Agreement
or any portion hereof is more restrictive than permitted by the law of the
jurisdiction in which enforcement is sought, this Agreement or such portion
shall be limited in that jurisdiction only to the extent required by the law of
that jurisdiction. If a court of competent jurisdiction shall determine that the
terms of this Section are partially or wholly inoperative, unenforceable or
invalid in a particular case because of their time or geographic scope or for
any other reason such court shall have the power to limit such time or
geographic scope or otherwise to recast the terms of this Agreement in such case
so as to permit its enforcement to the greatest extent permitted by applicable
law.
8.4 Audited Financial Statements. Stockholder shall provide audited
----------------------------
financial statements for the year ended December 31, 1997 within 30 days after
Closing. Such audited financial statements shall be prepared in accordance with
generally accepted accounting principals.
8.5 Independent Contractors. Seller and Stockholder shall assist
------------------------
Buyer in obtaining from Seller's independent contractors set forth on Exhibit A
attached to Exhibit B-1 all documents requested by Buyer in order for Buyer to
sign new contracts with such independent contractors subsequent to Closing.
ARTICLE IX
TERMINATION; WAIVER
-------------------
9.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Closing upon the following terms and conditions:
(a) the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing (i) in the event the
Seller has breached any representation, warranty, or covenant contained in this
Agreement in any material respect, the Buyer has notified the Seller of the
breach, and the breach has continued without cure for a period of 10 business
days after the notice of breach or (ii) if the Closing shall not have occurred
on or
31
<PAGE>
before August 31, 1998, by reason of Seller being unable or unwilling to effect
a Closing on or before, August 31, 1998, or by reason of the failure of any
condition precedent under Article IV hereof (unless the failure results
----------
primarily from the Buyer itself breaching any representation, warranty, or
covenant contained in this Agreement); and
(c) the Seller may terminate this Agreement by giving written notice
to the Buyer at any time prior to the Closing (i) in the event the Buyer has
breached any representation, warranty, or covenant contained in this Agreement
in any material respect, the Seller has notified the Buyer of the breach, and
the breach has continued without cure for a period of 10 business days after the
notice of breach, or (ii) if the Closing shall not have occurred on or before
August 31, 1998, by reason of Buyer being unable or unwilling to effect a
Closing on or before August 31, 1998, or by reason of the failure of any
condition precedent under Article V hereof (unless the failure results primarily
---------
from the Seller itself breaching any representation, warranty, or covenant
contained in this Agreement).
9.2 Effect of Termination; Specific Performance.
-------------------------------------------
(a) In the event of the termination of this Agreement pursuant to
Section 9.1 hereof, notice thereof shall be promptly given by the terminating
- -----------
party to the other party and thereafter this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, except that (i) the provisions of Section
-------
6.1 hereof shall remain in effect and (ii) nothing in this Section 9.2 shall
- --- -----------
relieve any party to this Agreement from liability for willful breach of this
Agreement or any fraudulent misrepresentation hereof, including pursuant to
paragraph (b) hereof.
(b) In the event of a willful breach or threatened breach by
Seller or Buyer of any of the agreements and obligations set forth herein,
monetary damages or the other remedies at law that may be available to the non-
breaching party for such breach or threatened breach will be inadequate and,
without prejudice to the non-breaching party's right to pursue any remedies at
law or in equity available to it for such breach or threatened breach, including
without limitation the recovery of damages, the non-breaching party will be
entitled to injunctive relief as a means of having the breaching party comply
with the provisions herein.
9.3 Extension; Waiver. At any time prior to the Closing, the parties
-----------------
hereto may (i) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein by the other party or in any
document, certificate or writing delivered pursuant hereto by the other party or
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of either party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. No waiver of any breach of a provision of this Agreement
shall constitute or be deemed a waiver of any other breach of the same or any
other provision of this Agreement, and no delay or failure to take action with
respect to any breach or provision of this Agreement shall constitute or be
deemed a waiver of
32
<PAGE>
the right to enforce this Agreement and to take action against such breach or
any subsequent breach of the same or any other provision.
ARTICLE X
MISCELLANEOUS PROVISIONS
------------------------
10.1 Entire Agreement; Amendment. Except with respect to those
---------------------------
documents signed in connection with the Closing of the transactions contemplated
by this Agreement and those documents that, by their terms, modify or supersede
this Agreement, this Agreement, (including the Disclosure Schedules), contains
the entire agreement between the parties hereto and supersedes all prior oral or
written agreements, promises, representations, commitments or understandings
with respect to the matters provided for herein. This Agreement may be modified
or amended only by a writing duly executed by Buyer and Seller, which
modification or amendment shall be binding upon all of the parties hereto.
10.2 Assignment and Binding Effect. This Agreement and the rights
-----------------------------
and obligations of any party hereunder may not be assigned by any party without
the prior written consent of the other party hereto. All covenants, agreements,
statements, representations, warranties and indemnities in this Agreement by and
on behalf of either of the parties hereto shall bind and inure to the benefit of
their respective heirs, successors and permitted assigns of the parties hereto.
10.3 Waivers. No waiver of any of the provisions of this Agreement
-------
shall be deemed or shall constitute a continuing waiver, and no waiver shall be
binding unless executed in writing by the party making the waiver.
10.4 Notices. All notices, demands or other communications which may
-------
be or are required to be given by any party to any other party pursuant to this
Agreement, shall be in writing and shall be mailed by certified mail, return
receipt requested, postage prepaid, or transmitted by hand delivery, national
overnight express, telegram or facsimile transmission, addressed as follows:
(a) If to Buyer:
Butler Telecom, Inc.
110 Summit Avenue
Montvale, New Jersey 07645
Attention: Michael C. Hellriegel
Sr. Vice President-Finance
Facsimile: (201) 573-9773
with a copy (which shall not constitute notice) to:
33
<PAGE>
McBreen, McBreen & Kopko
20 North Wacker Drive
Suite 2520
Chicago, Illinois 60606
Attention: Frederick H. Kopko, Jr.
Facsimile: (312) 332-2657
(b) If to Seller or Stockholders:
ISL International, Inc.
33 Wood Avenue South, 3rd Floor
Iselin, NJ 08830
Attn: Mervyn Haft
with a copy (which shall not constitute notice) to:
Howard J. Kerker, P.C.
600 Madison Avenue, 22nd Fl.
New York, NY 10022
Attention: Howard Kerker, Esq.
Facsimile: (212) 758-1747
until such time as either party notifies the other of a change of address. Each
notice or other communication which shall be mailed, delivered or transmitted in
the manner described above shall be deemed sufficiently given and received for
all purposes at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, or the affidavit of messenger or telefax
transmission log being deemed conclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
10.5 Governing Law; Jurisdiction and Venue. This Agreement shall be
-------------------------------------
governed by and construed in accordance with the laws of the State of New
Jersey, without giving effect to the principles of conflicts of laws thereof.
Except as otherwise provided herein with respect to the arbitration of certain
disputes hereunder, each party hereby submits to the personal jurisdiction of
the United States District Court for the District of New Jersey or any court of
the State of New Jersey, and hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such court. In addition, each party hereby irrevocably and
unconditionally waives, to the fullest extent permitted by law, (i) any
objection which it may now have or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
related matter in such court, (ii) the defense of an inconvenient forum to the
maintenance of any suit, action or proceeding in any such court and (iii) trial
by jury in any such suit, action or proceeding.
10.6 Counterparts; Execution. To facilitate execution, this
-----------------------
Agreement may be executed in as many counterparts as may be required, and each
such counterpart hereof shall be deemed
34
<PAGE>
to be an original instrument, but all such counterparts together shall
constitute but a single agreement.
10.7 Effective Time of Closing. Notwithstanding the time at which
-------------------------
Closing takes place, the Closing shall be deemed to be effective as of 11:59
p.m. on the Closing Date.
10.8 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.9 No Third Parties Benefitted. This Agreement is made and entered
---------------------------
into for the sole protection and benefit of the parties hereto, their successors
and assigns, and no other person or persons shall have any right or action under
this Agreement.
10.10 Recitals, Schedules and Exhibits. The recitals, schedules, and
--------------------------------
exhibits to this Agreement are incorporated herein and, by this reference, made
a part hereof as if fully set forth at length herein.
10.11 Section Headings. The section headings used herein are
----------------
inserted for reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement.
35
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be executed on its behalf, as of the date
first above written.
BUYER:
BUTLER TELECOM, INC.
By: ______________________________
Its: _____________________________
SELLER:
ISL INTERNATIONAL, INC.
By:________________________________
Its:_______________________________
STOCKHOLDER:
___________________________________
MERVYN HAFT
Butler International, Inc. a Maryland
Corporation, hereby guarantees payment
of the obligations set forth in Section
1.3(ii) hereof.
By:________________________________
Its:_______________________________
36
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BUTLER
INTERNATIONAL, INC FORM 10-Q FOR PERIOD ENDED JUNE 31, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
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0
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