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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
---------------------
DATE OF REPORT: APRIL 30, 1998
---------------------------------
(DATE OF EARLIEST EVENT REPORTED)
ABR INFORMATION SERVICES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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FLORIDA 0-24132 59-3228107
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(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NUMBER)
34125 U.S. HIGHWAY 19 NORTH
PALM HARBOR, FLORIDA 34684-2141
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(727) 785-2819
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ABR INFORMATION SERVICES, INC. HEREBY AMENDS AND RESTATES IN ITS
ENTIRETY ITS CURRENT REPORT ON FORM 8-K, DATED APRIL 30, 1998:
ITEM 2. Acquisition or Disposition of Assets.
On April 30, 1998, ABR Information Services, Inc., a Florida
corporation ("ABR"), acquired (the "Acquisition") all of the issued and
outstanding capital stock of Business Computer Services, Inc. (d/b/a
PayAmerica(R)), a Virginia corporation ("BCSI"), in exchange for
1,198,008 shares of ABR's voting common stock, $.01 par value per share
("ABR Stock"). The Acquisition was consummated in accordance with the
terms of an Agreement and Plan of Reorganization, dated April 30, 1998,
by and among ABR, BCSI, the Shareholders of BCSI, and Samuel N.
Klewans, as Shareholders' Agent (the "Acquisition Agreement"). At the
time of the Acquisition, it was contemplated that the Acquisition would
be accounted for as a pooling of interests for accounting purposes. As
a result of ABR's recent meeting and discussions with the Office of the
Chief Accountant ("OCA") of the Securities and Exchange Commission, ABR
will change the method of accounting for the Acquisition from the
pooling of interests method of accounting to the purchase method. After
seeking input from the OCA, ABR was informed that the OCA decided that
ABR's September 25, 1998 announcement regarding the action taken by its
Board of Directors on such date to authorize the repurchase of up to
3,000,000 shares of its outstanding common stock constituted the form
of announcement which the OCA considers determinative that ABR had an
intention to reacquire stock at the time of the Acquisition. Although
ABR had no intention to repurchase shares of its stock at the time of
the Acquisition, the OCA determined that the continued use of the
pooling of interests treatment for the Acquisition was unavailable. As
a result, the Company's acquisition of BCSI, which was completed on
April 30, 1998, will be accounted for using the purchase method of
accounting rather than the pooling of interests method of accounting.
Pursuant to the terms of the Acquisition Agreement, all of the issued
and outstanding shares of BCSI common stock were sold and transferred
to ABR in exchange for an aggregate number of shares of ABR Stock
determined by dividing $36,000,000 by the average closing price of the
ABR Stock on the Nasdaq National Market for the ten trading days
immediately preceding the day before the closing date. As of the
closing date of the Acquisition, there were 1,580 shares of BCSI
common stock outstanding.
BCSI is a pioneer of windows-based payroll and human resources
solutions and, prior to the Acquisition, was one of the largest
privately held payroll and tax filing service bureaus in the United
States. In 1997, BCSI processed more than $1 billion in payroll taxes
and earned "Bulk Filing Status" from the Internal Revenue Service, one
of only 13 companies to achieve such status. BCSI is headquartered in
McLean, Virginia, and maintains a sales office in Baltimore, Maryland.
A second sales office recently opened in Cherry Hill, New Jersey. BCSI
has over 2,000 customers and generated approximately $8.6 million in
revenue in calendar 1997.
The Acquisition Agreement is filed as an exhibit to this Current
Report on Form 8-K/A and is incorporated herein by reference. The
discussion above is qualified in its entirety by reference to that
agreement.
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ITEM 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Not applicable
(b) Pro Forma financial information.
Not applicable
(c) Exhibits.
2.1 Agreement and Plan of Reorganization, dated April 30, 1998, by and
among ABR Information Services, Inc., Business Computer Services, Inc.
("BCSI"), Joseph M. Speroni, Paul J. Speroni, Robert S. Speroni,
Stephen J. Speroni, Joseph F. Speroni, David M. Speroni, Richard B.
Speroni, Rex Haverty, E. Hale Waller, Nikky Losapio and Christopher
Mantua, as Shareholders of BCSI, and Samuel N. Klewans, as
Shareholders' Agent. The schedules and exhibits to this document are
not being filed herewith. ABR Information Services, Inc. agrees to
furnish supplementary copies of such schedules and exhibits to the
Securities and Exchange Commission upon request.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ABR INFORMATION SERVICES, INC.
By: /s/ James P. O'Drobinak
----------------------------------
James P. O'Drobinak
Senior Vice President and
Chief Financial Officer
Date: November 13, 1998
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EXHIBIT INDEX
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Exhibit No. Description
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2.1 Agreement and Plan of Reorganization, dated April 30, 1998, by
and among ABR Information Services, Inc., Business Computer
Services, Inc. ("BCSI"), Joseph M. Speroni, Paul J. Speroni,
Robert S. Speroni, Stephen J. Speroni, Joseph F. Speroni, David
M. Speroni, Richard B. Speroni, Rex Haverty, E. Hale Waller,
Nikky Losapio and Christopher Mantua, as Shareholders of BCSI,
and Samuel N. Klewans, as Shareholders' Agent.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
ABR INFORMATION SERVICES, INC.,
A FLORIDA CORPORATION,
BUSINESS COMPUTER SERVICES, INC.,
A VIRGINIA CORPORATION,
THOSE SHAREHOLDERS LISTED ON SCHEDULE 1
AND
SAMUEL N. KLEWANS,
AS SHAREHOLDERS' AGENT
<PAGE> 2
AGREEMENT AND PLAN OF REORGANIZATION
TABLE OF CONTENTS
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1. EXCHANGE OF SECURITIES................................................................................. 1
1.1 Exchange.................................................................................. 1
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1.2 Exchange Amounts.......................................................................... 2
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2. "B" REORGANIZATION..................................................................................... 2
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF BCSI AND SHAREHOLDERS.............................. 2
3.1 Corporate................................................................................. 2
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3.2 Shareholders.............................................................................. 4
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3.3 No Violation.............................................................................. 4
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3.4 Financial Statements...................................................................... 5
--------------------
3.5 Tax Matters............................................................................... 5
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3.6 Accounts Receivable....................................................................... 6
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3.7 Absence of Certain Changes................................................................ 6
--------------------------
3.8 Absence of Undisclosed Liabilities........................................................ 8
----------------------------------
3.9 No Litigation............................................................................. 8
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3.10 Compliance With Laws and Orders........................................................... 8
-------------------------------
3.11 Title to and Condition of Properties...................................................... 10
------------------------------------
3.12 Insurance................................................................................. 12
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3.13 Contracts and Commitments................................................................. 12
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3.14 Labor Matters............................................................................. 14
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3.15 Employee Benefit Plans.................................................................... 14
----------------------
3.16 Employment Compensation................................................................... 18
-----------------------
3.17 Trade Rights.............................................................................. 18
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3.18 Major Customers and Suppliers............................................................. 19
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3.19 Contracts................................................................................. 20
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3.20 Service Warranty and Liability............................................................ 20
------------------------------
3.21 Bank Accounts............................................................................. 20
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3.22 Affiliates' Relationships to Company...................................................... 21
------------------------------------
3.23 Assets Necessary to Business.............................................................. 21
----------------------------
3.24 No Brokers or Finders..................................................................... 21
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3.25 Year 2000 Compliance...................................................................... 21
--------------------
3.26 Systems Performance....................................................................... 21
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3.27 Software Ownership; Non Infringement...................................................... 22
------------------------------------
3.28 Disclosure................................................................................ 23
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3.29 Investment Representations................................................................ 23
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3.30 Nature of Shareholders.................................................................... 23
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3.31 Receipt of ABR Information................................................................ 23
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3.32 Pooling of Interests...................................................................... 24
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4. REPRESENTATIONS AND WARRANTIES OF ABR.................................................................. 25
4.1 Corporate................................................................................. 25
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4.2 Authority................................................................................. 25
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4.3 No Brokers or Finders..................................................................... 25
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4.4 Disclosure................................................................................ 25
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4.5 Investment Intent......................................................................... 25
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4.6 ABR Stock................................................................................. 26
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5. COVENANTS.............................................................................................. 26
5.1 Pooling of Interests...................................................................... 26
--------------------
5.2 General Releases.......................................................................... 26
----------------
5.3 Covenant Not to Compete................................................................... 26
-----------------------
5.4 Covenant of Confidentiality............................................................... 27
---------------------------
5.5 Equitable Relief for Violations........................................................... 28
-------------------------------
5.6 Employment and Noncompetition Agreements.................................................. 28
----------------------------------------
6. INDEMNIFICATION........................................................................................ 28
6.1 By Shareholders........................................................................... 28
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6.2 By ABR.................................................................................... 29
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6.3 Indemnification of Third-Party Claims..................................................... 29
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6.4 Payment................................................................................... 30
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6.5 No Waiver................................................................................. 30
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6.6 Limitations on Indemnification............................................................ 31
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6.7 Available Remedies........................................................................ 31
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7. CLOSING................................................................................................ 31
7.1 Documents to be Delivered by BCSI and Shareholders........................................ 32
--------------------------------------------------
7.2 Documents to be Delivered by ABR.......................................................... 33
--------------------------------
8. TERMINATION............................................................................................ 34
9. RESOLUTION OF DISPUTES................................................................................. 34
9.1 Arbitration............................................................................... 34
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9.2 Arbitrators............................................................................... 34
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9.3 Procedures; No Appeal..................................................................... 35
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9.4 Authority................................................................................. 35
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9.5 Entry of Judgment......................................................................... 35
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9.6 Confidentiality........................................................................... 35
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9.7 Continued Performance..................................................................... 35
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9.8 Tolling................................................................................... 35
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10. MISCELLANEOUS.......................................................................................... 35
10.1 Disclosure Schedule....................................................................... 35
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10.2 Further Assurance......................................................................... 36
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10.3 Disclosures and Announcements............................................................. 36
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10.4 Assignment; Parties in Interest........................................................... 36
-------------------------------
10.5 Law Governing Agreement................................................................... 36
-----------------------
10.6 Amendment and Modification................................................................ 36
--------------------------
10.7 Notice.................................................................................... 36
------
10.8 Expenses.................................................................................. 38
--------
10.9 Shareholders' Agent; Power of Attorney.................................................... 39
--------------------------------------
10.10 Entire Agreement.......................................................................... 40
----------------
10.11 Construction.............................................................................. 40
------------
10.12 Headings.................................................................................. 41
--------
10.13 Glossary of Terms......................................................................... 41
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DISCLOSURE SCHEDULE
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Schedule 1 - Shareholders
Schedule 1.2 - Exchange Amounts
Schedule 3.1(c) - Foreign Corporation Qualification
Schedule 3.1(d) - Subsidiaries
Schedule 3.3 - Violation, Conflict, Default
Schedule 3.4 - Financial Statements
Schedule 3.5(b) - Tax Returns (Exceptions to Representations)
Schedule 3.5(c) - Tax Audits
Schedule 3.5(d) - Consolidated Tax Returns
Schedule 3.5(e) - Tax, Other
Schedule 3.6 - Accounts Receivable (Aged Schedule)
Schedule 3.7 - Certain Changes
Schedule 3.8 - Off-Balance Sheet Liabilities
Schedule 3.9 - Litigation Matters
Schedule 3.10(a) - Non-Compliance with Laws
Schedule 3.10(b) - Licenses and Permits
Schedule 3.10(c) - Environmental Matters (Exceptions to Representations)
Schedule 3.11 - Liens
Schedule 3.11(c) - Real Property
Schedule 3.12 - Insurance
Schedule 3.13(b) - Personal Property Leases
Schedule 3.13(g) - Collective Bargaining Agreements
Schedule 3.13(h) - Loan Agreements, etc.
Schedule 3.13(i) - Guarantees
Schedule 3.13(l) - Material Contracts
Schedule 3.14 - Labor Matters
Schedule 3.15(a) - Employee Plans/Agreements
Schedule 3.16 - Employment Compensation
Schedule 3.17 - Trade Rights
Schedule 3.18(a) - Major Customers
Schedule 3.18(b) - Major Suppliers
Schedule 3.18(c) - Dealers and Distributors
Schedule 3.19 - Material Contracts
Schedule 3.20 - Product Warranty, Warranty Expense and Liability Claims
Schedule 3.21 - Bank Accounts
Schedule 3.22(a) - Contracts with Affiliates
Schedule 3.22(c) - Obligations of and to Affiliates
Schedule 3.25 - Year 2000 Compliance
Schedule 3.27 - Software Ownership Exceptions
Schedule 3.30 - Residences of Shareholders
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EXHIBITS
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Exhibit A - Form of Employment Agreement
Exhibit B - Registration Rights Agreement
Exhibit C - Opinion of Counsel to BCSI and Shareholders
Exhibit D - Opinion of Counsel to ABR
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated April
30, 1998, by and among ABR INFORMATION SERVICES, INC., a Florida corporation
("ABR"), BUSINESS COMPUTER SERVICES, INC., a Virginia corporation ("BCSI" and,
together with each of its subsidiaries, the "Company"), the Shareholders listed
on Schedule 1 (individually "Shareholder" and together the "Shareholders"), and
SAMUEL N. KLEWANS, as the Shareholders' agent (the "Shareholders' Agent").
RECITALS
1. BCSI is engaged in the business of providing payroll processing and
tax filing services and related software development (the "Business").
Shareholders own all of the issued and outstanding shares (the "Shares") of
capital stock of BCSI.
2. Company's facilities consist of leased offices at 7926 Jones Branch
Drive, McLean, Virginia 22102 (the "Virginia office"), 2222 Ambassador Road,
Suite 220, Baltimore, Maryland 21244 (the "Maryland Office"), and Cherry Tree
Corporate Center, 535 Route 38, Cherry Hill Township, New Jersey 08002 (the "New
Jersey Office") (collectively, the "Facilities").
3. ABR desires to acquire the Shares from Shareholders and Shareholders
desire to transfer the Shares to ABR in exchange for shares of voting common
stock, $.01 par value, of ABR ("ABR Stock"), upon the terms and conditions
herein set forth.
4. Shareholders wish to designate Samuel N. Klewans as their agent and
attorney-in-fact with the authority to act on their behalf in connection with
the exchange of Shares with ABR.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows.
1. EXCHANGE OF SECURITIES
1.1 Exchange. Subject to the terms and conditions of this Agreement, on
the Closing Date (as hereinafter defined) the Shareholders shall sell and
transfer to ABR all the Shares owned by such Shareholders, in exchange for an
aggregate number of shares of ABR Stock determined by dividing $36,000,000.00
(Thirty-Six Million and No/100 Dollars) by the average closing price of the ABR
Stock on the Nasdaq National Market for the ten trading days immediately
preceding the day before the Closing Date (the "Average Closing Price").
<PAGE> 8
1.2 Exchange Amounts. The number of shares of ABR Stock to be issued to
each Shareholder in exchange for the Shares owned thereby on the Closing Date
shall be determined as set forth on Schedule 1.2. No fractional shares of ABR
Stock shall be issued, but in lieu thereof, each Shareholder who would otherwise
be entitled to receive a fraction of a share of ABR Stock shall receive an
amount of cash equal to the product of (a) the fraction of a share of ABR Stock
to which such holder would otherwise be entitled multiplied times (b) the
Average Closing Price.
2. "B" REORGANIZATION
It is intended that the exchange of Shares for ABR Stock pursuant to
this Agreement constitute a reorganization within the meaning of Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code"), and
that this Agreement constitute a "plan of reorganization" for purposes of
Section 368 of the Code.
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF BCSI AND
SHAREHOLDERS
BCSI and Shareholders, jointly and severally, make the following
representations and warranties to ABR, each of which is true and correct on the
date hereof, shall be unaffected by any investigation heretofore or hereafter
made by ABR, or any knowledge of ABR other than as specifically disclosed in the
Disclosure Schedule delivered to ABR at the time of the execution of this
Agreement, and shall survive the Closing of the transactions provided for
herein. Notwithstanding the foregoing, the representations and warranties set
forth in Sections 3.2 and 3.3 with respect to each Shareholder are made
severally by each Shareholder, with respect to such Shareholder only.
3.1 Corporate.
3.1(a) Organization. BCSI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Virginia.
3.1(b) Corporate Power. BCSI has all requisite corporate
power and authority to own, operate and lease its properties and to
carry on its business as and where such is now being conducted.
3.1(c) Qualification. BCSI is duly licensed or qualified to
do business as a foreign corporation, and is in good standing, in each
jurisdiction wherein the character of the properties owned or leased by
it, or the nature of its business, makes such licensing or
qualification necessary. The states in which BCSI is licensed or
qualified to do business are listed in Schedule 3.1(c).
3.1(d) Subsidiaries. Schedule 3.1(d) sets forth the name,
jurisdiction of incorporation, capitalization, ownership and officers
and directors of each corporation
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in which BCSI has a direct or indirect equity interest ("Subsidiary")
and the jurisdictions in which each Subsidiary is qualified or licensed
to do business as a foreign corporation. Except as listed in Schedule
3.1(d), BCSI does not own, directly or indirectly, any capital stock or
other equity securities of any corporation or have any direct or
indirect equity or other ownership interest in any entity or business.
All of the outstanding shares of capital stock of each Subsidiary owned
by BCSI are free and clear of any security interest, restriction,
option, voting trust or agreement, proxy, encumbrance, claim or charge
of any kind whatsoever, and are validly issued, fully paid and
nonassessable. There are no (a) securities convertible into or
exchangeable for the capital stock or other securities of any
Subsidiary, (b) options, warrants or other rights to purchase or
subscribe for capital stock or other securities of any Subsidiary or
securities which are convertible into or exchangeable for capital stock
or other securities of any Subsidiary, or (c) contracts, commitments,
agreements, understandings or arrangements of any kind relating to the
issuance, sale or transfer of any capital stock or other equity
securities of any Subsidiary, any such convertible or exchangeable
securities or any such options, warrants or other rights. Each
Subsidiary (x) is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation, (y) has
full corporate power and authority to carry on its business as it is
now being conducted and to own and lease the properties and assets it
now owns and leases, and (z) is in good standing and is duly qualified
or licensed to do business as a foreign corporation in each of the
jurisdictions listed opposite the name of such Subsidiary in Schedule
3.1(d), which are the only jurisdictions in which such Subsidiary is
required to be so qualified or licensed. The copies of the Articles or
Certificate of Incorporation and Bylaws of each Subsidiary, including
any amendments thereto, which have been heretofore delivered by Seller
to ABR, are true, correct and complete copies of such instruments as
presently in effect. The corporate minute book and stock records of
each Subsidiary which have been furnished to ABR for inspection are
true, correct and complete and accurately reflect all material
corporate action taken by such Subsidiary.
3.1(e) Corporate Documents, etc. The copies of the
Certificate of Incorporation and Bylaws of BCSI, including any
amendments thereto, which have been delivered by BCSI to ABR are true,
correct and complete copies of such instruments as presently in effect.
The corporate minute book and stock records of BCSI which have been
furnished to ABR for inspection are true, correct and complete and
accurately reflect all material corporate action taken by BCSI. The
directors and officers of BCSI are listed in Schedule 3.1(e).
3.1(f) Capitalization of BCSI. The authorized capital stock
of BCSI consists entirely of One Hundred Thousand (100,000) shares of
common stock, par value $1.00 per share. No shares of such capital
stock are issued or outstanding except for One Thousand Five Hundred
Eighty (1,580) Shares of common stock of BCSI which are owned of record
and beneficially by Shareholders in the respective numbers set forth in
Schedule 1. All such Shares of capital stock of BCSI are validly
issued, fully paid and nonassessable. There are no (a) securities
convertible into or exchangeable for any of BCSI's capital stock or
other securities, (b) options, warrants
3
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or other rights to purchase or subscribe for capital stock or other
securities of BCSI or securities which are convertible into or
exchangeable for capital stock or other securities of BCSI, or (c)
(except for this Agreement) contracts, commitments, agreements,
understandings or arrangements of any kind relating to the issuance,
sale or transfer of any capital stock or other equity securities of
BCSI, any such convertible or exchangeable securities or any such
options, warrants or other rights.
3.2 Shareholders
3.2(a) Power. Each Shareholder has full power, legal right
and authority to enter into, execute and deliver this Agreement and the
other agreements, instruments and documents contemplated hereby (such
other documents sometimes referred to herein as "Ancillary
Instruments"), and to carry out the transactions contemplated hereby.
3.2(b) Authorization. The execution and delivery of this
Agreement and the Ancillary Instruments, and full performance
thereunder, have been duly authorized by the respective boards of
directors and the shareholders of each Shareholder which is a
corporation and by the respective persons with corresponding authority
of each Shareholder which is an entity other than a corporation, and no
other or further corporate or entity act on the part of any such
Shareholder is necessary therefor.
3.2(c) Validity. This Agreement has been duly and validly
executed and delivered by each Shareholder and is, and when executed
and delivered each Ancillary Instrument will be, the legal, valid and
binding obligation of such Shareholder, enforceable in accordance with
its terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally, and
by general equitable principles.
3.2(d) Title. Each Shareholder has, and at Closing ABR will
receive, good and marketable title to the Shares to be sold by such
Shareholder hereunder, free and clear of all Liens (as defined in
Section 3.11) including, without limitation, voting trusts or
agreements, proxies, and marital or community property interests.
3.3 No Violation. Except as set forth on Schedule 3.3, neither
the execution and delivery of this Agreement or the Ancillary Instruments nor
the consummation by BCSI and Shareholders of the transactions contemplated
hereby and thereby (a) will violate any statute, law, ordinance, rule or
regulation (collectively, "Laws") or any order, writ, injunction, judgment, plan
or decree (collectively, "Orders") of any court, arbitrator, department,
commission, board, bureau, agency, authority, instrumentality or other body,
whether federal, state, municipal, foreign or other (collectively, "Government
Entities"), (b) will require any authorization, consent, approval, exemption or
other action by or notice to any Government Entity (including, without
limitation, under any "plant-closing" or similar law), or (c) subject to
obtaining the consents referred to in Schedule 3.3, will violate or conflict
with, or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or will result in the termination
of, or accelerate the performance required by, or result
4
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in the creation of any Lien upon any of the assets of BCSI or any Subsidiary (or
the Shares) under, any term or provision of the Certificate of Incorporation or
Bylaws of BCSI or any Subsidiary or of any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to which BCSI,
any Subsidiary or any Shareholder is a party or by which BCSI, any Subsidiary or
any Shareholder or any of its or their assets or properties may be bound or
affected.
3.4 Financial Statements. Included as Schedule 3.4 are true and
complete copies of the consolidated financial statements of Company consisting
of (i) audited consolidated balance sheets of Company as of December 31, 1997,
1996 and 1995, and the related audited consolidated statements of income and
cash flows for the fiscal years then ended (including the notes contained
therein or annexed thereto), which financial statements have been reported on,
and are accompanied by, the signed, unqualified opinion of C.W. Amos & Company,
LLC, independent auditors for Company for such fiscal years, and (ii) unaudited
consolidated balance sheet of Company as of March 31, 1998, and the related
unaudited consolidated statements of income and cash flows for the three months
then ended and for the corresponding three-month period of the prior year
(including the notes and schedules contained therein or annexed thereto). (The
audited consolidated balance sheet as of December 31, 1997 is hereinafter
referred to as the "Recent Balance Sheet.") All of such financial statements
(including all notes and schedules contained therein or annexed thereto) are
true, complete and accurate, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited statements, for
the absence of footnote disclosure) applied on a consistent basis, have been
prepared in accordance with the books and records of Company, and fairly
present, in accordance with generally accepted accounting principles, the
assets, liabilities and financial position, the results of operations and cash
flows of Company as of the dates and for the years and periods indicated.
3.5 Tax Matters
3.5(a) Provision For Taxes. The provision made for taxes on
the Recent Balance Sheet is sufficient for the payment of all federal,
state, foreign, county, local and other income, ad valorem, excise,
profits, franchise, occupation, property, payroll, sales, use, gross
receipts and other taxes (and any interest and penalties) and
assessments, whether or not disputed, at the date of the Recent Balance
Sheet and for all years and periods prior thereto. The provision made
for taxes on the unaudited consolidated balance sheet of the Company as
of March 31, 1998 is sufficient for the payment of all federal, state,
foreign, county, local and other income, ad valorem, excise, profits,
franchise, occupation, property, payroll, sales, use, gross receipts
and other taxes (and any interest and penalties) and assessments,
whether or not disputed, at March 31, 1998 and for all years and
periods prior thereto. Since the date of the Recent Balance Sheet,
Company has not incurred any taxes other than taxes incurred in the
ordinary course of business consistent in type and amount with past
practices of Company.
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3.5(b) Tax Returns Filed. Except as set forth on Schedule
3.5(b), all federal, state, foreign, county, local and other tax
returns required to be filed by or on behalf of Company have been
timely filed and when filed were true and correct in all material
respects, and the taxes shown as due thereon were paid or adequately
accrued. True and complete copies of all tax returns or reports filed
by Company for each of its six most recent fiscal years have been
delivered to ABR. Company has duly withheld and paid all taxes which it
is required to withhold and pay relating to salaries and other
compensation heretofore paid to the employees of Company.
3.5(c) Tax Audits. The federal and state income tax returns
of Company have been audited by the Internal Revenue Service and
appropriate state taxing authorities for the periods and to the extent
set forth in Schedule 3.5(c), and Company has not received from the
Internal Revenue Service or from the tax authorities of any state,
county, local or other jurisdiction any notice of underpayment of taxes
or other deficiency which has not been paid nor any objection to any
return or report filed by Company. There are outstanding no agreements
or waivers extending the statutory period of limitations applicable to
any tax return or report.
3.5(d) Consolidated Group. Schedule 3.5(d) lists every year
BCSI or any Subsidiary was a member of an affiliated group of
corporations that filed a consolidated tax return on which the statute
of limitations does not bar a federal tax assessment, and each
corporation that has been part of such group. No affiliated group of
corporations of which BCSI or any Subsidiary has been a member has
discontinued filing consolidated returns during the past five years.
3.5(e) Other. Except as set forth in Schedule 3.5(e), the
Company has not (i) filed any consent or agreement under Section 341(f)
of the Code, (ii) applied for any tax ruling, (iii) entered into a
closing agreement with any taxing authority, (iv) filed an election
under Section 338(g) or Section 338(h)(10) of the Code (nor has a
deemed election under Section 338(e) of the Code occurred), (v) made
any payments, or been a party to an agreement (including this
Agreement) that under any circumstances could obligate it to make
payments that will not be deductible because of Section 280G of the
Code, or (vi) been a party to any tax allocation or tax sharing
agreement. The Company is not a "United States real property holding
company" within the meaning of Section 897 of the Code.
3.6 Accounts Receivable. All accounts receivable of Company
reflected on the Recent Balance Sheet, and as incurred in the normal course of
business since the date thereof, represent arm's length sales actually made in
the ordinary course of business; are collectible (net of the reserve shown on
the Recent Balance Sheet for doubtful accounts) in the ordinary course of
business without the necessity of commencing legal proceedings; are subject to
no counterclaim or setoff; and are not in dispute. Schedule 3.6 contains an aged
schedule of accounts receivable included in the Recent Balance Sheet.
3.7 Absence of Certain Changes. Except as and to the extent set
forth in Schedule 3.7, since the date of the Recent Balance Sheet there has not
been:
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3.7(a) No Adverse Change. Any material adverse change in the
financial condition, assets, liabilities, business, prospects or
operations of Company;
3.7(b) No Damage. Any material loss, damage or destruction,
whether covered by insurance or not, affecting Company's business or
properties;
3.7(c) No Increase in Compensation. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee or agent of Company (including, without limitation, any
increase or change pursuant to any bonus, pension, profit sharing,
retirement or other plan or commitment), or any bonus or other employee
benefit granted, made or accrued;
3.7(d) No Labor Disputes. Any labor dispute or disturbance,
other than routine individual grievances which are not material to the
business, financial condition or results of operations of Company;
3.7(e) No Commitments. Any commitment or transaction by
Company (including, without limitation, any borrowing or capital
expenditure) other than in the ordinary course of business consistent
with past practice;
3.7(f) No Dividends. Any declaration, setting aside, or
payment of any dividend or any other distribution in respect of BCSI's
capital stock; any redemption, purchase or other acquisition by BCSI of
any capital stock of BCSI, or any security relating thereto; or any
other payment to any shareholder of BCSI as such a shareholder;
3.7(g) No Disposition of Property. Any sale, lease or other
transfer or disposition of any properties or assets of Company, except
for the sales of unneeded or obsolete items in the ordinary course of
business;
3.7(h) No Indebtedness. Any indebtedness for borrowed money
incurred, assumed or guaranteed by Company;
3.7(i) No Liens. Any mortgage, pledge, lien or encumbrance
made on any of the properties or assets of Company;
3.7(j) No Amendment of Contracts. Any entering into,
amendment or termination by Company of any contract, or any waiver of
material rights thereunder, other than in the ordinary course of
business;
3.7(k) Loans and Advances. Any loan or advance (other than
advances to employees in the ordinary course of business for travel and
entertainment in accordance with past practice) to any person
including, but not limited to, any Affiliate (for purposes of this
Agreement, the term "Affiliate" shall mean and include all
Shareholders, directors and officers of BCSI or any Subsidiary; the
spouse of any such person; any person who would be the heir or
descendant of any such person
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if he or she were not living; and any entity in which any of the
foregoing has a direct or indirect interest, except through ownership
of less than 5% of the outstanding shares of any entity whose
securities are listed on a national securities exchange or traded in
the national over-the-counter market);
3.7(l) Credit. Any grant of credit to any customer on terms
or in amounts more favorable than those which have been extended to
such customer in the past, any other change in the terms of any credit
heretofore extended, or any other change of Company's policies or
practices with respect to the granting of credit; or
3.7(m) No Unusual Events. Any other event or condition not in
the ordinary course of business of Company.
3.8 Absence of Undisclosed Liabilities. Except as and to the
extent specifically disclosed in the Recent Balance Sheet, or in Schedule 3.8,
Company does not have any liabilities, commitments or obligations (secured or
unsecured, and whether accrued, absolute, contingent, direct, indirect or
otherwise), other than commercial liabilities and obligations incurred since the
date of the Recent Balance Sheet in the ordinary course of business and
consistent with past practice and none of which has or will have a material
adverse effect on the business, financial condition or results of operations of
Company. Except as and to the extent described in the Recent Balance Sheet or in
Schedule 3.8, neither BCSI nor any Shareholder has knowledge of any basis for
the assertion against Company of any liability and there are no circumstances,
conditions, happenings, events or arrangements, contractual or otherwise, which
may give rise to liabilities, except commercial liabilities and obligations
incurred in the ordinary course of Company's business and consistent with past
practice.
3.9 No Litigation. Except as set forth in Schedule 3.9 there is
no action, suit, arbitration, proceeding, investigation or inquiry, whether
civil, criminal or administrative ("Litigation") pending or threatened against
BCSI or any Subsidiary, its directors (in such capacity), its business or any of
its assets, nor does BCSI or any Shareholder know, or have grounds to know, of
any basis for any Litigation. Schedule 3.9 also identifies all Litigation to
which Company or any Subsidiary or any of its directors (in such capacity) have
been parties since January 1, 1993. Except as set forth in Schedule 3.9, no
Company nor its business or assets is subject to any Order of any Government
Entity.
3.10 Compliance With Laws and Orders
3.10(a) Compliance. Except as set forth in Schedule 3.10(a),
Company (including each and all of its operations, practices,
properties and assets) is in compliance with all applicable Laws and
Orders, including, without limitation, those applicable to
discrimination in employment, occupational safety and health, trade
practices, competition and pricing, warranties, zoning, building and
sanitation, employment, retirement and labor relations, advertising and
the Environmental Laws as hereinafter defined. Except as set forth in
Schedule 3.10(a), Company has not received notice of any violation or
alleged violation of, and is subject to no Liability
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<PAGE> 15
for past or continuing violation of, any Laws or Orders. All reports
and returns required to be filed by Company with any Government Entity
have been filed, and were accurate and complete when filed. Without
limiting the generality of the foregoing:
(i) The operation of Company's business as it is now
conducted does not, nor does any condition existing at any of
the Facilities, in any manner constitute a nuisance or other
tortious interference with the rights of any person or
persons in such a manner as to give rise to or constitute the
grounds for a suit, action, claim or demand by any such
person or persons seeking compensation or damages or seeking
to restrain, enjoin or otherwise prohibit any aspect of the
conduct of such business or the manner in which it is now
conducted.
(ii) Company has made all required payments to its
unemployment compensation reserve accounts with the
appropriate governmental departments of the states where it
is required to maintain such accounts, and each of such
accounts has a positive balance.
(iii) Company has delivered to ABR copies of all
reports of Company for the past five (5) years required under
the federal Occupational Safety and Health Act of 1970, as
amended, and under all other applicable health and safety
laws and regulations. The deficiencies, if any, noted on such
reports have been corrected.
3.10(b) Licenses and Permits. Company has all licenses,
permits, approvals, authorizations and consents of all Government
Entities and all certification organizations required for the conduct
of the business (as presently conducted and as proposed to be
conducted) and operation of the Facilities. All such licenses, permits,
approvals, authorizations and consents are described in Schedule
3.10(b), are in full force and effect and will not be affected or made
subject to loss, limitation or any obligation to reapply as a result of
the transactions contemplated hereby. Except as set forth in Schedule
3.10(b), Company (including its operations, practices, properties and
assets) is and has been in compliance with all such permits and
licenses, approvals, authorizations and consents.
3.10(c) Environmental Matters. The applicable Laws relating
to pollution or protection of the environment, including Laws relating
to emissions, discharges, generation, storage, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic,
hazardous or petroleum or petroleum-based substances or wastes
("Waste") into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Waste including,
without limitation, the Clean Water Act, the Clean Air Act, the
Resource Conservation and Recovery Act, the Toxic Substances Control
Act and the Comprehensive Environmental Response Compensation Liability
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<PAGE> 16
Act ("CERCLA"), as amended, and their state and local counterparts are
herein collectively referred to as the "Environmental Laws". Without
limiting the generality of the foregoing provisions of this Section
3.10, Company is in full compliance with all limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws or
contained in any regulations, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or
approved thereunder. Except as set forth in Schedule 3.10(c), there is
neither any Litigation nor any demand, claim, hearing or notice of
violation pending or threatened against Company relating in any way to
the Environmental Laws or any Order issued, entered, promulgated or
approved thereunder. Except as set forth in Schedule 3.10(c), there are
no past or present (or, to the best of BCSI's and the Shareholders'
knowledge, future) events, conditions, circumstances, activities,
practices, incidents, actions, omissions or plans which may interfere
with or prevent compliance or continued compliance with the
Environmental Laws or with any Order issued, entered, promulgated or
approved thereunder, or which may give rise to any liability,
including, without limitation, liability under CERCLA or similar state
or local Laws, or otherwise form the basis of any Litigation, hearing,
notice of violation, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any Waste.
3.11 Title to and Condition of Properties
3.11(a) Marketable Title. Company has good and marketable
title to all of Company's assets, business and properties, including,
without limitation, all such properties (tangible and intangible)
reflected in the Recent Balance Sheet, except for unneeded or obsolete
items disposed of in the ordinary course of business since the date of
such Recent Balance Sheet, free and clear of all mortgages, liens,
(statutory or otherwise) security interests, claims, pledges, licenses,
equities, options, conditional sales contracts, assessments, levies,
easements, covenants, reservations, restrictions, rights-of-way,
exceptions, limitations, charges or encumbrances of any nature
whatsoever (collectively, "Liens") except those described in Schedule
3.11 and, in the case of real property, Liens for taxes not yet due or
which are being contested in good faith by appropriate proceedings (and
which have been sufficiently accrued or reserved against in the Recent
Balance Sheet), municipal and zoning ordinances and easements for
public utilities, none of which interfere with the use of the property
as currently utilized. None of Company's assets, business or properties
are subject to any restrictions with respect to the transferability
thereof; and the Company's title thereto will not be affected in any
way by the transactions contemplated hereby.
3.11(b) Condition. All property and assets owned or utilized
by Company are in good operating condition and repair, free from any
defects (except such minor defects as do not interfere with the use
thereof in the conduct of the normal operations of Company), have been
maintained consistent with the standards
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<PAGE> 17
generally followed in the industry and are sufficient to carry on the
business of Company as conducted during the preceding 12 months. All
buildings, plants and other structures owned or otherwise utilized by
Company are in good condition and repair and have no structural defects
or defects affecting the plumbing, electrical, sewerage, or heating,
ventilating or air conditioning systems.
3.11(c) Real Property. Schedule 3.11(c) sets forth all real
property owned, used or occupied by Company (the "Real Property"),
including a description of all land, and all encumbrances, easements or
rights of way of record (or, if not of record, of which Company has
notice or knowledge) granted on or appurtenant to or otherwise
affecting such Real Property, the zoning classification thereof, and
all plants, buildings or other structures located thereon. Schedule
3.11(c) also sets forth, with respect to each parcel of Real Property
which is leased, the material terms of such lease. There are now in
full force and effect duly issued certificates of occupancy permitting
the Real Property and improvements located thereon to be legally used
and occupied as the same are now constituted. All of the Real Property
has permanent rights of access to dedicated public highways. No fact or
condition exists which would prohibit or adversely affect the ordinary
rights of access to and from the Real Property from and to the existing
highways and roads and there is no pending or threatened restriction or
denial, governmental or otherwise, upon such ingress and egress. There
is not (i) any claim of adverse possession or prescriptive rights
involving any of the Real Property, (ii) any structure located on any
Real Property which encroaches on or over the boundaries of neighboring
or adjacent properties or (iii) any structure of any other party which
encroaches on or over the boundaries of any of such Real Property. None
of the Real Property is located in a flood plain, flood hazard area,
wetland or lakeshore erosion area within the meaning of any Law,
regulation or ordinance. No public improvements have been commenced and
to the best of BCSI's and Shareholders' knowledge none are planned
which in either case may result in special assessments against or
otherwise materially adversely affect any Real Property. No portion of
any of the Real Property has been used as a landfill or for storage or
landfill of hazardous or toxic materials. Neither BCSI nor any
Shareholder has notice or knowledge of any (i) planned or proposed
increase in assessed valuations of any Real Property, (ii) Order
requiring repair, alteration, or correction of any existing condition
affecting any Real Property or the systems or improvements thereat,
(iii) condition or defect which could give rise to an order of the sort
referred to in "(ii)" above, (iv) underground storage tanks, or any
structural, mechanical, or other defects of material significance
affecting any Real Property or the systems or improvements thereat
(including, but not limited to, inadequacy for normal use of mechanical
systems or disposal or water systems at or serving the Real Property),
or (v) work that has been done or labor or materials that has or have
been furnished to any Real Property during the period of six (6) months
immediately preceding the date of this Agreement for which Liens could
be filed against any of the Real Property.
3.11(d) No Condemnation or Expropriation. Neither the whole
nor any portion of the property or any other assets of Company is
subject to any Order to be sold or
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<PAGE> 18
is being condemned, expropriated or otherwise taken by any Government
Entity with or without payment of compensation therefor, nor to the
best of BCSI's and Shareholders' knowledge has any such condemnation,
expropriation or taking been proposed.
3.12 Insurance. Set forth in Schedule 3.12 is a complete and
accurate list and description of all policies of fire, liability, errors and
omissions, workers compensation, health and other forms of insurance presently
in effect with respect to the business and properties of Company, true and
correct copies of which have heretofore been delivered to ABR. Schedule 3.12
includes, without limitation, the carrier, the description of coverage, the
limits of coverage, retention or deductible amounts, amount of annual premiums,
date of expiration and the date through which premiums have been paid with
respect to each such policy, and any pending claims aggregating in excess of
$25,000. All such policies are valid, outstanding and enforceable policies and
provide insurance coverage for the properties, assets and operations of Company,
of the kinds, in the amounts and against the risks customarily maintained by
organizations similarly situated; and no such policy (nor any previous policy)
provides for or is subject to any currently enforceable retroactive rate or
premium adjustment, loss sharing arrangement or other actual or contingent
liability arising wholly or partially out of events arising prior to the date
hereof. Schedule 3.12 indicates each policy as to which (a) the coverage limit
has been reached or (b) the total incurred losses to date equal 75% or more of
the coverage limit. No notice of cancellation or termination has been received
with respect to any such policy, and neither BCSI nor any Shareholder has
knowledge of any act or omission of Company which could result in cancellation
of any such policy prior to its scheduled expiration date. Company has not been
refused any insurance with respect to any aspect of the operations of the
business nor has its coverage been limited by any insurance carrier to which it
has applied for insurance or with which it has carried insurance during the last
three years. Company has duly and timely made all claims it has been entitled to
make under each policy of insurance. Since January 1, 1995, all errors and
omissions policies maintained by or for the benefit of Company have been "claims
made" policies. There is no claim by Company pending under any such policies as
to which coverage has been questioned, denied or disputed by the underwriters of
such policies, and neither BCSI nor any Shareholder knows of any basis for
denial of any claim under any such policy. Company has not received any written
notice from or on behalf of any insurance carrier issuing any such policy that
insurance rates therefor will hereafter be substantially increased (except to
the extent that insurance rates may be increased for all similarly situated
risks) or that there will hereafter be a cancellation or an increase in a
deductible (or an increase in premiums in order to maintain an existing
deductible) or nonrenewal of any such policy. Such policies are sufficient in
all material respects for compliance by Company with all requirements of Law and
with the requirements of all material contracts to which Company is a party.
3.13 Contracts and Commitments
3.13(a) Real Property Leases. Except as set forth in Schedule
3.11(c), Company has no leases of real property.
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3.13(b) Personal Property Leases. Except as set forth in
Schedule 3.13(b), Company has no leases of personal property involving
consideration or other expenditure in excess of $25,000 or involving
performance over a period of more than three (3) months.
3.13(c) Purchase Commitments. Company has no purchase
commitments for supplies or other items that, together with amounts on
hand, constitute in excess of six (6) months normal usage, or which are
at an excessive price.
3.13(d) Sales Commitments. Except as described in Section
3.19, Company has no sales contracts or commitments to customers which
aggregate in excess of $ 100,000 to any one customer or distributor (or
group of affiliated customers). Company has no sales contracts or
commitments except those made in the ordinary course of business, at
arm's length, and no such contracts or commitments are for a sales
price which would result in a loss to the Company.
3.13(e) Contracts With Affiliates and Certain Others. Company
has no agreement, understanding, contract or commitment (written or
oral) with any Affiliate or any employee, agent, consultant,
distributor, dealer or franchisee that is not cancelable by Company on
notice of not longer than 30 days without liability, penalty or premium
of any nature or kind whatsoever.
3.13(f) Powers of Attorney. The Company has not given a power
of attorney, which is currently in effect, to any person, firm or
corporation for any purpose whatsoever.
3.13(g) Collective Bargaining Agreements. Except as set forth
in Schedule 3.13(g), Company is not a party to any collective
bargaining agreements with any unions, guilds, shop committees or other
collective bargaining groups. True and correct copies of all such
agreements have heretofore been delivered to ABR.
3.13(h) Loan Agreements. Except as set forth in Schedule
3.13(h), Company is not obligated under any loan agreement, promissory
note, letter of credit, or other evidence of indebtedness as a
signatory, guarantor or otherwise.
3.13(i) Guarantees. Except as disclosed on Schedule 3.13(i),
Company has not guaranteed the payment or performance of any person,
firm or corporation, agreed to indemnify any person or act as a surety,
or otherwise agreed to be contingently or secondarily liable for the
obligations of any person.
3.13(j) Contracts Subject to Renegotiation. Company is not a
party to any contract with any governmental body which is subject to
renegotiation.
3.13(k) Burdensome or Restrictive Agreements. Company is not
a party to nor is it bound by any agreement, deed, lease or other
instrument which is so burdensome as to materially affect or impair the
operation of Company. Without
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limiting the generality of the foregoing, Company is not a party to nor
is it bound by any agreement requiring Company to assign any interest
in any trade secret or proprietary information, or prohibiting or
restricting Company from competing in any business or geographical area
or soliciting customers or otherwise restricting it from carrying on
its business anywhere in the world.
3.13(l) Other Material Contracts. Company has no lease,
contract or commitment of any nature involving consideration or other
expenditure in excess of $10,000, or involving performance over a
period of more than 3 months, or which is otherwise individually
material to the operations of Company, except as explicitly described
in Schedule 3.13(l) or in any other Schedule.
3.13(m) No Default. Company is not in default under any
lease, contract or commitment, nor has any event or omission occurred
which through the passage of time or the giving of notice, or both,
would constitute a default thereunder or cause the acceleration of any
of Company's obligations or result in the creation of any Lien on any
of the assets owned, used or occupied by Company. No third party is in
default under any lease, contract or commitment to which Company is a
party, nor has any event or omission occurred which, through the
passage of time or the giving of notice, or both, would constitute a
default thereunder or give rise to an automatic termination, or the
right of discretionary termination, thereof.
3.14 Labor Matters. Except as set forth in Schedule 3.14, within
the last five years Company has not experienced any labor disputes, union
organization attempts or any work stoppage due to labor disagreements in
connection with its business. Except to the extent set forth in Schedule 3.14,
(a) Company is in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practice; (b) there is no unfair labor
practice charge or complaint against Company pending or threatened; (c) there is
no labor strike, dispute, request for representation, slowdown or stoppage
actually pending or threatened against or affecting Company nor any secondary
boycott with respect to products of Company; (d) no question concerning
representation has been raised or is threatened respecting the employees of
Company; (e) no grievance which might have a material adverse effect on Company,
nor any arbitration proceeding arising out of or under collective bargaining
agreements, is pending and no such claim therefor exists; and (f) there are no
administrative charges or court complaints against Company concerning alleged
employment discrimination or other employment related matters pending or
threatened before the U.S. Equal Employment Opportunity Commission or any
Government Entity.
3.15 Employee Benefit Plans
3.15(a) Disclosure. Schedule 3.15(a) sets forth all pension,
thrift, savings, profit sharing, retirement, incentive bonus or other
bonus, medical, dental, life, accident insurance, benefit, employee
welfare, disability, group insurance, stock purchase, stock option,
stock appreciation, stock bonus, executive or deferred compensation,
hospitalization and other similar fringe or employee benefit plans,
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programs and arrangements, and any employment or consulting contracts,
"golden parachutes," collective bargaining agreements, severance
agreements or plans, vacation and sick leave plans, programs,
arrangements and policies, including, without limitation, all "employee
benefit plans" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), all employee
manuals, and all written or binding oral statements of policies,
practices or understandings relating to employment, which are provided
to, for the benefit of, or relate to, any persons ("Company Employees")
employed by BCSI or any Subsidiary. The items described in the
foregoing sentence are hereinafter sometimes referred to collectively
as "Employee Plans/Agreements," and each individually as an "Employee
Plan/Agreement." True and correct copies of all the Employee
Plans/Agreements, including all amendments thereto, have heretofore
been provided to ABR. Each of the Employee Plans/Agreements is
identified on Schedule 3.15(a), to the extent applicable, as one or
more of the following: an "employee pension benefit plan" (as defined
in Section 3(2) of ERISA), a "defined benefit plan" (as defined in
Section 414 of the Code), an "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA), and/or as a plan intended to be
qualified under Section 401 of the Code. No Employee Plan/Agreement is
a "multiemployer plan" (as defined in Section 4001 of ERISA), and
Company has never contributed nor been obligated to contribute to any
such multiemployer plan.
3.15(b) Terminations, Proceedings, Penalties, etc. With
respect to each employee benefit plan (including, without limitation,
the Employee Plans/Agreements) that is subject to the provisions of
Title IV of ERISA and with respect to which the Company or any of its
assets may, directly or indirectly, be subject to any Liability,
contingent or otherwise, or the imposition of any Lien (whether by
reason of the complete or partial termination of any such plan, the
funded status of any such plan, any "complete withdrawal" (as defined
in Section 4203 of ERISA) or "partial withdrawal" (as defined in
Section 4205 of ERISA) by any person from any such plan, or otherwise):
(i) no such plan has been terminated so as to
subject, directly or indirectly, any assets of Company to any
liability, contingent or otherwise, or the imposition of any
Lien under Title IV of ERISA;
(ii) no proceeding has been initiated or threatened by
any person (including the Pension Benefit Guaranty
Corporation ("PBGC")) to terminate any such plan;
(iii) no condition or event currently exists or
currently is expected to occur that could subject, directly
or indirectly, any assets of Company to any liability,
contingent or otherwise, or the imposition of any Lien under
Title IV of ERISA, whether to the PBGC or to any other person
or otherwise on account of the termination of any such plan;
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(iv) if any such plan were to be terminated as of the
Closing Date, no assets of Company would be subject, directly
or indirectly, to any liability, contingent or otherwise, or
the imposition of any Lien under Title IV of ERISA;
(v) no "reportable event" (as defined in Section 4043
of ERISA) has occurred with respect to any such plan;
(vi) no such plan which is subject to Section 302 of
ERISA or Section 412 of the Code has incurred any
"accumulated funding deficiency" (as defined in Section 302
of ERISA and Section 412 of the Code, respectively), whether
or not waived; and
(vii) no such plan is a multiemployer plan or a plan
described in Section 4064 of ERISA.
3.15(c) Prohibited Transactions, etc. There have been no
"prohibited transactions" within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code for which a statutory or
administrative exemption does not exist with respect to any Employee
Plan/Agreement, and no event or omission has occurred in connection
with which the Company or any of its assets or any Employee
Plan/Agreement, directly or indirectly, could be subject to any
liability under ERISA, the Code or any other Law or Order applicable to
any Employee Plan/Agreement, or under any agreement, instrument, Law or
Order pursuant to or under which Company has agreed to indemnify or is
required to indemnify any person against liability incurred under any
such Law or Order.
3.15(d) Full Funding. The funds available under each Employee
Plan/Agreement which is intended to be a funded plan exceed the amounts
required to be paid, or which would be required to be paid if such
Employee Plan/Agreement were terminated, on account of rights vested or
accrued as of the Closing Date (using the actuarial methods and
assumptions then used by Company's actuaries in connection with the
funding of such Employee Plan/Agreement).
3.15(e) Controlled Group; Affiliated Service Group; Leased
Employees. Company is not and never has been a member of a controlled
group of corporations as defined in Section 414(b) of the Code or in
common control with any unincorporated trade or business as determined
under Section 414(c) of the Code. Company is not and never has been a
member of an "affiliated service group" within the meaning of Section
414(m) of the Code. There are not and never have been any leased
employees within the meaning of Section 414(n) of the Code who perform
services for Company, and no individuals are expected to become leased
employees with the passage of time.
3.15(f) Payments and Compliance. With respect to each
Employee Plan/Agreement, (i) all payments due from Company to date have
been made and all amounts properly accrued to date as liabilities of
Company which have not been
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paid have been properly recorded on the books of Company and are
reflected in the Recent Balance Sheet; (ii) Company has complied with,
and each such Employee Plan/Agreement conforms in form and operation
to, all applicable laws and regulations, including but not limited to
ERISA and the Code, in all respects, and all reports and information
relating to such Employee Plan/Agreement required to be filed with any
governmental entity have been timely filed; (iii) all reports and
information relating to each such Employee Plan/Agreement required to
be disclosed or provided to participants or their beneficiaries have
been timely disclosed or provided; (iv) each such Employee
Plan/Agreement which is intended to qualify under Section 401 of the
Code has received a favorable determination letter from the Internal
Revenue Service with respect to such qualification, its related trust
has been determined to be exempt from taxation under Section 501(a) of
the Code, and nothing has occurred since the date of such letter that
has or is likely to adversely affect such qualification or exemption;
(iv) there are no actions, suits or claims pending (other than routine
claims for benefits) or threatened with respect to such Employee
Plan/Agreement or against the assets of such Employee Plan/Agreement;
and (v) no Employee Plan/Agreement is a plan which is established and
maintained outside the United States primarily for the benefit of
individuals substantially all of whom are nonresident aliens.
3.15(g) Post-Retirement Benefits. No Employee Plan/Agreement
provides benefits, including, without limitation, death or medical
benefits (whether or not insured) with respect to current or former
Company employees beyond their retirement or other termination of
service other than (i) coverage mandated by applicable law, (ii) death
or retirement benefits under any Employee Plan/Agreement that is an
employee pension benefit plan, (iii) deferred compensation benefits
accrued as liabilities on the books of Company (including the Recent
Balance Sheet), (iv) disability benefits under any Employee Plan/
Agreement that is an employee welfare benefit plan and which have been
fully provided for by insurance or otherwise or (v) benefits in the
nature of severance pay.
3.15(h) No Triggering of Obligations. The consummation of the
transactions contemplated by this Agreement will not (i) entitle any
current or former employee of Company to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due to any such employee or former employee
or (iii) result in any prohibited transaction described in Section 406
of ERISA or Section 4975 of the Code for which an exemption is not
available.
3.15(i) Delivery of Documents. There has been delivered to
ABR, with respect to each Employee Plan/Agreement:
(i) a copy of the annual report, if required under
ERISA, with respect to each such Employee Plan/Agreement for
the last two years;
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(ii) a copy of the summary plan description, together
with each summary of material modifications, required under
ERISA with respect to such Employee Plan/Agreement, all
material employee communications relating to such Employee
Plan/Agreement, and, unless the Employee Plan/Agreement is
embodied entirely in an insurance policy to which Company is
a party, a true and complete copy of such Employee
Plan/Agreement;
(iii) if the Employee Plan/Agreement is funded through
a trust or any third party funding vehicle (other than an
insurance policy), a copy of the trust or other funding
agreement and the latest financial statements thereof; and
(iv) the most recent determination letter received
from the Internal Revenue Service with respect to each
Employee Plan/Agreement that is intended to be a "qualified
plan" under Section 401 of the Code.
With respect to each Employee Plan/Agreement for which an annual report
has been filed and delivered to ABR pursuant to clause (i) of this
Section 3.15(i), no material adverse change has occurred with respect
to the matters covered by the latest such annual report since the date
thereof.
3.15(j) Future Commitments. Company has no announced plan or
legally binding commitment to create any additional Employee
Plans/Agreements or to amend or modify any existing Employee
Plan/Agreement.
3.16 Employment Compensation. Schedule 3.16 contains a true and
correct list of all employees to whom Company is paying compensation, including
bonuses and incentives, at an annual rate in excess of Fifteen Thousand Dollars
($15,000) for services rendered or otherwise; and in the case of salaried
employees such list identifies the current annual rate of compensation for each
employee and in the case of hourly or commission employees identifies certain
reasonable ranges of rates and the number of employees falling within each such
range.
3.17 Trade Rights. Schedule 3.17 lists all Trade Rights (as
defined below) in which Company now has any interest, specifying whether such
Trade Rights are owned, controlled, used or held (under license or otherwise) by
Company, and also indicating which of such Trade Rights are registered. All
Trade Rights shown as registered in Schedule 3.17 have been properly registered,
all pending registrations and applications have been properly made and filed and
all annuity, maintenance, renewal and other fees relating to registrations or
applications are current. In order to conduct the business of Company, as such
is currently being conducted or proposed to be conducted, Company does not
require any Trade Rights that it does not already have. Company is not
infringing and has not infringed any Trade Rights of another in the operation of
the business of Company, nor is any other person infringing the Trade Rights of
Company. Company has not granted any license or made any assignment of any Trade
Right listed on Schedule 3.17, nor does Company pay any royalties or other
consideration for the right to use any Trade Rights of others. There is no
Litigation pending or threatened to challenge Company's right, title and
interest with respect to its
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continued use and right to preclude others from using any Trade Rights of
Company. All Trade Rights of Company are valid, enforceable and in good
standing, and there are no equitable defenses to enforcement based on any act or
omission of Company. The consummation of the transactions contemplated hereby
will not alter or impair any Trade Rights owned or used by Company. As used
herein, the term "Trade Rights" shall mean and include: (i) all trademark
rights, business identifiers, trade dress, service marks, trade names and brand
names, all registrations thereof and applications therefor and all goodwill
associated with the foregoing; (ii) all copyrights, copyright registrations and
copyright applications, and all other rights associated with the foregoing and
the underlying works of authorship; (iii) all patents and patent applications,
and all international proprietary rights associated therewith; (iv) all
contracts or agreements granting any right, title, license or privilege under
the intellectual property rights of any third party; (v) all inventions, mask
works and mask work registrations, know-how, discoveries, improvements, designs,
trade secrets, shop and royalty rights, employee covenants and agreements
respecting intellectual property and non-competition and all other types of
intellectual property; (vi) all computer source codes, programs and other
software of Company, including all machine readable code, printed listings of
code, databases, documentation and related property and information of Company
used or under development for use in Company's business and any right under any
agreement between Company and any other person for the development of any of the
foregoing; and (vii) all claims for infringement or breach of any of the
foregoing.
3.18 Major Customers and Suppliers
3.18(a) Major Customers. Schedule 3.18(a) contains a list of
the twenty (20) largest customers, including distributors, of Company
for each of the two (2) most recent fiscal years (determined on the
basis of the total dollar amount of net sales) showing the total dollar
amount of net sales to each such customer during each such year.
Neither Company nor any Shareholder has any knowledge or information of
any facts indicating, nor any other reason to believe, that any of the
customers listed on Schedule 3.18(a) will not continue to be customers
of the business of Company after the Closing at substantially the same
level of purchases as heretofore.
3.18(b) Major Suppliers. Schedule 3.18(b) contains a list of
the five (5) largest suppliers to Company for each of the two (2) most
recent fiscal years (determined on the basis of the total dollar amount
of purchases) showing the total dollar amount of purchases from each
such supplier during each such year. Neither Company nor any
Shareholder has any knowledge or information of any facts indicating,
nor any other reason to believe, that any of the suppliers listed on
Schedule 3.18(b) will not continue to be suppliers to the business of
Company after the Closing and will not continue to supply the business
with substantially the same quantity and quality of goods and services
at competitive prices.
3.18(c) Dealers and Distributors. Schedule 3.18(c) contains a
list by product or service line of all sales representatives, brokers,
dealers, distributors and franchisees of Company, together with
representative copies of all sales
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representative, dealer, distributor and franchise contracts and policy
statements, and a description of all substantial modifications or
exceptions.
3.19 Contracts. Schedule 3.19 contains a true, complete and
accurate list of each contract material to the provision of services by Company
and to which Company is a party. Except as set forth on Schedule 3.19: (i) all
of such contracts are binding and enforceable in accordance with their
respective terms; (ii) no material default or alleged material default exists
thereunder; (iii) no condition or event exists which (with or without notice or
lapse of time or both) would constitute a material default by any party thereto;
(iv) Company enjoys good working relationships under all of such contracts, and
no material unresolved disputes are pending or threatened under or in respect of
any of such contracts; (v) Company has not received any notice of termination or
any other information indicating that any party to any such contract intends to
terminate its contract or to cease dealing with Company or, following the
Closing, with ABR.
3.19 Service Warranty and Liability. Schedule 3.20 contains a
true, correct and complete copy of Company's standard warranty or warranties for
sales of Services (as defined below) and, except as stated therein, there are no
warranties, commitments or obligations with respect to the provision of such
Services. Schedule 3.20 sets forth the estimated aggregate annual cost to
Company of meeting warranty or liability obligations or commitments for
customers for each of the five (5) preceding fiscal years and the current fiscal
year to the date of the Recent Balance Sheet. Schedule 3.20 contains a
description of all liability claims and similar Litigation relating to services
rendered, which are presently pending or which to the best of Company's or any
Shareholder's knowledge are threatened, or which have been asserted or commenced
against Company within the last five (5) years, in which a party thereto either
requests injunctive relief or alleges damages (whether or not covered by
insurance). The provision of such services by the Company meets and complies
with all governmental laws and regulations currently in effect. As used in this
Section 3.20, the term "Services" means any and all services currently or at any
time previously rendered, provided or sold by Company, or by any predecessor of
Company under any brand name or mark under which services are or have been
rendered, provided or sold by Company.
3.21 Bank Accounts. Schedule 3.21 sets forth the names and
locations of all banks, trust companies, savings and loan associations and other
financial institutions at which the Company maintains a safe deposit box, lock
box or checking, savings, custodial or other account of any nature, the type and
number of each such account and the signatories therefore, a description of any
compensating balance arrangements, and the names of all persons authorized to
draw thereon, make withdrawals therefrom or have access thereto. Schedule 3.21
also sets forth the names and locations of all banks, trust companies, savings
and loan associations and other financial institutions at which a customer
maintains a safe deposit box, lockbox or checking, savings, custodial or other
account of any nature on which any employee of the Company is an authorized
signatory, the type and number of each such account and the signatories
therefore, a description of any compensating balance arrangements, and the names
of all persons authorized to draw thereon, make withdrawals therefrom or have
access thereto.
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3.22 Affiliates' Relationships to Company
3.22(a) Contracts With Affiliates. All leases, contracts,
agreements or other arrangements between Company and any Affiliate are
described on Schedule 3.22(a).
3.22(b) No Adverse Interests. No Affiliate has any direct or
indirect interest in (i) any entity which does business with Company,
(ii) any entity which competes with Company's business, or (iii) any
property, asset or right which is used by Company in the conduct of its
business.
3.22(c) Obligations. All obligations of any Affiliate to
Company, and all obligations of Company to any Affiliate, are listed on
Schedule 3.22(c).
3.23 Assets Necessary to Business. Company presently has and at
the Closing will have good, valid and marketable title to all property and
assets, tangible and intangible, and all leases, licenses and other agreements,
necessary to permit ABR to carry on the business of Company as presently
conducted.
3.24 No Brokers or Finders. Neither Company nor any of its
directors, officers, employees, Shareholders or agents have retained, employed
or used any broker or finder in connection with the transaction provided for
herein or in connection with the negotiation thereof.
3.25 Year 2000 Compliance. Except as set forth in Schedule 3.25:
(a) the computer source codes, programs and other software of the Company
(including machine readable code, printed listings of code, databases,
documentation and related property and information of Company used or under
development for use in the BCSI Business) (collectively, "Software") accurately
determine chronological dates and accurately perform all calculations, data
manipulations, sorting and transmission of date data regardless of whether the
date represents or references different centuries (For example, when the actual
date changes from 12/31/1999 to 1/1/2000, the Software will accurately determine
that 1/1/2000 is the new date and determine that an individual born in 1948 is
52 years old and not -48 [i.e., 00-48 = -48], or otherwise incorrectly perform
the age calculation); (b) the Software provides that all date related user
interface functionalities and data fields permit the entry of a four digit year
(i.e., the years 1965, 2065 and 3065 could all be entered by the user without
the need of a manual override) and such date data will result in accurate
calculations, data manipulations, sorting and transmission of all data,
including the date data; (c) the entry of a date equal to or greater than
01/01/2000 into the Software will not affect any calculation that produces or
uses time spans such that the results of the calculation are incorrect (i.e.,
such as an interest calculation); and (d) the integrity of calculations
performed utilizing the Software will not be affected by date data for dates on
or after 01/02/2000, and calculations using previously generated data (on or
before 12/31/1999) will also maintain calculation integrity.
3.26 Systems Performance. The Software and related systems owned,
developed or used by Company perform in accordance with the written
specifications previously
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delivered to ABR. The Software and related system components are capable of
interconnecting and/or interfacing with each other, and they deliver the
functionality needed to meet the information systems requirements of the BCSI
Business as they are presently conducted. No Shareholder will cause any
unplanned interruption of the operations of, or accessibility to, the Software
or related systems (or any system component) through any device, method or means
including, without limitation, the use of any "virus," "lockup," "time bomb" or
"key lock" device or program, or disabling code, which has the potential or
capability of causing any unplanned interruption of the operations of, or
accessibility of, the Software or related systems (or any system component) to
ABR, or any user authorized by ABR, or which could alter, destroy or inhibit the
use of the Software or related systems (or any system component), or the data
contained therein (collectively, "Disabling Devices"), which could block access
to or prevent the use of the Software or any system (or system component) by ABR
or any authorized user. No Shareholder has placed, nor is any Shareholder aware
of, any Disabling Device on any Software or system component owned or used by
Company.
3.27 Software Ownership; Non Infringement. Except as set forth in
Schedule 3.27 hereto:
(1) Company owns all right, title and interest in and
to the Software;
(2) Company has developed the Software entirely through
its own efforts for its own account, and the Software is free
and clear of all Liens of any nature whatsoever;
(3) The Software does not infringe any patent,
copyright or trade secret of any third party;
(4) The Software is fully eligible for protection under
the applicable copyright law and has not been forfeited to
the public domain;
(5) The source code and system specification of the
Software have been maintained in confidence;
(6) All personnel, including employees, agents,
consultants and contractors, who have participated in the
concept and the development of the Software either (a) have
been party to a for-hire relationship with Company that has
accorded the Company full, effective and exclusive ownership
of all tangible and intangible property thereby arising with
respect to the Software, or (b) have executed appropriate
instruments and assigns in favor of the Company as assignees
and have conveyed to Company full, effective and exclusive
ownership of all tangible and intangible property thereby
arising with respect to the Software;
(7) Company has duly obtained the right and license to
use, copy, modify and distribute the software components
contained in the Software, the
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Software contains no other software components in which any
third party may claim superior or joint ownership, and no
Software is a derivative work of any software programs not
owned by their entirety by Company;
(8) Company has not granted any rights in the Software
to any third party; and
(9) The Software contains certain software components
duly licensed to Company for inclusion in the Software, and
the Software contains no other software components in which
any third party may claim superior or joint ownership, nor is
any Software a derivative work of any other software program
not owned in their entirety by Company.
3.28 Disclosure. No representation or warranty by Company and/or
the Shareholders in this Agreement, nor any statement, certificate, schedule,
document or exhibit hereto furnished or to be furnished by or on behalf of
Company or Shareholders pursuant to this Agreement or in connection with
transactions contemplated hereby, contains or shall contain any untrue statement
of material fact or omits or shall omit a material fact necessary to make the
statements contained therein not misleading. All statements and information
contained in any certificate, instrument, Disclosure Schedule or document
delivered by or on behalf of Company and/or Shareholders shall be deemed
representations and warranties by the Company and the Shareholders.
3.29 Investment Representations. Each Shareholder will acquire
the ABR Stock hereunder for such person's own account and not with a view to or
for sale in connection with any public distribution thereof within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"). Each
Shareholder hereby acknowledges that the ABR Stock to be issued to such
Shareholder hereunder is not registered under the Securities Act or any state
securities laws and cannot be resold without registration thereunder or
exemption therefrom. Each Shareholder agrees that such person will not transfer
all or any portion of such ABR Stock unless such transfer has been registered or
is exempt from registration under the Securities Act and any applicable state
securities laws, that the ABR Stock shall contain a prominent legend with
respect to the foregoing restrictions on transfer and that appropriate stop
transfer instructions will be maintained by ABR's transfer agent with respect to
the ABR Stock.
3.30 Nature of Shareholders. Each Shareholder hereby represents
and warrants that such person has sufficient knowledge and experience in
financial and business matters to enable such person to evaluate the merits and
risks of an investment in ABR Stock and has the ability to bear the economic
risk of acquiring the ABR Stock. Each Shareholder represents that such person is
an "accredited investor," as such term is defined in Regulation D promulgated
under the Securities Act, and that such person is a permanent resident of the
jurisdiction set forth on Schedule 3.30.
3.31 Receipt of ABR Information. Each Shareholder has been
furnished with a copy of the ABR Exchange Act Reports and all other materials
which they have requested and
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which ABR could furnish without unreasonable effort and expense, and each
Shareholder has had a full opportunity to ask questions of and receive answers
from ABR concerning ABR and the terms and conditions of the acquisition of ABR
Stock hereunder. The "ABR Exchange Act Reports" mean the following documents
filed by ABR with the Securities and Exchange Commission since October 1, 1997
and prior to the Closing: (i) ABR's Form 10-K annual report, (ii) all quarterly
reports on Form 10-Q and any periodic reports on Form 8-K, (iii) all definitive
proxy statements, and (iv) all amendments or supplements to any of the
foregoing.
3.32 Pooling of Interests. Shareholders acknowledge that ABR
intends to account for the transactions contemplated by this Agreement as a
pooling of interests, and that qualifying for such accounting treatment is
dependent in part upon actions taken, or not taken, by BCSI and the Shareholders
both before and after the date hereof. In this regard, and with the
understanding that ABR is relying thereon in entering into this Agreement, the
Shareholders warrant that the Shareholders, BCSI and their respective Affiliates
have not, directly or indirectly, taken any of the following actions, which
Shareholders acknowledge could prevent ABR from obtaining such pooling
accounting treatment:
(i) acquired or sold, assigned, transferred or otherwise
disposed of, or reduced any risk relative to, any capital stock of BCSI
in contemplation of the transactions provided for herein;
(ii) paid or received any dividends or other distributions
with respect to the capital stock of BCSI, other than distributions in
the ordinary course of BCSI's business and not in contemplation of the
transactions provided for herein;
(iii) altered the relative ownership interests of the
Shareholders in BCSI in contemplation of the transactions provided for
herein;
(iv) caused BCSI to acquire any treasury shares within two
years prior to the date of this Agreement;
(v) disposed of any significant part of the assets of BCSI
within the nine months preceding the date hereof or in contemplation of
the transactions provided for herein;
(vi) become a party to any contract, document, instrument or
any written or oral agreement regarding the sale, assignment or
transfer of, or allowed to be created any rights or obligations for the
sale, assignment or transfer of, or explicitly or impliedly agreed to
sell, assign or transfer any capital stock of BCSI held by any of the
Shareholders to any other Shareholder or any Affiliate or family member
of any other Shareholder; or
(vii) entered into any agreement to do any of the foregoing,
including, without limitation, any agreement to distribute or dispose
of any significant part of the assets of BCSI upon the consummation of
the transactions provided for herein.
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4. REPRESENTATIONS AND WARRANTIES OF ABR
ABR makes the following representations and warranties to the
Shareholders, each of which is true and correct on the date hereof, shall be
unaffected by any investigation heretofore or hereafter made by Shareholders or
any notice to Shareholders, and shall survive the Closing of the transactions
provided for herein.
4.1 Corporate
4.1(a) Organization. ABR is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Florida.
4.1(b) Corporate Power. ABR has all requisite corporate power
to enter into this Agreement and the other documents and instruments to
be executed and delivered by ABR and to carry out the transactions
contemplated hereby and thereby.
4.2 Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by ABR pursuant
hereto and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by the Board of Directors of ABR. No other corporate
act or proceeding on the part of ABR or its shareholders is necessary to
authorize this Agreement or the other documents and instruments to be executed
and delivered by ABR pursuant hereto or the consummation of the transactions
contemplated hereby and thereby. This Agreement constitutes, and when executed
and delivered, the other documents and instruments to be executed and delivered
by ABR pursuant hereto will constitute, valid and binding agreements of ABR,
enforceable in accordance with their respective terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
4.3 No Brokers or Finders. Except for Robert W. Baird & Co.,
Incorporated neither ABR nor any of its directors, officers, employees or agents
has retained, employed or used any broker or finder in connection with the
transaction provided for herein or in connection with the negotiation thereof.
ABR shall be solely responsible for all fees payable to Robert W. Baird & Co.,
Incorporated in connection with the transactions contemplated by this Agreement.
4.4 Disclosure. No representation or warranty by ABR in this
Agreement, nor any statement, certificate, schedule, document or exhibit hereto
furnished or to be furnished by or on behalf of ABR pursuant to this Agreement
or in connection with transactions contemplated hereby, contains or shall
contain any untrue statement of material fact or omits or shall omit a material
fact necessary to make the statements contained therein not misleading.
4.5 Investment Intent. The Shares are being acquired by ABR for
ABR's own account and not with a view to or for sale in connection with any
public distribution thereof
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<PAGE> 32
within the meaning of the Securities Act. ABR hereby acknowledges that the
Shares are not registered under the Securities Act or any state securities laws
and cannot be resold without registration thereunder or exemption therefrom. ABR
agrees not to transfer all or any portion of the Shares unless such transfer has
been registered or is exempt from registration under the Securities Act and any
applicable state securities laws.
4.6 ABR Stock. The ABR Stock issued to the Shareholders at the Closing
will be duly and validly issued, fully paid and nonassessable.
5. COVENANTS
5.1 Pooling of Interests. The Shareholders shall not, and shall not
permit BCSI to take, any action which could result in the transfer of the Shares
not qualifying to be accounted for as a pooling of interests, including any of
the following actions: (a) acquiring or transferring any capital stock of BCSI
or of ABR during the thirty (30) days prior to the Closing Date, and (b)
selling, assigning or transferring, or agreeing or allowing to be created any
rights or obligations for the sale, assignment or transfer of, any ABR Stock in
violation of the restrictions set forth in Section 3.32. The Shareholders shall
not sell, assign or transfer, or agree or allow to be created any rights or
obligations for the sale, assignment or transfer of any ABR Stock before at
least thirty (30) days of combined operations of Company and ABR have elapsed
and the financial statements reflecting such operations have been prepared and
published within the meaning of Section 201.01 of the Securities and Exchange
Commission's Codification of Financial Reporting Policies. Each Shareholder
agrees that the ABR Stock shall contain a prominent legend with respect to the
foregoing restrictions on transfer and that appropriate stop transfer
instructions will be maintained by ABR's transfer agent with respect to the ABR
Stock.
5.2 General Releases. At the Closing, each Shareholder shall deliver
general releases to ABR, in form and substance satisfactory to ABR and its
counsel, releasing Company and the directors, officers, agents and employees of
Company from all claims to the Closing Date, except (i) as may be described in
written contracts disclosed in the Disclosure Schedule and expressly described
and excepted from such releases, and (ii) in the case of persons who are
employees of the Company, compensation for current periods expressly described
and excepted from such releases. Such releases shall also contain waivers of any
right of contribution or other recourse against Company with respect to
representations, warranties or covenants made herein by Company.
5.3 Covenant Not to Compete. Subject to the Closing, and as an
inducement to ABR to execute this Agreement and complete the transactions
contemplated hereby, and in order to preserve the goodwill associated with the
business of Company being acquired pursuant to this Agreement, each shareholder
covenants and agrees that, for a period of three (3) years from the Closing
Date, he will not directly or indirectly:
(i) engage in, continue in or carry on any business
which competes with the Business or is substantially similar
thereto, including owning or
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<PAGE> 33
controlling any financial interest in any corporation,
partnership, firm or other form of business organization which
is so engaged;
(ii) consult with, advise or assist in any way,
whether or not for consideration, any corporation,
partnership, firm or other business organization which is now
or becomes a competitor of Company or ABR in any aspect with
respect to the Business, including, but not limited to,
advertising or otherwise endorsing the products of any such
competitor; soliciting customers or otherwise serving as an
intermediary for any such competitor; loaning money or
rendering any other form of financial assistance to or
engaging in any form of business transaction on other than an
arm's length basis with any such competitor;
(iii) offer employment to an employee of Company,
without the prior written consent of ABR; or
(iv) engage in any practice the purpose of which is
to evade the provisions of this covenant not to compete or to
commit any act which adversely affects the Business;
provided, however, that the foregoing shall not prohibit the ownership
of securities of corporations which are listed on a national securities
exchange or traded in the national over-the-counter market in an amount
which shall not exceed 5% of the outstanding shares of any such
corporation. The parties agree that the geographic scope of this
covenant not to compete shall extend to the United States jurisdictions
of Maryland, New Jersey, New York, Pennsylvania, Virginia and the
District of Columbia, which constitute the geographic area in which the
Employer has operated its business at some time during the two years
preceding the date of this Agreement. The parties agree that ABR may
sell, assign or otherwise transfer this covenant not to compete, in
whole or in part, to any person, corporation, firm or entity that
purchases all or part of the business of the Company. In the event a
court of competent jurisdiction determines that the provisions of this
covenant not to compete are excessively broad as to duration,
geographical scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and
effect, and any such over broad provisions shall be deemed, without
further action on the part of any person, to be modified, amended
and/or limited, but only to the extent necessary to render the same
valid and enforceable in such jurisdiction.
5.4 Covenant of Confidentiality. Subject to the Closing, and as an
inducement to ABR to execute this Agreement and complete the transactions
contemplated hereby, and in order to preserve the goodwill associated with the
business of Company being acquired pursuant to this Agreement, each Shareholder
hereby covenants and agrees that he shall not at any time subsequent to the
Closing, except as explicitly requested by ABR, (i) use for any purpose, (ii)
disclose to any person, or (iii) keep or make copies of documents, tapes, discs
or programs containing, any confidential information concerning Company. For
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purposes hereof, "confidential information" shall mean and include, without
limitation, all Trade Rights in which Company has an interest, all customer
lists and customer information, and all other information concerning Company's
services, processes, apparatus, equipment, packaging, products, marketing and
distribution methods, not previously disclosed to the public directly by
Company.
5.5 Equitable Relief for Violations. Each Shareholder agrees that the
provisions and restrictions contained in Sections 5.3 and 5.4 are necessary to
protect the legitimate continuing interests of ABR in acquiring the Shares, and
that any violation or breach of these provisions will result in irreparable
injury to ABR for which a remedy at law would be inadequate and that, in
addition to any relief at law which may be available to ABR for such violation
or breach and regardless of any other provision contained in this Agreement, ABR
shall be entitled to injunctive and other equitable relief as a court may grant
after considering the intent of Sections 5.3 through 5.5.
5.6 Employment and Noncompetition Agreements. Contemporaneously with
the execution of this Agreement, Shareholders shall cause each of Joseph M.
Speroni, Paul J. Speroni, Robert S. Speroni and E. Hale Waller to execute and
deliver to Company an Employment and Noncompetition Agreement, substantially in
the form of Exhibit A hereto.
6. INDEMNIFICATION
6.1 By Shareholders. Subject to the terms and conditions of this
Article 6, the Shareholders, severally (in proportion to each such Shareholder's
percentage ownership of the Shares) and not jointly, hereby agree to indemnify,
defend and hold harmless ABR, its directors, officers, employees (hereinafter
"ABR's Affiliates") and the Company, its directors, officers and employees from
and against all Claims (as hereinafter defined) asserted against, resulting to,
imposed upon, or incurred by ABR, ABR's Affiliates or the Company, directly or
indirectly, by reason of, arising out of or resulting from (a) the inaccuracy or
breach of any representation or warranty of the Shareholders contained in this
Agreement, (b) the breach of any covenant by any Shareholder contained in this
Agreement, (c) the conduct of the Business or operations of the Company prior to
the Closing, (d) any dispute involving, or Claim made by, any current or former
security holder of the Company (or their heirs, successors or assigns), (e) any
Litigation that is, or should have been, disclosed in Schedule 3.9, (f) any
Claim or other liability relating to or arising from the Company's failure to be
qualified to do business in any jurisdiction in which it transacts or has
transacted business, including (but not limited to) Maryland and New Jersey, (g)
any dispute involving, or Claim made by, any landlord of any of the Company's
Facilities relating to, or arising out of, the failure to obtain any necessary
consents and/or approvals of such landlords in connection with the transactions
contemplated hereby, (h) any Claim, penalty or other liability resulting from
the Company's failure to file timely Form 5500's relating to any of the
Company's employee benefit plans for 1995, 1996 and 1997 or (i) any liability
incurred for a brokerage fee (or similar fee incurred connection with this
transaction) other than the fee to be paid Robert W. Baird & Co., Incorporated
by ABR pursuant to Section 10.8. As used in this Article 6, the term "Claim"
shall include (i) all debts, liabilities and obligations; (ii) all losses,
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damages (including, without limitation, consequential damages), judgments,
awards, settlements, costs and expenses (including, without limitation, interest
(including prejudgment interest in any litigated matter), penalties, court costs
and attorneys fees and expenses); and (iii) all demands, claims, suits, actions,
costs of investigation, causes of action, proceedings and assessments. Each
Shareholder agrees that he will meet his indemnification obligations to ABR,
ABR's Affiliates, and the Company, its directors, officers and employees
hereunder by promptly transferring to ABR that number of shares of ABR stock
which, at the Average Closing Price (as adjusted in good faith by the Board of
Directors of ABR for stock splits, stock dividends and similar transactions),
shall aggregate in value such Shareholder's indemnification obligations
hereunder.
6.2 By ABR. Subject to the terms and conditions of this Article 6, ABR
hereby agrees to indemnify, defend and hold harmless each Shareholder from and
against all Claims asserted against, resulting to, imposed upon or incurred by
any such person, directly or indirectly, by reason of or resulting from (a) the
inaccuracy or breach of any representation or warranty of ABR contained in or
made pursuant to this Agreement, (b) the breach of any covenant of ABR contained
in this Agreement or (c) the conduct of the Business or operations of the
Company after the Closing, provided such Claim(s) do not result from or arise
out of, in whole or in part, (i) the inaccuracy or breach of any representation
or warranty of any Shareholder or the Company contained in or made pursuant to
this Agreement, or (ii) the breach or violation of any agreement or covenant of
any Shareholder or the Company contained in this Agreement. ABR agrees that it
will meet its indemnification obligations to Shareholders hereunder by issuing
to the Shareholders that number of shares of ABR Stock which, at the Average
Closing Price (as adjusted in good faith by the Board of Directors of ABR for
stock splits, stock dividends and similar transactions), shall aggregate in
value ABR's indemnity obligations hereunder.
6.3 Indemnification of Third-Party Claims. The obligations and
liabilities of any party to indemnify any other under this Article 6 with
respect to Claims relating to third parties shall be subject to the following
terms and conditions:
6.3(a) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will give
the party or parties from whom indemnification is sought (whether one
or more, the "Indemnifying Party") prompt written notice of any Claim,
and the Indemnifying Party will have the right to undertake the defense
thereof by representatives chosen by it. In all matters concerning the
Shareholders by virtue of joint and several liability, the
Shareholders' Agent shall give and receive notice and otherwise act in
all respects on their behalf. Failure to give such notice shall not
affect the indemnifying Party's duty or obligations under this Article
6, except to the extent the Indemnifying Party is prejudiced thereby.
So long as the Indemnifying Party is defending any such Claim actively
and in good faith, the Indemnified Party shall not settle such Claim.
The Indemnified Party shall make available to the Indemnifying Party or
its representatives all records or other materials required by the
Indemnifying Party in connection with such Claim and in the possession
or under the control of the Indemnified Party, for use of the
Indemnifying Party and its representatives in defending any such Claim.
The Indemnified Party
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shall be entitled to participate in the defense of such claim. Subject
to the provisions of Section 6.3(b) and 6.3(c) hereof, if the
Indemnifying Party has acknowledged its liability for indemnification
hereunder and the defense of such Claim is assumed by the Indemnified
Party, and (except for a Claim based upon any matter disclosed in
Schedule 3.9 in which case no such approval shall be necessary) upon
approval by the Indemnified Party of counsel selected by the
Indemnified Party, the Indemnifying Party shall be free to compromise
or settle such Claim without the consent of the Indemnified Party and
shall have no liability for any compromise or settlement of such Claim
without its written consent.
6.3(b) Failure to Defend. If the Indemnifying Party, within a
reasonable time after notice of any such Claim, fails to assume the
defense of such Claim actively and in good faith, the Indemnified Party
will (upon further notice) have the right to undertake the defense,
compromise or settlement of such Claim or consent to the entry of a
judgment with respect to such Claim, on behalf of and for the account
of and risk of the Indemnifying Party, and the Indemnifying Party shall
thereafter have no right to challenge the Indemnified Party's defense,
compromise, settlement or consent to judgment therein.
6.3(c) Indemnified Party's Rights. Anything in this Article 6
to the contrary notwithstanding, (i) except for a Claim based upon any
matter disclosed in Schedule 3.9, if there is a reasonable probability
that a Claim may materially and adversely affect the Indemnified Party
other than as a result of money damages or other money payments, the
Indemnified Party shall have the right to defend, compromise or settle
such Claim, and (ii) the Indemnifying Party shall not, without the
written consent of the Indemnified Party, settle or compromise any
Claim or consent to the 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.
6.4 Payment. The Indemnifying Party shall promptly pay the Indemnified
Party any amount due under this Article 6. Upon judgment, determination,
settlement or compromise of any third party Claim, the Indemnifying Party shall
pay promptly on behalf of the Indemnified Party, and/or to the Indemnified Party
in reimbursement of any amount theretofore required to be paid by it, the amount
so determined by judgment, determination, settlement or compromise and all other
Claims of the Indemnified Party with respect thereto, unless in the case of a
judgment an appeal is made from the judgment. If the Indemnifying Party desires
to appeal from an adverse judgment, then the Indemnifying Party shall post and
pay the cost of the security or bond to stay execution of the judgment pending
appeal. Upon the payment in full by the Indemnifying Party of such amounts, the
Indemnifying Party shall succeed to the rights of such Indemnified Party, to the
extent not waived in settlement, against the third party who made such third
party Claim.
6.5 No Waiver. The closing of the transactions contemplated by this
Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder,
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regardless of whether the party seeking indemnification has knowledge of the
breach, violation or failure of condition constituting the basis of the Claim at
or before the Closing.
6.6 Limitations on Indemnification. Except for any willful or knowing
breach or misrepresentation and except for any action brought by any former
employees and security holders of the Company, as to which a claim for
indemnification hereunder may be brought without limitation as to time or
amount:
6.6(a) Time Limitation. No claim for indemnification shall be
brought under Section 6.1 or Section 6.2 of this Article 6 for the
inaccuracy or breach of a representation or warranty contained in or
made pursuant to this Agreement unless the nature of such claim for
indemnification has been described in reasonable detail and with
identification to this Section 6 in a written notice provided by an
Indemnified Party to an Indemnifying Party and which are determined
during the period which ends (1) on the date of issuance to ABR of the
first independent audit report on the combined results of ABR and the
Company, for those claims involving items expected to be encountered in
the audit process, and (2) on the first anniversary of the date hereof
for claims involving any other items.
6.6(b) Aggregate Amount Limitations. Notwithstanding any
provision of this Article 6 to the contrary, the aggregate amount of
the indemnification obligations of the Shareholders pursuant to Section
6.1 of this Article 6 for the inaccuracy or breach of any
representations or warranties contained in or made pursuant to this
Agreement shall not exceed for the purposes of these indemnification
provisions ten percent (10%) of the value of the consideration received
by the Shareholders hereunder, and (ii) the aggregate amount of the
indemnification obligations of ABR for the inaccuracy or breach of any
representations or warranties contained in or made pursuant to this
Agreement shall not exceed for the purposes of these indemnification
provisions ten percent (10%) of the value of the consideration received
by ABR hereunder.
6.7 Available Remedies. The foregoing provisions of this Article 6 are
in addition to, and not in derogation of, any statutory, equitable or common law
remedy any party may have for breach of any representation, warranty or covenant
in this Agreement.
7. CLOSING
The closing of this transaction ("the Closing") shall take place
simultaneously with the execution and delivery of this Agreement at the offices
of Grad, Logan & Klewans, P.C., Prince Street Plaza, 1421 Prince Street, Suite
320, Alexandria, Virginia 22314, at 10:00 A.M. on April 30, 1998, or at such
other time and place as the parties hereto shall agree upon in writing. The date
hereof is sometimes referred to in this Agreement as the "Closing Date".
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7.1 Documents to be Delivered by BCSI and Shareholders. At the Closing,
BCSI and Shareholders shall deliver to ABR the following documents, in each case
duly executed or otherwise in proper form:
7.1(a) Stock Certificates. Stock certificates representing the
Shares, duly endorsed for transfer or with duly executed stock powers
attached.
7.1(b) Registration Rights Agreement. A registration rights
agreement between ABR and the Shareholders, dated as of the Closing
Date, substantially in the form of Exhibit B hereto.
7.1(c) Consents and Approvals. Executed originals of all
approvals, consents and waivers that are required to effect the
transactions contemplated hereby.
7.1(d) Estoppel Certificates. An estoppel certificate or
status letter from the landlord under each lease of Real Property,
which estoppel certificate or status letter will certify: (i) the lease
is valid and in full force and effect; (ii) the amounts payable by
Company under the lease and the date to which the same have been paid;
(iii) whether there are, to the knowledge of said landlord, any
defaults thereunder, and, if so, specifying the nature thereof; and
(iv) a statement that the transactions contemplated by this Agreement
will not constitute a default under the lease.
7.1(e) Certified Resolutions. Certified copies of the
resolutions of the Board of Directors and the Shareholders of Company,
authorizing and approving this Agreement and the consummation of the
transactions contemplated by this Agreement.
7.1(f) Pooling Letter. A letter from the independent certified
public accounting firm that has certified Company's financial
statements included as Schedule 3.4, in form and substance satisfactory
to ABR and its advisors, to the effect that ABR's acquisition of Shares
at the Closing will qualify for pooling of interests accounting
treatment.
7.1(g) Opinion of Counsel. A written opinion of Grad, Logan &
Klewans, P.C., counsel to BCSI and Shareholders, dated as of the
Closing Date, addressed to ABR, substantially in the form of Exhibit C
hereto.
7.1(h) Articles; Bylaws. A copy of the Articles or Certificate
of Incorporation of each Company certified by the Secretary of State of
the state of incorporation of such Company, and a copy of the Bylaws of
each Company certified by the secretary of such Company.
7.1(i) Incumbency Certificate. Incumbency certificates
relating to each person executing (as a corporate officer or otherwise
on behalf of another person) any document executed and delivered to ABR
pursuant to the terms hereof.
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7.1(j). General Releases. The General Releases referred to in
Section 5.2, duly executed by the persons referred to in such Section.
7.1(k) Resignations. The resignations of Joseph M. Speroni,
Paul J. Speroni, Robert S. Speroni, Gloria B. Speroni, Rex Haverty, E.
Hale Waller and Nikky Losapio as officers, and Joseph M. Speroni as the
sole director of the Company, effective as of the Closing Date and in
form satisfactory to ABR's counsel.
7.1(l) Affidavit. An affidavit from the Shareholders, in form
and substance satisfactory to ABR, to the effect that Company is not a
"foreign person," "foreign corporation," "foreign partnership,"
"foreign trust" or "foreign estate" under Section 1445 of the Code, and
containing all such other information as is required to comply with the
requirements of such Section.
7.1(m) Employment and Noncompetition Agreements. The
Employment and Noncompetition Agreements referred to in Section 5.6,
duly executed by the persons referred to in such Section.
7.1(n) Other Documents. All other documents, instruments or
writings required to be delivered to ABR at the Closing pursuant to
this Agreement and such other certificates of authority and documents
as ABR may reasonably request.
7.2 Documents to be Delivered by ABR. At the Closing, ABR shall deliver
to Shareholders the following documents, in each case duly executed or otherwise
in proper form:
7.2(a) ABR Stock. A letter addressed to ABR's Transfer Agent
authorizing the Transfer Agent to issue and deliver to each Shareholder
a certificate representing the number of shares of ABR Stock determined
in accordance with Section 1.2 hereof.
7.2(b) Registration Rights Agreement. A registration rights
agreement between ABR and the Shareholders, dated as of the Closing
Date, substantially in the form of Exhibit B hereto.
7.2(c) Opinion of Counsel. A written opinion of Foley &
Lardner, counsel to ABR, dated as of the Closing Date, addressed to
Company, in substantially the form of Exhibit D hereto.
7.2(d) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of ABR authorizing and approving
this Agreement and the consummation of the transactions contemplated by
this Agreement.
7.2(e) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and delivered
to BCSI or Shareholders by ABR pursuant to the terms hereof.
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7.2(f) Other Documents. All other documents, instruments or
writings required to be delivered to BCSI at or prior to the Closing
pursuant to this Agreement and such other certificates of authority and
documents as BCSI may reasonably request.
8. TERMINATION
This Agreement may be terminated without further liability of any party
at any time prior to the Closing: (a) by mutual written agreement of ABR and
Shareholders' Agent; or (b) by either ABR or Shareholders' Agent (i) if the
Closing shall not have occurred by 11:59 p.m. Eastern time on the date hereof,
provided the terminating party has not, through breach of a representation,
warranty or covenant, prevented the Closing from occurring at or before such
time, or (ii) if any Government Entity shall have issued a final and
non-appealable Order enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement.
9. RESOLUTION OF DISPUTES
9.1 Arbitration
9.1(a) Any dispute, controversy or claim arising out of or
relating to this Agreement or any contract or agreement entered into
pursuant hereto or the performance by the parties of its or their terms
shall be settled by binding arbitration held in Tampa, Florida in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect, except as specifically
otherwise provided in this Article 9. Notwithstanding the foregoing,
ABR may, in its discretion, apply to a court of competent jurisdiction
for equitable relief from any violation or threatened violation of the
covenants of any Shareholder under Sections 5.3 through 5.5 of this
Agreement.
9.1(b) No party shall be required to submit to arbitration
hereunder unless all persons who are not parties to this Agreement, but
who are necessary parties to a complete resolution of the controversy,
submit to the arbitration process on the same terms as the parties
hereto. Without limiting the generality of the foregoing, no claim
under Article 6 for the indemnification of a third-party claim shall be
subject to arbitration under this Article 9 unless the third party
bringing such claim against the indemnitee shall agree in writing to
the application of this Article 9 to the resolution of such claim.
9.2 Arbitrators. If the matter in controversy (exclusive of attorney
fees and expenses) shall appear, as at the time of the demand for arbitration,
to exceed $250,000, then the panel to be appointed shall consist of three
neutral arbitrators; otherwise, one neutral arbitrator.
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9.3 Procedures; No Appeal. The arbitrator(s) shall allow such discovery
as the arbitrator(s) determine appropriate under the circumstances and shall
resolve the dispute as expeditiously as practicable, and if reasonably
practicable, within 120 days after the selection of the arbitrator(s). The
arbitrator(s) shall give the parties written notice of the decision, with the
reasons therefor set out, and shall have 30 days thereafter to reconsider and
modify such decision if any party so requests within 10 days after the decision.
Thereafter, the decision of the arbitrator(s) shall be final, binding, and
nonappealable with respect to all persons, including (without limitation)
persons who have failed or refused to participate in the arbitration process.
9.4 Authority. The arbitrator(s) shall have authority to award relief
under legal or equitable principles, including interim or preliminary relief,
and to allocate responsibility for the costs of the arbitration and to award
recovery of attorneys fees and expenses in such manner as is determined to be
appropriate by the arbitrator(s).
9.5 Entry of Judgment. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having in personam and subject matter
jurisdiction. ABR and each Shareholder hereby submit to the in personam
jurisdiction of the Federal and State courts in Florida, for the purpose of
confirming any such award and entering judgment thereon.
9.6 Confidentiality. All proceedings under this Article 9, and all
evidence given or discovered pursuant hereto, shall be maintained in confidence
by all parties.
9.7 Continued Performance. The fact that the dispute resolution
procedures specified in this Article 9 shall have been or may be invoked shall
not excuse any party from performing its obligations under this Agreement and
during the pendency of any such procedure all parties shall continue to perform
their respective obligations in good faith, subject to any rights to terminate
this Agreement that may be available to any party.
9.8 Tolling. All applicable statutes of limitation shall be tolled
while the procedures specified in this Article 9 are pending. The parties will
take such action, if any, required to effectuate such tolling.
10. MISCELLANEOUS
10.1 Disclosure Schedule. The Schedules have been compiled in a bound
volume (the "Disclosure Schedule"), executed by Shareholders and dated and
delivered to ABR on the date of this Agreement. Information set forth in the
Disclosure Schedule specifically refers to the article and section of this
Agreement to which such information is responsive and such information shall not
be deemed to have been disclosed with respect to any other article or section of
this Agreement or for any other purpose. The Disclosure Schedule includes a
table of contents and/or index to all of the information and documents contained
therein. The Disclosure Schedule shall not vary, change or alter the language of
the representations and warranties contained in this Agreement and, to the
extent the language
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in the Disclosure Schedule does not conform in every respect to the language of
such representations and warranties, such language in the Disclosure Schedule
shall be disregarded and be of no force or effect.
10.2 Further Assurance. From time to time, at ABR's request and without
further consideration, BCSI and Shareholders will execute and deliver to ABR
such documents and take such other action as ABR may reasonably request in order
to consummate more effectively the transactions contemplated hereby.
10.3 Disclosures and Announcements. Announcements concerning the
transactions provided for in this Agreement by ABR, BCSI or Shareholders shall
be subject to the approval of the other parties in all essential respects,
except that approval of the Shareholders or BCSI shall not be required as to any
statements and other information which ABR may submit to the Securities and
Exchange Commission, any other Government Entity or ABR's stockholders or be
required to make pursuant to any rule or regulation of the Securities and
Exchange Commission or Nasdaq or any applicable stock exchange, or otherwise
required by law. Shareholders shall act hereunder only through Shareholders'
Agent.
10.4 Assignment; Parties in Interest
10.4(a) Assignment. Except as expressly provided herein, the
rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other parties. Notwithstanding the foregoing, ABR may, without consent
of any other party, assign its rights and cause one or more
subsidiaries of ABR to carry out all or part of the transactions
contemplated hereby; provided, however, that ABR shall, nevertheless,
remain liable for all of its obligations, and those of any such
subsidiary, to Shareholders hereunder.
10.4(b) Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other person any
right or remedy under or by reason of this Agreement.
10.5 Law Governing Agreement. This Agreement may not be modified or
terminated orally, and shall be construed and interpreted according to the
internal laws of the State of Florida, excluding any choice of law rules that
may direct the application of the laws of another jurisdiction.
10.6 Amendment and Modification. ABR and Shareholders may amend, modify
and supplement this Agreement in such manner as may be agreed upon in writing
between ABR and Shareholders' Agent; provided, however, that ABR may, in ABR's
discretion, require the execution of any amendment by all the Shareholders
personally.
10.7 Notice. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; (b)
sent by telecopier,
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facsimile transmission or other electronic means of transmitting written
documents; or (c) sent to the parties at their respective addresses indicated
herein by registered or certified U.S. mail, return receipt requested and
postage prepaid, or by private overnight mail courier service. The respective
addresses to be used for all such notices, demands or requests are as follows:
(a) If to ABR, to:
ABR Information Services, Inc.
34125 U.S. Highway 19 North
Palm Harbor, Florida 34684-2116
Attention: James E. MacDougald
Chairman of the Board, President and
Chief Executive Officer
Facsimile: 813/789-3854
(with a copy to)
Foley & Lardner
100 North Tampa Street, Suite 2700
Tampa, Florida 33602-5804
Attention: Todd B. Pfister, Esq.
Facsimile: 813/221-4210
or to such other person or address as ABR shall furnish to Shareholders' Agent
in writing.
(b) If to Shareholders, to Shareholders' Agent:
Samuel N. Klewans
c/o Grad, Logan & Klewans, P.C.
Prince Street Plaza
1421 Prince Street
Suite 320
Alexandria, Virginia 22314
Facsimile: (703) 836-6289
or to such other person or address as Shareholders shall designate as a
successor Shareholders' Agent in accordance with this Agreement.
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(c) If to BCSI to:
Business Computer Services, Inc.
7926 James Branch Drive
McLean, Virginia 22102
Attention: President
Facsimile: (703) 556-7509
(with a copy to)
ABR Information Services, Inc.
34125 U.S. Highway 19 North
Palm Harbor, Florida 34684-2116
Attention: James E. MacDougald
Chairman of the Board, President and
Chief Executive Officer
Facsimile: 813/789-3854
In addition, any notice to BCSI given prior to Closing shall also be given in
the same manner to Shareholders' Agent; and any notice to BCSI given after
Closing shall also be given in the same manner to ABR.
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this paragraph,
such communication shall be deemed delivered the next business day after
transmission (and sender shall bear the burden of proof of delivery); if sent by
overnight courier pursuant to this paragraph, such communication shall be deemed
delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph,
such communication shall be deemed delivered as of the date of delivery
indicated on the receipt issued by the relevant postal service, or, if the
addressee fails or refuses to accept delivery, as of the date of such failure or
refusal. Delivery to Shareholders' Agent shall constitute delivery to all
Shareholders. Any party to this Agreement may change its address for the
purposes of this Agreement by giving notice thereof in accordance with this
Section.
10.8 Expenses. Regardless of whether or not the transactions
contemplated hereby are consummated:
10.8(a) Brokerage. Except for Robert W. Baird & Co.,
Incorporated, which shall be compensated by ABR, Shareholders and ABR
each represent and warrant to each other that there is no broker
involved or in any way connected with the transfer provided for herein
on their behalf respectively (and Shareholders represent and warrant
that there is no broker involved on behalf of BCSI) and each agrees to
hold the other harmless from and against all other claims for brokerage
commissions or finder's fees in connection with the execution of this
Agreement or the transactions provided for herein.
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10.8(b) Expenses to be Paid by Shareholders. Shareholders
shall pay, and shall indemnify, defend and hold ABR and Company
harmless from and against, each of the following:
(i) Transfer Taxes. Any sales, use, excise,
transfer or other similar tax imposed with respect to the
transactions provided for in this Agreement, and any interest
or penalties related thereto.
(ii) Fees of Shareholders' Agent. Any fees and other
expenses of Samuel N. Klewans (or his successor) relating to
the performance of his duties as Shareholders' Agent.
(iii) Professional Fees. All fees and expenses of
their own and BCSI's legal, accounting, investment banking and
other professional counsel in connection with the transactions
contemplated hereby, including the cost of obtaining an audit
of Company's financial statements and of the opinion with
respect to pooling of interests accounting treatment.
10.8(c) Other. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its counsel
and other agents in connection with the transactions contemplated
hereby.
10.8(d) Costs of Litigation or Arbitration. The parties agree
that (subject to the discretion, in an arbitration proceeding, of the
arbitrator as set forth in Section 9.4) the prevailing party in any
action brought with respect to or to enforce any right or remedy under
this Agreement shall be entitled to recover from the other party or
parties all reasonable costs and expenses of any nature whatsoever
incurred by the prevailing party in connection with such action,
including without limitation attorneys' fees and prejudgment interest.
10.9 Shareholders' Agent; Power of Attorney
10.9(a) Shareholders' Agent. The Shareholders hereby appoint
and constitute Samuel N. Klewans as Shareholders' Agent hereunder, to
exercise the powers on behalf of Shareholders set forth in this
Agreement; and Samuel N. Klewans hereby accepts such appointment. In
the event of the death, resignation or inability to act of the person
then serving as the Shareholders' Agent and upon receipt by ABR of
evidence of the same which is satisfactory to ABR, a Shareholder
selected by a majority in interest of the Shareholders shall be
successor Shareholders' Agent with all powers of his predecessor.
10.9(b) Power of Attorney. Each Shareholder, by his execution
of this Agreement, hereby constitutes and appoints the Shareholders'
Agent his true and lawful attorney in fact, with full power in his name
and on his behalf:
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(i) to receive on behalf of such Shareholder the
ABR Stock to which such Shareholder is entitled hereunder, to
give ABR a receipt therefor on behalf of such Shareholder and
to hold such ABR Stock subject to the terms hereof and the
instructions of such Shareholder with respect to the ultimate
disbursement thereof;
(ii) to act on such Shareholder's behalf according
to the terms of this Agreement, including, without limitation,
to amend this Agreement in accordance with Article 10.6 or
terminate this Agreement in accordance with Article 8; to
consent to the assignment of rights under this Agreement in
accordance with Section 10.4(a); to give and receive notices
on behalf of all the Shareholders; and to act on their behalf
in connection with any matter as to which the Shareholders
jointly and severally are an "Indemnified Party" or
"Indemnifying Party" under Article 6 hereof; all in the
absolute discretion of the Shareholders' Agent;
(iii) in general, to do all things and to perform all
acts, including, without limitation, executing and delivering
all agreements, certificates, receipts, instructions and other
instruments contemplated by or deemed advisable in connection
with this Agreement.
This power of attorney, and all authority hereby conferred, is granted subject
to the interests of the other Shareholders and the ABR hereunder and in
consideration of the mutual covenants and agreements made herein, and shall be
irrevocable and shall not be terminated by any act of any Shareholder or by
operation of law, whether by the death or incapacity of any Shareholder or by
the occurrence of any other event. Each Shareholder agrees, jointly and
severally, to hold the Shareholders' Agent free and harmless from any and all
loss, damage or liability which they, or any one of them, may sustain as a
result of any action taken in good faith hereunder.
10.10 Entire Agreement. This instrument embodies the entire agreement
between the parties hereto with respect to the transactions contemplated herein,
and there have been and are no agreements, representations or warranties between
the parties other than those set forth or provided for herein.
10.11 Construction. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The term "Company" as
used herein shall refer to BCSI and/or any Subsidiary, as the context may
require. Without limiting the foregoing, it is the intent of the parties that
each representation and warranty apply to each Subsidiary separately, except
where the context clearly requires otherwise. The words "hereof," "herein," and
"hereunder" and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement unless otherwise specifically stated to the contrary. The parties
acknowledge that this Agreement and the other documents to be executed in
connection with the transactions contemplated hereby have been negotiated at
arms' length, with the assistance of their respective counsel, and
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accordingly, this Agreement and such other documents shall not be construed
against or in favor of any party over the other, regardless of which party was
responsible for drafting the same.
10.12 Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
10.13 Glossary of Terms. The following sets forth the location of
certain definitions of capitalized terms defined in the body of this Agreement:
"ABR Exchange Act Reports" - Section 3.31
"ABR's Affiliates" - Section 6.1
"Affiliate" - Section 3.7(k)
"Ancillary Instruments" - Section 3.2(a)
"Average Closing Price" - Section 1.2
"CERCLA" - Section 3.10(c)
"Claim" - Section 6.1
"Closing" - Section 9
"Closing Date" - Section 7
"Code" - Section 2
"Company" - Section 10.11
"Company Employees" - Section 3.15(a)
"Disclosure Schedule" - Section 10.1
"Employee Plans/Agreement(s)" - Section 3.15(a)
"Environmental Laws" - Section 3.10(c)
"ERISA" - Section 3.15(a)
"Government Entities" - Section 3.3
"Indemnified Party" - Section 6.3(a)
"Indemnifying Party" - Section 6.3(a)
"Laws" - Section 3.3
"Liens" - Section 3.11(a)
"Litigation" - Section 3.9
"Orders" - Section 3.3
"PBGC" - Section 3.15(b)(ii)
"Products" - Section 3.20
"Real Property" - Section 3.11(c)
"Recent Balance Sheet" - Section 3.4
"Securities Act" - Section 3.29
"Subsidiary" - Section 3.1(d)
"Trade Rights" - Section 3.17
"Value per BCSI Security" - Section 1.2
"Waste" - Section 3.10(c)
Where any group or category of items or matters is defined collectively in the
plural number, any item or matter within such definition may be referred to
using such defined term in the singular number.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
ABR INFORMATION SERVICES, INC.,
A FLORIDA CORPORATION
By: /s/ Dennis A. Sweeney
----------------------------------------
Name: Dennis A. Sweeney
Title: Senior Vice President - Mergers &
Acquisitions
BUSINESS COMPUTER SERVICES, INC.,
A VIRGINIA CORPORATION
By: /s/ Joseph M. Speroni
----------------------------------------
Name: Joseph M. Speroni
Title: President
SHAREHOLDERS:
/s/ Joseph M. Speroni
--------------------------------------------
Joseph M. Speroni
/s/ Paul J. Speroni
--------------------------------------------
Paul J. Speroni
/s/ Robert S. Speroni
--------------------------------------------
Robert S. Speroni
/s/ Stephen J. Speroni
--------------------------------------------
Stephen J. Speroni
/s/ Joseph F. Speroni
--------------------------------------------
Joseph F. Speroni
/s/ David M. Speroni
--------------------------------------------
David M. Speroni
/s/ Richard B. Speroni
--------------------------------------------
Richard B. Speroni
[Signatures Continued On Next Page]
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/s/ Rex Haverty
--------------------------------------------
Rex Haverty
/s/ E. Hale Waller
--------------------------------------------
E. Hale Waller
/s/ Nikky Losapio
--------------------------------------------
Nikky Losapio
/s/ Christopher Mantua
--------------------------------------------
Christopher Mantua
SHAREHOLDERS' AGENT
/s/ Samuel N. Klewans
--------------------------------------------
Samuel N. Klewans
43
