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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): February 13, 1997
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Renaissance Solutions, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-25746 04-3150009
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(Commission File Number) (I.R.S. Employer
Identification No.)
Lincoln North, 55 Old Bedford Road, Lincoln, MA 01773
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(Address of Principal Executive Offices) (Zip Code)
(617) 259-8833
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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On February 13, 1997 (the "Closing Date"), Renaissance Solutions, Inc. (the
"Company") acquired all of the capital stock (the "COBA-Boston Common Stock") of
C.M. Management Consulting Ltd. Inc., a Massachusetts corporation ("COBA-
Boston"), pursuant to a Stock Purchase Agreement dated as of February 13, 1997,
(the "Stock Purchase Agreement") between the Company and the holders of all of
the COBA-Boston Common Stock (the "Stockholders"). The transactions
contemplated by the Stock Purchase Agreement are referred to herein as the
"Acquisition."
Pursuant to the Stock Purchase Agreement, COBA-Boston became a subsidiary
of the Company on the Closing Date. The COBA-Boston Common Stock was acquired
for the sum of (i) $9,250,000 (the "Initial Purchase Price") and (ii) an earn-
out payable in 1998 and 1999 based upon the financial performance of COBA-Boston
in 1997 and 1998, respectively. The maximum possible amount of the payments to
be made pursuant to the earn-out is $9,250,000 per year, part of which may be
paid by the issuance of shares of Common Stock of the Company. The Initial
Purchase Price was paid out of the Company's current cash balances.
The Company and the Stockholders have entered into an Escrow Agreement
providing, among other things, that 10% of the Initial Purchase Price will be
held in escrow to reimburse the Company in connection with breaches, if any, of
representations, warranties or covenants made by the Stockholders in the Stock
Purchase Agreement.
Prior to the Acquisition, COBA-Boston provided consultative assistance in
strategy formulation, enterprise transformation, market and competitive analysis
and executive education. The Company currently intends to continue COBA-
Boston's business substantially in the manner conducted by COBA-Boston
immediately prior to the Acquisition.
The Stock Purchase Agreement and the Acquisition were approved by the Board
of Directors of the Company and by the Board of Directors and the Stockholders
of COBA-Boston. The terms of the Stock Purchase Agreement and the Acquisition
were determined on the basis of arm's-length negotiations. Prior to the
execution of the Stock Purchase Agreement, neither the Company nor any of its
affiliates, nor any director or officer of the Company or any associate of any
such director or officer, had any material relationship with COBA-Boston.
The foregoing description of the Stock Purchase Agreement does not purport
to be complete and is qualified in its entirety by reference to the full text of
the Stock Purchase Agreement, which is filed as Exhibit 2 to this Current Report
on Form 8-K and incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
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(a) Financial Statements of Businesses Acquired:
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None required.
(b) Pro Forma Financial Information:
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None required.
(c) Exhibits:
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See the Exhibit Index attached hereto.
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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 hereunto duly authorized.
Date: February 28, 1997 RENAISSANCE SOLUTIONS, INC.
(Registrant)
/s/ George A. McMillan
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By: George A. McMillan
Vice President, Chief Financial
Officer and Chief Operating Officer
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INDEX TO EXHIBITS
Exhibit
Number Description
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2 Stock Purchase Agreement by and among the Company, C.M.
Management Systems Ltd. Inc., Mark R. Bruneau, Andrew R.
Belt and Frederique Bouty, dated as of February 13, 1997.
The following schedules to the Stock Purchase Agreement have
been omitted. The Company will furnish copies of the
omitted schedules to the Commission upon request:
Schedule I - Company Stockholder Information
Attachment A to Schedule II - Customers
Schedule 5.18 - Employee Retention Arrangements
Disclosure Schedule
99 Press Release issued February 14, 1997
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STOCK PURCHASE AGREEMENT
BY AND AMONG
RENAISSANCE SOLUTIONS, INC.,
C.M. MANAGEMENT SYSTEMS LTD. INC.
AND
MARK R. BRUNEAU, ANDREW R. BELT AND FREDERIQUE BOUTY
AS THE STOCKHOLDERS OF C.M. MANAGEMENT SYSTEMS LTD. INC.
FEBRUARY 13, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I - PURCHASE AND SALE OF THE SHARES........................ 1
1.1 Purchase of the Company Shares from
the Company Stockholders.............................. 1
1.2 Further Assurances..................................... 1
1.3 The Closing............................................ 2
1.4 Actions at the Closing................................. 2
1.5 Purchase Price......................................... 3
1.6 Delivery of Shares..................................... 3
1.7 Escrow................................................. 3
1.8 Post-Closing Adjustments............................... 3
1.9 Stockholders' Representative........................... 5
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE
COMPANY STOCKHOLDERS................................ 7
2.1 Organization, Qualification,
Corporate Power and Authority.......................... 8
2.2 Capitalization......................................... 8
2.3 Noncontravention....................................... 9
2.4 Subsidiaries........................................... 9
2.5 Financial Statements................................... 10
2.6 Absence of Certain Changes............................. 10
2.7 Undisclosed Liabilities................................ 10
2.8 Tax Matters............................................ 10
2.9 Assets 12
2.10 Owned Real Property.................................... 13
2.11 Intellectual Property.................................. 13
2.12 Real Property Leases................................... 15
2.13 Contracts.............................................. 16
2.14 Accounts Receivable; Customer Contracts in Progress.... 18
2.15 Powers of Attorney..................................... 18
2.16 Insurance.............................................. 18
2.17 Litigation............................................. 19
2.18 Product and Service Warranties......................... 19
2.19 Employees and Subcontractors........................... 20
2.20 Employee Benefits...................................... 20
2.21 Environmental Matters.................................. 22
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2.22 Legal Compliance....................................... 23
2.23 Permits................................................ 24
2.24 Certain Business Relationships With Affiliates......... 24
2.25 Books and Records...................................... 24
2.26 Customers and Suppliers................................ 24
2.27 Prepayments, Prebilled Invoices and Deposits........... 25
2.28 Banking Facilities..................................... 25
2.29 Brokers' Fees.......................................... 25
2.30 Disclosure............................................. 26
ARTICLE III - FURTHER REPRESENTATIONS AND WARRANTIES OF THE
COMPANY STOCKHOLDERS................................ 26
3.1 Ownership of Stock; Authority.......................... 26
3.2 Investment Representations............................. 27
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE BUYER........... 28
4.1 Organization........................................... 28
4.2 Authority of Transaction............................... 28
4.3 Noncontravention....................................... 28
4.4 Reports and Financial Statements....................... 28
4.5 Investment Representation.............................. 29
4.6 Brokers' Fees.......................................... 29
4.7 Disclosure............................................. 29
ARTICLE V - COVENANTS.............................................. 29
5.1 Conduct of Business.................................... 30
5.2 Absence of Material Changes............................ 30
5.3 Delivery of Interim Financial Statements............... 31
5.4 Communications with Customers and Suppliers............ 32
5.5 Compliance with Laws................................... 32
5.6 Continued Truth of Representations and Warranties...... 32
5.7 Continuing Obligation to Inform........................ 32
5.8 Exclusive Dealing...................................... 32
5.9 Reports, Taxes......................................... 33
5.10 Best Efforts to Obtain Satisfaction of Conditions...... 33
5.11 Full Access............................................ 33
5.12 Non-Competition........................................ 33
5.13 Solicitation and Hiring................................ 34
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5.14 Stock Options.......................................... 34
5.15 Accounts Receivable.................................... 34
5.16 Tax Refund............................................. 35
5.17 Information............................................ 35
5.18 Employee Non-Solicitation and Confidentiality and
Retention Agreements.................................. 35
5.19 Employee Agreements.................................... 35
ARTICLE VI - CONDITIONS TO CLOSING................................. 36
6.1 Conditions to Obligations of the Buyer................. 36
6.2 Conditions to Obligations of the Company Stockholders.. 38
ARTICLE VII - INDEMNIFICATION...................................... 39
7.1 Indemnification........................................ 39
7.2 Method of Asserting Claims............................. 40
7.3 Survival and Limitation................................ 42
7.4 Allocation of Tax Liabilities.......................... 43
ARTICLE VIII - TERMINATION......................................... 44
8.1 Termination of Agreement............................... 44
8.2 Effect of Termination.................................. 44
ARTICLE IX - DEFINITIONS........................................... 45
ARTICLE X - GENERAL PROVISIONS..................................... 46
10.1 Press Releases and Announcements....................... 46
10.2 No Third Party Beneficiaries........................... 47
10.3 Entire Agreement....................................... 47
10.4 Succession and Assignment.............................. 47
10.5 Counterparts........................................... 47
10.6 Headings............................................... 47
10.7 Notices................................................ 47
10.8 Governing Law.......................................... 48
10.9 Amendments and Waivers................................. 48
10.10 Severability........................................... 49
10.11 Expenses............................................... 49
10.12 Specific Performance................................... 49
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10.13 Construction........................................... 49
10.14 Incorporation of Exhibits and Schedules................ 49
SCHEDULES AND EXHIBITS
Schedule I Company Stockholder Information
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Schedule II Contingent Payments
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Exhibit A Escrow Agreement
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Exhibit B.1 Employment Agreement of Mark R. Bruneau
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Exhibit B.2 Employment Agreement of Andrew R. Belt
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Exhibit B.3 Employment Agreement of Frederique Bouty
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Exhibit C Opinion of Bingham, Dana & Gould LLP
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Exhibit D Registration Rights Agreement
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Exhibit E Non-solicitation and Confidentiality Agreement
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Exhibit F Opinion of Hale and Dorr LLP
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Exhibit G Waiver and Termination Agreement
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Exhibit H Retention Agreement
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Disclosure Schedule
Schedule 5.18 Employee Retention Arrangements
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is entered into as of
February 13, 1997 (the "Agreement Date") by and among Renaissance Solutions,
Inc., a Delaware corporation (the "Buyer"), C.M. Management Systems Ltd. Inc., a
Massachusetts corporation (the "Company"), and the undersigned stockholders of
the Company (the "Company Stockholders"). The Buyer, the Company and the
Company Stockholders are referred to collectively herein as the "Parties."
PRELIMINARY STATEMENT
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1. The Company Stockholders collectively own all of the outstanding
shares of the capital stock of the Company (the "Company Shares") as set forth
on Schedule I hereto.
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2. The Buyer desires to purchase, and the Company Stockholders desire to
sell, the Company Shares for the consideration set forth below subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Parties agree as
follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
1.1 Purchase of the Company Shares from the Company Stockholders. Upon
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and subject to the terms and conditions of this Agreement, at the closing of the
transactions contemplated by this Agreement (the "Closing"), the Company
Stockholders shall sell, transfer, convey, assign and deliver to the Buyer, and
the Buyer shall purchase, acquire and accept from each Company Stockholder, all
of the Company Shares owned by such Company Stockholder. At the Closing each
Company Stockholder shall deliver to the Buyer certificates evidencing the
Company Shares owned by such Company Stockholder duly endorsed in blank or with
stock powers duly executed in blank by the Company Stockholder.
1.2 Further Assurances. At any time and from time to time after the
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Closing, at the Buyer's request and without further consideration to any of the
Company Stockholders, the Company Stockholders shall promptly execute and
deliver such instruments of sale, transfer, conveyance, assignment and
confirmation, and take all such other action as the Buyer may reasonably
request, more effectively to transfer, convey and assign to the Buyer, and to
confirm the Buyer's title to, all of
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the Company Shares, to put the Buyer (through its ownership of the Company) in
actual possession and operating control of the assets (including without
limitation the original corporate minute books of the Company and all corporate
seals), properties and business of the Company, to assist the Buyer in
exercising all rights with respect thereto and to carry out the purpose and
intent of this Agreement.
1.3 The Closing. The Closing shall take place at the offices of Hale and
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Dorr LLP, 60 State Street, Boston, Massachusetts 02109 commencing at 10:00 a.m.,
local time, on February 13, 1997 (the "Closing Date"), or, if all of the
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby have not been satisfied or waived by such date, on such
mutually agreeable later date as soon as practicable after the satisfaction or
waiver of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby.
1.4 Actions at the Closing. At the Closing:
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(a) the Company shall deliver to the Buyer the various certificates,
instruments and documents referred to in Section 6.1 below;
(b) the Buyer shall deliver to the Company the various certificates,
instruments and documents referred to in Section 6.2 below;
(c) each Company Stockholder shall deliver to the Buyer certificates
("Certificates") evidencing the Company Shares owned by such Company Stockholder
(including any Company Shares subject to an escrow or pledge arrangement) duly
endorsed in blank or with stock powers duly executed in blank by the Company
Stockholder;
(d) the Buyer shall deliver to each respective Company Stockholder, by
check or wire transfer of immediately available funds to an account designated
by the Company Stockholder, the amount set forth next to that Company
Stockholder's name in Schedule I hereto and designated the "Initial Cash
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Payment," in accordance with Section 1.5 below; and
(e) the Buyer, each of the Company Stockholders, the Stockholders'
Representative (as defined in Section 1.9 below) and the Escrow Agent (as
defined therein) shall execute and deliver the Escrow Agreement attached hereto
as Exhibit A (the "Escrow Agreement") and the Buyer shall deliver to the Escrow
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Agent a check in the amount of the Escrow Cash Payment (as defined in Section
1.5 below) being placed in escrow on the Closing Date pursuant to Section 1.7
below.
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1.5 Purchase Price. The aggregate purchase price to be paid by the Buyer
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for the Company Shares shall be (a) $9,250,000 in cash, which shall consist of
(i) $8,325,000 (the "Initial Cash Payment") and (ii) $925,000 (the "Escrow Cash
Payment"), and (b) further contingent consideration, consisting of cash and (at
the Buyer's option) shares of the Buyer's common stock, $.0001 par value per
share (the "Buyer Common Stock"), subject to and calculated in accordance with
the provisions of Schedule II (the "Contingent Consideration"). Any shares of
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Buyer Common Stock issuable as part of the Contingent Consideration shall be
subject to equitable adjustment in the event of any stock split, stock dividend,
reverse stock split or similar event affecting the Buyer Common Stock between
the Agreement Date and the date of payment of such Contingent Consideration in
accordance with Schedule II. The Initial Cash Payment shall be delivered to
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each of the Company Stockholders at the Closing in accordance with Section
1.4(d). The Escrow Cash Payment shall be deposited in escrow pursuant to
Section 1.7 below and shall be held and disposed of in accordance with the terms
of the Escrow Agreement and Section 1.8 below. The Initial Cash Payment and the
Escrow Cash Payment shall together be referred to herein as the "Base Purchase
Price."
1.6 Delivery of Shares. On the Closing Date, each Company Stockholder
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shall deliver to the Buyer the Certificates held by such Company Stockholder and
shall be entitled to receive in exchange therefor (subject to any taxes required
to be withheld) his portion of the Initial Cash Payment to be paid pursuant to
Section 1.5 above. Until properly surrendered, each such Certificate shall be
deemed for all purposes to evidence only the right to receive his portion of the
Initial Cash Payment to be paid to such Company Stockholder pursuant to Section
1.5 above. No holder of Certificates shall be entitled to receive his portion
of the Initial Cash Payment to which he would otherwise be entitled until his
Certificates are properly surrendered.
1.7 Escrow. On the Closing Date, the Buyer shall deliver to the Escrow
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Agent, by certified or bank check or wire transfer of immediately available
funds, the Escrow Cash Payment, for the purpose of (a) securing the
indemnification obligations of the Company Stockholders set forth in this
Agreement and (b) securing the post-Closing adjustments set forth in Section 1.8
below. The Escrow Cash Payment shall be held by the Escrow Agent under the
Escrow Agreement pursuant to the terms thereof. The Escrow Cash Payment shall
be held as a trust fund and shall not be subject to any lien, attachment,
trustee process or any other judicial process of any creditor of any party, and
shall be held and disbursed solely for the purposes and in accordance with the
terms of the Escrow Agreement and Section 1.8 below.
1.8 Post Closing Adjustments. The Base Purchase Price shall be subject to
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adjustment after the Closing Date as follows:
(a) Not later than 60 days after the Closing Date, the Buyer shall
prepare and deliver to the Stockholders' Representative a balance sheet of the
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Company as of the Closing Date (the "Closing Balance Sheet"). The Closing
Balance Sheet shall be prepared in accordance with United States generally
accepted accounting principles ("GAAP") and with the previous custom and
practice of the Company (to the extent consistent with GAAP), subject to the
adjustments set forth in this Section 1.8 (which shall be in addition to and not
in lieu of those required by GAAP).
(b) The Closing Balance Sheet shall be accompanied by a statement
setting forth the sum, if any, by which the Net Asset Value (as defined below in
this Section 1.8(b)) as shown on the Closing Balance Sheet is greater than, or
less than $772,000 (such value, the "Net Book Value Adjustment") (with the Net
Book Value Adjustment to be expressed as a positive number if the Net Asset
Value on the Closing Balance Sheet is greater than $772,000 and as a negative
number if the Net Asset Value on the Closing Balance Sheet is less than
$772,000). For purposes of this Agreement the "Net Asset Value" shall be equal
to the total tangible assets of the Company on the Closing Balance Sheet minus
the total liabilities of the Company on the Closing Balance Sheet. The Closing
Balance Sheet shall be accompanied by a statement setting forth the calculations
showing the basis for the determination of such sums. The Closing Balance Sheet
shall not include any item reflecting or relating in any way to a potential tax
refund that the Company may receive from the taxing authorities or government of
Canada. The Closing Balance sheet shall include an accrued liability for the
loan from the Buyer to the Company in the amount of $1,000,000 made, in part, to
fund the bonuses paid to certain employees of the Company immediately prior to
the Closing (the "Buyer Loan").
(c) In the event that the Stockholders' Representative disputes the
Closing Balance Sheet or the calculation of the Net Book Value Adjustment, the
Stockholders' Representative shall notify the Buyer in writing (the "Dispute
Notice") in detail of the amount, nature and basis of such dispute within 20
calendar days after delivery of the Closing Balance Sheet. In the event of such
a dispute, the Buyer and the Stockholders' Representative shall first use their
diligent good faith efforts to resolve such dispute between themselves. If the
Buyer and the Stockholders' Representative are unable to resolve the dispute
within 10 calendar days after delivery of the Dispute Notice, the dispute shall
be submitted to Ernst & Young LLP (the "Accountants") for resolution. The
Accountants shall be required to resolve the dispute within 30 days after
submission. The determination of the Accountants as to the resolution of any
dispute shall be binding and conclusive upon the Parties. All determinations by
the Accountants pursuant to this Section 1.8(c) shall be in writing and shall be
delivered to the Parties. Any award made pursuant to this Section 1.8 may be
entered in and enforced by any court having jurisdiction thereover.
(d) The fees and expenses of the Accountants in connection with the
resolution of disputes pursuant to Section 1.8(c) above shall be shared equally
by the Company Stockholders, on the one hand, and the Buyer, on the other hand.
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(e) Immediately upon the expiration of the 20-day period for giving
the Dispute Notice, if no Dispute Notice is given, or immediately upon the
resolution of disputes, if any, pursuant to Section 1.8(c) above, the Parties
shall make post-Closing adjustments as set forth in Section 1.8(f) below.
(f) If the Net Book Value Adjustment is negative, the Buyer shall give
notice to the Company Stockholders specifying the amount of the Net Book Value
Adjustment (expressed as a positive) (the "Buyer's Adjustment Amount") and the
Company Stockholders shall pay the Buyer's Adjustment Amount to the Buyer, by
bank or certified check or wire transfer of immediately available funds to an
account designated by the Buyer within 10 days of receipt of the notice.
Notwithstanding the foregoing, the Buyer shall have the right, but not the
obligation, to give notice to the Escrow Agent specifying the Buyer's Adjustment
Amount or such portion thereof as has not been collected from the Company
Stockholders (not to exceed the amount of the Escrow Cash Payment so held by the
Escrow Agent) (the "Escrow Amount"). Upon receipt of such notice from the
Buyer, the Escrow Agent shall deliver the Escrow Amount to the Buyer pursuant
to the terms of the Escrow Agreement. Neither the Escrow Agent nor any of the
Company Stockholders shall have any right, title or interest in or to the Escrow
Amount. Any remaining portion of the Escrow Cash Payment shall remain in escrow
subject to the provisions of the Escrow Agreement.
(g) If the Net Book Value Adjustment is positive, the Buyer shall give
notice to the Stockholders' Representative specifying the amount of the Net Book
Value Adjustment (expressed as a positive) (the "Company Stockholders'
Adjustment Amount") and the Company shall pay the Company Stockholders'
Adjustment Amount to the Stockholders' Representative, by bank or certified
check or wire transfer of immediately available funds to an account designated
by the Stockholders' Representative, within 10 days of delivery of the notice.
All amounts paid to the Stockholders' Representative under this Section 1.8(g)
shall be distributed pro rata to the Company Stockholders in accordance with
their respective ownership of the Company Shares, as set forth on Schedule I
hereto.
1.9 Stockholders' Representative.
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(a) In order to efficiently administer the transactions contemplated
hereby, including (i) the determination of the Net Book Value Adjustment, (ii)
the waiver of any condition to the obligations of the Company Stockholders to
consummate the transactions contemplated hereby, and (iii) the defense and/or
settlement of any claims for which the Company Stockholders may be required to
indemnify the Buyer and/or the Company pursuant to the Escrow Agreement and
Article VII below, the Stockholders hereby designate Mark R. Bruneau as their
representative (the "Stockholders' Representative").
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(b) The Company Stockholders hereby authorize the Stockholders'
Representative (i) to make all decisions relating to the determination of the
Net Book Value Adjustment and to deliver all or any portion of the Escrow Cash
Payment with respect thereto, (ii) to take all action necessary in connection
with the waiver of any condition to the obligations of the Company Stockholders
to consummate the transactions contemplated hereby, or the defense and/or
settlement of any claims for which the Company Stockholders may be required to
indemnify the Buyer and/or the Company pursuant to Article VII below, (iii) to
give and receive all notices required to be given under this Agreement and the
Escrow Agreement, and (iv) to take any and all additional action as is
contemplated to be taken by or on behalf of the Company Stockholders by the
terms of this Agreement and the Escrow Agreement.
(c) In the event that the Stockholders' Representative dies, becomes
unable to perform his responsibilities hereunder or resigns from such position,
the Company Stockholders holding, prior to Closing, a majority of the Company
Shares as set forth on Schedule I attached hereto shall select another
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representative to fill such vacancy and such substituted representative shall be
deemed to be the Stockholders' Representative for all purposes of this Agreement
and the documents delivered pursuant hereto.
(d) All decisions and actions by the Stockholders' Representative,
including without limitation any agreement between the Stockholders'
Representative and the Buyer relating to the determination of the Net Book Value
Adjustment, the defense or settlement of any claims for which the Company
Stockholders may be required to indemnify the Buyer and/or the Company pursuant
to Article VII below, shall be binding upon all of the Company Stockholders and
no Company Stockholder shall have the right to object, dissent, protest or
otherwise contest the same.
(e) By his execution of this Agreement, each Company Stockholder
agrees that:
(i) the Buyer shall be able to rely conclusively on the instructions
and decisions of the Stockholders' Representative as to the determination of the
Net Book Value Adjustment, the settlement of any claims for indemnification by
the Buyer and/or the Company pursuant to Article VII below or any other actions
required or permitted to be taken by the Stockholders' Representative hereunder,
and no party hereunder shall have any cause of action against the Buyer to the
extent the Buyer has relied upon the instructions or decisions of the
Stockholders' Representative;
(ii) all actions, decisions and instructions of the Stockholders'
Representative shall be conclusive and binding upon all of the Company
Stockholders and no Company Stockholder shall have any cause of action against
the Stockholders'
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Representative for any action taken, decision made or instruction given by the
Stockholders' Representative under this Agreement, except for fraud or willful
breach of this Agreement by the Stockholders' Representative;
(iii) the provisions of this Section 1.9 are independent and
severable, are irrevocable and coupled with an interest and shall be enforceable
notwithstanding any rights or remedies that any Company Stockholder may have in
connection with the transactions contemplated by this Agreement;
(iv) remedies available at law for any breach of the provisions of
this Section 1.9 are inadequate; therefore, the Buyer and the Company shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving damages if either the Buyer and/or the Company brings an action to
enforce the provisions of this Section 1.9; and
(v) the provisions of this Section 1.9 shall be binding upon the
executors, heirs, legal representatives, personal representatives, successor
trustees, and successors of each Company Stockholder, and any references in
this Agreement to a Company Stockholder or the Company Stockholders shall mean
and include the successors to the Company Stockholder's rights hereunder,
whether pursuant to testamentary disposition, the laws of descent and
distribution or otherwise.
(f) All fees and expenses incurred by the Stockholders' Representative
shall be paid by the Company Stockholders in proportion to their ownership of
Company Shares as set forth in Schedule I attached hereto.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY STOCKHOLDERS
Each of the Company Stockholders, jointly and severally, represents and
warrants to the Buyer that the statements contained in this Article II are true
and correct, except as set forth in the disclosure schedule attached hereto (the
"Disclosure Schedule"). The Disclosure Schedule shall be initialed by each of
the Company Stockholders and shall be arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Article II, and the
disclosures in any paragraph of the Disclosure Schedule shall qualify only the
corresponding paragraph in this Article II.
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2.1 Organization, Qualification, Corporate Power and Authority.
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(a) The Company is a corporation duly organized, validly existing and
in corporate and tax good standing under the laws of the Commonwealth of
Massachusetts. The Company is duly qualified to conduct business and is in
corporate and tax good standing under the laws of each jurisdiction in which the
nature of its businesses or the ownership or leasing of its properties requires
such qualification, each of which jurisdictions is set forth in Section 2.1 of
the Disclosure Schedule. The Company has all requisite corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. The Company has furnished to the Buyer
true and complete copies of its Articles of Organization and By-laws, each as
amended and as in effect on the Agreement Date. The Company has at all times
complied with, and is not in default under or in violation of, any provision of
its Articles of Organization and By-laws.
(b) The Company has all requisite power and authority to execute and
deliver the Fundamental Agreements (as defined below in this Section 2.1(b)) and
to perform its obligations under the Fundamental Agreements. The Fundamental
Agreements have each been (or in the case of the Escrow Agreement, shall be when
delivered) duly and validly (i) executed and delivered by the Company and (ii)
authorized by all necessary corporate action on the part of the Company. Each
Fundamental Agreement constitutes (or, in the case of the Escrow Agreement,
shall constitute) a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. For purposes of this
Agreement, as to each Company Stockholder, the term "Fundamental Agreements"
means this Agreement, the Escrow Agreement, the Employment Agreement in the form
attached hereto as Exhibit B.1 (in the case of Mark R. Bruneau), Exhibit B.2 (in
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the case of Andrew R. Belt), Exhibit B.3 (in the case of Frederique Bouty), and
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the Registration Rights Agreement in the form attached hereto as Exhibit D.
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2.2 Capitalization. The authorized capital stock of the Company consists
--------------
of 7,500 shares of common stock, no par value per share, of which 1,000 shares
are issued and outstanding and 6,500 shares are held in the treasury of the
Company. Schedule I sets forth a complete and accurate list of all stockholders
-------- -
of the Company, indicating the number of Company Shares held by each
stockholder. All of the issued and outstanding Company Shares are duly
authorized, validly issued, fully paid, nonassessable and free of all preemptive
rights. There are no outstanding or authorized options, warrants, rights,
agreements or commitments to which the Company is a party or which are binding
upon the Company providing for the issuance, disposition or acquisition of any
of its capital stock. There are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to the Company.
There are no agreements, voting trusts, proxies or understandings with respect
to the voting, or registration under the Securities Act of 1933 (the "Securities
Act"), of any Company Shares. All of the issued and
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outstanding Company Shares were issued in compliance with applicable federal and
state securities laws.
2.3 Noncontravention. Subject to compliance with the applicable
----------------
requirements of the Securities Act and any applicable state securities laws,
neither the execution and delivery by the Company or the Company Stockholders of
this Agreement or the Escrow Agreement, nor the consummation of the transactions
contemplated hereby or thereby, will (a) conflict with or violate any provision
of the Articles of Organization or By-laws of the Company, (b) require on the
part of the Company any filing with, or any permit, authorization, consent or
approval of, any court, arbitrational tribunal, administrative agency or
commission or other governmental or regulatory authority or agency (a
"Governmental Entity"), (c) conflict with, result in a breach of, constitute
(with or without due notice or lapse of time or both) a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice, consent or waiver under, any contract,
lease, sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest (as
defined below) or other arrangement to which the Company is a party or by which
the Company is bound or to which its assets is subject, (d) result in the
imposition of any Security Interest upon any assets of the Company, or (e)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of its properties or assets. For purposes of
this Agreement, "Security Interest" means any mortgage, pledge, security
interest, encumbrance, charge or other lien (whether arising by contract or by
operation of law).
2.4 Subsidiaries. Ontario Inc., c.o.b. as COBA-M.I.D. ("COBA Canada") is
------------
the only Subsidiary (as defined below in this Section 2.4) of the Company. The
Company does not control directly or indirectly or have any direct or indirect
equity interest in any Business Entity that is not a Subsidiary. The Company
owns all of the issued and outstanding shares of capital stock of COBA Canada.
COBA Canada (a) does not conduct any business operations, (b) does not own,
lease or otherwise have the right to any assets or property of any kind, (c) is
not a party to and, to the knowledge of the Company and the Company
Stockholders, is not threatened to be named as a party to, any litigation, (d)
does not employ any employees, (e) does not file any documents with any
Governmental Entity, (f) is not a party to any contract, agreement or other
arrangement, (g) does not borrow, owe or lend any property, including without
limitation, money, from or to the Company, any of Company Stockholders or any
third party, and (h) has never engaged in any of the foregoing acts. No
financial statement of any kind exists nor has existed in the past with respect
to COBA Canada. COBA Canada does not have any Subsidiaries. For purposes of
this Agreement, "Subsidiary" means any corporation, partnership, limited
liability company or other form of business association (a "Business Entity")
with respect to which the Company, directly or indirectly, owns or has the power
to vote
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<PAGE>
or direct the voting of sufficient securities to elect a majority of the
directors or others authorized to manage or direct the affairs of such Business
Entity.
2.5 Financial Statements. The Company has previously furnished to the
--------------------
Buyer complete and accurate copies of its (a) audited balance sheets and related
statements of income, retained earnings, stockholders' equity and cash flows for
the years ended December 31, 1994 and 1995 and the nine months ended September
30, 1996, together with reports thereon by KPMG Peat Marwick, independent
auditors of the Company (the "Audited Financial Statements"), and (b) unaudited
balance sheet (the "Most Recent Balance Sheet") and related statements of
income, retained earnings, stockholders' equity and cash flows for the three
months ended December 31, 1996 (the "Balance Sheet Date"). The foregoing
financial statements (the "Financial Statements") have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated therein or in the notes thereto),
fairly present the financial condition, results of operations and cash flows of
the Company as of the respective dates thereof and for the periods referred to
therein, and are consistent with the books and records of the Company.
2.6 Absence of Certain Changes. Since the Balance Sheet Date, (i) there
--------------------------
has not been any material adverse change in the assets, business, financial
condition, results of operations or future prospects of the Company, nor has
there occurred any event or development that could reasonably be foreseen to
result in such a material adverse change in the future, and (ii) the Company has
not taken any of the actions set forth in subsections (a) through (t) of Section
5.2 below.
2.7 Undisclosed Liabilities. The Company has no liability (whether known
-----------------------
or unknown, whether absolute or contingent, whether liquidated or unliquidated
and whether due or to become due), except for (a) liabilities shown on the
Company's Most Recent Balance Sheet, a copy of which is included in Section 2.7
of the Disclosure Schedule, (b) liabilities that have arisen since the Balance
Sheet Date in the ordinary course of business consistent with past custom and
practice (including with respect to frequency and amount) ("Ordinary Course of
Business") of the Company and that are similar in nature and amount to the
liabilities that arose during the comparable period of time in the immediately
preceding fiscal period, and (c) contractual liabilities incurred in the
Ordinary Course of Business of the Company that are not required to be reflected
on the Most Recent Balance Sheet and that are not in the aggregate material.
2.8 Tax Matters.
-----------
(a) The Company has filed all Tax Returns (as defined below) that it
was required to file through the Closing Date and all such Tax Returns were
correct and complete in all respects. The Company has paid all Taxes (as
defined below)
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that are shown to be due on any such Tax Returns. The accruals and reserves for
Taxes set forth on the Most Recent Balance Sheet are sufficient to pay all
unpaid Taxes of the Company attributable (excluding, for this purpose, any
accruals or reserves for "deferred taxes" or similar items that reflect timing
differences in the recognition of income or deductions for tax and financial
accounting purposes) to all periods ended on or before the date of the Most
Recent Balance Sheet, and all Taxes attributable to the period from and after
the Balance Sheet Date and contributing through the Closing Date are
attributable to the operation of the Company in the Ordinary Course of Business
of the Company. The Company has no actual or potential liability for any Tax
obligation of any taxpayer (including without limitation any affiliated or
combined group of corporations or other entities that included the Company
during a prior period) other than the Company. All Taxes that the Company is or
was required by law to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper Governmental Entity.
For purposes for this Section 2.8, the Taxes attributable to a particular period
shall be determined in accordance with Section 7.4 hereof. For purposes of this
Agreement, "Taxes" means all taxes, charges, fees, levies or other similar
assessments or liabilities, including without limitation income, gross receipts,
ad valorem, premium, value-added, excise, real property, personal property,
sales, use, transfer, transfer gains, withholding, employment, payroll and
franchise taxes imposed by the United States of America or any state, local or
foreign government, or any agency thereof, or other political subdivision of the
United States or any such government, and any interest, fines, penalties,
assessments or additions to tax resulting from, attributable to or incurred in
connection with any tax or any contest or dispute thereof. For purposes of this
Agreement, "Tax Returns" means all reports, returns, declarations, statements or
other information required to be supplied to a taxing authority in connection
with Taxes.
(b) The Company has delivered to the Buyer correct and complete copies
of all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by the Company since December 31,
1993. The federal income Tax Returns of the Company have been audited by the
Internal Revenue Service or are closed by the applicable statute of limitations
for all taxable years through December 31, 1995. No examination or audit of any
Tax Returns of the Company by any Governmental Entity is currently in progress
or, to the knowledge of the Company and the Company Stockholders, threatened or
contemplated.
(c) The Company is not a "consenting corporation" within the meaning
of Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code")
and none of the assets of the Company are "subsection (f) assets" as defined in
Section 341(f) of the Code. The Company has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(l)(A)(ii) of the Code.
The Company is not a party to any Tax allocation or sharing agreement or any Tax
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<PAGE>
indemnity agreement. The Company has not waived any statute of limitations with
respect to Taxes or agreed to an extension of time with respect to a Tax
assessment or deficiency. The Company has not ever been a member of an
affiliated group of corporations, within the meaning of Section 1504 of the Code
and has never filed Tax Returns on a combined or consolidated basis with any
other Business Entity in any jurisdiction. The Company has not agreed to make,
nor is it required to make, any adjustments under Section 481(a) of the Code by
reason of a change in accounting method or otherwise. The Company has not
participated in, nor will participate in, an international boycott within the
meaning of Section 999 of the Code. The Company is not a party to any
agreement, contract, arrangement or plan that has resulted, or would result,
separately or in the aggregate, in the payment of any excess "parachute
payments" within the meaning of Section 280G of the Code.
(d) The Company has not made an election at any time under Section
1362 of the Code to be treated as an "S corporation" as defined in Section
1361(a) of the Code.
(e) The Company uses the cash method of accounting for all income Tax
purposes.
2.9 Assets.
------
(a) The Company owns or leases all tangible assets necessary for the
conduct of its businesses as presently conducted and as presently proposed to be
conducted. Such tangible assets, in the aggregate, are free from material
defects, have been maintained in accordance with normal industry practice, are
in good operating condition and repair (subject to normal wear and tear) and are
suitable for the purposes for which they presently are used.
(b) No asset of the Company (tangible or intangible) is subject to any
Security Interest.
(c) Section 2.9(c) of the Disclosure Schedule sets forth (i) a true,
correct and complete list of all items of tangible personal property, including
without limitation purchased and capitalized software, owned by the Company as
of the Agreement Date, or not owned by the Company but in the possession of or
used in the business of the Company (the "Personal Property"), other than
individual assets with a book value of less than $10,000; and (ii) a description
of the owner of, and any agreement relating to the use of, each item of Personal
Property not owned by the Company and the circumstances under which such
Property is used. Each item of Personal Property not owned by the Company is in
such condition that upon the return of such property to its owner in its present
condition at the end of the relevant lease term or as otherwise contemplated by
the applicable agreement between the
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<PAGE>
Company and the owner or lessor thereof, the obligations of the Company to such
owner or lessor will be discharged.
2.10 Owned Real Property. The Company does not own, nor has it ever owned,
-------------------
any real property.
2.11 Intellectual Property.
---------------------
(a) The Company owns or has the right to use all Intellectual Property
(as defined below in this Section 2.11) used in the operation of its business or
necessary for the operation of its businesses as presently proposed to be
conducted. Each item of Intellectual Property owned by or used in the operation
of the business of the Company at any time during the period covered by the
Financial Statements will be owned or available for use by the Company on
identical terms and conditions immediately following the Closing. The Company
has taken reasonable measures to protect the proprietary nature of each item of
Intellectual Property and to maintain in confidence all trade secrets and
confidential information, that it owns or uses. To the knowledge of the Company
and the Company Stockholders, no other person or Business Entity has any rights
to any of the Intellectual Property owned or used by the Company, and no other
person or Business Entity is infringing, violating or misappropriating any of
the Intellectual Property that the Company owns or uses. For purposes of this
Agreement, "Intellectual Property" means all (i) patents, patent applications,
patent disclosures and all related continuation, continuation-in-part,
divisional, reissue, reexamination, utility model, certificate of invention and
design patents, patent applications, registrations and applications for
registrations, (ii) trademarks, service marks, trade dress, logos, trade names
and corporate names and registrations and applications for registration thereof,
(iii) copyrights and registrations and applications for registration thereof,
(iv) computer software, data and documentation, (v) trade secrets and
confidential business information, whether patentable or unpatentable and
whether or not reduced to practice, know-how, manufacturing and production
processes and techniques, research and development information, copyrightable
works, financial, marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and information,
(vi) other proprietary rights relating to any of the foregoing, and (vii) copies
and tangible embodiments thereof.
(b) None of the activities or business conducted by the Company
infringes, violates or constitutes a misappropriation of (or in the past
infringed, violated or constituted a misappropriation of) any Intellectual
Property rights of any other person or Business Entity. The Company has not
received any complaint, claim or notice alleging any such infringement,
violation or misappropriation, and to the knowledge of the Company and the
Company Stockholders, there is no basis for any such complaint, claim or notice.
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<PAGE>
(c) Section 2.11(c) of the Disclosure Schedule identifies each (i)
patent or registration that has been issued to the Company with respect to any
of its Intellectual Property, (ii) pending patent application or application for
registration that the Company has made with respect to any of its Intellectual
Property, and (iii) license or other agreement pursuant to which the Company has
granted any rights to any third party with respect to any of its Intellectual
Property. The Company has delivered to the Buyer correct and complete copies of
all such patents, registrations, applications, licenses and agreements (as
amended to date) and has specifically identified and made available to the Buyer
correct and complete copies of all other written documentation evidencing
ownership of, and any claims or disputes relating to, each such item. Except as
set forth in Section 2.11(c) of the Disclosure Schedule, with respect to each
item of Intellectual Property that the Company owns:
(A) subject to such rights as have been granted by the Company under
license agreements entered into in the Ordinary Course of Business of the
Company, the Company possesses all right, title and interest in and to such
item;
(B) such item is not subject to any outstanding judgment, order,
decree, stipulation or injunction; and
(C) except in accordance with the terms of Company's standard form of
software license agreement, a copy of which has previously been provided to the
Buyer, the Company has not agreed to indemnify any person or Business Entity for
or against any infringement, misappropriation or other conflict with respect to
such item.
(d) Section 2.11(d) of the Disclosure Schedule identifies each item of
Intellectual Property used in the operation of the business of the Company at
any time during the period covered by the Financial Statements, or that the
Company plans to use in the future, that is owned by a party other than the
Company. The Company has supplied the Buyer with correct and complete copies of
all licenses, sublicenses or other agreements (as amended to date) pursuant to
which the Company uses such Intellectual Property, all of which are listed on
Section 2.11(d) of the Disclosure Schedule. Except as set forth in Section
2.11(d) of the Disclosure Schedule, with respect to each such item of
Intellectual Property:
(i) the license, sublicense or other agreement covering such item is
legal, valid, binding, enforceable and in full force and effect;
(ii) such license, sublicense or other agreement will continue to be
legal, valid, binding, enforceable and in full force and effect immediately
following the Closing in accordance with the terms thereof as in effect prior to
the Closing;
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<PAGE>
(iii) neither the Company nor, to the knowledge of the Company and
the Company Stockholders, any other party to such license, sublicense or other
agreement is in breach or default, and no event has occurred which with notice
or lapse of time would constitute a breach or default or permit termination,
modification or acceleration thereunder;
(iv) the underlying item of Intellectual Property is not subject to
any outstanding judgment, order, decree, stipulation or injunction;
(v) the Company has not agreed to indemnify any person or Business
Entity for or against any interference, infringement, misappropriation or other
conflict with respect to such item; and
(vi) no license or other fee is payable upon any transfer or
assignment of such license, sublicense or other agreement.
2.12 Real Property Leases. Section 2.12 of the Disclosure Schedule lists
--------------------
and describes briefly all real property leased or subleased to the Company and
lists the term of such lease, any extension and expansion options, and the rent
payable thereunder. The Company has delivered to the Buyer correct and complete
copies of the leases and subleases (as amended to date) listed in Section 2.12
of the Disclosure Schedule. With respect to each lease and sublease listed in
Section 2.12 of the Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding, enforceable and in
full force and effect;
(b) the lease or sublease will continue to be legal, valid, binding,
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect prior to the Closing;
(c) neither the Company nor, to the knowledge of the Company and the
Company Stockholders, any other party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(d) there are no disputes, oral agreements or forbearance programs in
effect as to the lease or sublease;
(e) the Company has not assigned, transferred, conveyed, mortgaged,
deeded in trust or encumbered any interest in the leasehold or subleasehold;
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<PAGE>
(f) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities;
(g) to the knowledge of the Company and the Company Stockholders, the
owner of each facility leased or subleased by the Company has good and clear
record and marketable title to the parcel of real property, free and clear of
any Security Interest, easement, covenant or other restriction, except for
recorded easements, covenants, and other restrictions that do not impair the
occupancy, value or use of the property as it is being used as of the Agreement
Date and as of the Closing Date; and
(h) no construction, alteration or other leasehold improvement work
with respect to the lease or sublease remains to be paid for or performed by the
Company.
2.13 Contracts.
---------
(a) Section 2.13 of the Disclosure Schedule lists the following
written arrangements (including without limitation written agreements) to which
the Company is a party:
(i) any written arrangement (or group of related written arrangements)
for the lease of personal property from or to third parties providing for lease
payments in excess of $10,000 per annum;
(ii) any written arrangement (or group of related written
arrangements) for the purchase or sale of raw materials, commodities, supplies,
products or other personal property or for the furnishing or receipt of services
(i) which calls for performance over a period of more than one year, (ii) which
involves more than the sum of $25,000, or (iii) in which the Company has granted
"most favored nation" pricing provisions or marketing or distribution rights
relating to any products or territory or has agreed to purchase a minimum
quantity of goods or services or has agreed to purchase goods or services
exclusively from a certain party;
(iii) any written arrangement establishing a partnership or joint
venture;
(iv) any written arrangement (or group of related written arrangements)
under which it has created, incurred, assumed or guaranteed (or may create,
incur, assume or guarantee) indebtedness (including capitalized lease
obligations) involving more than $15,000 or under which it has imposed (or may
impose) a Security Interest on any of its assets, tangible or intangible;
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<PAGE>
(v) any written arrangement concerning confidentiality, non-
solicitation or non-competition (other than the Company's customary
confidentiality agreements with its employees, copies of which have been
provided to the Buyer);
(vi) any written arrangement involving any of the Company Stockholders
or their Affiliates (for the purposes of this Agreement, "Affiliate" shall mean
(A) in the case of an individual, the members of the immediate family (including
parents, siblings and children) of (i) the individual and (ii) his or her spouse
and (iii) any Business Entity that directly or indirectly, through one or more
intermediaries controls, or is controlled by, or is under common control with
any of the foregoing individuals, or (B) in the case of a Business Entity,
another Business Entity or a person that directly or indirectly, through one or
more intermediaries controls, or is controlled by, or is under common control
with the Business Entity);
(vii) any written arrangement under which the consequences of a
default or termination could have a material adverse effect on the assets,
business, financial condition, results of operations or future prospects of the
Company; and
(viii) any other written arrangement (or group of related written
arrangements) either involving more than $25,000 or not entered into in the
Ordinary Course of Business of the Company.
(b) Section 2.13 of the Disclosure Schedule accurately discloses as to
each arrangement or agreement for the sale or license of products or the
performance of services disclosed therein (the "Customer Contracts") (i) the
project name; (ii) the customer name; (iii) whether or not the contract amount
is fixed (which shall include, for purposes of this Agreement, a Customer
Contract for the provision of services on a "time and materials not to exceed"
basis) or may be varied based upon services performed; (iv) if the contract
amount is fixed, the contract amount, or, if the contract amount is not fixed, a
good faith, reasonable estimate of the contract amount; (v) if the contract
amount is not fixed, the estimated contract amount most recently communicated to
the customer; (vi) the work completed and total costs incurred to date
thereunder; (vii) the total billings to date under such Customer Contract;
(viii) the estimated completion dates therefor; and (ix) whether or not the
Company or any Company Stockholder has any reason to believe that its profit
margin with respect to such Customer Contract might be less than it has
customarily achieved in the past for similar contracts.
(c) The Company has delivered to the Buyer a correct and complete copy
of each written arrangement (as amended to date) listed in Section 2.13 of the
Disclosure Schedule. With respect to each written arrangement so listed: (i)
the written arrangement is legal, valid, binding and enforceable and in full
force and effect; (ii) the written arrangement will continue to be legal, valid,
binding and enforceable and in full force and effect immediately following the
Closing in
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<PAGE>
accordance with the terms thereof as in effect prior to the Closing; and (iii)
neither the Company nor, to the knowledge of the Company and the Company
Stockholders, any other party, is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or default
or permit termination, modification, or acceleration, under the written
arrangement. The Company is not a party to any oral contract, agreement or other
arrangement which, if reduced to written form, would be required to be listed in
Section 2.13 of the Disclosure Schedule under the terms of this Section 2.13.
The Company is not restricted by any arrangement from carrying on its business
anywhere in the world.
2.14 Accounts Receivable; Customer Contracts in Progress. All accounts
---------------------------------------------------
receivable of the Company reflected on (i) the Most Recent Balance Sheet (net of
the applicable reserve for bad debts and sales returns shown on the Most Recent
Balance Sheet) and (ii) the financial or accounting records of the Company that
have arisen since December 31, 1996 (collectively, the "Accounts Receivable")
are valid receivables of the Company subject to no setoffs or counterclaims and
are current and collectible within 120 days after the invoice date. Section
2.14 of the Disclosure Schedule sets forth a complete list of the Accounts
Receivable, including the aging thereof as of Agreement Date. As to each
Customer Contract in progress as of the Agreement Date, Section 2.14 of the
Disclosure Schedule sets forth as of the Agreement Date the costs incurred by
the Company under such contract, the Company's reasonable estimate of the costs
to complete each such contract, the revenues received by the Company under such
contract, and the Company's reasonable estimate of the revenues to be received
through completion of such contract.
2.15 Powers of Attorney. There are no outstanding powers of attorney
------------------
executed on behalf of the Company.
2.16 Insurance. Section 2.16 of the Disclosure Schedule sets forth the
---------
following information with respect to each insurance policy (including fire,
theft, casualty, general liability, workers compensation, business interruption,
environmental, product liability and automobile insurance policies and bond and
surety arrangements) to which the Company has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past three years:
(a) the name of the insurer, the name of the policyholder and the name
of each covered insured;
(b) the policy number and the period of coverage;
(c) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount (including a description
of how deductibles and ceilings are calculated and operate) of coverage; and
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<PAGE>
(d) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
Except as set forth in Section 2.16 of the Disclosure Schedule, (i) each such
insurance policy is enforceable and in full force and effect; (ii) such policy
will continue to be enforceable and in full force and effect immediately
following the Closing in accordance with the terms thereof as in effect prior to
the Closing; (iii) the Company is not in breach or default (including with
respect to the payment of premiums or the giving of notices) under such policy,
and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default or permit termination, modification or
acceleration, under such policy; and (iv) the Company has not received any
notice from the insurer disclaiming coverage or reserving rights with respect to
a particular claim or such policy in general. Section 2.16 of the Disclosure
Schedule identifies all claims asserted by the Company pursuant to any insurance
policy since January 1, 1993 and describes the nature and status of each such
claim. The Company has not incurred any loss, damage, expense or liability
covered by any such insurance policy for which it has not properly asserted a
claim under such policy. The Company is covered by insurance in scope and
amount customary and reasonable for the businesses in which it is engaged.
2.17 Litigation. Except as identified and described in Section 2.17 of the
----------
Disclosure Schedule, (a) there is no action, suit, proceeding or investigation
to which the Company is a party (either as a plaintiff or defendant) pending or,
to the knowledge of the Company and the Company Stockholders, threatened before
any court, Governmental Entity or arbitrator, and to the knowledge of the
Company and the Company Stockholders, there is no basis for any such action,
suit, proceeding or investigation; (b) neither the Company nor, to the knowledge
of the Company and the Company Stockholders, any officer, director or employee
of the Company has been permanently or temporarily enjoined by any order,
judgment or decree of any court or Governmental Entity from engaging in or
continuing to conduct the business of the Company; and (c) no order, judgment or
decree of any court or Governmental Entity exists that enjoins or requires the
Company to take any action of any kind with respect to its business, assets or
properties. None of the actions, suits, proceedings or investigations set forth
in Section 2.17 of the Disclosure Schedule, individually or collectively, could
have a material adverse effect on the assets, business, financial condition,
results of operations or future prospects of the Company.
2.18 Product and Service Warranties. No product or service manufactured,
------------------------------
sold, leased or delivered by the Company is subject to any guaranty, warranty,
right of return or other indemnity other than (a) the Company's applicable
standard terms and conditions of sale or lease that are set forth in Section
2.18 of the Disclosure Schedule and (b) manufacturers' pass-through warranties.
Section 2.18 of the Disclosure Schedule sets forth the aggregate expenses
incurred by the Company in fulfilling its obligations under its guaranty,
warranty, right of return and indemnity
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provisions during each of the fiscal years and the interim period covered by the
Financial Statements. To the knowledge of the Company and the Company
Stockholders, such expenses should not significantly increase as a percentage of
sales in the future.
2.19 Employees and Subcontractors.
----------------------------
(a) Section 2.19(a) of the Disclosure Schedule contains a list of (i)
all employees of the Company (the "Employees"), along with the position, date of
hire, annual rate of compensation (or, with respect to Employees compensated on
an hourly or per diem basis, the hourly or per diem rate of compensation) and
estimated or target annual incentive compensation of each such Employee, (ii)
all employment contracts or agreements relating to employment which are not
terminable by the Company without penalty upon less than 30 days notice, and
(iii) all Employees who have executed confidentiality, non-competition or non-
solicitation agreements. None of the Employees are a party to any collective
bargaining agreement. The Company has not experienced any strikes, grievances,
claims of unfair labor practices or other collective bargaining disputes and no
organizational effort is presently being made or threatened by or on behalf of
any labor union with respect to the Employees.
(b) Section 2.19(b) of the Disclosure Schedule sets forth (i) a list
of all subcontractors currently performing services or under contract to perform
future services for the Company and (ii) the start date, type of services to be
provided, estimated completion date and hourly or per diem pay rate of such
subcontractors.
(c) To the knowledge of the Company and the Company Stockholders, no
key employee or group of employees employed by the Company has any plans to
terminate employment with the Company.
2.20 Employee Benefits.
-----------------
(a) Section 2.20(a) of the Disclosure Schedule contains a complete and
accurate list of all Employee Benefit Plans (as defined below in this Section
2.20(a)) maintained, or contributed to, by the Company, or any ERISA Affiliate
(as defined below in this Section 2.20(a)). For purposes of this Agreement,
"Employee Benefit Plan" means any "employee pension benefit plan" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), any "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA), and any other written or oral plan, agreement or arrangement involving
direct or indirect compensation, including without limitation insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock appreciation or
other forms of incentive compensation or post-retirement compensation. For
purposes of this Agreement, "ERISA Affiliate" means any member of (i) a
controlled group of corporations (as defined in Section 414(b) of
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the Code), (ii) a group of trades or businesses under common control (as defined
in Section 414(c) of the Code), or (iii) an affiliated service group (as defined
under Section 414(m) of the Code or the regulations under Section 414(o) of the
Code), any of which at any time after December 31, 1989 included the Company.
Complete and accurate copies of (i) all Employee Benefit Plans that have been
reduced to writing, (ii) written summaries of all unwritten Employee Benefit
Plans, (iii) all related trust agreements, insurance contracts and summary plan
descriptions, and (iv) all annual reports filed on IRS Form 5500, 5500C or 5500R
for the last five plan years for each Employee Benefit Plan, and (v) all
qualification letters issued by the Internal Revenue Service with respect to
every Employee Benefit Plan that is intended to qualify under Section 401(k) of
the Code, have been delivered to the Buyer. Each Employee Benefit Plan has been
administered in accordance with its terms, and each of the Company and the ERISA
Affiliates has met its obligations with respect to such Employee Benefit Plan
and has made all required contributions thereto. The Company and all Employee
Benefit Plans are in compliance in form and operation with the currently
applicable provisions of ERISA, the Code and other applicable federal and state
laws and the regulations thereunder. Each Employee Benefit Plan that is intended
to qualify under Section 401(k) of the Code is so qualified. Nothing has
occurred that might cause a loss of such qualification and no loss of
qualification has been threatened.
(b) There are no inquiries or investigations by any Governmental
Entity, termination proceedings or other claims (except claims for benefits
payable in the normal operation of the Employee Benefit Plans and proceedings
with respect to qualified domestic relations orders), suits or proceedings
against or involving any Employee Benefit Plan or asserting any rights or claims
to benefits under any Employee Benefit Plan.
(c) Neither the Company nor any ERISA Affiliate has ever maintained an
Employee Benefit Plan subject to Section 412 of the Code, Part 3 of Subtitle B
of Title I or ERISA, or Title IV of ERISA. Except as set forth in Section
2.20(c) of the Disclosure Schedule, at no time has the Company or any ERISA
Affiliate been obligated to contribute to any "multi-employer plan" (as defined
in Section 4001(a)(3) of ERISA). No act or omission has occurred and no
condition exists with respect to any Employee Benefit Plan maintained by the
Company, any of its Affiliates or any ERISA Affiliate that would subject the
Company or any ERISA Affiliate to any fine, penalty, tax or liability of any
kind imposed under ERISA or the Code. No prohibited transaction (as defined in
Section 406 of ERISA or Section 4975 of the Code) has occurred. No Employee
Benefit Plan, plan documentation or agreement, summary plan description or other
written communication distributed generally to employees by its terms prohibits
the Company from amending or terminating any such Employee Benefit Plan and any
Employee Benefit Plan may be terminated without liability to the Company or the
Buyer, except for benefits accrued through the date of termination. No former
employees participate in any welfare
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benefit plans listed in Section 2.20(a) of the Disclosure Schedule. No Employee
Benefit Plan includes in its assets any securities issued by the Company. No
Employee Benefit Plan has been subject to tax under Section 511 of the Code.
(d) Section 2.20(d) of the Disclosure Schedule discloses each: (i)
agreement with any director, executive officer or other key employee of the
Company (A) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving the Company
of the nature of any of the transactions contemplated by this Agreement, (B)
providing any term of employment or compensation guarantee or (C) providing
severance benefits or other benefits after the termination of employment of such
director, executive officer or key employee; (ii) agreement, plan or arrangement
under which any person may receive payments from the Company that may be subject
to the tax imposed by Section 4999 of the Code or included in the determination
of such person's "parachute payment" under Section 280G of the Code; and (iii)
agreement or plan binding the Company, including without limitation any stock
option plan, stock appreciation right plan, restricted stock plan, stock
purchase plan, severance benefit plan, or any Employee Benefit Plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
2.21 Environmental Matters.
---------------------
(a) The Company has complied in all material respects with all
applicable Environmental Laws (as defined below in this Section 2.21(a)). There
is no pending or, to the knowledge of the Company and the Company Stockholders,
threatened civil or criminal litigation, written notice of violation, formal
administrative proceeding, or investigation, inquiry or information request by
any Governmental Entity, relating to any Environmental Law involving the
Company. For purposes of this Agreement, "Environmental Law" means any federal,
state or local law, statute, rule or regulation or the common law relating to
the environment or occupational health and safety, including without limitation
any statute, regulation or order pertaining to (i) treatment, storage, disposal,
generation and transportation of industrial, toxic or hazardous substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous substances, or solid or hazardous
waste, including without limitation emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) the protection
of wild life, marine sanctuaries and wetlands, including without limitation all
endangered and threatened species; (vi) storage tanks, vessels and containers;
(vii) underground and other storage tanks or vessels, abandoned, disposed or
discarded barrels, containers and other closed receptacles; (viii) health
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and safety of employees and other persons; and (ix) manufacture, processing,
use, distribution, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or oil or petroleum products or solid or hazardous waste. As used in this
Section 2.21, the terms "release" and "environment" shall have the meaning set
forth in the federal Comprehensive Environmental Compensation, Liability and
Response Act of 1980 ("CERCLA").
(b) There have been no releases of any Materials of Environmental
Concern (as defined below in this Section 2.21(b)) into the environment at any
parcel of real property or any facility formerly or currently owned, operated or
controlled by the Company. With respect to any such releases of Materials of
Environmental Concern, the Company has given all required notices to
Governmental Entities (copies of which have been provided to the Buyer). The
Company is not aware of any releases of Materials of Environmental Concern at
parcels of real property or facilities other than those owned, operated or
controlled by the Company that could reasonably be expected to have an impact on
the real property or facilities owned, operated or controlled by the Company.
For purposes of this Agreement, "Materials of Environmental Concern" means any
chemicals, pollutants or contaminants, hazardous substances (as such term is
defined under CERCLA), solid wastes and hazardous wastes (as such terms are
defined under the federal Resources Conservation and Recovery Act), toxic
materials, oil or petroleum and petroleum products, or any other material
subject to regulation under any Environmental Law.
(c) Set forth in Section 2.21(c) of the Disclosure Schedule is a list
of all environmental reports, investigations and audits (whether conducted by or
on behalf of the Company or a third party, and whether done at the initiative of
the Company or directed by a Governmental Entity or other third party) issued or
conducted during the past five years relating to premises currently or
previously owned or operated by the Company. Complete and accurate copies of
any such report, or the results of any such investigation or audit, have been
provided to the Buyer.
(d) The Company is not aware of any material environmental liability
of the solid and hazardous waste transporters and treatment, storage and
disposal facilities that have been utilized by the Company.
2.22 Legal Compliance. The Company and the conduct and operations of its
----------------
business are and have been in compliance with each law (including rules and
regulations thereunder) of any federal, state, local or foreign government, or
any Governmental Entity that (a) affects or relates to this Agreement or the
transactions contemplated hereby or (b) is applicable to the Company or its
business.
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<PAGE>
2.23 Permits. Section 2.23 of the Disclosure Schedule sets forth a list of
-------
all permits, licenses, registrations, certificates, orders or approvals from any
Governmental Entity (including without limitation those issued or required under
Environmental Laws and those relating to the occupancy or use of owned or leased
real property) ("Permits") issued to or held by the Company. Such listed
Permits are the only Permits that are required for the Company to conduct its
business as presently conducted or as proposed to be conducted. Each such
Permit is in full force and effect and, to the knowledge of the Company and the
Company Stockholders, no suspension or cancellation of such Permit is threatened
and there is no basis for believing that such Permit will not be renewable upon
expiration. Except as set forth in Section 2.23 of the Disclosure Schedule,
each such Permit will continue in full force and effect following the Closing.
2.24 Certain Business Relationships With Affiliates. No Company
----------------------------------------------
Stockholder or any Affiliate of any Company Stockholder (a) owns any property or
right, tangible or intangible, which is used in the business of the Company, (b)
has any claim or cause of action against the Company, (c) is a party to any
contract or other arrangement, written or verbal, with the Company, or (d) owes
any money to the Company or is owed any money by the Company (the agreements,
arrangements and relationships described in this sentence are hereinafter
referred to as "Related Party Transactions"). Section 2.24 of the Disclosure
Schedule summarizes any Related Party Transactions.
2.25 Books and Records. The minute books and other similar records of the
-----------------
Company contain true and complete records of all actions taken at any meetings
of the Company's stockholders, Board of Directors or any committee thereof and
of all written consents executed in lieu of the holding of any such meeting.
The books and records of the Company accurately reflect the assets, liabilities,
business, financial condition and results of operations of the Company and have
been maintained in accordance with good business and bookkeeping practices.
2.26 Customers and Suppliers. No unfilled customer order or commitment
-----------------------
obligating the Company to process, manufacture, license or deliver products or
perform services will, upon completion of the entire order or commitment, result
in a loss to the Company. No material supplier of the Company has indicated
within the past year that it will stop, or decrease the rate of, supplying
materials, products or services to them and no material customer of the Company
has indicated within the past year that it will stop, or decrease the rate of,
buying materials, products or services from them. Section 2.26 of the
Disclosure Schedule identifies (a) all customers of the Company during the last
two full fiscal years, the amount of revenues accounted for by such customer
during each such period, and the responsible account principal in charge of the
customer engagement and (b) each supplier that is the sole supplier of any
significant product, component or service used by the Company. Except as set
forth in Section 2.26 of the Disclosure Schedule,
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<PAGE>
the Company has good customer relations and none of the customers of the Company
has notified the Company that it intends to discontinue its relationship with
the Company.
2.27 Prepayments, Prebilled Invoices and Deposits.
--------------------------------------------
(a) Section 2.27(a) of the Disclosure Schedule sets forth (i) all
prepayments, prebilled invoices and deposits that have been received by the
Company as of the Agreement Date from customers for products to be shipped, or
services to be performed, after the Closing Date, and (ii) with respect to each
such prepayment, prebilled invoice or deposit, (A) the party and contract
credited, (B) the date received or invoiced, (C) the products and/or services to
be delivered, and (D) the conditions for the return of such prepayment,
prebilled invoice or deposit. All such prepayments, prebilled invoices and
deposits are properly accrued for on the Most Recent Balance Sheet in accordance
with GAAP applied on a consistent basis with the past practice of the Company.
(b) Section 2.27(b) of the Disclosure Schedule sets forth (i) all
prepayments, prebilled invoices and deposits that have been made or paid by the
Company as of the Agreement Date for products to be purchased, services to be
performed or other benefits to be received after the Closing Date, and (ii) with
respect to each such prepayment, prebilled invoice or deposit, (A) the party to
whom such prepayment, prebilled invoice or deposit was made or paid, (B) the
date made or paid, (C) the products and/or services to be delivered, and (D) the
conditions for the return of such prepayment, prebilled invoice or deposit. All
such prepayments, prebilled invoices and deposits are properly accrued for on
the Most Recent Balance Sheet in accordance with GAAP applied on a consistent
basis with the past practices of the Company.
2.28 Banking Facilities. Section 2.28 of the Disclosure Schedule
------------------
identifies:
(a) Each bank, savings and loan or similar financial institution in
which the Company has an account or safety deposit box and the numbers of the
accounts or safety deposit boxes maintained by the Company thereat; and
(b) The names of all persons authorized to draw on each such account
or to have access to any such safety deposit box facility, together with a
description of the authority (and conditions thereof, if any) or each such
person with respect thereto.
2.29 Brokers' Fees. Neither the Company nor any of the Company
-------------
Stockholders has any liability or obligation to pay any fees or commissions to
any broker, finder or agent with respect to the transactions contemplated by
this Agreement.
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<PAGE>
2.30 Disclosure. No representation or warranty by the Company or any of
----------
the Company Stockholders contained in this Agreement, and no statement contained
in the Disclosure Schedule or any other document, certificate or other
instrument delivered to or to be delivered by or on behalf of the Company or the
Company Stockholders pursuant to this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading. The
Company and the Company Stockholders have disclosed to the Buyer all material
information relating to the business of the Company or the transactions
contemplated by this Agreement.
ARTICLE III
FURTHER REPRESENTATIONS AND WARRANTIES
OF THE COMPANY STOCKHOLDERS
Each Company Stockholder severally represents and warrants to the Buyer as
follows:
3.1 Ownership of Stock; Authority.
-----------------------------
(a) He or she has good and marketable title, free and clear of any and
all Security Interests, to all of the Company Shares listed on Schedule I as
-------- -
being owned by him or her. He or she has the full right, power and authority to
transfer, convey and sell to the Buyer at the Closing the Company Shares to be
sold by him or her and, upon consummation of the purchase contemplated hereby,
the Buyer will acquire from him or her good and marketable title to such Company
Shares, free and clear of all covenants, conditions, restrictions, voting trust
arrangements, liens, charges, encumbrances, options and adverse claims or rights
whatsoever.
(b) He or she has all requisite power and authority to execute and
deliver the Fundamental Agreements and to perform his or her obligations under
the Fundamental Agreements. The Fundamental Agreements have each been (or in
the case of the Escrow Agreement, shall be when delivered) duly and validly
executed and delivered by him or her, and each constitutes (or, in the case of
the Escrow Agreement, shall constitute) a valid and binding obligation of him or
her, enforceable against him or her in accordance with its terms.
(c) Neither the execution and delivery of any or all of the
Fundamental Agreements by him or her, nor the consummation by him or her of the
transactions contemplated thereby, will (i) conflict with, result in a breach
of, constitute (with or without due notice or lapse of time or both) a default
under, or require any notice, consent or waiver under, any instrument, contract,
agreement or
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<PAGE>
arrangement to which he or she is a party or by which he or she is bound, (ii)
result in the imposition of any Security Interest upon the Company Shares owned
by him or her, or (iii) violate any order, writ, injunction or decree applicable
to him or her or to the Company Shares.
3.2 Investment Representations. To the extent the Contingent
--------------------------
Consideration is paid, in part, in shares of Buyer Common Stock (the "Buyer
Shares"):
(a) He or she will be acquiring the Buyer Shares to be issued to him
or her for his or her own account for investment only, and not with a view to,
or for sale in connection with, any distribution of such Buyer Shares in
violation of the Securities Act or any rule or regulation under the Securities
Act.
(b) He or she has had adequate opportunity to obtain from
representatives of the Buyer such information, in addition to the
representations set forth in the Agreement, as is necessary to evaluate the
merits and risks of his or her investment in the Buyer.
(c) He or she has sufficient experience in business, financial and
investment matters to be able to evaluate the risks involved in the acquisition
of the Buyer Shares which may be issued to him or her and to make an informed
investment decision with respect to such investment.
(d) He or she understands that the Buyer Shares, if and when issued,
will not have been registered under the Securities Act and will be "restricted
securities" within the meaning of Rule 144 under the Securities Act; and the
Buyer Shares will not be eligible to be sold, transferred or otherwise disposed
of unless they are subsequently registered under the Securities Act or an
exemption from registration is then available.
(e) A legend substantially in the following form will be placed on the
certificate representing any Buyer Shares which may be issued to him or her:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended,
and may not be sold, transferred or otherwise disposed of
in the absence of an effective registration statement
under such Act or an opinion of counsel satisfactory to
the corporation to the effect that such registration is
not required."
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<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to each Company Stockholder as follows:
4.1 Organization. The Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware.
4.2 Authorization of Transaction. The Buyer has all requisite power and
----------------------------
authority to execute and deliver the Fundamental Agreements and to perform its
obligations under the Fundamental Agreements. The execution and delivery of the
Fundamental Agreements by the Buyer and the performance of the Fundamental
Agreements and the consummation of the transactions contemplated thereby by the
Buyer have been (or, in the case of the Escrow Agreement, shall be when
delivered) duly and validly authorized by all necessary corporate action on the
part of the Buyer. The Fundamental Agreements have been (or, in the case of the
Escrow Agreement, shall be when delivered) duly and validly executed and
delivered by the Buyer and constitute valid and binding obligations of the
Buyer, enforceable against it in accordance with their terms.
4.3 Noncontravention. Subject to compliance with the applicable
----------------
requirements of the Securities Act and any applicable state securities laws, the
execution and delivery of the Fundamental Agreements by the Buyer and the
consummation by the Buyer of the transactions contemplated thereby will not (a)
conflict with or violate any provision of the charter or By-laws of the Buyer,
(b) require on the part of the Buyer any filing with, or permit, authorization,
consent or approval of, any Governmental Entity, (c) conflict with, result in
breach of, constitute (with or without due notice or lapse of time or both) a
default under, result in the acceleration of, create in any party any right to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest or other arrangement to which the Buyer is a
party or by which the Buyer is bound or to which any of its assets are subject,
or (d) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Buyer or any of its properties or assets.
4.4 Reports and Financial Statements. The Buyer has previously furnished
--------------------------------
to each of the Company Stockholders complete and accurate copies, as amended or
supplemented, of the Buyer's (a) Registration Statement on Form S-3 (File No.
333-14923) and (b) all reports filed by the Buyer with the United States
Securities and Exchange Commission (the "SEC") under Section 13 or 15 of the
Securities Exchange Act of 1934 (as amended, the "Exchange Act") since December
31, 1995 (such materials, together with any amendments or supplements thereto,
are collectively
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<PAGE>
referred to herein as the "Buyer Reports"). As of their respective dates, the
Buyer Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited financial statements and unaudited interim financial
statements of the Buyer included in the Buyer Reports (i) comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated therein or in the notes thereto, and
in the case of quarterly financial statements, as permitted by Form 10-Q under
the Exchange Act), (iii) fairly present the consolidated financial condition,
results of operations and cash flows of the Buyer as of the respective dates
thereof and for the periods referred to therein, and (iv) are consistent with
the books and records of the Buyer.
4.5 Investment Representation. The Buyer is acquiring the Company Shares
-------------------------
from each Company Stockholder for its own account for investment and not with a
view to, or for sale in connection with, any distribution thereof, nor with any
present intention of distributing or selling the same; and, except as
contemplated by this Agreement and the agreements contemplated herein, the Buyer
has no present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment providing for the disposition thereof.
4.6 Brokers' Fees. Except as to fees or commissions payable by the Buyer
-------------
to Cowen & Company, the Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
4.7 Disclosure. No representation or warranty by the Buyer contained in
----------
this Agreement, and no statement contained in the any document, certificate or
other instrument delivered to or to be delivered by or on behalf of the Buyer
pursuant to this Agreement, contains or will contain any untrue statement of a
material fact or omit or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements herein or therein not misleading.
ARTICLE V
COVENANTS
From and after the Agreement Date and until (i) the Closing Date (as to
Sections 5.1 through 5.11 inclusive), (ii) the date specified in the respective
Section (as to Sections 5.12, 5.13, 5.14, 5.15, 5.17, 5.18 and 5.19); or (iii)
the sixth anniversary of the Closing Date (as to Section 5.16):
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5.1 Conduct of Business . The Company shall carry on its business
--------------------
diligently and substantially in the same manner as before the Agreement Date and
shall not make or institute any unusual or new methods of manufacture, purchase,
sale, shipment or delivery, lease, management, accounting or operation, except
as agreed to in writing by the Buyer. All of the property of the Company shall
be used, operated, repaired and maintained in a normal business manner
consistent with past practice.
5.2 Absence of Material Changes . Without the prior written consent of
----------------------------
the Buyer, the Company shall not:
(a) take any action to amend its charter documents or bylaws;
(b) issue any stock, bonds or other corporate securities or grant any
option or issue any warrant to purchase or subscribe for any of such securities
or issue any securities convertible into such securities;
(c) incur any obligation or liability (absolute or contingent), except
current liabilities incurred and obligations under contracts entered into in the
Ordinary Course of Business of the Company;
(d) declare or make any payment or distribution to its stockholders
with respect to its stock or purchase or redeem any shares of its capital stock;
(e) mortgage, pledge, or subject to any lien, charge or any other
encumbrance any of its assets or properties;
(f) sell, assign, or transfer any of its assets, except in the
Ordinary Course of Business of the Company;
(g) cancel any debts or claims, except in the Ordinary Course of
Business of the Company;
(h) merge or consolidate with or into any Business Entity;
(i) make, accrue or become liable for any bonus, profit sharing or
incentive payment, except for accruals under existing plans, if any, or increase
the rate of compensation payable or to become payable by it to any of its
officers, directors or employees;
(j) make any election or give any consent under the Code or the tax
statutes of any state or other jurisdiction or make any termination, revocation
or cancellation of any such election or any consent or compromise or settle any
claim for past or present tax due;
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<PAGE>
(k) waive any rights of material value;
(l) modify, amend, alter or terminate any of its executory contracts
of a material value or which are material in amount;
(m) take or permit any act or omission constituting a breach or
default under any contract, indenture or agreement by which it or its properties
are bound;
(n) fail to (i) preserve the possession and control of its assets and
business, (ii) keep in faithful service its present officers and key employees,
and (iii) preserve the goodwill of its consumers, suppliers, agents, brokers and
others having business relations with it;
(o) fail to operate its business and maintain its books, accounts and
records in the customary manner and in the Ordinary Course of Business of the
Company and maintain in good repair its business premises, fixtures, machinery,
furniture and equipment;
(p) enter into any lease, contract, agreement or understanding, other
than in the Ordinary Course of Business of the Company;
(q) incur any capital expenditure in excess of $10,000 in an instance
or $50,000 in the aggregate;
(r) engage any new employee for a salary in excess of $100,000 per
annum;
(s) materially alter the terms, status or funding condition of any
Employee Benefit Plan; or
(t) commit or agree to do any of the foregoing in the future.
5.3 Delivery of Interim Financial Statements . Prior to the Closing Date,
-----------------------------------------
the Company shall deliver to the Buyer an unaudited balance sheet of the Company
and related statements of income, shareholders' equity, retained earnings and
cash flows for the month ended January 31, 1997 and as of February 13, 1997, and
as promptly as possible following the last day of each month after the Agreement
Date until the Closing Date, and in any event within 20 days after the end of
each such month, the Company Stockholders shall deliver to the Buyer the balance
sheet of the Company and the related statements of income, shareholders' equity,
retained earnings and cash flows for the one-month period then ended, all
certified by the chief financial officer of the Company to the effect that such
interim financial statements are prepared in accordance with GAAP and fairly
present the financial condition of the
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<PAGE>
Company as of the date thereof and for the period covered thereby (collectively,
the "Interim Financial Statements").
5.4 Communications with Customers and Suppliers .
--------------------------------------------
(a) Unless instructed otherwise by the Buyer in writing, the Company
will continue to accept customer orders in the Ordinary Course of Business of
the Company for all products and services offered by the Company, whether
expected to be shipped before or after the Closing Date.
(b) The Parties will cooperate in communications with the Company's
suppliers and customers in connection with the transfer of the Company Shares to
the Buyer on the Closing Date.
5.5 Compliance with Laws . The Company will comply with all laws and
---------------------
regulations that are applicable to it or to the conduct of its business and will
perform and comply with all contracts, commitments and obligations by which it
is bound.
5.6 Continued Truth of Representations and Warranties . Neither the
--------------------------------------------------
Company Stockholders nor the Company will take any actions that would result in
any of the representations or warranties set forth in Articles II and III above
being untrue.
5.7 Continuing Obligation to Inform . From time to time prior to the
--------------------------------
Closing, the Company Stockholders will deliver or cause to be delivered to the
Buyer supplemental information concerning events subsequent to the Agreement
Date that would render any statement, representation or warranty in this
Agreement or any information contained in any Schedule attached hereto
inaccurate or incomplete at any time after the Agreement Date until the Closing
Date; provided, that such supplemental information shall not constitute an
amendment of any statement, representation or warranty in this Agreement or any
Schedule, Exhibit or document furnished pursuant hereto.
5.8 Exclusive Dealing. Neither the Company Stockholders nor the Company
-----------------
will, directly or indirectly, through any officer, director, agent or otherwise,
(a) solicit, initiate or encourage submission of proposals or offers from any
person or Business Entity relating to an acquisition or purchase of all or any
material portion of the assets of or an equity interest in the Company or any
merger, consolidation or business combination with the Company, or (b)
participate in any discussions or negotiations regarding, or furnish to any
other person or Business Entity, any non-public information with respect to or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person to do or seek any of the
foregoing. The Company Stockholders and the Company shall
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promptly notify the Buyer of any such proposal or offer, or any inquiry or
contact with respect thereto received by the Company or any of the Company
Stockholders.
5.9 Reports, Taxes. The Company will duly and timely file all reports or
--------------
returns required to be filed with federal, state, local and foreign authorities
and will promptly pay all federal, state, local and foreign Taxes, assessments
and governmental charges levied or assessed upon them or any of their properties
(unless contesting such in good faith and adequate provision has been made
therefor).
5.10 Best Efforts to Obtain Satisfaction of Conditions. The Parties shall
-------------------------------------------------
use their best efforts, to the extent commercially reasonable, to obtain the
satisfaction of the conditions specified in this Agreement.
5.11 Full Access. The Company shall permit representatives of the Buyer to
-----------
have full access (at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Company) to all premises,
properties, financial and accounting records, contracts, other records and
documents, and personnel, of or pertaining to the Company. The officers and
management of the Company shall cooperate fully with the Buyer's representatives
and agents and shall make themselves available to the extent necessary to
complete the due diligence process and the Closing. The Company shall, at the
request of the Buyer, introduce the Buyer to the Company's principal suppliers,
customers and employees to facilitate discussions between such persons and the
Buyer in regard to the conduct of the business of the Company following the
Closing.
5.12 Non-Competition.
---------------
(a) For a period of three years after the Closing Date, no Company
Stockholder or any Affiliate of any Company Stockholder shall, except as an
officer or employee of the Company or the Buyer (i) develop, manufacture,
perform, market, sell or deliver any product or service that competes with any
existing or proposed product manufactured or service provided by the Company on
or prior to the Closing Date, or (ii) engage in any business competitive with
the business of the Company as conducted on the Agreement Date or on the Closing
Date, in the United States or any other country in which the Company conducted
its business during the three years prior to the Closing Date; provided,
however, that nothing in this Section 5.12(a) shall prohibit any spouse or other
immediate family member of a Company Stockholder from being employed by, or
acting as a consultant to, a business competitive with the business of the
Company.
(b) The Parties agree that the duration and geographic scope of the
non-competition provision set forth in this Section 5.12 are reasonable. In the
event that any court of competent jurisdiction determines that the duration or
the geographic scope, or both, are unreasonable and that such provision is to
that extent
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unenforceable, the Parties agree that the provision shall remain in full force
and effect for the greatest time period and in the greatest area that would not
render it unenforceable. The Parties intend that this non-competition provision
shall be deemed to be a series of separate covenants, one for each and every
county of each and every state of the United States of America and each and
every political subdivision of each and every country outside the United States
of America where this provision is intended to be effective.
(c) The Company Stockholders agree that damages are an inadequate
remedy for any breach of this Section 5.12 or Section 5.13 below and that the
Buyer shall, whether or not it is pursuing any potential remedies at law, be
entitled to equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or threatened breach
of this Section 5.12 or Section 5.13 below. The agreements of the Company
Stockholders set forth in this Section 5.12 and Section 5.13 below are in
addition to, and in no way in limitation of, their respective agreements set
forth in Section 6.1 of the Employment Agreements entered into between each of
them and the Company on the Agreement Date (in the forms set forth in Exhibits
--------
B.1, B.2 and B.3, respectively, to this Agreement).
- --- --- ---
5.13 Solicitation and Hiring. For a period of three years after the
-----------------------
Closing Date, no Company Stockholder shall, and each of them shall cause his
respective Affiliates not to, either directly or indirectly as a stockholder,
investor, partner, director, officer, employee or otherwise, (a) solicit or
attempt to induce any person employed by the Company on the Agreement Date or
any time thereafter to terminate his or her employment with the Company or the
Buyer or any Affiliate of the Buyer or (b) hire or attempt to hire any person
employed by the Company on the Agreement Date or any time thereafter.
5.14 Stock Options. The Buyer shall grant to certain employees of the
-------------
Company options to purchase an aggregate of 200,000 shares of Buyer Common Stock
(the "Stock Options") at such times, in such amounts and with such vesting as is
customary for similarly situated employees of the Buyer. Such Stock Options
shall have an exercise price equal to the closing price of the Buyer Common
Stock on the Nasdaq National Market on the date of grant.
5.15 Accounts Receivable. The Buyer shall use commercially reasonable
-------------------
efforts to cause the Company, from and after the Closing, to collect the
Accounts Receivable. Any amounts received by the Buyer as a result of the
collection of any Account Receivable shall be (in order of priority) (i) first,
retained by the Buyer to repay the Buyer Loan, (ii) second, retained by the
Buyer and applied against total liabilities of the Company existing as of the
Closing Date (other than liabilities evidencing Taxes payable as a result of the
change in the method of accounting by the Company resulting from the
transactions contemplated by this Agreement ("Deferred Taxes Payable")), and 50%
of the Deferred Taxes Payable (in each case, to
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the extent such amounts have not been previously recovered by the Buyer pursuant
to Section 1.8(f) of this Agreement), and (iii) third, the balance, if any, paid
to the Stockholders' Representative, for the benefit of the Company
Stockholders. With respect to any Account Receivable, the proceeds of which
would be paid to the Stockholders' Representative pursuant to clause (iii) in
the preceding sentence, the Buyer shall not agree to receive any amount in
satisfaction of an Account Receivable if such amount is less than the full
amount of the Account Receivable without the consent of the Stockholders'
Representative, which consent shall not be unreasonably withheld.
5.16 Tax Refund. The Buyer shall use commercially reasonable efforts, at
----------
the Company Stockholders' direction and expense, to pursue from the Canadian
taxing authorities a refund to the Buyer for withholding Taxes paid in the
period prior to the Closing Date (a "Tax Refund"). In the event that the Buyer
receives a Tax Refund, the Buyer shall deliver such refund to the Stockholders'
Representative, for the benefit of the Company Stockholders. The Buyer shall
retain from the Tax Refund any amounts necessary to pay (a) all expenses
incurred by the Buyer in connection with the Tax Refund, and (b) any income or
other Taxes due as a result of the Tax Refund.
5.17 Information. From and after the Closing and continuing until the
-----------
third anniversary thereof, the Buyer shall send to the Company Stockholders
copies of such information as is generally provided to stockholders of the
Buyer, including without limitation annual reports and proxy statements, as and
when such information is provided by the Buyer to its stockholders.
5.18 Employee Non-Solicitation and Confidentiality and Retention
-----------------------------------------------------------
Agreements. The Company and the Company Stockholder shall use their best
efforts to obtain as soon as practicable from each of the Company's employees
identified on Schedule 5.18 attached hereto, an executed Non-Solicitation and
Confidentiality Agreement in the form attached hereto as Exhibit E (the "Non-
----------
Solicitation and Confidentiality Agreement") and a Retention Agreement in the
form attached hereto as Exhibit H (the "Retention Agreement"). As consideration
---------
for the Non-Solicitation and Confidentiality Agreement and the Retention
Agreement, the Buyer shall pay retention payments to such employees in the
amounts and on the terms set forth in the Retention Agreement; provided,
however, that no such employee shall be entitled to any such payment unless and
until he or she has executed and delivered to the Buyer a Non-Solicitation and
Confidentiality Agreement and a Retention Agreement.
5.19 Employee Agreements. The Company Stockholders shall use their best
-------------------
efforts to cause each of the Company's employees to execute a Non-Solicitation
and Confidentiality Agreement within 10 days of the date of this Agreement.
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ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of the Buyer. The obligation of the Buyer
--------------------------------------
to consummate the transactions to be performed by the Buyer in connection with
the Closing is subject to the satisfaction, or waiver by the Buyer, of the
following conditions:
(a) the Company Stockholders shall have obtained all of the waivers,
permits, consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, necessary to consummate the transactions
contemplated hereby;
(b) the representations and warranties of the Company Stockholders set
forth in Articles II and III above shall have been true and correct in all
material respects when made on the Agreement Date and shall be true and correct
in all material respects as of the Closing Date as if made as of the Closing
Date, except for representations and warranties made as of a specific date,
which shall be true and correct in all material respects as of such date;
(c) each of the Company and the Company Stockholders shall have
performed or complied with their agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the Closing;
(d) no action, suit or proceeding shall be pending or threatened by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or (iii)
affect adversely the right of the Company to own, operate or control any of its
assets or operations, and no such judgment, order, decree, stipulation or
injunction shall be in effect;
(e) the Company Stockholders shall have delivered to the Buyer a
certificate (except for clause (d) above, without qualification as to knowledge
or materiality or otherwise) to the effect that each of the conditions specified
in clauses (a) through (d) of this Section 6.1 is satisfied in all respects;
(f) on the Agreement Date, each of the Company Stockholders shall have
executed and delivered to the Buyer an employment agreement in the form attached
hereto as Exhibit B.1, B.2 or B.3 (as applicable) and such employment agreements
------- --- --- ---
shall be in full force and effect on the Closing Date in accordance with their
respective terms;
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(g) the Buyer shall have received from Bingham, Dana & Gould LLP an
opinion in the form attached hereto as Exhibit C, addressed to the Buyer and
------- -
dated as of the Closing Date;
(h) on the Agreement Date, each of the Company Stockholders shall have
executed and delivered to the Buyer a Registration Rights Agreement in the form
attached hereto as Exhibit D and such Agreement shall be in full force and
------- -
effect on the Closing Date in accordance with its terms;
(i) the Company Stockholders shall have executed and delivered to the
Buyer an Escrow Agreement in the form attached hereto as Exhibit A and such
---------
Agreement shall be in full force and effect on the Closing Date in accordance
with its terms;
(j) the Buyer shall have received the resignations, effective as of
the Closing Date, of each director of the Company;
(k) the Company Stockholders shall have delivered to the Buyer a
certificate of the Secretary of State of the Commonwealth of Massachusetts as of
the Closing Date as to the legal existence and good standing of the Company in
Massachusetts as of the Closing Date;
(l) the Company Stockholders shall have delivered to the Buyer a
certificate of the treasurer of the Company certifying as to the payment of
taxes in Massachusetts;
(m) the Company Stockholders shall have delivered to the Buyer
certificates of the Secretary of the Company attesting to the incumbency of the
Company's officers, the authenticity of the resolutions authorizing the
transactions contemplated by this Agreement, and the authenticity and continuing
validity of the charter documents of the Company;
(n) the Company Stockholders shall have delivered to the Buyer
certificates of appropriate governmental officials in each state or country in
which the Company is required to qualify to do business as a foreign corporation
as to the qualification and corporate and tax good standing of the Company in
each such jurisdiction;
(o) the Buyer shall have received an estoppel certificate from each
lessor from whom the Company leases real property, in each case consenting to
the transactions contemplated under this Agreement and representing that there
are no outstanding claims against the Company under such lease except for claims
for rent not yet due and payable; and
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<PAGE>
(p) all actions to be taken by the Company and the Company
Stockholders in connection with the consummation of the transactions
contemplated hereby and all certificates, opinions, instruments and other
documents required to effect the transactions contemplated hereby shall be
reasonably satisfactory in form and substance to the Buyer.
6.2 Conditions to Obligations of the Company Stockholders. The
-----------------------------------------------------
obligations of the Company Stockholders to consummate the transactions to be
performed by them in connection with the Closing are subject to the
satisfaction, or waiver by the Stockholders' Representative, of the following
conditions:
(a) the representations and warranties of the Buyer as set forth in
Article IV above shall have been true and correct in all material respects when
made on the Agreement Date and shall be true and correct in all material
respects as of the Closing Date as if made as of the Closing Date, except for
representations and warranties made as of a specific date, which shall be true
and correct in all material respects as of such date;
(b) the Buyer shall have performed or complied with its agreements and
covenants required to be performed or complied with under this Agreement as of
or prior to the Closing;
(c) the Company Stockholders shall have received from Hale and Dorr
LLP an opinion in the form attached hereto as Exhibit F, addressed to the
------- -
Company Stockholders and dated as of the Closing Date;
(d) on the Agreement Date, the Buyer shall have executed and delivered
to each of the Company Stockholders an employment agreement in the form attached
hereto as Exhibit B.1, B.2 or B.3 (as applicable) and such employment agreements
------- --- --- ---
shall be in full force and effect on the Closing Date in accordance with their
respective terms;
(e) on the Agreement Date, the Buyer shall have executed and delivered
to each of the Company Stockholders a Registration Rights Agreement in the form
attached hereto as Exhibit D and such Agreement shall be in full force and
------- -
effect on the Closing Date in accordance with its terms;
(f) the Buyer shall have executed and delivered to each of the Company
Stockholders an Escrow Agreement in the form attached hereto as Exhibit A and
---------
such Agreement shall be in full force and effect on the Closing Date in
accordance with its terms;
(g) the Buyer shall have executed a Waiver and Termination Agreement
in the form attached hereto as Exhibit G, waiving the payment due to
------- -
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<PAGE>
COBA-M.I.D., Inc. upon the consummation of the transactions contemplated hereby
pursuant to the Sale and Purchase Agreement dated August 6, 1993 by and between
COBA-M.I.D., Inc. and the Company (the "Sale and Purchase Agreement"), and
terminating the provision for such payment; and
(h) all actions to be taken by the Buyer in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
the Stockholders' Representative.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification.
---------------
(a) Indemnification by the Company Stockholders. The Company
-------------------------------------------
Stockholders, jointly and severally, shall indemnify the Buyer and the Company
in respect of, and hold such Parties harmless against, any and all claims,
debts, obligations and other liabilities (whether absolute, accrued, contingent,
fixed or otherwise, known or unknown, due or to become due or otherwise),
monetary damages, fines, fees, penalties, interest obligations, deficiencies,
losses and expenses (including without limitation amounts paid in settlement,
interest, court costs, costs of investigators, fees and expenses of attorneys,
accountants, financial advisors and other experts, and other expenses of
litigation) incurred or suffered by such Parties or any Affiliate thereof
("Damages"):
(i) resulting from, relating to or constituting any misrepresentation,
breach of warranty or failure to perform any covenant or agreement of the
Company or the Company Stockholders contained in this Agreement or in the
Certificate delivered pursuant to Section 6.1(i);
(ii) resulting from or relating to any failure of any Company
Stockholder to have good, valid and marketable title to the issued and
outstanding Company Shares held by such Company Stockholder, free and clear of
all liens, claims, pledges, options, adverse claims or charges of any nature
whatsoever;
(iii) resulting from or relating to Taxes attributable to any and all
periods of time, or portions thereof, ending on or before the Closing Date,
allocated in accordance with Section 7.4 below;
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(iv) resulting from or relating to any claim by a stockholder or
former stockholder of the Company, or any other person or Business Entity,
seeking to assert, or based upon: (A) ownership or rights to ownership of any
shares of stock of the Company; (B) any rights of a stockholder (other than the
right to receive the Buyer Shares pursuant to this Agreement), including any
option, preemptive rights or rights to notice or to vote; or (C) any rights
under the Articles of Organization or By-laws of the Company; or
(v) resulting from or relating to any goods sold or services rendered
by the Company through the Closing Date, including without limitation, customer
claims and customer warranty claims in respect of such pre-Closing goods and
services ("Customer Claims"), regardless of when asserted.
(b) Indemnification by the Buyer. The Buyer shall indemnify the
----------------------------
Company Stockholders in respect of, and hold the Company Stockholders harmless
against, any and all Damages incurred or suffered by the Company Stockholders
resulting from, relating to or constituting any misrepresentation, breach of
warranty or failure to perform any covenant or agreement of the Buyer contained
in this Agreement.
(c) Notwithstanding the provisions of Section 7.1(a), the
indemnification obligations of each Company Stockholder shall be several and not
joint with respect to any claims for indemnification arising under Section
3.1(a) or 7.1(a)(ii), or out of any breach of any representation or warranty
contained in Section 3.1(a), except for any such claims arising under Section
3.1(a) or 7.1(a)(ii) as a result of any adverse claim by one of the Company
Stockholders.
7.2 Method of Asserting Claims.
--------------------------
(a) All claims for indemnification by an Indemnified Person pursuant
to this Article VII shall be made in accordance with the provisions of this
Section 7.2 and the Escrow Agreement.
(b) A party entitled to indemnification under this Article VII (the
"Indemnified Person") shall give prompt written notification to the Party
obligated to provide such indemnification (the "Indemnifying Person") of the
commencement of any action, suit or proceeding relating to a third party claim
for which indemnification pursuant to this Article VII may be sought; provided,
however, that no delay on the part of the Indemnified Person in notifying the
Indemnifying Person shall relieve the Indemnifying Person from any liability or
obligation under this Article VII except to the extent of any damage or
liability caused by or arising out of such delay. Within 20 days after delivery
of such notification, the Indemnifying Person may, upon written notice thereof
to the Indemnified Person, assume control of
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the defense of such action, suit or proceeding with counsel reasonably
satisfactory to the Indemnified Person, provided (i) the Indemnifying Person
acknowledges in writing to the Indemnified Person that the Indemnifying Person
shall indemnify the Indemnified Person with respect to all elements of such
action, suit or proceeding and any damages, fines, costs or other liabilities
that may be assessed against the Indemnified Person in connection with such
action, suit or proceeding, (ii) the third party seeks monetary damages only,
and (iii) an adverse resolution of the third party's claim would not have a
material adverse effect on the goodwill or the reputation of the Indemnified
Person or the business, operations or future conduct of the Indemnified Person.
If the Indemnifying Person does not so assume control of such defense, the
Indemnified Person shall control such defense. The party not controlling such
defense may participate therein at its own expense; provided, that if the
Indemnifying Person assumes control of such defense and the Indemnified Person
reasonably concludes that the Indemnifying Person and the Indemnified Person
have conflic ting interests or different defenses available with respect to such
action, suit or proceeding, the reasonable fees and expenses of counsel to the
Indemnified Person shall be considered "Damages" for purposes of this Agreement.
The party controlling such defense shall keep the other party advised of the
status of such action, suit or proceeding and the defense thereof and shall
consider in good faith recommendations made by the other party with respect
thereto. Except as provided in Section 7.2(c) below, an Indemnified Person shall
not agree to any settlement of such action, suit or proceeding without the prior
written consent of the Indemnifying Person, which shall not be unreasonably
withheld or delayed. The Indemnifying Person shall not agree to any settlement
or the entry of a judgment in any action, suit or proceeding without the prior
written consent of the Indemnified Person, which shall not be unreasonably
withheld (it being understood that it is reasonable to withhold such consent if,
among other things, the settlement or the entry of a judgment (A) lacks a
complete release of the Indemnified Person for all liability with respect
thereto or (B) imposes any liability or obligation on the Indemnified Person).
(c) If a third party asserts that an Indemnified Person is liable to
such third party for a monetary or other obligation that may constitute or
result in Damages for which such Indemnified Person may be entitled to
indemnification pursuant to this Article VII, and such Indemnified Person
reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) such Indemnified Person shall be entitled to satisfy such
obligation, without prior notice to or consent from the Indemnifying Person,
(ii) such Indemnified Person may make a claim for indemnification pursuant to
this Article VII, and (iii) such Indemnified Person shall be reimbursed for any
such Damages for which it is entitled to indemnification pursuant to this
Article VII.
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<PAGE>
7.3 Survival and Limitation.
-----------------------
(a) Unless otherwise specified in this Section 7.3 or elsewhere in
this Agreement, all provisions of this Agreement shall survive the Closing and
the consummation of the transactions contemplated hereby and shall continue
forever in full force and effect in accordance with their terms.
(b) The representations and warranties of the Company Stockholders set
forth in Articles II and III above and the indemnification obligations set forth
in this Article VII:
(i) shall survive the Closing and the consummation of the transactions
contemplated hereby and continue until (and terminate upon) the first
anniversary of the Closing Date, except for the representations and warranties
set forth in Section 2.8 and Article III above and the indemnification
obligations relating to the foregoing provisions (including without limitation
the indemnification obligations set forth in Section 7.1(c)), which shall
continue until (and terminate upon) the sixth anniversary of the Closing Date;
and
(ii) shall not be affected by any examination made for or on behalf of
the Buyer or the knowledge of any of the Buyer's officers, directors,
stockholders, employees or agents.
(c) The date on which any particular representation, warranty or
indemnification obligation of each of the Company Stockholders terminates shall
be referred to herein and in the Escrow Agreement as the "Termination Date." If
a notice of a claim is given in accordance with the notice provisions of this
Agreement or the Escrow Agreement before the Termination Date, then
(notwithstanding the occurrence of the Termination Date) the representation,
warranty or indemnification obligation applicable to such claim shall survive
until, but only for purposes of, the resolution of such claim.
(d) The representations and warranties of the Buyer set forth in
Article IV above (i) shall survive the Closing and the consummation of the
transactions contemplated hereby and shall continue until the first anniversary
of the Closing Date and (ii) shall not be affected by any examination made for
or on behalf of the Company Stockholders or the knowledge of any of the Company
Stockholders.
(e) Notwithstanding anything to the contrary herein, (i) in no event
shall the liability of a Company Stockholder for Damages under this Article VII
resulting from a breach of the representations and warranties set forth in
Article II hereof (other than Damages resulting from a breach of the
representations set forth in Section 2.8, for which there shall be no limit)
exceed his or her pro rata share of the Base Purchase Price plus his or her pro
rata share of any Contingent Consideration
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paid to date at the time of resolution of the claim under this Article VII, (ii)
in no event shall the aggregate liability of the Buyer for Damages under this
Article VII resulting from a breach of the representations and warranties set
forth in Article IV hereof exceed the amount of the Base Purchase Price plus any
Contingent Consideration paid to date at the time of resolution of the claim
under this Article VII, (iii) the Company Stockholders shall not be liable under
this Article VII unless and until the aggregate Damages to the Buyer exceed
$75,000 (at which point the Company Stockholders shall become liable for the
aggregate Damages, and not just amounts in excess of $75,000), and (iv) the
Buyer shall not be liable under this Article VII unless and until the aggregate
Damages to the Company Stockholders exceed $75,000 (at which point the Buyer
shall become liable for the aggregate Damages, and not just amounts in excess of
$75,000). Except with respect to claims based on fraud, the rights of the
Parties under this Article VII shall be the exclusive remedy of the Parties with
respect to matters covered by this Article VII.
(f) The Company Stockholders shall make all payments with respect to
their indemnification obligations hereunder by cash, certified or bank check or
wire transfer of immediately available funds to an account designated by the
Buyer. The Buyer shall have the right, at its option, to seek all or any
portion of such payments pursuant to the terms of the Escrow Agreement. The
Buyer shall make all payments with respect to its indemnification obligations
hereunder by cash, certified or bank check or wire transfer of immediately
available funds to an account designated by the Stockholders' Representative.
7.4 Allocation of Tax Liabilities. For purposes of determining the amount
-----------------------------
of Damages attributable to any Taxes, the following rules relating to the
allocation of Taxes shall apply:
(a) In the event that the Company is permitted but not required under
applicable foreign, state or local Tax laws to treat the Closing Date as the
last day of a taxable period, the Parties shall treat such day as the last day
of a taxable period.
(b) Any Taxes for a taxable period beginning before the Closing Date
and ending after the Closing Date with respect to the Company shall be
apportioned for purposes of Sections 2.8 and 7.1 based on the actual operations
of the Company during the portion of such period ending on the Closing Date and
the portion of such period beginning on the day following the Closing Date, and
each portion of such period shall be deemed to be a taxable period (whether or
not it is in fact a taxable period).
(c) The amount of any Taxes attributable to periods (or portions
thereof, determined in accordance with subsection (b) hereof) ending on or
before the Closing Date shall be determined without regard to the amount of any
losses,
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<PAGE>
deductions or credits carried back to such periods from periods (or portions
thereof, determined in accordance with subsection (b) hereof) beginning after
the Closing Date.
ARTICLE VIII
TERMINATION
8.1 Termination of Agreement. The Parties may terminate this Agreement
------------------------
prior to the Closing Date only as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent;
(b) the Buyer may terminate this Agreement by giving written notice to
the Company and the Company Stockholders in the event the Company or the Company
Stockholders are in breach, and the Company or the Company Stockholders may
terminate this Agreement by giving written notice to the Buyer in the event the
Buyer is in breach, of any material representation, warranty, or covenant
contained in this Agreement, and such breach is not remedied within 10 days of
delivery of written notice thereof;
(c) the Buyer may terminate this Agreement by giving written notice to
the Company if the Closing shall not have occurred on or before February 28,
1997, by reason of the failure of any condition precedent under Section 6.1
above (unless the failure results primarily from a breach by the Buyer of any
representation, warranty or covenant contained in this Agreement); and
(d) the Company or the Company Stockholders may terminate this
Agreement by giving written notice to the Buyer if the Closing shall not have
occurred on or before February 28, 1997 by reason of the failure of any
condition precedent under Section 6.2 above (unless the failure results
primarily from a breach by the Company or the Company Stockholders of any
representation, warranty or covenant contained in this Agreement).
8.2 Effect of Termination. If any Party terminates this Agreement
---------------------
pursuant to Section 8.1 above, all obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (except for any
liability of any Party for breaches of this Agreement).
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ARTICLE IX
DEFINITIONS
For purposes of this Agreement, each of the following defined terms is
defined in the Section of this Agreement indicated below.
<TABLE>
<CAPTION>
Defined Term Section
- ------------ -------
<S> <C>
Accountants 1.8(c)
Accounts Receivable 2.14
Affiliate 2.13(a)(vi)
Agreement Date Introduction
Audited Financial Statements 2.5
Balance Sheet Date 2.5
Base Purchase Price 1.5
Business Entity 2.4
Buyer Introduction
Buyer Common Stock 1.5
Buyer Loan 1.8(b)
Buyer Reports 4.4
Buyer Shares 3.2
Buyer's Adjustment Amount 1.8(f)
CERCLA 2.21(a)
Certificate 1.4(c)
Closing 1.1
Closing Balance Sheet 1.8(a)
Closing Date 1.3
Company Stockholders' Adjustment Amount 1.8(g)
COBA Canada 2.4
Code 2.8(c)
Company Introduction
Company Shares Preliminary
Statement
Company Stockholders Introduction
Contingent Consideration 1.5
Customer Claims 7.1(e)
Customer Contracts 2.14(b)
Damages 7.1
Deferred Taxes Payable 5.15
Disclosure Schedule Article II
Dispute Notice 1.8(c)
Employees 2.19
Employee Benefit Plan 2.20(a)
</TABLE>
-45-
<PAGE>
<TABLE>
<S> <C>
Environmental Law 2.21(a)
ERISA 2.20(a)
ERISA Affiliate 2.20(a)
Escrow Agreement 1.4(e)
Escrow Amount 1.8(f)
Escrow Cash Payment 1.5
Exchange Act 4.4
Financial Statements 2.5
Fundamental Agreements 2.1(b)
GAAP 1.8(a)
Governmental Entity 2.3
Indemnified Person 7.2(b)
Indemnifying Person 7.2(b)
Initial Cash Payment 1.5
Intellectual Property 2.11(a)
Interim Financial Statements 5.3
Materials of Environmental Concern 2.21(b)
Most Recent Balance Sheet 2.5
Net Asset Value 1.8(b)
Net Book Value Adjustment 1.8(b)
Non-Solicitation and Confidentiality Agreement 5.18
Ordinary Course of Business 2.7
Parties Introduction
Permitted Distribution 1.8(b)
Permits 2.23
Personal Property 2.9(c)
Related Party Transactions 2.24
Retention Agreement 5.18
SEC 4.4
Securities Act 2.2
Security Interest 2.3
Stockholders' Representative 1.9(a)
Subsidiary 2.4
Tax Returns 2.8(a)
Taxes 2.8(a)
Tax Refund 5.16
Termination Date 7.3
</TABLE>
-46-
<PAGE>
ARTICLE X
GENERAL PROVISIONS
10.1 Press Releases and Announcements. No Party shall issue any
--------------------------------
press release or announcement relating to the subject matter of this Agreement
without the prior written approval of the other Parties; provided, however, that
any Party may make any public disclosure it believes in good faith is required
by law or regulation (in which case the disclosing Party shall advise the other
Parties and provide them with a copy of the proposed disclosure prior to making
the disclosure).
10.2 No Third Party Beneficiaries. This Agreement shall not confer
----------------------------
any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
10.3 Entire Agreement. The Fundamental Agreements and the exhibits
----------------
and schedules attached thereto, together with two certain Confidential
Disclosure Agreements, each dated August 26, 1996, by and between the Buyer and
the Company, constitute the entire agreement among the Parties and supersede any
prior understandings, agreements, or representations by or among the Parties,
written or oral, that may have related in any way to the subject matter of the
Fundamental Agreements.
10.4 Succession and Assignment. This Agreement shall be binding upon
-------------------------
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties, provided that the Buyer may assign its rights,
interests and/or obligations under this Agreement to an Affiliate of the Buyer
by notice to the Company and the Company Stockholders.
10.5 Counterparts. 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.
10.6 Headings. The section headings contained in this Agreement are
--------
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.7 Notices. All notices, requests, demands, claims and other
-------
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered three
business days after it is sent by registered or certified mail, return receipt
requested, postage
-47-
<PAGE>
prepaid, or one business day after it is sent via a reputable nationwide
overnight courier service, in each case to the intended recipient as set forth
below:
If to the Company: Copy to:
- ------------------ --------
C.M. Management Systems Bingham, Dana & Gould LLP
Ltd. Inc. 150 Federal Street
150 Federal Street Boston, Massachusetts 02110
14th Floor Attn: James C. Stokes, Esq.
Boston, MA 02110
If to the Company Stockholders: Copy to:
- ------------------------------- --------
Company Stockholders Bingham, Dana & Gould LLP
c/o Mark R. Bruneau 150 Federal Street
C.M. Management Boston, Massachusetts 02110
Systems Ltd. Inc. Attn: James C. Stokes, Esq.
150 Federal Street
14th Floor
Boston, MA 02110
If to the Buyer: Copy to:
- ---------------- --------
Renaissance Solutions, Inc. Hale and Dorr LLP
Lincoln North 60 State Street
55 Old Bedford Road Boston, MA 02109
Lincoln, MA 01773 Attn: Hal J. Leibowitz, Esq.
Attn: George A. McMillan
Any Party may give any notice, request, demand, claim or other communication
hereunder by personal delivery or telecopy, but no such notice, request, demand,
claim or other communication shall be deemed to have been duly given unless and
until it actually is received by the Party for whom it is intended. Any Party
may change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
10.8 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws (and not the law of conflicts) of
the Commonwealth of Massachusetts.
-48-
<PAGE>
10.9 Amendments and Waivers. The Parties may mutually amend any
----------------------
provision of this Agreement at any time by a written instrument signed by all of
the Parties. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
10.10 Severability. Any term or provision of this Agreement that is
------------
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term or provision, and this
Agreement shall be enforceable as so modified after the expiration of the time
within which the judgment may be appealed.
10.11 Expenses. Except as set forth in the Escrow Agreement and
--------
Section 1.8 above, each of the Buyer and the Company Stockholders shall bear its
or their own costs and expenses (including fees and expenses of their respective
legal, accounting and financial advisors) incurred in connection with this
Agreement and the transactions contemplated hereby. The Company Stockholders
agree prior to Closing to pay the Company's costs and expenses (including,
without limitation, the fees and expenses of its legal, accounting and financial
advisors) incurred in connection with this Agreement and the transactions
contemplated hereby, except that the Company Stockholders shall not be
responsible for any fees payable to KPMG Peat Marwick in connection with the
preparation of the Audited Financial Statements.
10.12 Specific Performance. Each of the Parties acknowledges and
--------------------
agrees that one or more of the other Parties would be damaged irreparably in the
event any of the provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached. Accordingly, each of the
Parties agrees that the other Parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy to
which it may be entitled, at law or in equity.
-49-
<PAGE>
10.13 Construction. The language used in this Agreement shall be
------------
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
Any reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
10.14 Incorporation of Exhibits and Schedules. The Exhibits and
---------------------------------------
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
[Signatures are on the following page]
-50-
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Stock Purchase
Agreement as of the date first above written.
RENAISSANCE SOLUTIONS, INC.
By: /s/ William T. Jenkins
---------------------------------------
Title: Vice President Administration
and Finance
C.M. MANAGEMENT SYSTEMS
LTD. INC.
By: /s/ Mark R. Bruneau
-------------------------------------
Title: President and CEO
COMPANY STOCKHOLDERS:
/s/ Mark R. Bruneau
------------------------------------------
Mark R. Bruneau
/s/Andrew R. Belt
-------------------------------------------
Andrew R. Belt
/s/ Frederique Bouty
--------------------------------------------
Frederique Bouty
-51-
<PAGE>
Schedule II
-------- --
Contingent Payments
-------------------
1. Definitions. For purposes of this Schedule II:
----------- -------- --
(a) "Qualifying Revenues" shall mean the sum of (i) all professional fees
and other income credits and revenue items attributable to consulting services
provided by the Company to clients of the Company, plus (ii) 20% of the
professional fees and other income credits and revenue items received by the
Buyer or by any company or business acquired by the Buyer after the date of this
Agreement from sales of its products and services to those customers of the
Company whose names are listed on Attachment A hereto, in each case exclusive of
---------- -
reimbursable expenses, accrued for such period. Notwithstanding the foregoing,
there shall be excluded from the definition of Qualifying Revenues (A) any gross
income from any companies or businesses acquired after the date of this
Agreement by the Company and/or its subsidiaries, and (B) any gross income from
any companies or businesses acquired after the date of this Agreement by the
Buyer and/or its subsidiaries (other than the Company) from any customers of the
Company whose names are listed on Attachment A and who were customers or active
---------- -
prospects of such companies or businesses on or before the date of such
acquisition.
(b) "Operating Margin" shall mean Adjusted Operating Profit as a percentage
of Qualifying Revenues.
(c) "Adjusted Operating Profit" shall mean the pre-tax profits of the
Company calculated in accordance with GAAP and the previous custom and practice
of the Company (to the extent consistent with GAAP) before interest and other
financial expenses but after excluding (i) incremental costs incurred by the
Company at the request of or with the agreement of or as a result of policies
pursued by the Buyer; (ii) management charges made by the Buyer; and (iii)
additional expenses incurred by bringing the benefits of the employees of the
Company into line with those offered by the Buyer to its employees.
(d) "Points Ratio" shall mean, with respect to a Contingent Payment, the
ratio achieved by adding together the number of Points applicable to the
employees named below who are employed by the Buyer or the Company on December
31, 1997, in case of the First Contingent Payment, and on December 31, 1998, in
the case of the Second Contingent Payment, and dividing the resulting total by
625 (the "Denominator"). In the event that any such employee is terminated by
the Buyer other than for Cause (as defined below) or by reason of death or
disability, the number of Points associated with such employee shall be
subtracted from the Denominator. In the event the result of such division is
greater than 1.0, the Points Ratio shall equal 1.0.
<PAGE>
<TABLE>
<CAPTION>
Employee Points
-------- ------
<S> <C>
Mark R. Bruneau 200
Andrew R. Belt 100
Frederique Bouty 100
Roger Wery 50
Alok Prasad 50
John Kenney 0
David Allnutt 0
Richard Reese 0
Ford Cavallari 10
Ann Carroll 5
Rolf DeVegt 25
Lucinda Linde 15
Pascal Aguirre 10
Mukhils Balbale 0
John Benchoff 6
Phillip Bedrock 6
Kim Greenwood 10
Blaik Kirby 10
Andrew Young 6
Kristin Berg 4
Laura Dunham 4
Charu Gupta 4
Kang Lawler 4
John McCarthy 4
Kathleen Schaller 4
Jennifer VonBriesen 4
Garrick Gauch 4
Anneliese Marchand 4
Simon Neale 4
Samuel Allore 0
Amy Cahoon 4
Lisa Dickinson 2
Steven Durkee 2
Lisa Gilbert 2
Carol Grady 4
Marcia Karr 4
Sandra King 4
Nancy Migliozzi 2
George O'Shea 2
Deborah Seyfert 2
Alistair Williamson 4
TOTAL 675
</TABLE>
-2-
<PAGE>
(e) "Change in Control" shall mean (i) the sale of all or substantially all
of the assets of the Buyer to a third party or parties in a single transaction
or a series of related transactions approved by the Board of Directors of the
Buyer, or (ii) a merger or consolidation of the Buyer with any other entity, in
a transaction approved by the Buyer's Board of Directors, other than (A) a
merger or consolidation which would result in the voting securities of the Buyer
outstanding immediately prior thereto continuing to represent more than 50% of
the combined voting power of the voting securities of the Buyer or such
surviving entity outstanding immediately after such merger or consolidation and
being held immediately after the merger or consolidation by the same beneficial
owners (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of the Buyer as immediately prior to the merger or consolidation or (B)
a merger or consolidation effected to implement a recapitalization of the Buyer.
(f) "Cause" for termination of an employee shall be deemed to exist upon
(i) a good faith finding by the Buyer of failure of the employee to perform his
assigned duties for the Buyer, dishonesty, gross negligence or misconduct; (ii)
the conviction of the employee of, or the entry of a pleading of guilty or nolo
contendere by the employee to, any crime involving moral turpitude or any
felony; (iii) the employee's habitual drunkenness, use of illegal substances or
drugs or the use, possession, distribution or being under the influence of
alcohol or illegal substances or drugs in the workplace (the only exception is
that the employee may consume alcohol reasonably and responsibly, if he so
chooses, at legitimate business events and functions where alcohol is legally
available); or (iv) the breach by the employee of any terms of an employment
agreement, which breach continues for 30 days subsequent to written notice from
the Buyer to the employee of the breach (unless such breach is not susceptible
to cure, in which case termination shall be deemed to be immediate).
(g) "Disability" shall mean the inability of an employee, due to a physical
or mental disability, for a period of 90 days, whether or not consecutive,
during any 360-day period to perform the services contemplated by such
employee's employment. A determination of disability shall be made by a
physician satisfactory to both the employee and the Buyer; provided, that if the
employee and the Buyer do not agree on a physician, the employee and the Buyer
shall each select a physician and such physicians together shall select a third
physician, whose determination as to disability shall be binding on all parties.
All other terms used in this Schedule II and not otherwise defined shall
-------- --
have the respective meanings ascribed to them in the Stock Purchase Agreement.
2. Contingent Payments. The Company Stockholders shall be eligible to receive
-------------------
two payments of Contingent Consideration, the First Contingent Payment and the
Second Contingent Payment (together, the "Contingent Payments"). Such
Contingent
-3-
<PAGE>
Payments shall be paid pro rata among the Company Stockholders based
on their respective percentage ownership of the Company Shares as set forth
opposite their respective names in the third column of Schedule I. Such
-------- -
Contingent Payments shall be made to the Stockholders' Representative, whose
receipt of the same shall be an absolute discharge of the Buyer's obligations to
make such Contingent Payment to the Company Stockholders.
(a) The First Contingent Payment. The Company Stockholders shall be
----------------------------
entitled to an aggregate contingent payment in respect of the period commencing
on January 1, 1997 and ending on December 31, 1997 (the "First Contingent
Payment") based on the Qualifying Revenues of the Company and its subsidiaries
as determined in accordance with Section 4 hereof. The aggregate First
Contingent Payment, subject to adjustment as outlined in paragraphs (c) and (d)
below, shall be in the range of:
(i) $0 to $1,526,000 in cash and (at the Buyer's option) Buyer Common
Stock, where Qualifying Revenues are equal to or greater than $13,000,000 but
less than $13,700,000;
(ii) $1,526,001 to $3,094,000 in cash and (at the Buyer's option)
Buyer Common Stock, where Qualifying Revenues are equal to or greater than
$13,700,000 but less than $14,300,000;
(iii) $3,094,001 to $4,620,000 in cash and (at the Buyer's option)
Buyer Common Stock, where Qualifying Revenues are equal to or greater than
$14,300,000 but less than $15,000,000;
(iv) $4,620,001 to $6,146,000 in cash and (at the Buyer's option)
Buyer Common Stock, where Qualifying Revenues are equal to or greater than
$15,000,000 but less than $15,600,000;
(v) $6,146,001 to $7,714,000 in cash and (at the Buyer's option) Buyer
Common Stock, where Qualifying Revenues are equal to or greater than $15,600,000
but less than $16,300,000;
(vi) $7,714,001 to $9,250,000 in cash and (at the Buyer's option)
Buyer Common Stock, where Qualifying Revenues are equal to or greater than
$16,300,000 but less than $16,900,000; and
(vii) $9,250,001 in cash and (at the Buyer's option) Buyer Common
Stock, where Qualifying Revenues are equal to or greater than $16,900,000.
The Company Stockholders shall not be entitled to any First Contingent
Payment if Qualifying Revenues for the period commencing on January 1, 1997 and
ending on December 31, 1997 are less than $13,000,000.
-4-
<PAGE>
Notwithstanding the foregoing, in the event that a Change in Control occurs
after the Closing Date but before December 31, 1997, the Company Stockholders
shall be entitled to receive at least $4,625,000 of the First Contingent
Payment, all of which amount shall be payable in shares of Buyer Common Stock
(or in an equivalent amount of any securities into which the Buyer Common Stock
may be converted pursuant to the transaction giving rise to the Change in
Control) calculated in the manner provided in Section 3 below.
(b) The Second Contingent Payment. The Company Stockholders shall be
-----------------------------
entitled to an aggregate contingent payment in respect of the period commencing
on January 1, 1998 and ending on December 31, 1998 (the "Second Contingent
Payment") based on the Qualifying Revenues of the Company and its subsidiaries
as determined in accordance with Section 4 hereof. The aggregate Second
Contingent Payment, subject to adjustment as outlined in paragraphs (c) and (d)
below, shall be in the range of:
(i) $0 to $1,526,000 in cash and (at the Buyer's option) Buyer Common
Stock, where Qualifying Revenues are equal to or greater than $16,900,000 but
less than $17,700,000;
(ii) $1,526,001 to $3,094,000 in cash and (at the Buyer's option)
Buyer Common Stock, where Qualifying Revenues are equal to or greater than
$17,700,000 but less than $18,600,000;
(iii) $3,094,001 to $4,620,000 in cash and (at the Buyer's option)
Buyer Common Stock, where Qualifying Revenues are equal to or greater than
$18,600,000 but less than $19,400,000;
(iv) $4,620,001 to $6,146,000 in cash and (at the Buyer's option)
Buyer Common Stock, where Qualifying Revenues are equal to or greater than
$19,400,000 but less than $20,300,000;
(v) $6,146,001 to $7,714,000 in cash and (at the Buyer's option) Buyer
Common Stock, where Qualifying Revenues are equal to or greater than $20,300,000
but less than $21,100,000;
(vi) $7,714,001 to $9,250,000 in cash and (at the Buyer's option)
Buyer Common Stock, where Qualifying Revenues are equal to or greater than
$21,100,000 but less than $22,000,000; and
(vii) $9,250,001 in cash and (at the Buyer's option) Buyer Common
Stock, where Qualifying Revenues are equal to or greater than $22,000,000.
-5-
<PAGE>
The Company Stockholders shall not be entitled to any Second Contingent
Payment if Qualifying Revenues for the period commencing on January 1, 1998 and
ending on December 31, 1998 are less than $16,900,000.
Notwithstanding the foregoing, in the event that a Change in Control occurs
after the Closing Date but before December 31, 1998, the Company Stockholders
shall be entitled to receive at least $4,625,000 of the Second Contingent
Payment, all of which amount shall be payable in shares of Buyer Common Stock
(or in an equivalent amount of any securities into which the Buyer Common Stock
may be converted pursuant to the transaction giving rise to the Change in
Control) calculated in the manner provided in Section 3 below.
(c) Interpolation of Ranges. To determine the amount of the First and
-----------------------
Second Contingent Payment (subject to the adjustments provided for in paragraph
(d) below), the value of actual Qualifying Revenues for the applicable calendar
year shall be interpolated in the applicable range set forth in paragraphs (a)
and (b) above for Qualifying Revenues (the "Revenues Range") and the Contingent
Payment shall bear the same ratio to the highest possible Contingent Payment in
the applicable range, as the Qualifying Revenues bear to the highest possible
Qualifying Revenue in the applicable Revenues Range.
(d) Adjustments. Any Contingent Payments payable hereunder shall be
-----------
subject to adjustment in the manner provided in this paragraph (d).
(i) First, the Contingent Payment shall be interpolated in accordance
with paragraph (c) above;
(ii) Next, in the event that the Operating Margin for calendar year
1997 or 1998, as the case may be, is less than 30%, the First or Second
Contingent Payment, as the case may be, after interpolation in accordance with
paragraph (c) above, shall be decreased by 5% for each percentage point (or
portion thereof) by which such Operating Margin is less than 30%; and
(iii) Finally, the resulting amount shall be multiplied by the Points
Ratio for such year and the product thereof shall be the aggregate amount to be
paid to the Company Stockholders in respect of the First or Second Contingent
Payment, as the case may be.
3. Payment in Buyer Common Stock. The Buyer, at its option, may elect to make
-----------------------------
up to 50% of any Contingent Payment payable pursuant to Section 2(a) or 2(b) of
this Schedule II in the form of shares of Buyer Common Stock. For this purpose
-------- --
the value of a share of Buyer Common Stock shall equal the average closing price
of the Buyer Common Stock on The Nasdaq Stock Market as quoted in The Wall
Street Journal Eastern Edition during the 30-day period ending three days prior
to the
-6-
<PAGE>
Closing Date. In no event shall the cash portion of any Contingent Payment
comprise less than 50% of such Contingent Payment.
4. Method of Determining Contingent Amounts.
----------------------------------------
(a) As promptly as reasonably possible following the completion of the
audit of Buyer's financial statements for the year ending December 31, 1997, in
the case of the First Contingent Payment, and December 31, 1998, in the case of
the Second Contingent Payment (but in any event within 30 days of the completion
of such audit), the Buyer shall deliver to the Stockholders' Representative its
calculation of the First Contingent Payment or the Second Contingent Payment, as
the case may be. Unless the Stockholders' Representative shall, in accordance
with the provisions of paragraph (c) below, challenge the Buyer's determination
of the First Contingent Payment or the Second Contingent Payment, as the case
may be, within 30 days after the delivery of the Buyer's calculation thereof,
the Buyer's determination shall be binding upon the Company Stockholders.
(b) The Stockholders' Representative shall have the right to review the
work papers of the Buyer and any accountants or auditors utilized by the Buyer
in preparing its calculation of the First Contingent Payment or the Second
Contingent Payment, as the case may be, for the purpose of confirming the
Buyer's calculation thereof. The Stockholders' Representative shall work in
good faith and cooperate with the Buyer and its accountants or auditors in the
resolution of any dispute in connection with such calculation.
(c) If the Stockholders' Representative gives written notice within 30
days after delivery of the Buyer's determination of the First Contingent Payment
or the Second Contingent Payment, as the case may be, of disagreement with any
of the values or amounts shown therein, specifying as to each such item, in
reasonable detail, the nature and extent of such disagreement (a "Dispute
Notice"), and if the Buyer and the Stockholders' Representative are unable to
resolve any such disagreement within 30 days after the date of the Dispute
Notice, the disagreement shall be submitted to arbitration by written notice of
either party to the other within 60 days after the date of the Dispute Notice
(an "Arbitration Notice") in accordance with the provisions set forth in
paragraph (e) below.
(d) If the Stockholders' Representative and the Buyer are unable to agree
on any matter referred to in this Schedule II within the period(s) stated, the
-------- --
matter in dispute shall be referred at the request of either the Stockholders'
Representative or the Buyer for a decision to the Accountants. Within fifteen
days after the referral of the matter in dispute to the Accountants, the
Accountants, the Buyer and the Stockholders' Representative shall meet, at which
time the Buyer and the Stockholders' Representative shall be required to set
forth in writing all disputed issues and a proposed ruling on each such issue.
The Accountants shall set a date
-7-
<PAGE>
for a hearing (which shall be no later than 30 days after the submission of
written proposals) to discuss each of the issues identified by the Buyer and the
Stockholders' Representative. Each party shall have the right to be represented
by counsel. The Accountants shall use their best efforts to rule on each
disputed issue within thirty days after the completion of the hearings referred
to above. All rulings of the Accountants shall be in writing and shall be
delivered to the parties hereto. The Accountants shall act as an expert and not
as an arbitrator and its decision shall, except in the case of manifest error,
be final and binding on the parties. The fees of the Accountants shall be paid
by the Company Stockholders and/or the Buyer as the Accountants may direct.
5. Payment of Contingent Consideration. In the event that the Company
-----------------------------------
Stockholders become entitled to any Contingent Payments hereunder, such
Contingent Payments shall be paid pro rata among the Company Stockholders based
on their respective percentage ownership of the Company Shares as set forth
opposite their respective names in the third column of Schedule I to the Stock
----------
Purchase Agreement, in accordance with and subject to the provisions of Section
3 and 4 of this Schedule II, within 30 days of determination of the amount of
-----------
such Contingent Payment.
-8-
<PAGE>
EXHIBIT A
ESCROW AGREEMENT
----------------
This Escrow Agreement (this "Agreement") is entered into as of February
13, 1997, by and among Renaissance Solutions, Inc., a Delaware corporation (the
"Buyer"), Mark R. Bruneau, Andrew R. Belt and Frederique Bouty (collectively,
the "Company Stockholders"), Mark R. Bruneau (the "Stockholders'
Representative") and State Street Bank and Trust Company (the "Escrow Agent").
The Buyer and the Company Stockholders are sometimes referred to herein as the
"Interested Parties."
WHEREAS, the Buyer, C.M. Management Systems Ltd. Inc., a Massachusetts
corporation (the "Company"), and the Company Stockholders have entered into a
Stock Purchase Agreement dated as of February 13, 1997 (the "Purchase
Agreement"), pursuant to which the Buyer has agreed to purchase from the Company
Stockholders all of the issued and outstanding shares of capital stock of the
Company; and
WHEREAS, the Purchase Agreement provides that an escrow account will be
established to secure the Company Stockholders' indemnification obligations and
post-Closing adjustment obligations to the Indemnified Persons (as that term is
defined in the Purchase Agreement) under the Purchase Agreement on the terms and
conditions set forth herein; and
WHEREAS, the parties hereto desire to establish the terms and conditions
pursuant to which such escrow account will be established and maintained;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used in this Agreement and not
-------------
otherwise defined shall have the meanings given them in the Purchase Agreement.
2. Consent of Company Stockholders. Pursuant to the Purchase Agreement,
-------------------------------
the Company Stockholders have consented to (a) the establishment of this escrow
to secure the Company Stockholders' indemnification obligations under Article
VII of the Purchase Agreement and the post-Closing adjustment obligations under
Section 1.8 of the Purchase Agreement in the manner set forth herein and (b) the
appointment of the Stockholders' Representative as their representative for
purposes of this Agreement and the taking by the Stockholders' Representative of
any and all actions and the making of any decisions required or permitted to be
taken or made by him under this Agreement.
<PAGE>
3. Escrow and Indemnification.
--------------------------
(a) Escrow Account. On the Closing Date, the Buyer shall deposit with the
--------------
Escrow Agent, by certified or bank check or wire transfer of immediately
available funds, the Escrow Cash Payment in the amount of $925,000 as specified
in Section 1.5 of the Purchase Agreement. The Escrow Cash Payment shall be held
as a trust fund and shall not be subject to any lien, attachment, trustee
process or any other judicial process of any creditor of any party hereto. The
Escrow Agent agrees to accept delivery of the Escrow Cash Payment and to hold
the Escrow Cash Payment in an escrow account (the "Escrow Account"), subject to
the terms and conditions of this Agreement.
(b) Investment of Escrow Property.
(i) Investment Instruction. Upon receipt by the Escrow Agent of specific
written investment instruction from the Stockholders' Representative, available
uninvested cash in the Escrow Account shall be invested (and reinvested, as the
case may be) from time to time by the Escrow Agent in any of the following
investments (collectively, "Eligible Investments"), as specified in such
instruction:
(A) obligations issued or guaranteed by The United States of America or any
agency or instrumentality thereof;
(B) certificates of deposit of or interest bearing accounts with national
banks or corporations endowed with trust powers, including the Escrow Agent,
having capital and surplus in excess of $100,000,000;
(C) commercial paper that at the time of investment is rated A-1 by
Standard & Poor's Corporation or Prime-1 by Moody's Investor Service, Inc.;
(D) repurchase agreements with any bank or corporation described in clause
(B) fully secured by obligations described in clause (A); or
(E) State Street Bank's "Seven Seas" Money Market Deposit Account ("Seven
Seas"), or the State Street Bank Insured Money Market Deposit Account ("IMMA").
Investments pursuant to such investment instructions described above shall
in all instances be subject to availability (including any time-of-day
requirements). In
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no instance shall the Escrow Agent have any obligation to provide investment
advice of any kind.
(ii) Liquidity. The Escrow Agent shall be authorized at all times and from
time to time to liquidate any investment of the Escrow Property as may be
necessary to provide available cash to make any release, disbursement or payment
called for under the terms of this Agreement. The Escrow Agent shall have no
responsibility or liability for any losses resulting from liquidation of the
Escrow Property (such as liquidation prior to maturity), nor for any delay in
the availability or disbursement of any interest or other income earned from the
investment of the Escrow Property due to the timing or frequency with which such
interest or earnings are received by the Escrow Agent or posted to the Escrow
Account.
(iii) Earnings and Losses. Investment earnings and other income from
investment of the Escrow Property (net of transaction costs) shall be deposited
in the Escrow Account and shall become part of the Escrow Fund (and may be
reinvested pursuant to the terms of Section 3(b)(i) above); and all losses
incurred on any investment shall be debited to the Escrow Account. In no event
shall the Escrow Agent have any liability under this Agreement for investment
losses incurred on any investment or reinvestment. The parties hereto agree
that, for tax reporting purposes, all interest or other income earned from the
investment of the Escrow Property shall be allocable to the Company Stockholders
in the percentages set forth opposite their respective names on Attachment A,
hereto.
(c) Indemnification and Post-Closing Adjustments. The Company Stockholders
--------------------------------------------
have agreed in Article VII of the Purchase Agreement to indemnify and hold
harmless the Indemnified Persons from and against specified Damages. The
Company Stockholders have further agreed in Section 1.8 of the Purchase
Agreement to authorize the Escrow Agent to disburse all or a portion of the
Escrow Cash Payment to the Buyer based on post-closing adjustments described in
Section 1.8 of the Purchase Agreement. The Escrow Account shall be security for
the foregoing obligations of the Company Stockholders, subject to the
limitations, and in the manner provided, in this Agreement and the Purchase
Agreement.
(d) Transferability. The respective interests of the Company Stockholders
---------------
in the Escrow Cash Payment and any other property comprising the Escrow Account
(collectively with the Escrow Cash Payment, the "Escrow Property") shall not be
assignable or transferable, other than by operation of law. Notice of any such
assignment or transfer by operation of law shall be given to the Escrow Agent
and the Buyer, and no such assignment or transfer shall be valid until such
notice is given.
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4. Administration of Escrow Account for Post-Closing Adjustments. The
-------------------------------------------------------------
Buyer and the Stockholders' Representative shall comply with Section 1.8 of the
Purchase Agreement before the provisions of this Section 4 shall apply. Upon
receipt by the Escrow Agent of notice (the "Adjustment Notice") from (a) the
Buyer and the Stockholders' Representative, (b) only the Buyer certifying that
(i) the Buyer has not received a Dispute Notice from the Stockholders'
Representative and (ii) the period for giving a Dispute Notice under Section
1.8(e) of the Purchase Agreement has expired, or (c) only the Buyer (i)
certifying that the Accountants have resolved the matters set forth in any
Dispute Notice delivered to the Buyers under Section 1.8(c) of the Purchase
Agreement and (ii) attaching a copy of the Accountants' determination, the
Escrow Agent shall promptly disburse to the Buyer Escrow Property having a Fair
Market Value (as defined below) equal to the Adjustment Amount (or such lesser
amount of Escrow Property as is then held in the Escrow Account), all as
specified in the Adjustment Notice.
5. Administration of Escrow Account for Indemnification Claims. The
-----------------------------------------------------------
Escrow Agent shall administer the Escrow Account in connection with the
indemnification provisions of Article VII of the Purchase Agreement as follows:
(a) If an Indemnified Person has incurred or suffered Damages for which it
is entitled to indemnification under Section 7.1(a) of the Purchase Agreement,
the Indemnified Person shall, prior to the Termination Date with respect to a
particular claim, give written notice of such claim (a "Claim Notice") to the
Stockholders' Representative and the Escrow Agent. Each Claim Notice shall
state the amount of claimed Damages (the "Claimed Amount") and the basis for
such claim.
(b) Claims for indemnification involving a claim or legal proceeding by a
third party shall be made in accordance with the procedures set forth in Article
VII of the Purchase Agreement and the provisions of this Section 5. For
indemnification claims not involving any claim or legal proceeding by a third
party, the procedures herein shall apply. Within 20 days after delivery of a
Claim Notice the Stockholders' Representative shall provide to the Indemnified
Person, with a copy to the Escrow Agent, a written response (the "Response
Notice") in which the Stockholders' Representative shall: (i) agree that Escrow
Property having a Fair Market Value (as computed pursuant to Section 7 below)
equal to the full Claimed Amount may be released from the Escrow Account to the
Indemnified Person, (ii) agree that Escrow Property having a Fair Market Value
equal to part, but not all, of the Claimed Amount (the "Agreed Amount") may be
released from the Escrow Account to the Indemnified Person, or (iii) contest
that any of the Escrow Property may be released from the Escrow Account to the
Indemnified Person. The
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<PAGE>
Stockholders' Representative may contest the release of Escrow Property having a
Fair Market Value equal to all or a portion of the Claimed Amount only based
upon a good faith belief that all or such portion of the Claimed Amount does not
constitute Damages for which the Indemnified Person is entitled to
indemnification under Article VII of the Purchase Agreement. If no Response
Notice is delivered by, and received by the Escrow Agent from, the Stockholders'
Representative within such 20-day period, the Stockholders' Representative shall
be deemed to have agreed that Escrow Property having a Fair Market Value equal
to all of the Claimed Amount may be released to the Indemnified Person from the
Escrow Account.
(c) If the Stockholders' Representative in the Response Notice agrees (or
is deemed to have agreed) that Escrow Property having a Fair Market Value equal
to all of the Claimed Amount may be released from the Escrow Account to the
Indemnified Person, the Escrow Agent shall, promptly following the earlier of
the required delivery date for the Response Notice or the delivery of the
Response Notice, disburse to the Indemnified Person Escrow Property having a
Fair Market Value equal to the Claimed Amount (or such lesser amount of Escrow
Property as is then held in the Escrow Account).
(d) If the Stockholders' Representative in the Response Notice agrees that
Escrow Property having a Fair Market Value equal to part, but not all, of the
Claimed Amount may be released from the Escrow Account to the Indemnified
Person, the Escrow Agent shall promptly following the delivery of the Response
Notice disburse to the Indemnified Person Escrow Property having a Fair Market
Value equal to the Agreed Amount (or such lesser amount of Escrow Property as is
then held in the Escrow Account).
(e) If the Stockholders' Representative in the Response Notice contests the
release of Escrow Property having a Fair Market Value equal to all or part of
the Claimed Amount (the "Contested Amount"), the Stockholders' Representative
and the Indemnified Person shall attempt promptly and in good faith to agree
upon the rights of the parties with respect to the Contested Amount. If the
Stockholders' Representative and the Indemnified Person should so agree, a
memorandum setting forth such agreement shall be prepared and signed by both
parties and delivered to the Escrow Agent and, if such agreement provides that
all or a portion of the Contested Amount is to be paid to the Indemnified
Person, the Escrow Agent shall disburse to the Indemnified Person from the
Escrow Account an amount of Escrow Property having a Fair Market Value equal to
the amount so agreed. If no such agreement can be reached after good faith
negotiation over a period of 15 days (or such longer period as the Indemnified
Person and the Stockholders' Representative may mutually agree), the matter
shall be settled by
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<PAGE>
binding arbitration in Boston, Massachusetts. All claims shall be settled by a
single arbitrator mutually agreeable to the Indemnified Person and the
Stockholders' Representative, or if they cannot agree on a single arbitrator in
15 days, by three arbitrators, in accordance with the Commercial Arbitration
Rules then in effect of the American Arbitration Association (the "AAA Rules"),
as follows: If a single arbitrator has not been mutually agreed upon, the
Stockholders' Representative and the Indemnified Person shall each designate one
arbitrator within 45 days of the delivery of the Stockholders' Representative's
Response Notice contesting the Claimed Amount. The Stockholders' Representative
and the Indemnified Person shall cause such designated arbitrators mutually to
agree upon and designate a third arbitrator; provided, however, that (i) failing
such agreement within 75 days of delivery of the Stockholders' Representative's
Response Notice, the third arbitrator shall be appointed in accordance with the
AAA Rules, and (ii) if either the Stockholders' Representative or the
Indemnified Person fail to timely designate an arbitrator, the dispute shall be
resolved by the one arbitrator timely designated. The Company Stockholders, on
the one hand, and the Indemnified Person, on the other hand, shall pay the fees
and expenses of their respectively designated arbitrators and shall bear equally
the fees and expenses of the third arbitrator (or of the sole arbitrator, in the
event a single arbitrator decides the matter). The Stockholders' Representative
and the Indemnified Person shall cause the arbitrators to decide the matter to
be arbitrated pursuant hereto within 60 days after the appointment of the last
arbitrator. The arbitrators' decision shall relate solely to whether the
Indemnified Person is entitled to receive the Contested Amount (or a portion
thereof) pursuant to the applicable terms of the Purchase Agreement and this
Agreement. The final decision of the arbitrator, or a majority of the
arbitrators in the case of three arbitrators, shall be furnished to the
Stockholders' Representative, the Indemnified Person and the Escrow Agent in
writing and shall constitute a conclusive determination of the issue in
question, binding upon the Stockholders' Representative, the Company
Stockholders, the Indemnified Person and the Escrow Agent, and shall not be
contested by any of them. Such decision may be used in a court of law only for
the purpose of seeking enforcement of the arbitrators' award.
(f) After delivery of a Response Notice that the Claimed Amount is
contested by the Stockholder's Representative, the Escrow Agent shall continue
to hold in the Escrow Account an amount of Escrow Property having a Fair Market
Value sufficient to cover the Contested Amount (up to the amount of Escrow
Property then available in the Escrow Account), notwithstanding the occurrence
of the first anniversary of the Closing Date, until (i) delivery of a copy of a
settlement agreement executed by the Indemnified Person and the Stockholders'
Representative setting forth instructions to the Escrow Agent as to the release
of Escrow Property, if any, that shall be made with respect to the Contested
Amount or (ii) delivery of a
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<PAGE>
copy of the final award of the arbitrator, or a majority of the arbitrators in
the case of three arbitrators, setting forth instructions to the Escrow Agent as
to the release of Escrow Property, if any, that shall be made with respect to
the Contested Amount. The Escrow Agent shall thereupon release Escrow Property
from the Escrow Account (up to the amount of Escrow Property then available in
the Escrow Account) in accordance with such agreement or instructions.
(g) If, as a result of any third party claim or legal proceeding subject to
the indemnification procedures set forth in the Purchase Agreement, any
settlement has been entered into, or any judgment entered in favor of any third
party (which is not subject to further appeal), the Indemnified Person may give
notice of the resulting Damages to the Escrow Agent, together with a copy of the
settlement or judgement and the Escrow Agent shall, promptly following the
receipt of such notice, disburse to the Indemnified Person an amount of Escrow
Property having a Fair Market Value equal to such Damages (up to the amount of
Escrow Property then available in the Escrow Account).
6. Release of Escrow Property.
--------------------------
(a) Subject to the provisions of paragraph (b) below, within 15 days after
the first anniversary of the Closing Date (such date, the "Release Date"), the
Escrow Agent shall deliver to the Company Stockholders the Escrow Property then
held in escrow, apportioned in accordance with Section 6(c) below.
(b) Notwithstanding the foregoing, the release of the Escrow Property shall
be subject to the following limitations:
(i) if on the Release Date the Escrow Agent has not received an Adjustment
Notice or a Dispute Notice and has received a notice from the Buyer indicating
that adjustment matters relating to Section 1.8 of the Purchase Agreement remain
unresolved (an "Adjustment Delay"), all Escrow Property shall be retained by the
Escrow Agent after the Release Date;
(ii) if on the Release Date the Escrow Agent has not received an Adjustment
Notice but has received a Dispute Notice, and such dispute has not as of the
Release Date been resolved in accordance with Section 1.8(c) of the Purchase
Agreement, the Escrow Agent shall retain in the Escrow Account after the Release
Date an amount of the Escrow Property having a Fair Market Value equal to the
Net Book Value Adjustment asserted by the Buyer in connection with such dispute
(the "Contested Purchase Price Amount") and release the balance of the Escrow
Property, if any, to the Company Stockholders, subject to Section 6(b)(iii); and
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<PAGE>
(iii) if on the Release Date an Indemnified Person has previously given
any Claim Notices that have not then been resolved in accordance with Section 5
above, the Escrow Agent shall retain in the Escrow Account after the Release
Date an amount of Escrow Property having a Fair Market Value equal to the
aggregate Claimed Amount covered by all such Claim Notices that have not then
been resolved (provided that Section 6(b)(i) does not otherwise apply, in which
case Section 6(b)(i) shall govern).
Any Escrow Property so retained in escrow shall be disbursed in accordance
with the terms of the resolution of such claims.
(c) Any distribution of all or a portion of the Escrow Property to the
Company Stockholders shall be made in accordance with the percentages set forth
opposite such holders' respective names on Attachment A hereto; provided,
---------- -
however, that the Escrow Agent shall deduct from any portion of the Escrow
Property to be distributed to any Company Stockholder, and shall distribute to
the other Company Stockholders, the other Company Stockholders' pro rata portion
of any amounts previously disbursed to the Buyer hereunder as the result of the
satisfaction of any liability for which such Company Stockholder was severally
and not jointly liable to the Buyer. Distributions to the Company Stockholders
shall be made by mailing a check to such holders at their respective addresses
shown on Attachment A (or such other address as may be provided in writing to
---------- -
the Escrow Agent by any such holder).
7. Valuation of Escrow Property. For purposes of this Agreement, the Fair
----------------------------
Market Value of all cash held in the Escrow Account shall be the face amount
thereof. The Fair Market Value of all other Escrow Property, if any, shall be
determined by the mutual agreement of the Buyer and the Stockholders'
Representative which shall be reduced to a writing signed by both of them and
delivered to the Escrow Agent.
8. Fees and Expenses of the Escrow Agent. The Buyer and, on behalf of the
-------------------------------------
Company Stockholders, the Stockholders' Representative hereby agree, jointly and
severally, to pay to the Escrow Agent its fees and expenses in accepting and
performing its appointment as escrow agent hereunder. As between themselves,
the Buyer, on the one hand, and the Company Stockholders, on the other hand,
hereby agree that each shall pay (a) one-half of the fees of the Escrow Agent
for the services to be rendered by the Escrow Agent hereunder and (b) one-half
of any fees and expenses of counsel reasonably incurred by the Escrow Agent in
the performance of its duties hereunder. In releasing any amounts hereunder,
the Escrow Agent may
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<PAGE>
deduct therefrom and pay to itself the amount of any outstanding fees and
expenses payable to it pursuant to the terms of this Agreement.
9. General Terms and Standards Regarding the Escrow Agent.
------------------------------------------------------
Notwithstanding any terms of this Agreement to the contrary, each term of
this Agreement, including without limitation each of the stated duties and
responsibilities of the Escrow Agent set forth herein, shall be subject to the
following terms and conditions:
(a) The duties, responsibilities and obligations of the Escrow Agent shall
be limited to those expressly set forth in this Agreement (and the duty to
exercise reasonable care in the physical safekeeping of any property held in
escrow hereunder), and no implied duties, responsibilities or obligations shall
be read into this Agreement against the Escrow Agent. Without limiting the
generality of the foregoing, the Escrow Agent shall have no duty to take action
to preserve or exercise rights in any property held by it hereunder (including,
without limitation, against prior parties or otherwise).
(b) The Escrow Agent shall not be subject to, bound by, charged with notice
of or be required to comply with or interpret any agreement or document
(including without limitation the Purchase Agreement) between or among the
Interested Parties (whether or not reference to any such other agreement or
documents expressed herein) other than this Agreement.
(c) The Escrow Agent shall in no instance be under any duty to give any
property held by it hereunder any greater degree of care than it gives its own
similar property. The Escrow Agent shall not be required to invest any funds
held hereunder (except as expressly provided for herein), and shall not be
obligated to pay interest on uninvested funds. All amounts received by the
Escrow Agent (and any credits to the Escrow Account) shall be conditional upon
collection (and actual receipt by the Escrow Agent of final payment). In no
event shall the Escrow Agent have any obligation to advance funds.
(d) The Escrow Agent may rely upon, and shall be protected in acting or
refraining from acting upon, any written notice, instruction, statement,
request, waiver, order, judgment, certification, consent, receipt or other paper
or document furnished to it (not only as to genuineness, but also as to its due
execution and validity, the genuineness of signatures appearing thereon and as
to the truth and accuracy of any information therein contained), which it in
good faith believes to be genuine and signed or presented by the proper person.
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<PAGE>
(e) Neither the Escrow Agent nor any of its directors, officers or
employees shall be liable to anyone for any error of judgment, or for any act
done or step taken or omitted to be taken by it or any of its directors,
officers or employees, or for any mistake of fact or law, or for anything which
it, or any of its directors, officers or employees, may do or refrain from doing
in connection with or in the administration of this Agreement, unless and except
to the extent the same constitutes gross negligence, bad faith or wilful
misconduct on the part of the Escrow Agent. In no event shall the Escrow Agent
be liable for any indirect, punitive, special or consequential damages, or any
amount in excess of the value of the Escrow Property (as of the date of the
action or omission giving rise to liability).
(f) The Escrow Agent may consult with, and obtain advice from, legal
counsel (including, without limitation, in-house counsel) with respect to any
question as to any of the provisions hereof or its duties hereunder, or any
matter relating hereto, and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action reasonably taken,
suffered or omitted by the Escrow Agent in good faith in accordance with the
opinion and directions of such counsel.
(g) The Escrow Agent shall not be deemed to have notice of any fact, claim
or demand with respect hereto unless actually known by an officer charged with
responsibility for administering this Agreement or unless in writing received by
the Escrow Agent and making specific reference to this Agreement.
(h) No provision of this Agreement shall require the Escrow Agent to expend
or risk its own funds, or to take any legal or other action hereunder which
might in its judgment involve it in, or require it to incur in connection with
the performance of its duties hereunder, any expense or any financial liability
unless it shall be furnished with indemnification acceptable to it.
(i) Any permissive right of the Escrow Agent to take any action hereunder
shall not be construed as duty.
(j) All indemnifications contained in this Agreement shall survive the
resignation or removal of the Escrow Agent, and shall survive the termination of
this Agreement.
(k) The Escrow Agent is not responsible for the recitals appearing in this
Agreement. The recitals shall be deemed to be statements of the Interested
Parties to this Agreement.
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<PAGE>
(l) The Escrow Agent has no responsibility for the sufficiency of this
Agreement for any purpose. Without limiting the foregoing, if any security
interest is referred to herein, the Escrow Agent shall have no responsibility
for, and makes no representation or warranty as to, the creation, attachment or
perfection of any such security interest or the sufficiency of this Agreement
therefor.
(m) Nothing in this Agreement shall obligate the Escrow Agent to qualify to
do business or act in any jurisdiction in which it is not presently qualified to
do business, or be deemed to impose upon the Escrow Agent the duties of a
trustee. The duties of the Escrow Agent under this Agreement are strictly
ministerial in nature.
(n) In no event shall the Escrow Agent have any liability for any failure
or inability of any of the Interested Parties to perform or observe his or its
duties under the Agreement, or by reason of a breach of this Agreement by either
of the Interested Parties. In no event shall the Escrow Agent be obligated to
take any action against any of the Interested Parties to compel performance
hereunder.
(o) The Escrow Agent shall in no instance be obligated to commence,
prosecute or defend any legal proceedings in connection herewith. The Escrow
Agent shall be authorized and entitled, however, in any instance to commence,
prosecute or defend any legal proceedings in connection herewith, including
without limitation any proceeding it may deem necessary to resolve any matter or
dispute, to obtain a necessary declaration of rights, or to appoint a successor
upon resignation (and after failure by the Interested Parties to appoint a
successor, as provided in Section 14).
(p) Whenever the terms hereof call for any notice, payment or other action
on a day which is not a business day, such payment or action may be taken, or
such notice given, as the case may be, on the next succeeding business day. As
used herein, "business day" shall mean any day other than a Saturday or Sunday,
or any other day on which the Escrow Agent is closed for business.
(q) In the event of any ambiguity or uncertainty under this Agreement, or
in any notice, instruction, or other communication received by the Escrow Agent
hereunder, the Escrow Agent may, in its reasonable discretion, refrain from
taking action, and may retain the Escrow Property, until and unless it receives
written instruction signed by all Interested Parties, or a decision by a court
of competent jurisdiction which eliminates such uncertainty or ambiguity.
(r) If at any time the Escrow Agent is served with any judicial or
administrative order, judgement, decree, writ or other form of judicial
administrative
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process which in any way relates to or affects the Escrow Property (including
but not limited to orders of attachment or garnishment or other forms of levies
or injunctions or stays relating to the Escrow Property), the Escrow Agent is
authorized to comply therewith in any manner as it or its legal counsel
reasonably deems appropriate; and if the Escrow Agent complies with any such
judicial or administrative order, judgement, decree, writ or other form of
judicial or administrative process, the Escrow Agent shall not be liable to any
of the parties hereto or to any other person or entity notwithstanding that
though such order, judgment, decree, writ or process may be subsequently
modified, annulled, set aside, vacated, found to have been without proper
jurisdiction, or otherwise determined to have been without legal force or
effect.
(s) The Escrow Agent shall have no liability for the actions or omissions
of any transfer agent, book-entry depository, nominee, correspondent, subagent
or subcustodian, except to the extent that such action or omission of any
transfer agent, book-entry depository, nominee, correspondent, subagent or
subcustodian was caused by the Escrow Agent's own gross negligence, bad faith or
willful misconduct.
10. Indemnification.
---------------
(a) General. Each of the Buyer and the Company Stockholders, jointly and
-------
severally, hereby covenants and agrees to indemnify the Escrow Agent for, and to
defend and hold harmless the Escrow Agent from and against, any and every loss,
liability, damage, claim, cost and expense of any nature incurred or suffered by
the Escrow Agent and arising out of or in connection with this Agreement or the
administration of this Agreement or the performance or observance by the Escrow
Agent of its responsibilities or services under this Agreement (including but
not limited to attorneys fees and other costs and expenses of defending or
preparing to defend against any claim or liability), unless and except to the
extent such loss, liability, damage, cost or expense shall be caused by the
Escrow Agent's own wilful misconduct, bad faith or gross negligence.
(b) Tax-Related. Each of the Buyer and the Company Stockholders, jointly
-----------
and severally, agree to assume any and all obligations imposed now or hereafter
by any applicable tax law with respect to the payment of Escrow Property under
this Agreement, and, without limiting the generality of Section 10(a) above,
hereby agree to indemnify and hold the Escrow Agent harmless from and against
any taxes, additions for late payment, interest, penalties and other expenses,
that may be assessed against the Escrow Agent on any such payment or other
activities under this Agreement. The Buyer and the Stockholders' Representative
undertake to instruct the Escrow Agent in writing with respect to any actions
that may be required by the
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Internal Revenue Code as to withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting in connection
with this Agreement. Each of the Buyer and the Company Stockholders, jointly and
severally, agrees to indemnify and hold the Escrow Agent harmless from any
liability on account of taxes, assessments or other governmental charges,
including without limitation the withholding or deduction or the failure to
withhold or deduct same, and any liability for failure to obtain proper
certifications or to properly report to governmental authorities, to which the
Escrow Agent may be or become subject in connection with or which arises out of
this Agreement, including costs and expenses (including reasonable legal fees),
interest and penalties. The Interested Parties shall each promptly provide to
Escrow Agent with appropriate IRS Forms W-9 for taxpayer identification number
certifications, or Forms W-8 for non-resident alien certifications in connection
with any payments to be made to them.
11. Authority of Stockholders' Representative; Successors and Assignees.
-------------------------------------------------------------------
(a) The Stockholders' Representative shall have full power and authority to
represent the Company Stockholders, and their successors, with respect to all
matters arising under this Agreement and all actions taken by the Stockholders'
Representative hereunder shall be binding upon the Company Stockholders, and
their successors, as if expressly confirmed and ratified in writing by each of
them. Without limiting the generality of the foregoing, the Stockholders'
Representative shall have full power and authority to interpret all of the terms
and provisions of this Agreement and the Purchase Agreement, to compromise any
claims asserted hereunder or thereunder and to authorize payments to be made
with respect thereto, on behalf of the Company Stockholders and their
successors.
(b) In the event that the Stockholders' Representative dies, becomes unable
to perform his responsibilities hereunder or resigns from such position, Company
Stockholders holding, prior to the Closing, a majority of the Company Shares as
set forth on Schedule I attached to the Purchase Agreement shall select another
representative to fill such vacancy and such substituted representative shall be
deemed to be the Stockholders' Representative for all purposes of this
Agreement. Any successor Stockholders' Representative shall have all of the
power, authority, rights and privileges conferred by this Agreement upon the
original Stockholders' Representative, and the term "Stockholders'
Representative" as used herein shall be deemed to include any successor
Stockholders' Representative.
12. Termination. This Agreement shall terminate upon the later of the
-----------
first anniversary of the Closing Date or the distribution by the Escrow Agent of
all of the
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Escrow Account in accordance with this Agreement; provided, that the provisions
of Sections 9 and 10 above shall survive such termination.
13. Notices. All notices, requests, demands, claims and other
-------
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered three
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
If to the Buyer: Copy to:
--------------- -------
Renaissance Solutions, Inc. Hale and Dorr LLP
Lincoln North 60 State Street
55 Old Bedford Road Boston, MA 02109
Lincoln, MA 01773 Attn: Hal J. Leibowitz, Esq.
Attn: President
If to the Stockholders' Representative: Copy to:
-------------------------------------- -------
Mark R. Bruneau Bingham, Dana & Gould LLP
c/o C.M. Management 150 Federal Street
Systems Ltd. Inc. Boston, MA 02110
14th Floor 150 Federal Street Attn: James C. Stokes, Esq.
Boston, MA 02110
If to the Escrow Agent:
----------------------
State Street Bank and
Trust Company
Corporate Trust Department
2 International Place
4th Floor
Boston, MA 02110
Any party may give any notice, request, demand, claim or other
communication hereunder by personal delivery or telecopy, but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the party for whom it is
intended. Any party may change the address to which notices, requests, demands,
claims and
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<PAGE>
other communications hereunder are to be delivered by giving the other parties
notice in the manner herein set forth. Copies of any notice, request, demand,
claim or other communication hereunder by personal delivery or telecopy given to
the Escrow Agent by either party, shall be delivered to the other party as soon
thereafter as practicable.
14. Successor Escrow Agent. In the event the Escrow Agent becomes
----------------------
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by
delivering a resignation to the parties to this Agreement, not less than 60 days
prior to the date when such resignation shall take effect. The Buyer may
appoint a successor Escrow Agent without the consent of the Stockholders'
Representative so long as such successor is a bank with assets of at least $100
million, and may appoint any other successor Escrow Agent with the consent of
the Stockholders' Representative, which shall not be unreasonably withheld. If,
within such notice period, the Buyer provides to the Escrow Agent written
instructions with respect to the appointment of a successor Escrow Agent and
directions for the transfer of any Escrow Property then held by the Escrow Agent
to such successor, the Escrow Agent shall act in accordance with such
instructions and promptly transfer such Escrow Property to such designated
successor. If no successor is so appointed, the Escrow Agent may apply to a
court of competent jurisdiction for such appointment.
15. General.
-------
(a) Governing Law, Assigns. This Agreement shall be governed by and
----------------------
construed in accordance with the internal laws of the Commonwealth of
Massachusetts without regard to conflict-of-law principles and shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns.
(b) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(c) Entire Agreement. Except for the provisions of the Purchase Agreement
----------------
referenced herein, this Agreement constitutes the entire understanding and
agreement of the parties with respect to the subject matter of this Agreement
and supersedes all prior agreements or understandings, written or oral, between
the parties with respect to the subject matter hereof.
-15-
<PAGE>
(d) Waivers. No waiver by any party hereto of any condition or of any
-------
breach of any provision of this Escrow Agreement shall be effective unless in
writing. No waiver by any party of any such condition or breach, in any one
instance, shall be deemed to be a further or continuing waiver of any such
condition or breach or a waiver of any other condition or breach of any other
provision contained herein.
(e) Amendment. This Agreement may be amended only with the written consent
---------
of the Buyer, the Escrow Agent and the Stockholders' Representative.
[Signatures are on the following page]
-16-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Escrow Agreement as
of the day and year first above written.
RENAISSANCE SOLUTIONS, INC.
By:________________________________
STATE STREET BANK AND TRUST COMPANY
By:________________________________
___________________________________
Mark R. Bruneau
COMPANY STOCKHOLDERS:
___________________________________
Mark R. Bruneau
___________________________________
Andrew R. Belt
___________________________________
Frederique Bouty
-17-
<PAGE>
ATTACHMENT A
------------
Company Stockholder Percentage
- ------------------- ----------
Mark R. Bruneau 60%
c/o C.M. Management Systems Ltd. Inc.
150 Federal Street
14th Floor
Boston, MA 02110
Andrew R. Belt 25%
c/o C.M. Management Systems Ltd. Inc.
150 Federal Street
14th Floor
Boston, MA 02110
Frederique Bouty 15%
c/o C.M. Management Systems Ltd. Inc.
150 Federal Street
14th Floor
Boston, MA 02110
-18-
<PAGE>
Exhibit B-1
-----------
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement"), made this 13th day of February
1997, is entered into by and between Renaissance Solutions, Inc., a Delaware
corporation with its principal place of business at Lincoln North, 55 Old
Bedford Road, Lincoln, MA 01773 (the "Company"), and Mark R. Bruneau, residing
at ____________________ (the "Employee").
Whereas, on February 13, 1997, the Company, C.M. Consulting Systems Ltd.,
Inc., a Massachusetts corporation ("COBA"), the Employee, as a stockholder of
COBA, and the other stockholders of COBA entered into a Stock Purchase Agreement
(the "Purchase Agreement"), pursuant to which the Company has agreed to acquire
all of the outstanding capital stock of COBA; and
Whereas, in connection with the consummation of the transactions
contemplated by the Purchase Agreement, the Company desires to employ the
Employee, and the Employee desires to be employed by the Company.
Now, therefore, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Term of Employment. The Company hereby agrees to employ the Employee,
------------------
and the Employee hereby accepts employment with the Company, upon the terms set
forth in this Agreement, for the period commencing on the Closing Date, as such
term is defined in the Purchase Agreement (the "Commencement Date"), and ending
on the fourth anniversary of the Commencement Date, unless sooner terminated in
accordance with the provisions of Section 4 (such period, as it may be extended,
the "Employment Period").
2. Title; Capacity. The Employee shall serve initially in such position
---------------
as the Employee and the Company shall, promptly following the Closing Date,
determine, or in such other position as the Company or its Board of Directors
(the "Board") may from time to time determine. The Employee shall be subject to
the supervision of, and shall have such authority as is delegated to him by, the
Board or such officer or officers of the Company designated by the Board.
The Employee hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position and such other duties and
responsibilities as the Board or its designee shall from time to time reasonably
assign to him. The Employee agrees to devote his entire business time,
attention and energies to the business and interests of the Company during the
Employment Period; provided, however, that the Employee shall be free to
-------- -------
participate in board,
<PAGE>
civic and charitable activities so long as such activities do not interfere with
his duties and responsibilities to the Company hereunder. The Employee agrees to
abide by the rules, regulations, instructions, personnel practices and policies
of the Company and any changes therein which may be adopted from time to time by
the Company.
3. Compensation and Benefits.
-------------------------
3.1 Base Salary. The Company shall pay the Employee, at such times as the
-----------
Company pays its employees in general, an annual base salary of $360,000 for the
one-year period commencing on the Commencement Date. Such base salary shall be
subject to adjustment thereafter as determined by the Board; provided, however,
-------- -------
that the Board shall not decrease the base salary during the Employment Period
without the prior written consent of the Employee.
3.2 Fringe Benefits. The Employee shall be entitled to participate in
----------------
all benefit programs that the Company establishes and makes available to its
employees generally, if any, to the extent that Employee's position, tenure,
salary, age, health and other qualifications make him eligible to participate.
3.3 Reimbursement of Expenses. The Company shall reimburse the Employee
-------------------------
for all reasonable travel, entertainment and other expenses incurred or paid by
the Employee in connection with, or related to, the performance of his duties,
responsibilities or services under this Agreement, upon presentation by the
Employee of documentation, expense statements, vouchers and/or such other
supporting information as the Company may request; provided, however, that such
-------- -------
travel, entertainment and other expenses shall be subject to limitation in
accordance with Company policy as in effect from time to time.
4. Employment Termination. The employment of the Employee by the Company
----------------------
pursuant to this Agreement shall terminate upon the occurrence of any of the
following:
4.1 Expiration of the Employment Period in accordance with Section 1;
4.2 At the election of the Company, for cause, immediately upon written
notice by the Company to the Employee. For the purposes of this Section 4.2,
cause for termination shall be deemed to exist upon (a) a good faith finding by
the Company of continual failure of the Employee to perform his assigned duties
for the Company, or dishonesty, gross negligence or willful misconduct related
to the performance of the Employee's duties for the Company; (b) the conviction
of the Employee of, or the entry of a pleading of guilty or nolo contendere by
the Employee to, any crime involving moral turpitude or any felony; (c)
Employee's habitual drunkenness, or the use, possession, distribution or being
under the influence of
-2-
<PAGE>
alcohol or illegal substances or drugs in the workplace or in a manner otherwise
affecting the Employee's performance of his duties for the Company (the only
exception is that the Employee may consume alcohol reasonably and responsibly,
if he so chooses, at legitimate business events and functions where alcohol is
legally available); or (d) the material breach by the Employee of any terms of
this Agreement, which breach continues for 30 days subsequent to written notice
from the Company to the Employee of the breach (unless such breach is not
susceptible to cure, in which case termination shall be deemed to be immediate);
4.3 Upon the death or disability of the Employee. As used in this
Agreement, the term "disability" shall mean the inability of the Employee, due
to a physical or mental disability, for a period of 120 days, whether or not
consecutive, during any 360-day period to perform the services contemplated
under this Agreement. A determination of disability shall be made by a
physician satisfactory to both the Employee and the Company; provided that if
-------- ----
the Employee and the Company do not agree on a physician, the Employee and the
Company shall each select a physician and such physicians together shall select
a third physician, whose determination as to disability shall be binding on all
parties; or
4.4 At the election of the Company or the Employee, upon not less than 30
days' prior written notice of termination.
5. Effect of Termination.
---------------------
5.1 Termination for Cause or Voluntary Termination. In the event the
----------------------------------------------
Employee's employment is terminated by the Company for cause pursuant to Section
4.2, or by the Employee pursuant to Section 4.4, the Company shall pay to the
Employee the compensation and benefits which would otherwise be payable to him
through the last day of his actual employment by the Company.
5.2 Termination for Death or Disability. If the Employee's employment is
-----------------------------------
terminated by death or because of disability pursuant to Section 4.3, the
Company shall pay to the estate of the Employee or to the Employee, as the case
may be, the compensation and benefits which would otherwise be payable to the
Employee through the date of his termination of employment because of death or
disability.
5.3 Termination Without Cause. If the Employee's employment is terminated
-------------------------
at the election of the Company pursuant to Section 4.4, the Company shall pay to
the Employee the base salary and benefits payable to him under Section 3, at the
times provided in Section 3, through the day immediately prior to the one-year
anniversary of the date of his termination of employment.
-3-
<PAGE>
5.4 Survival. The provisions of Sections 5 and 6 and the terms of the
--------
Non-disclosure Agreement (as defined below) shall survive the termination of
this Agreement.
6. Non-competition and Non-Solicitation
------------------------------------
6.1 Non-competition. During the Non-Competition Period (as defined below)
---------------
the Employee will not directly or indirectly:
(A) as an individual proprietor, partner, stockholder, officer, employee,
director, joint venturer, investor, lender, consultant, or in any
other capacity whatsoever (other than as the holder of not more than
one percent of the combined voting power of the outstanding stock of a
publicly held company), develop, design, produce, market, sell or
render (or assist any other person in developing, designing,
producing, marketing, selling or rendering) products or services
competitive with those developed, designed, produced, marketed, sold
or rendered by the Company or any subsidiary of the Company (whether
existing now or hereafter acquired or established) (a "Subsidiary")
while the Employee was employed by the Company; provided, however,
-------- -------
that nothing herein shall prohibit the Employee from holding up to 3%
of the publicly-traded securities of any corporation; or
(B) solicit, divert or take away, or attempt to divert or to take away,
the business or patronage of any of the clients, customers or
accounts, or prospective clients, customers or accounts, of the
Company or any of its Subsidiaries which were contracted, solicited or
served by the Employee while employed by the Company.
The term Non-Competition Period means the period of time commencing on the
Commencement Date and ending on (a) the first anniversary of the termination or
cessation of the Employee's employment, if such termination or cessation occurs
under Sections 4.1 or 4.3 or under Section 4.4 at the election of the Company,
and (b) the later of (i) the fourth anniversary of the Commencement Date, and
(ii) the first anniversary of the termination or cessation of the Employee's
employment, if such termination or cessation occurs under Section 4.2 or under
Section 4.4 at the election of the Employee.
6.2 Non-solicitation. While the Employee is employed by the Company and
----------------
for a period of one year after the termination or cessation of such employment
for any reason, the Employee will not directly or indirectly recruit, solicit or
hire or otherwise retain the services of any employee of the Company or of any
of its Subsidiaries, or induce or attempt to induce any employee of the Company
-4-
<PAGE>
or any of its Subsidiaries to terminate his/her employment with, or otherwise
cease his/her relationship with, the Company or such Subsidiary.
6.3 Interpretation. If any restriction set forth in Sections 6.1 or 6.2
--------------
is found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a geographic area, it shall be interpreted to extend only over the
maximum period of time, range of activities or geographic area as to which it
may be enforceable.
6.4 Equitable Remedies. The restrictions contained in this Section 6 are
------------------
necessary for the protection of the business and goodwill of the Company and are
considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of this Section 6 is likely to cause the Company
substantial and irrevocable damage and therefore, in the event of any such
breach, the Employee agrees that the Company, in addition to such other remedies
which may be available, shall be entitled to specific performance and other
injunctive relief.
7. Proprietary Information and Developments. Concurrently with the
----------------------------------------
execution of this Agreement, the Employee shall enter into an Invention and Non-
disclosure Agreement, a copy of which is attached hereto as Exhibit A (the "Non-
------- -
disclosure Agreement").
8. Notices. All notices required or permitted under this Agreement shall
-------
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 8.
9. Pronouns. Whenever the context may require, any pronouns used in this
--------
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
10. Entire Agreement. This Agreement, together with the Non-disclosure
----------------
Agreement, constitutes the entire agreement between the parties and supersedes
all prior agreements and understandings, whether written or oral, relating to
the subject matter of this Agreement.
11. Amendment. This Agreement may be amended or modified only by a
---------
written instrument executed by all of the parties hereto.
-5-
<PAGE>
12. Governing Law. This Agreement shall be construed, interpreted and
-------------
enforced in accordance with the internal laws (and not the law of conflicts) of
the Commonwealth of Massachusetts.
13. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of all of the parties hereto and their respective
successors and assigns, including any corporation with which or into which the
Company may be merged or which may succeed to its respective assets or business;
provided, however, that the obligations of the Employee are personal and shall
not be assigned by him.
14. Severability. The invalidly or unenforceability of any provision of
------------
this Agreement shall not affect the validly or enforceability of any other
provision of this Agreement.
15. Miscellaneous.
-------------
15.1 No delay or omission by the Company in exercising any right under
this Agreement shall operate as a waiver of that or any other right. A waiver
or consent given by the Company on any one occasion shall be effective only in
that instance and shall not be construed as a bar or waiver of any right on any
other occasion.
15.2 The captions of the sections of this Agreement are for convenience of
reference only and in no way define, limit or affect the scope or substance of
any section of this Agreement.
15.3 In case any provision of this Agreement shall be invalid, illegal or
otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.
15.4 This Agreement shall become effective upon the Closing Date (as such
term is defined in the Purchase Agreement) and shall be of no force and effect
if the Purchase Agreement is terminated in accordance with its terms.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
RENAISSANCE SOLUTIONS, INC.
By:________________________________
Name:
Title:
___________________________________
Mark R. Bruneau
-7-
<PAGE>
Exhibit A
---------
INVENTION AND NON-DISCLOSURE AGREEMENT
--------------------------------------
This Agreement is made between Renaissance Solutions, Inc., a Delaware
corporation (hereinafter referred to collectively with its subsidiaries as the
"Company"), and Mark R. Bruneau (the "Employee").
In consideration of the employment or the continued employment of the
Employee by the Company, the Company and the Employee agree as follows:
1. Proprietary Information.
-----------------------
(a) The Employee agrees that all information, whether or not in writing, of
a private, secret or confidential nature concerning the Company's business,
business relationships or financial affairs (collectively, "Proprietary
Information") is and shall be the exclusive property of the Company. By way of
illustration, but not limitation, Proprietary Information may include
inventions, products, processes, methods, techniques, formulas, compositions,
compounds, projects, developments, plans, research data, clinical data,
financial data, personnel data, computer programs, customer and supplier lists,
and contacts at or knowledge of customers or prospective customers of the
Company. The Employee will not disclose any Proprietary Information to any
person or entity other than employees of the Company or use the same for any
purposes (other than in the performance of his duties as an employee of the
Company) without written approval by an officer of the Company, either during or
after his employment with the Company, unless and until such Proprietary
Information has become public knowledge without fault by the Employee.
(b) The Employee agrees that all files, letters, memoranda, reports,
records, data, sketches, drawings, laboratory notebooks, program listings, or
other written, photographic, or other tangible material containing Proprietary
Information, whether created by the Employee or others, which shall come into
his custody or possession, shall be and are the exclusive property of the
Company to be used by the Employee only in the performance of his duties for the
Company. All such materials or copies thereof and all tangible property of the
Company in the custody or possession of the Employee shall be delivered to the
Company, upon the earlier of (i) a request by the Company or (ii) termination of
his employment. After such delivery, the Employee shall not retain any such
materials or copies thereof or any such tangible property.
(c) The Employee agrees that his obligation not to disclose or to use
information and materials of the types set forth in paragraphs (a) and (b)
above, and his obligation to return materials and tangible property, set forth
in paragraph (b)
<PAGE>
above, also extends to such types of information, materials and tangible
property of customers of the Company or suppliers to the Company or other third
parties who may have disclosed or entrusted the same to the Company or to the
Employee.
2. Developments.
------------
(a) The Employee will make full and prompt disclosure to the Company of all
inventions, improvements, discoveries, methods, developments, software, and
works of authorship, whether patentable or not, which are created, made,
conceived or reduced to practice by him or under his direction or jointly with
others during his employment by the Company, whether or not during normal
working hours or on the premises of the Company (all of which are collectively
referred to in this Agreement as "Developments").
(b) The Employee agrees to assign and does hereby assign to the Company (or
any person or entity designated by the Company) all his right, title and
interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications. However, this paragraph
2(b) shall not apply to Developments which do not relate to the present or
planned business or research and development of the Company and which are made
and conceived by the Employee not during normal working hours, not on the
Company's premises and not using the Company's tools, devices, equipment or
Proprietary Information. The Employee understands that, to the extent this
Agreement shall be construed in accordance with the laws of any state which
precludes a requirement in an employee agreement to assign certain classes of
inventions made by an employee, this paragraph 2(b) shall be interpreted not to
apply to any invention which a court rules and/or the Company agrees falls
within such classes. The Employee also hereby waives all claims to moral rights
in any Developments.
(c) The Employee agrees to cooperate fully with the Company, both during
and after his employment with the Company, with respect to the procurement,
maintenance and enforcement of copyrights, patents and other intellectual
property rights (both in the United States and foreign countries) relating to
Developments. The Employee shall sign all papers, including, without
limitation, copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights, and powers of attorney,
which the Company may deem necessary or desirable in order to protect its rights
and interests in any Development. The Employee further agrees that if the
Company is unable, after reasonable effort, to secure the signature of the
Employee on any such papers, any executive officer of the Company shall be
entitled to execute any such papers as the agent and the attorney-in-fact of the
Employee, and the Employee hereby irrevocably designates and appoints each
executive officer of the Company as his agent and attorney-in-fact to execute
any such papers on his behalf, and to take any and all actions as the
-2-
<PAGE>
Company may deem necessary or desirable in order to protect its rights and
interests in any Development, under the conditions described in this sentence.
3. Other Agreements.
----------------
The Employee hereby represents that, except as the Employee has disclosed
in writing to the Company, the Employee is not bound by the terms of any
agreement with any previous employer or other party to refrain from using or
disclosing any trade secret or confidential or proprietary information in the
course of his employment with the Company or to refrain from competing, directly
or indirectly, with the business of such previous employer or any other party.
The Employee further represents that his performance of all the terms of this
Agreement and as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information, knowledge or data
acquired by the Employee in confidence or in trust prior to his employment with
the Company, and the Employee will not disclose to the Company or induce the
Company to use any confidential or proprietary information or material belonging
to any previous employer or others.
4. United States Government Obligations.
------------------------------------
The Employee acknowledges that the Company from time to time may have
agreements with the other persons or with the United States Government, or
agencies thereof, which impose obligations or restrictions on the Company
regarding inventions made during the course of work under such agreements or
regarding the confidential nature of such work. The Employee agrees to be bound
by all such obligations and restrictions which are made known to the Employee
and to take all action necessary to discharge the obligations of the Company
under such agreements.
5. No Employment Contract.
----------------------
The Employee understands that this Agreement does not constitute a contract
of employment and does not imply that his employment will continue for any
period of time.
6. Miscellaneous.
-------------
(a) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(b) This Agreement supersedes all prior agreements, written or oral,
between the Employee and the Company relating to the subject matter of this
Agreement. This Agreement may not be modified, changed or discharged in whole or
in part, except by an agreement in writing signed by the Employee and the
Company. The Employee agrees that any change or changes in his duties, salary or
-3-
<PAGE>
compensation after the signing of this Agreement shall not affect the validity
or scope of this Agreement.
(c) This Agreement will be binding upon the Employee's heirs, executors and
administrators and will inure to the benefit of the Company and its successors
and assigns.
(d) No delay or omission by the Company in exercising any right under this
Agreement will operate as a waiver of that or any other right. A waiver or
consent given by the Company on any one occasion is effective only in that
instance and will not be construed as a bar to or waiver of any right on any
other occasion.
(e) The Employee expressly consents to be bound by the provisions of this
Agreement for the benefit of the Company or any subsidiary or affiliate thereof
to whose employ the Employee may be transferred without the necessity that this
Agreement be re-signed at the time of such transfer.
(f) The restrictions contained in this Agreement are necessary for the
protection of the business and goodwill of the Company and are considered by the
Employee to be reasonable for such purpose. The Employee agrees that any breach
of this Agreement is likely to cause the Company substantial and irrevocable
damage and therefore, in the event of any such breach, the Employee agrees that
the Company, in addition to such other remedies which may be available, shall be
entitled to specific performance and other injunctive relief.
(g) This Agreement is governed by and will be construed as a sealed
instrument under and in accordance with the laws of the Commonwealth of
Massachusetts. Any action, suit, or other legal proceeding which is commenced
to resolve any matter arising under or relating to any provision of this
Agreement shall be commenced only in a court of the Commonwealth of
Massachusetts (or, if appropriate, a federal court located within
Massachusetts), and the Company and the Employee each consents to the
jurisdiction of such a court.
-4-
<PAGE>
THE EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.
WITNESS: RENAISSANCE SOLUTIONS, INC.
Date:_______________________ By:______________________________
______________________________
(print name and title)
Date:_______________________ _________________________________
Mark R. Bruneau
-5-
<PAGE>
Exhibit B-2
-----------
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement"), made this 13th day of February
1997, is entered into by and between Renaissance Solutions, Inc., a Delaware
corporation with its principal place of business at Lincoln North, 55 Old
Bedford Road, Lincoln, MA 01773 (the "Company"), and Andrew R. Belt, residing at
____________________ (the "Employee").
Whereas, on February 13, 1997, the Company, C.M. Consulting Systems Ltd.,
Inc., a Massachusetts corporation ("COBA"), the Employee, as a stockholder of
COBA, and the other stockholders of COBA entered into a Stock Purchase Agreement
(the "Purchase Agreement"), pursuant to which the Company has agreed to acquire
all of the outstanding capital stock of COBA; and
Whereas, in connection with the consummation of the transactions
contemplated by the Purchase Agreement, the Company desires to employ the
Employee, and the Employee desires to be employed by the Company.
Now, therefore, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Term of Employment. The Company hereby agrees to employ the Employee,
------------------
and the Employee hereby accepts employment with the Company, upon the terms set
forth in this Agreement, for the period commencing on the Closing Date, as such
term is defined in the Purchase Agreement (the "Commencement Date"), and ending
on the fourth anniversary of the Commencement Date, unless sooner terminated in
accordance with the provisions of Section 4 (such period, as it may be extended,
the "Employment Period").
2. Title; Capacity. The Employee shall serve initially in such position
---------------
as the Employee and the Company shall, promptly following the Closing Date,
determine, or in such other position as the Company or its Board of Directors
(the "Board") may from time to time determine. The Employee shall be subject to
the supervision of, and shall have such authority as is delegated to him by, the
Board or such officer or officers of the Company designated by the Board.
The Employee hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position and such other duties and
responsibilities as the Board or its designee shall from time to time reasonably
assign to him. The Employee agrees to devote his entire business time,
attention and energies to the business and interests of the Company during the
Employment Period; provided, however, that the Employee shall be free to
-------- -------
participate in board,
<PAGE>
civic and charitable activities so long as such activities do not interfere with
his duties and responsibilities to the Company hereunder. The Employee agrees to
abide by the rules, regulations, instructions, personnel practices and policies
of the Company and any changes therein which may be adopted from time to time by
the Company.
3. Compensation and Benefits.
-------------------------
3.1 Base Salary. The Company shall pay the Employee, at such times as the
-----------
Company pays its employees in general, an annual base salary of $250,000 for the
one-year period commencing on the Commencement Date. Such base salary shall be
subject to adjustment thereafter as determined by the Board; provided, however,
-------- -------
that the Board shall not decrease the base salary during the Employment Period
without the prior written consent of the Employee.
3.2 Fringe Benefits. The Employee shall be entitled to participate in
----------------
all benefit programs that the Company establishes and makes available to its
employees generally, if any, to the extent that Employee's position, tenure,
salary, age, health and other qualifications make him eligible to participate.
3.3 Reimbursement of Expenses. The Company shall reimburse the Employee
-------------------------
for all reasonable travel, entertainment and other expenses incurred or paid by
the Employee in connection with, or related to, the performance of his duties,
responsibilities or services under this Agreement, upon presentation by the
Employee of documentation, expense statements, vouchers and/or such other
supporting information as the Company may request; provided, however, that such
-------- -------
travel, entertainment and other expenses shall be subject to limitation in
accordance with Company policy as in effect from time to time.
4. Employment Termination. The employment of the Employee by the Company
----------------------
pursuant to this Agreement shall terminate upon the occurrence of any of the
following:
4.1 Expiration of the Employment Period in accordance with Section 1;
4.2 At the election of the Company, for cause, immediately upon written
notice by the Company to the Employee. For the purposes of this Section 4.2,
cause for termination shall be deemed to exist upon (a) a good faith finding by
the Company of continual failure of the Employee to perform his assigned duties
for the Company, or dishonesty, gross negligence or willful misconduct related
to the performance of the Employee's duties for the Company; (b) the conviction
of the Employee of, or the entry of a pleading of guilty or nolo contendere by
the Employee to, any crime involving moral turpitude or any felony; (c)
Employee's habitual drunkenness, or the use, possession, distribution or being
under the influence of
-2-
<PAGE>
alcohol or illegal substances or drugs in the workplace or in a manner otherwise
affecting the Employee's performance of his duties for the Company (the only
exception is that the Employee may consume alcohol reasonably and responsibly,
if he so chooses, at legitimate business events and functions where alcohol is
legally available); or (d) the material breach by the Employee of any terms of
this Agreement, which breach continues for 30 days subsequent to written notice
from the Company to the Employee of the breach (unless such breach is not
susceptible to cure, in which case termination shall be deemed to be immediate);
4.3 Upon the death or disability of the Employee. As used in this
Agreement, the term "disability" shall mean the inability of the Employee, due
to a physical or mental disability, for a period of 120 days, whether or not
consecutive, during any 360-day period to perform the services contemplated
under this Agreement. A determination of disability shall be made by a
physician satisfactory to both the Employee and the Company; provided that if
-------- ----
the Employee and the Company do not agree on a physician, the Employee and the
Company shall each select a physician and such physicians together shall select
a third physician, whose determination as to disability shall be binding on all
parties; or
4.4 At the election of the Company or the Employee, upon not less than 30
days' prior written notice of termination.
5. Effect of Termination.
---------------------
5.1 Termination for Cause or Voluntary Termination. In the event the
----------------------------------------------
Employee's employment is terminated by the Company for cause pursuant to Section
4.2, or by the Employee pursuant to Section 4.4, the Company shall pay to the
Employee the compensation and benefits which would otherwise be payable to him
through the last day of his actual employment by the Company.
5.2 Termination for Death or Disability. If the Employee's employment is
-----------------------------------
terminated by death or because of disability pursuant to Section 4.3, the
Company shall pay to the estate of the Employee or to the Employee, as the case
may be, the compensation and benefits which would otherwise be payable to the
Employee through the date of his termination of employment because of death or
disability.
5.3 Termination Without Cause. If the Employee's employment is terminated
-------------------------
at the election of the Company pursuant to Section 4.4, the Company shall pay to
the Employee the base salary and benefits payable to him under Section 3, at the
times provided in Section 3, through the day immediately prior to the one-year
anniversary of the date of his termination of employment.
-3-
<PAGE>
5.4 Survival. The provisions of Sections 5 and 6 and the terms of the
--------
Non-disclosure Agreement (as defined below) shall survive the termination of
this Agreement.
6. Non-competition and Non-Solicitation
------------------------------------
6.1 Non-competition. During the Non-Competition Period (as defined below)
---------------
the Employee will not directly or indirectly:
(A) as an individual proprietor, partner, stockholder, officer, employee,
director, joint venturer, investor, lender, consultant, or in any
other capacity whatsoever (other than as the holder of not more than
one percent of the combined voting power of the outstanding stock of a
publicly held company), develop, design, produce, market, sell or
render (or assist any other person in developing, designing,
producing, marketing, selling or rendering) products or services
competitive with those developed, designed, produced, marketed, sold
or rendered by the Company or any subsidiary of the Company (whether
existing now or hereafter acquired or established) (a "Subsidiary")
while the Employee was employed by the Company; provided, however,
-------- -------
that nothing herein shall prohibit the Employee from holding up to 3%
of the publicly-traded securities of any corporation; or
(B) solicit, divert or take away, or attempt to divert or to take away,
the business or patronage of any of the clients, customers or
accounts, or prospective clients, customers or accounts, of the
Company or any of its Subsidiaries which were contracted, solicited or
served by the Employee while employed by the Company.
The term Non-Competition Period means the period of time commencing on the
Commencement Date and ending on (a) the first anniversary of the termination or
cessation of the Employee's employment, if such termination or cessation occurs
under Sections 4.1 or 4.3 or under Section 4.4 at the election of the Company,
and (b) the later of (i) the fourth anniversary of the Commencement Date, and
(ii) the first anniversary of the termination or cessation of the Employee's
employment, if such termination or cessation occurs under Section 4.2 or under
Section 4.4 at the election of the Employee.
6.2 Non-solicitation. While the Employee is employed by the Company and
----------------
for a period of one year after the termination or cessation of such employment
for any reason, the Employee will not directly or indirectly recruit, solicit or
hire or otherwise retain the services of any employee of the Company or of any
of its Subsidiaries, or induce or attempt to induce any employee of the Company
-4-
<PAGE>
or any of its Subsidiaries to terminate his/her employment with, or otherwise
cease his/her relationship with, the Company or such Subsidiary.
6.3 Interpretation. If any restriction set forth in Sections 6.1 or 6.2
--------------
is found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a geographic area, it shall be interpreted to extend only over the
maximum period of time, range of activities or geographic area as to which it
may be enforceable.
6.4 Equitable Remedies. The restrictions contained in this Section 6 are
------------------
necessary for the protection of the business and goodwill of the Company and are
considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of this Section 6 is likely to cause the Company
substantial and irrevocable damage and therefore, in the event of any such
breach, the Employee agrees that the Company, in addition to such other remedies
which may be available, shall be entitled to specific performance and other
injunctive relief.
7. Proprietary Information and Developments. Concurrently with the
----------------------------------------
execution of this Agreement, the Employee shall enter into an Invention and Non-
disclosure Agreement, a copy of which is attached hereto as Exhibit A (the "Non-
------- -
disclosure Agreement").
8. Notices. All notices required or permitted under this Agreement shall
-------
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 8.
9. Pronouns. Whenever the context may require, any pronouns used in this
--------
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
10. Entire Agreement. This Agreement, together with the Non-disclosure
----------------
Agreement, constitutes the entire agreement between the parties and supersedes
all prior agreements and understandings, whether written or oral, relating to
the subject matter of this Agreement.
11. Amendment. This Agreement may be amended or modified only by a
---------
written instrument executed by all of the parties hereto.
-5-
<PAGE>
12. Governing Law. This Agreement shall be construed, interpreted and
-------------
enforced in accordance with the internal laws (and not the law of conflicts) of
the Commonwealth of Massachusetts.
13. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of all of the parties hereto and their respective
successors and assigns, including any corporation with which or into which the
Company may be merged or which may succeed to its respective assets or business;
provided, however, that the obligations of the Employee are personal and shall
not be assigned by him.
14. Severability. The invalidly or unenforceability of any provision of
------------
this Agreement shall not affect the validly or enforceability of any other
provision of this Agreement.
15. Miscellaneous.
-------------
15.1 No delay or omission by the Company in exercising any right under
this Agreement shall operate as a waiver of that or any other right. A waiver
or consent given by the Company on any one occasion shall be effective only in
that instance and shall not be construed as a bar or waiver of any right on any
other occasion.
15.2 The captions of the sections of this Agreement are for convenience of
reference only and in no way define, limit or affect the scope or substance of
any section of this Agreement.
15.3 In case any provision of this Agreement shall be invalid, illegal or
otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.
15.4 This Agreement shall become effective upon the Closing Date (as such
term is defined in the Purchase Agreement) and shall be of no force and effect
if the Purchase Agreement is terminated in accordance with its terms.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
RENAISSANCE SOLUTIONS, INC.
By:________________________________
Name:
Title:
___________________________________
Andrew R. Belt
-7-
<PAGE>
Exhibit A
---------
INVENTION AND NON-DISCLOSURE AGREEMENT
--------------------------------------
This Agreement is made between Renaissance Solutions, Inc., a Delaware
corporation (hereinafter referred to collectively with its subsidiaries as the
"Company"), and Andrew R. Belt (the "Employee").
In consideration of the employment or the continued employment of the
Employee by the Company, the Company and the Employee agree as follows:
1. Proprietary Information.
-----------------------
(a) The Employee agrees that all information, whether or not in writing, of
a private, secret or confidential nature concerning the Company's business,
business relationships or financial affairs (collectively, "Proprietary
Information") is and shall be the exclusive property of the Company. By way of
illustration, but not limitation, Proprietary Information may include
inventions, products, processes, methods, techniques, formulas, compositions,
compounds, projects, developments, plans, research data, clinical data,
financial data, personnel data, computer programs, customer and supplier lists,
and contacts at or knowledge of customers or prospective customers of the
Company. The Employee will not disclose any Proprietary Information to any
person or entity other than employees of the Company or use the same for any
purposes (other than in the performance of his duties as an employee of the
Company) without written approval by an officer of the Company, either during or
after his employment with the Company, unless and until such Proprietary
Information has become public knowledge without fault by the Employee.
(b) The Employee agrees that all files, letters, memoranda, reports,
records, data, sketches, drawings, laboratory notebooks, program listings, or
other written, photographic, or other tangible material containing Proprietary
Information, whether created by the Employee or others, which shall come into
his custody or possession, shall be and are the exclusive property of the
Company to be used by the Employee only in the performance of his duties for the
Company. All such materials or copies thereof and all tangible property of the
Company in the custody or possession of the Employee shall be delivered to the
Company, upon the earlier of (i) a request by the Company or (ii) termination of
his employment. After such delivery, the Employee shall not retain any such
materials or copies thereof or any such tangible property.
(c) The Employee agrees that his obligation not to disclose or to use
information and materials of the types set forth in paragraphs (a) and (b)
above, and his obligation to return materials and tangible property, set forth
in paragraph (b)
<PAGE>
above, also extends to such types of information, materials and tangible
property of customers of the Company or suppliers to the Company or other third
parties who may have disclosed or entrusted the same to the Company or to the
Employee.
2. Developments.
------------
(a) The Employee will make full and prompt disclosure to the Company of all
inventions, improvements, discoveries, methods, developments, software, and
works of authorship, whether patentable or not, which are created, made,
conceived or reduced to practice by him or under his direction or jointly with
others during his employment by the Company, whether or not during normal
working hours or on the premises of the Company (all of which are collectively
referred to in this Agreement as "Developments").
(b) The Employee agrees to assign and does hereby assign to the Company (or
any person or entity designated by the Company) all his right, title and
interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications. However, this paragraph
2(b) shall not apply to Developments which do not relate to the present or
planned business or research and development of the Company and which are made
and conceived by the Employee not during normal working hours, not on the
Company's premises and not using the Company's tools, devices, equipment or
Proprietary Information. The Employee understands that, to the extent this
Agreement shall be construed in accordance with the laws of any state which
precludes a requirement in an employee agreement to assign certain classes of
inventions made by an employee, this paragraph 2(b) shall be interpreted not to
apply to any invention which a court rules and/or the Company agrees falls
within such classes. The Employee also hereby waives all claims to moral rights
in any Developments.
(c) The Employee agrees to cooperate fully with the Company, both during
and after his employment with the Company, with respect to the procurement,
maintenance and enforcement of copyrights, patents and other intellectual
property rights (both in the United States and foreign countries) relating to
Developments. The Employee shall sign all papers, including, without
limitation, copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights, and powers of attorney,
which the Company may deem necessary or desirable in order to protect its rights
and interests in any Development. The Employee further agrees that if the
Company is unable, after reasonable effort, to secure the signature of the
Employee on any such papers, any executive officer of the Company shall be
entitled to execute any such papers as the agent and the attorney-in-fact of the
Employee, and the Employee hereby irrevocably designates and appoints each
executive officer of the Company as his agent and attorney-in-fact to execute
any such papers on his behalf, and to take any and all actions as the
-2-
<PAGE>
Company may deem necessary or desirable in order to protect its rights and
interests in any Development, under the conditions described in this sentence.
3. Other Agreements.
----------------
The Employee hereby represents that, except as the Employee has disclosed
in writing to the Company, the Employee is not bound by the terms of any
agreement with any previous employer or other party to refrain from using or
disclosing any trade secret or confidential or proprietary information in the
course of his employment with the Company or to refrain from competing, directly
or indirectly, with the business of such previous employer or any other party.
The Employee further represents that his performance of all the terms of this
Agreement and as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information, knowledge or data
acquired by the Employee in confidence or in trust prior to his employment with
the Company, and the Employee will not disclose to the Company or induce the
Company to use any confidential or proprietary information or material belonging
to any previous employer or others.
4. United States Government Obligations.
------------------------------------
The Employee acknowledges that the Company from time to time may have
agreements with the other persons or with the United States Government, or
agencies thereof, which impose obligations or restrictions on the Company
regarding inventions made during the course of work under such agreements or
regarding the confidential nature of such work. The Employee agrees to be bound
by all such obligations and restrictions which are made known to the Employee
and to take all action necessary to discharge the obligations of the Company
under such agreements.
5. No Employment Contract.
----------------------
The Employee understands that this Agreement does not constitute a contract
of employment and does not imply that his employment will continue for any
period of time.
6. Miscellaneous.
-------------
(a) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(b) This Agreement supersedes all prior agreements, written or oral,
between the Employee and the Company relating to the subject matter of this
Agreement. This Agreement may not be modified, changed or discharged in whole
or in part, except by an agreement in writing signed by the Employee and the
Company. The Employee agrees that any change or changes in his duties, salary
or
-3-
<PAGE>
compensation after the signing of this Agreement shall not affect the validity
or scope of this Agreement.
(c) This Agreement will be binding upon the Employee's heirs, executors and
administrators and will inure to the benefit of the Company and its successors
and assigns.
(d) No delay or omission by the Company in exercising any right under this
Agreement will operate as a waiver of that or any other right. A waiver or
consent given by the Company on any one occasion is effective only in that
instance and will not be construed as a bar to or waiver of any right on any
other occasion.
(e) The Employee expressly consents to be bound by the provisions of this
Agreement for the benefit of the Company or any subsidiary or affiliate thereof
to whose employ the Employee may be transferred without the necessity that this
Agreement be re-signed at the time of such transfer.
(f) The restrictions contained in this Agreement are necessary for the
protection of the business and goodwill of the Company and are considered by the
Employee to be reasonable for such purpose. The Employee agrees that any breach
of this Agreement is likely to cause the Company substantial and irrevocable
damage and therefore, in the event of any such breach, the Employee agrees that
the Company, in addition to such other remedies which may be available, shall be
entitled to specific performance and other injunctive relief.
(g) This Agreement is governed by and will be construed as a sealed
instrument under and in accordance with the laws of the Commonwealth of
Massachusetts. Any action, suit, or other legal proceeding which is commenced
to resolve any matter arising under or relating to any provision of this
Agreement shall be commenced only in a court of the Commonwealth of
Massachusetts (or, if appropriate, a federal court located within
Massachusetts), and the Company and the Employee each consents to the
jurisdiction of such a court.
-4-
<PAGE>
THE EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.
WITNESS: RENAISSANCE SOLUTIONS, INC.
Date:_______________________ By:______________________________
______________________________
(print name and title)
Date:_______________________ _________________________________
Andrew R. Belt
-5-
<PAGE>
Exhibit B-3
-----------
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement"), made this 13th day of February
1997, is entered into by and between Renaissance Solutions, Inc., a Delaware
corporation with its principal place of business at Lincoln North, 55 Old
Bedford Road, Lincoln, MA 01773 (the "Company"), and Frederique Bouty, residing
at ____________________ (the "Employee").
Whereas, on February 13, 1997, the Company, C.M. Consulting Systems Ltd.,
Inc., a Massachusetts corporation ("COBA"), the Employee, as a stockholder of
COBA, and the other stockholders of COBA entered into a Stock Purchase Agreement
(the "Purchase Agreement"), pursuant to which the Company has agreed to acquire
all of the outstanding capital stock of COBA; and
Whereas, in connection with the consummation of the transactions
contemplated by the Purchase Agreement, the Company desires to employ the
Employee, and the Employee desires to be employed by the Company.
Now, therefore, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Term of Employment. The Company hereby agrees to employ the Employee,
------------------
and the Employee hereby accepts employment with the Company, upon the terms set
forth in this Agreement, for the period commencing on the Closing Date, as such
term is defined in the Purchase Agreement (the "Commencement Date"), and ending
on the fourth anniversary of the Commencement Date, unless sooner terminated in
accordance with the provisions of Section 4 (such period, as it may be extended,
the "Employment Period").
2. Title; Capacity. The Employee shall serve initially in such position
---------------
as the Employee and the Company shall, promptly following the Closing Date,
determine, or in such other position as the Company or its Board of Directors
(the "Board") may from time to time determine. The Employee shall be subject to
the supervision of, and shall have such authority as is delegated to him by, the
Board or such officer or officers of the Company designated by the Board.
The Employee hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position and such other duties and
responsibilities as the Board or its designee shall from time to time reasonably
assign to him. The Employee agrees to devote his entire business time,
attention and energies to the business and interests of the Company during the
Employment Period; provided, however, that the Employee shall be free to
-------- -------
participate in board,
<PAGE>
civic and charitable activities so long as such activities do not interfere with
his duties and responsibilities to the Company hereunder. The Employee agrees to
abide by the rules, regulations, instructions, personnel practices and policies
of the Company and any changes therein which may be adopted from time to time by
the Company.
3. Compensation and Benefits.
-------------------------
3.1 Base Salary. The Company shall pay the Employee, at such times as the
-----------
Company pays its employees in general, an annual base salary of $250,000 for the
one-year period commencing on the Commencement Date. Such base salary shall be
subject to adjustment thereafter as determined by the Board; provided, however,
-------- -------
that the Board shall not decrease the base salary during the Employment Period
without the prior written consent of the Employee.
3.2 Fringe Benefits. The Employee shall be entitled to participate in
----------------
all benefit programs that the Company establishes and makes available to its
employees generally, if any, to the extent that Employee's position, tenure,
salary, age, health and other qualifications make him eligible to participate.
3.3 Reimbursement of Expenses. The Company shall reimburse the Employee
-------------------------
for all reasonable travel, entertainment and other expenses incurred or paid by
the Employee in connection with, or related to, the performance of his duties,
responsibilities or services under this Agreement, upon presentation by the
Employee of documentation, expense statements, vouchers and/or such other
supporting information as the Company may request; provided, however, that such
-------- -------
travel, entertainment and other expenses shall be subject to limitation in
accordance with Company policy as in effect from time to time.
4. Employment Termination. The employment of the Employee by the Company
----------------------
pursuant to this Agreement shall terminate upon the occurrence of any of the
following:
4.1 Expiration of the Employment Period in accordance with Section 1;
4.2 At the election of the Company, for cause, immediately upon written
notice by the Company to the Employee. For the purposes of this Section 4.2,
cause for termination shall be deemed to exist upon (a) a good faith finding by
the Company of continual failure of the Employee to perform his assigned duties
for the Company, or dishonesty, gross negligence or willful misconduct related
to the performance of the Employee's duties for the Company; (b) the conviction
of the Employee of, or the entry of a pleading of guilty or nolo contendere by
the Employee to, any crime involving moral turpitude or any felony; (c)
Employee's habitual drunkenness, or the use, possession, distribution or being
under the influence of
-2-
<PAGE>
alcohol or illegal substances or drugs in the workplace or in a manner otherwise
affecting the Employee's performance of his duties for the Company (the only
exception is that the Employee may consume alcohol reasonably and responsibly,
if he so chooses, at legitimate business events and functions where alcohol is
legally available); or (d) the material breach by the Employee of any terms of
this Agreement, which breach continues for 30 days subsequent to written notice
from the Company to the Employee of the breach (unless such breach is not
susceptible to cure, in which case termination shall be deemed to be immediate);
4.3 Upon the death or disability of the Employee. As used in this
Agreement, the term "disability" shall mean the inability of the Employee, due
to a physical or mental disability, for a period of 120 days, whether or not
consecutive, during any 360-day period to perform the services contemplated
under this Agreement. A determination of disability shall be made by a
physician satisfactory to both the Employee and the Company; provided that if
-------- ----
the Employee and the Company do not agree on a physician, the Employee and the
Company shall each select a physician and such physicians together shall select
a third physician, whose determination as to disability shall be binding on all
parties; or
4.4 At the election of the Company or the Employee, upon not less than 30
days' prior written notice of termination.
5. Effect of Termination.
---------------------
5.1 Termination for Cause or Voluntary Termination. In the event the
----------------------------------------------
Employee's employment is terminated by the Company for cause pursuant to Section
4.2, or by the Employee pursuant to Section 4.4, the Company shall pay to the
Employee the compensation and benefits which would otherwise be payable to him
through the last day of his actual employment by the Company.
5.2 Termination for Death or Disability. If the Employee's employment is
-----------------------------------
terminated by death or because of disability pursuant to Section 4.3, the
Company shall pay to the estate of the Employee or to the Employee, as the case
may be, the compensation and benefits which would otherwise be payable to the
Employee through the date of his termination of employment because of death or
disability.
5.3 Termination Without Cause. If the Employee's employment is terminated
-------------------------
at the election of the Company pursuant to Section 4.4, the Company shall pay to
the Employee the base salary and benefits payable to him under Section 3, at the
times provided in Section 3, through the day immediately prior to the one-year
anniversary of the date of his termination of employment.
-3-
<PAGE>
5.4 Survival. The provisions of Sections 5 and 6 and the terms of the
--------
Non-disclosure Agreement (as defined below) shall survive the termination of
this Agreement.
6. Non-competition and Non-Solicitation
------------------------------------
6.1 Non-competition. During the Non-Competition Period (as defined below)
---------------
the Employee will not directly or indirectly:
(A) as an individual proprietor, partner, stockholder, officer, employee,
director, joint venturer, investor, lender, consultant, or in any
other capacity whatsoever (other than as the holder of not more than
one percent of the combined voting power of the outstanding stock of a
publicly held company), develop, design, produce, market, sell or
render (or assist any other person in developing, designing,
producing, marketing, selling or rendering) products or services
competitive with those developed, designed, produced, marketed, sold
or rendered by the Company or any subsidiary of the Company (whether
existing now or hereafter acquired or established) (a "Subsidiary")
while the Employee was employed by the Company; provided, however,
-------- -------
that nothing herein shall prohibit the Employee from holding up to 3%
of the publicly-traded securities of any corporation; or
(B) solicit, divert or take away, or attempt to divert or to take away,
the business or patronage of any of the clients, customers or
accounts, or prospective clients, customers or accounts, of the
Company or any of its Subsidiaries which were contracted, solicited or
served by the Employee while employed by the Company.
The term Non-Competition Period means the period of time commencing on the
Commencement Date and ending on (a) the first anniversary of the termination or
cessation of the Employee's employment, if such termination or cessation occurs
under Sections 4.1 or 4.3 or under Section 4.4 at the election of the Company,
and (b) the later of (i) the fourth anniversary of the Commencement Date, and
(ii) the first anniversary of the termination or cessation of the Employee's
employment, if such termination or cessation occurs under Section 4.2 or under
Section 4.4 at the election of the Employee.
6.2 Non-solicitation. While the Employee is employed by the Company and
----------------
for a period of one year after the termination or cessation of such employment
for any reason, the Employee will not directly or indirectly recruit, solicit or
hire or otherwise retain the services of any employee of the Company or of any
of its Subsidiaries, or induce or attempt to induce any employee of the Company
-4-
<PAGE>
or any of its Subsidiaries to terminate his/her employment with, or otherwise
cease his/her relationship with, the Company or such Subsidiary.
6.3 Interpretation. If any restriction set forth in Sections 6.1 or 6.2
--------------
is found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a geographic area, it shall be interpreted to extend only over the
maximum period of time, range of activities or geographic area as to which it
may be enforceable.
6.4 Equitable Remedies. The restrictions contained in this Section 6 are
------------------
necessary for the protection of the business and goodwill of the Company and are
considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of this Section 6 is likely to cause the Company
substantial and irrevocable damage and therefore, in the event of any such
breach, the Employee agrees that the Company, in addition to such other remedies
which may be available, shall be entitled to specific performance and other
injunctive relief.
7. Proprietary Information and Developments. Concurrently with the
----------------------------------------
execution of this Agreement, the Employee shall enter into an Invention and Non-
disclosure Agreement, a copy of which is attached hereto as Exhibit A (the "Non-
------- -
disclosure Agreement").
8. Notices. All notices required or permitted under this Agreement shall
-------
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 8.
9. Pronouns. Whenever the context may require, any pronouns used in this
--------
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
10. Entire Agreement. This Agreement, together with the Non-disclosure
----------------
Agreement, constitutes the entire agreement between the parties and supersedes
all prior agreements and understandings, whether written or oral, relating to
the subject matter of this Agreement.
11. Amendment. This Agreement may be amended or modified only by a
---------
written instrument executed by all of the parties hereto.
-5-
<PAGE>
12. Governing Law. This Agreement shall be construed, interpreted and
-------------
enforced in accordance with the internal laws (and not the law of conflicts) of
the Commonwealth of Massachusetts.
13. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of all of the parties hereto and their respective
successors and assigns, including any corporation with which or into which the
Company may be merged or which may succeed to its respective assets or business;
provided, however, that the obligations of the Employee are personal and shall
not be assigned by him.
14. Severability. The invalidly or unenforceability of any provision of
------------
this Agreement shall not affect the validly or enforceability of any other
provision of this Agreement.
15. Miscellaneous.
-------------
15.1 No delay or omission by the Company in exercising any right under
this Agreement shall operate as a waiver of that or any other right. A waiver
or consent given by the Company on any one occasion shall be effective only in
that instance and shall not be construed as a bar or waiver of any right on any
other occasion.
15.2 The captions of the sections of this Agreement are for convenience of
reference only and in no way define, limit or affect the scope or substance of
any section of this Agreement.
15.3 In case any provision of this Agreement shall be invalid, illegal or
otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.
15.4 This Agreement shall become effective upon the Closing Date (as such
term is defined in the Purchase Agreement) and shall be of no force and effect
if the Purchase Agreement is terminated in accordance with its terms.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
RENAISSANCE SOLUTIONS, INC.
By:________________________________
Name:
Title:
___________________________________
Frederique Bouty
-7-
<PAGE>
Exhibit A
---------
INVENTION AND NON-DISCLOSURE AGREEMENT
--------------------------------------
This Agreement is made between Renaissance Solutions, Inc., a Delaware
corporation (hereinafter referred to collectively with its subsidiaries as the
"Company"), and Frederique Bouty (the "Employee").
In consideration of the employment or the continued employment of the
Employee by the Company, the Company and the Employee agree as follows:
1. Proprietary Information.
-----------------------
(a) The Employee agrees that all information, whether or not in writing, of
a private, secret or confidential nature concerning the Company's business,
business relationships or financial affairs (collectively, "Proprietary
Information") is and shall be the exclusive property of the Company. By way of
illustration, but not limitation, Proprietary Information may include
inventions, products, processes, methods, techniques, formulas, compositions,
compounds, projects, developments, plans, research data, clinical data,
financial data, personnel data, computer programs, customer and supplier lists,
and contacts at or knowledge of customers or prospective customers of the
Company. The Employee will not disclose any Proprietary Information to any
person or entity other than employees of the Company or use the same for any
purposes (other than in the performance of his duties as an employee of the
Company) without written approval by an officer of the Company, either during or
after his employment with the Company, unless and until such Proprietary
Information has become public knowledge without fault by the Employee.
(b) The Employee agrees that all files, letters, memoranda, reports,
records, data, sketches, drawings, laboratory notebooks, program listings, or
other written, photographic, or other tangible material containing Proprietary
Information, whether created by the Employee or others, which shall come into
his custody or possession, shall be and are the exclusive property of the
Company to be used by the Employee only in the performance of his duties for the
Company. All such materials or copies thereof and all tangible property of the
Company in the custody or possession of the Employee shall be delivered to the
Company, upon the earlier of (i) a request by the Company or (ii) termination of
his employment. After such delivery, the Employee shall not retain any such
materials or copies thereof or any such tangible property.
(c) The Employee agrees that his obligation not to disclose or to use
information and materials of the types set forth in paragraphs (a) and (b)
above, and his obligation to return materials and tangible property, set forth
in paragraph (b)
<PAGE>
above, also extends to such types of information, materials and tangible
property of customers of the Company or suppliers to the Company or other third
parties who may have disclosed or entrusted the same to the Company or to the
Employee.
2. Developments.
------------
(a) The Employee will make full and prompt disclosure to the Company of all
inventions, improvements, discoveries, methods, developments, software, and
works of authorship, whether patentable or not, which are created, made,
conceived or reduced to practice by him or under his direction or jointly with
others during his employment by the Company, whether or not during normal
working hours or on the premises of the Company (all of which are collectively
referred to in this Agreement as "Developments").
(b) The Employee agrees to assign and does hereby assign to the Company (or
any person or entity designated by the Company) all his right, title and
interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications. However, this paragraph
2(b) shall not apply to Developments which do not relate to the present or
planned business or research and development of the Company and which are made
and conceived by the Employee not during normal working hours, not on the
Company's premises and not using the Company's tools, devices, equipment or
Proprietary Information. The Employee understands that, to the extent this
Agreement shall be construed in accordance with the laws of any state which
precludes a requirement in an employee agreement to assign certain classes of
inventions made by an employee, this paragraph 2(b) shall be interpreted not to
apply to any invention which a court rules and/or the Company agrees falls
within such classes. The Employee also hereby waives all claims to moral rights
in any Developments.
(c) The Employee agrees to cooperate fully with the Company, both during
and after his employment with the Company, with respect to the procurement,
maintenance and enforcement of copyrights, patents and other intellectual
property rights (both in the United States and foreign countries) relating to
Developments. The Employee shall sign all papers, including, without
limitation, copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights, and powers of attorney,
which the Company may deem necessary or desirable in order to protect its rights
and interests in any Development. The Employee further agrees that if the
Company is unable, after reasonable effort, to secure the signature of the
Employee on any such papers, any executive officer of the Company shall be
entitled to execute any such papers as the agent and the attorney-in-fact of the
Employee, and the Employee hereby irrevocably designates and appoints each
executive officer of the Company as his agent and attorney-in-fact to execute
any such papers on his behalf, and to take any and all actions as the
-2-
<PAGE>
Company may deem necessary or desirable in order to protect its rights and
interests in any Development, under the conditions described in this sentence.
3. Other Agreements.
----------------
The Employee hereby represents that, except as the Employee has disclosed
in writing to the Company, the Employee is not bound by the terms of any
agreement with any previous employer or other party to refrain from using or
disclosing any trade secret or confidential or proprietary information in the
course of his employment with the Company or to refrain from competing, directly
or indirectly, with the business of such previous employer or any other party.
The Employee further represents that his performance of all the terms of this
Agreement and as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information, knowledge or data
acquired by the Employee in confidence or in trust prior to his employment with
the Company, and the Employee will not disclose to the Company or induce the
Company to use any confidential or proprietary information or material belonging
to any previous employer or others.
4. United States Government Obligations.
------------------------------------
The Employee acknowledges that the Company from time to time may have
agreements with the other persons or with the United States Government, or
agencies thereof, which impose obligations or restrictions on the Company
regarding inventions made during the course of work under such agreements or
regarding the confidential nature of such work. The Employee agrees to be bound
by all such obligations and restrictions which are made known to the Employee
and to take all action necessary to discharge the obligations of the Company
under such agreements.
5. No Employment Contract.
----------------------
The Employee understands that this Agreement does not constitute a contract
of employment and does not imply that his employment will continue for any
period of time.
6. Miscellaneous.
-------------
(a) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(b) This Agreement supersedes all prior agreements, written or oral,
between the Employee and the Company relating to the subject matter of this
Agreement. This Agreement may not be modified, changed or discharged in whole or
in part, except by an agreement in writing signed by the Employee and the
Company. The Employee agrees that any change or changes in his duties, salary or
-3-
<PAGE>
compensation after the signing of this Agreement shall not affect the validity
or scope of this Agreement.
(c) This Agreement will be binding upon the Employee's heirs, executors and
administrators and will inure to the benefit of the Company and its successors
and assigns.
(d) No delay or omission by the Company in exercising any right under this
Agreement will operate as a waiver of that or any other right. A waiver or
consent given by the Company on any one occasion is effective only in that
instance and will not be construed as a bar to or waiver of any right on any
other occasion.
(e) The Employee expressly consents to be bound by the provisions of this
Agreement for the benefit of the Company or any subsidiary or affiliate thereof
to whose employ the Employee may be transferred without the necessity that this
Agreement be re-signed at the time of such transfer.
(f) The restrictions contained in this Agreement are necessary for the
protection of the business and goodwill of the Company and are considered by the
Employee to be reasonable for such purpose. The Employee agrees that any breach
of this Agreement is likely to cause the Company substantial and irrevocable
damage and therefore, in the event of any such breach, the Employee agrees that
the Company, in addition to such other remedies which may be available, shall be
entitled to specific performance and other injunctive relief.
(g) This Agreement is governed by and will be construed as a sealed
instrument under and in accordance with the laws of the Commonwealth of
Massachusetts. Any action, suit, or other legal proceeding which is commenced
to resolve any matter arising under or relating to any provision of this
Agreement shall be commenced only in a court of the Commonwealth of
Massachusetts (or, if appropriate, a federal court located within
Massachusetts), and the Company and the Employee each consents to the
jurisdiction of such a court.
-4-
<PAGE>
THE EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.
WITNESS: RENAISSANCE SOLUTIONS, INC.
Date:_______________________ By:______________________________
______________________________
(print name and title)
Date:_______________________ _________________________________
Frederique Bouty
-5-
<PAGE>
EXHIBIT C
BINGHAM, DANA & GOULD LETTERHEAD
February 13, 1997
Renaissance Solutions, Inc.
55 Old Bedford Road
Lincoln, MA 01773
Ladies and Gentlemen:
We have acted as special counsel to (i) C.M. Management Systems Ltd., Inc.,
a Massachusetts corporation (the "Company"), and (ii) Mark R. Bruneau, Andrew
Belt and Frederique Bouty (the "Company Stockholders") in connection with the
--------------------
proposed acquisition by Renaissance Solutions, Inc., a Delaware corporation (the
"Buyer"), of all of the issued and outstanding shares of the capital stock of
the Company pursuant to the Stock Purchase Agreement, dated as of February 13,
1997 (the "Stock Purchase Agreement"), by and among the Buyer, the Company and
the Company Stockholders. This opinion is delivered to you pursuant to Section
6.1(g) of the Stock Purchase Agreement. All capitalized terms that are defined
in the Stock Purchase Agreement and that are used herein without definition
shall have the meanings set forth for such terms in the Stock Purchase
Agreement.
In connection with the rendering of this opinion, we have reviewed
originals or copies of each of the Stock Purchase Agreement, the Escrow
Agreement and the Registration Rights Agreement (collectively, the
"Agreements"), certified copies of the charter documents and by-laws of the
Company, resolutions of the Board of Directors and Stockholders of the
Company authorizing the transactions contemplated by the Stock Purchase
Agreement, the certificates of public officials attached hereto as Exhibit 1 and
---------
such other documents as we have deemed necessary or appropriate for purposes of
this opinion.
As to all matters of fact (including factual conclusions and
characterizations and descriptions of purpose, intention or other state of
mind), we have relied entirely upon representations made to us by officers of
the Company and the Company Stockholders, the representations and warranties of
the Company and the Company Stockholders set forth in the Agreements, and
certificates delivered contemporaneously to us by officers of the Company and
by the Company Stockholders and have assumed, without independent inquiry or
investigation, the accuracy of such representations
<PAGE>
Renaissance Solutions, Inc.
February 13, 1997
Page 2
and such certificates. As to any opinion below relating to the valid existence,
qualification or corporate good standing of the Company in any jurisdiction, our
opinion relies entirely on and is limited by those certificates of public
officials aftached hereto as Exhibit 1. For purposes of the opinions set forth
---------
in paragraph 6 below, we have not undertaken any searches of court dockets or
other public records.
We have assumed the genuineness of all signatures (other than those on
behalf of the Company and the Company Stockholders), the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document.
When an opinion set forth below is given to the best of our knowledge, or
to our knowledge, or with reference to matters of which we are aware or which
are known to us, or with another similar qualification, the relevant knowledge
or awareness is limited to the actual knowledge or awareness of the individual
lawyers in the firm who have participated directly in the specific transactions
to which this opinion relates and without any special or additional
investigation undertaken for the purposes of this opinion.
Each opinion set forth below relating to the enforceability of any
agreement or instrument against the Company is subject to the following general
qualifications:
(i) as to any instrument delivered by the Company or the Company
Stockholders, we assume that the Company Stockholders have received the Initial
Cash Payment payable under the Stock Purchase Agreement;
(ii) as to any agreement or instrument to which the Company or the
Company Stockholders is a party, we assume that such agreement or instrument is
the binding obligation of each party thereto other than the Company and the
Company Stockholders;
(iii) the enforceability of any obligation of the Company or the Company
Stockholders may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, marshaling or other laws and rules of law affecting
the enforcement generally of creditors' rights and remedies (including such as
may deny giving effect to waivers of debtors' or guarantors' rights) and may be
subject to or limited by considerations of public policy;
<PAGE>
Renaissance Solutions, Inc.
February 13, 1997
Page 3
(iv) no opinion is given herein as to the availability of any specific or
equitable relief of any kind, or as to the enforceability of any indemnification
obligations of the Company or the Company Stockholders to the extent the
enforcement of such obligations may be considered by a court having jurisdiction
thereover to violate any applicable securities laws;
(v) the enforcement of any of your rights may in all cases be subject to an
implied duty of good faith and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity);
and
(vi) we have assumed that the Buyer has and is qualified to do business in
any and all jurisdictions in which such qualification is necessary.
Subject to the limitations set forth herein, we have made such examination
of law as we have deemed necessary for purposes of this opinion. This opinion
is limited solely to the internal laws of The Commonwealth of Massachusetts as
applied by courts located in Massachusetts, and the laws of the United States of
America, to the extent that the same may apply to or govern such transactions,
excluding any federal or state securities laws and the antitrust laws of the
United States, including without limitation the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, as to which we express no opinion.
We understand that all of the foregoing assumptions, limitations and
qualifications are acceptable to you.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation validly existing and in corporate good
standing under the laws of The Commonwealth of Massachusetts. The Company has
the corporate power and authority to lease its real property, to own and use the
properties owned and used by it, and to conduct its business as presently
conducted.
2. The authorized capital stock of the Company consists of 7,500 shares
of common stock, no par value per share ("Common Stock"). As of the Closing
Date, based solely on our review of Company stock records kept and maintained by
the Company, there are 1,000 shares of Common Stock issued and outstanding, all
of which are owned of record by the Company Stockholders as set forth on
Schedule I to the Stock Purchase Agreement, and all of such shares of Common
Stock have been duly authorized and validly issued, are fully paid and non-
assessable and have not been
<PAGE>
Renaissance Solutions, Inc.
February 13, 1997
Page 4
issued in violation of any preemptive or similar rights imposed by statute or
the Company's charter or by-laws or, to our knowledge, any other preemptive or
similar rights. To our knowledge, and except as set forth in the Stock Purchase
Agreement and the Disclosure Schedule, there are no outstanding or authorized
(i) options, warrants, rights, contracts, calls, puts, rights to subscribe,
conversion rights or other agreements or commitments to which the Company is a
party or which are binding upon the Company providing for the issuance,
disposition or acquisition of any of its capital stock, (ii) stock appreciation,
phantom stock or similar rights with respect to the Company, or (iii)
agreements, voting trusts, proxies, or understandings with respect to the voting
or registration under the Securities Act of any shares of capital stock of the
Company.
3. The execution and delivery by the Company of each of the Agreements,
and the performance by the Company of its obligations thereunder and the
transactions contemplated thereby, are within the corporate power and authority
of the Company. The execution and delivery of the Agreements by the Company, the
performance of the Agreements by the Company, and the consummation by the
Company of the transactions contemplated by the Agreements have been duly and
validly authorized by all necessary corporate action on the part of the Company.
4. Each of the Agreements has been duly executed and delivered by the
Company and the Company Stockholders and constitutes a valid and binding
obligation of the Company and the Company Stockholders, enforceable in
accordance with the respective terms of each such Agreement (other than Section
6 of the Registration Rights Agreement, as to which we express no opinion).
5. Except as set forth in the Stock Purchase Agreement and the
Disclosure Schedule, neither the execution and delivery of the Agreements by the
Company or the Company Stockholders, nor the consummation of the transactions
contemplated thereby or the performance by the Company or the Company
Stockholders of their respective obligations thereunder, will (i) conflict with
or result in any breach or violation of any term of the articles of organization
or by-laws of the Company, (ii) require on the part of the Company or any of the
Company Stockholders any filing with, or permit, authorization, consent or
approval of, any Governmental Entity which has not been filed or obtained, (iii)
conflict with, result in a breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel or require any
notice, consent or waiver (which has not been obtained) under, any contract,
lease, sublease, license, sublicense, franchise, permit, indenture,
<PAGE>
Renaissance Solutions, Inc.
February 13, 1997
Page 5
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest or other agreement or instrument known to us to which the Company, any
Subsidiary of the Company or any of the Company Stockholders is a party or by
which the Company, any Subsidiary of the Company or any of the Company
Stockholders is bound or to which any of the Company's or any Subsidiary of the
Company's assets is subject, or (iv) violate any statute, rule or regulation or
any order, writ, injunction, or decree, known to us, applicable to the Company
or any of the Company Stockholders.
6. Except as set forth in the Disclosure Schedule, to the best of our
knowledge, neither the Company nor any of its Subsidiaries (i) is subject to any
unsatisfied judgment, order, decree, stipulation or injunction, or (ii) is a
party or is threatened to be made a party to any complaint, action, suit,
proceeding, hearing or investigation of or in any court or administrative agency
of any federal, state, local, or foreign jurisdiction or before any arbitrator.
This opinion has been delivered solely for your use and benefit in
connection with the transactions contemplated by the Agreements and may not be
used, circulated, quoted, relied upon or otherwise referred to by anyone, other
than the other parties to the Stock Purchase Agreement and their legal advisors,
for any other purpose without our prior written consent. The opinions expressed
herein are given as of the date hereof and we undertake no obligation hereby,
and disclaim any obligation, to advise you of any change after the date hereof
pertaining to any matter referred to herein.
Very truly yours,
BINGHAM, DANA & GOULD LLP
<PAGE>
Exhibit 1
---------
A copy of a certificate of corporate good standing for the Company from the
Secretary of State for the Commonwealth of Massachusetts is attached hereto.
<PAGE>
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
Agreement dated as of February 13, 1997, by and among Renaissance
Solutions, Inc., a corporation organized under the laws of the State of Delaware
(the "Company"), and Mark R. Bruneau, Andrew R. Belt and Frederique Bouty
(individually, a "Stockholder" and collectively, the "Stockholders").
INTRODUCTION
------------
The Company and the Stockholders have, as of the date hereof, entered into
a certain Stock Purchase Agreement (the "Purchase Agreement") pursuant to which,
upon and subject to the occurrence of certain events, the Company may issue to
the Stockholders shares of Common Stock, $.0001 par value per share ("Common
Stock"), of the Company. The Stockholders wish to have, and the Company is
willing to grant to them, certain rights with respect to the registration of
such shares of Common Stock, if any are so issued.
In consideration of the mutual covenants and promises contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Stockholders agree as
follows:
1. Certain Definitions. As used in this Section 1 and elsewhere in this
-------------------
Agreement, the following terms shall have the following respective meanings:
"Commission" means the Securities and Exchange Commission, or any other
----------
Federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
------------
any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"First Contingent Payment Date" means the date of payment of the First
-----------------------------
Contingent Payment by the Company to the Stockholders in accordance with the
terms of the Purchase Agreement.
-1-
<PAGE>
"Registration Statement" means a registration statement filed by the
----------------------
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"Registration Expenses" means the expenses described in Section 5.
---------------------
"Registrable Shares" means (a) the shares of Common Stock, if any, issued
------------------
to the Stockholders pursuant to Purchase Agreement and (b) any other shares of
Common Stock of the Company issued in respect of such shares (because of stock
splits, stock dividends, reclassifications, recapitalizations, or similar
events); provided, however, that shares of Common Stock which are Registrable
-------- -------
Shares shall cease to be Registrable Shares (i) upon any sale pursuant to a
Registration Statement, Section 4(1) of the Securities Act or Rule 144 under the
Securities Act or upon any sale in any manner to a person or entity which, by
virtue of Section 11 of this Agreement, is not entitled to the rights provided
in this Agreement, (ii) at such time as all of the Registrable Shares then held
by the Rightsholders may be sold without restriction as to volume under Rule
144, or (iii) with respect to a Rightsholder, at such time as all such shares
may be sold by such Rightsholder under Rule 144(k).
"Rightsholders" means the Stockholders and any other person or entity who
-------------
becomes a Rightsholder under this Agreement pursuant to Section 11.
"Second Contingent Payment Date" means the date of payment of the Second
------------------------------
Contingent Payment by the Company to the Stockholders in accordance with the
terms of the Purchase Agreement.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.
Other terms used herein and not otherwise defined shall have the respective
meanings ascribed to them in the Purchase Agreement.
2. Demand Registration Rights.
--------------------------
(a) Subject to the provisions of paragraph (c) below, from and after the
First Contingent Payment Date and prior to the first anniversary thereof, the
-2-
<PAGE>
Rightsholders, by an election of the Stockholders' Representative, may request,
in writing, that the Company effect the registration of up to 35% of the
Registrable Shares owned by each Rightsholder and issued to him as part of the
First Contingent Payment (the "First Demand"). Subject to the provisions of
paragraph (c) below, from and after the Second Contingent Payment Date and prior
to the first anniversary thereof, the Rightsholders, by an election of the
Stockholders' Representative, may request, in writing, that the Company effect
the registration of up to 35% of the Registrable Shares owned by each
Rightsholder and issued to him as part of the First Contingent Payment or the
Second Contingent Payment, less such number of Registrable Shares as were
registered pursuant to the First Demand. If the Rightsholders intend to
distribute such Registrable Shares by means of an underwriting, the
Stockholders' Representative shall so advise the Company in his request. In the
event either such registration is underwritten, the right of Rightsholders to
participate shall be conditioned on such Rightsholders' participation in such
underwriting. Upon receipt of such a request, the Company shall, as
expeditiously as possible, use its best efforts to effect the registration of
all Registrable Shares which the Company has been requested to so register
(subject to the maximums stated above in this paragraph (a)) on such
registration form selected by the Company as the Company is then eligible to
use. Notwithstanding any other provision of this Section 2, if the managing
underwriter(s) advises the Rightsholders participating in the registration in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the number of Registrable Shares that may be included in
the underwriting shall be allocated among all such Rightsholders in proportion
(as nearly as practicable) to the amount of Registrable Shares of the Company
owned by each such Rightsholder.
(b) The Company shall not be required to effect more than two registrations
pursuant to paragraph (a) above.
(c) If at the time of any request to register Registrable Shares pursuant
to this Section 2 the Company is engaged or has fixed plans to engage within 30
days of the time of the request in a registered public offering as to which the
Rightsholders may include Registrable Shares pursuant to Section 3 (subject to
the limitations set forth therein) or is engaged in any other activity which, in
the good faith determination of the Company's Board of Directors, would be
adversely affected by the requested registration to the material detriment of
the Company, then the Company may at its option direct that such request be
delayed for a period not in excess of six months from the effective date of such
offering or the date of commencement of such other material activity, as the
case may be, such right to delay a request to be exercised by the Company not
more than once.
-3-
<PAGE>
3. Incidental Registration Rights.
------------------------------
(a) From and after the First Contingent Payment Date and until the first
anniversary of the Second Contingent Payment Date (or, if no Second Contingent
Payment is made, the date by which such payment would have been made), whenever
the Company proposes to file a Registration Statement at any time and from time
to time relating to an offering in which the Company proposes to sell shares of
Common Stock for its own account, it will, prior to such filing, give at least
20 days' written notice to all Rightsholders of its intention to do so (subject
to the limitations set forth in paragraph (c) below) and, upon the written
request of a Rightsholder or Rightsholders given within 20 days after the
Company provides such notice (which request shall state the intended method of
disposition of such Registrable Shares), the Company shall use its best efforts
to cause all Registrable Shares which the Company has been requested by such
Rightsholder or Rightsholders to register to be registered under the Securities
Act to the extent necessary to permit their sale or other disposition in
accordance with the intended methods of distribution specified in the request of
such Rightsholder or Rightsholders; provided, that the Company shall have the
right to postpone or withdraw any registration effected pursuant to this Section
3 without obligation to any Rightsholder.
(b) In connection with any offering under this Section 3 involving an
underwriting, the Company shall not be required to include any Registrable
Shares in such underwriting unless the holders thereof accept the terms of the
underwriting as agreed upon between the Company and the underwriter(s) of such
offering. If in the opinion of the managing underwriter(s) of such offering the
registration of all, or part of, the shares of Common Stock (the "Incidental
Shares") which the Rightsholders have requested to be included pursuant to this
Section 3 and/or which other holders of shares of Common Stock or other
securities of the Company entitled to include shares of Common Stock in such
registration have requested to be included would materially and adversely affect
such public offering, then the Company shall be required to include in the
underwriting only that number of such shares, if any, which the managing
underwriter(s) believe(s) may be sold without causing such adverse effect. If
the number of Registrable Shares to be included in the underwriting in
accordance with the foregoing is less than the total number of shares which the
Rightsholders have requested to be included, then (i) the Company shall be
entitled to include all shares that it desires to be registered and (ii) the
Rightsholders who have requested registration and other holders of shares of
Common Stock or other securities of the Company entitled to include shares of
Common Stock in such registration on a parity with the Rightsholders shall
participate in the underwriting
-4-
<PAGE>
pro rata based upon their total ownership of shares of Common Stock of the
Company.
(c) Notwithstanding anything in the foregoing to the contrary, the Company
shall not be required to provide any advance notice to Rightsholders in
connection with any offering under this Section 3 involving an underwriting if
the Company has been informed that in the opinion of the managing underwriter(s)
the inclusion of any Incidental Shares in such offering would materially and
adversely affect the offering. In such event, the Company will provide written
notice to all Rightsholders of such managing underwriter's(s') opinion, which
notice need not be given prior to the filing of the applicable Registration
Statement.
4. Registration Procedures. If and whenever the Company is required by
-----------------------
the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registrable Shares under the Securities Act, the
Company shall:
(a) file with the Commission a Registration Statement with respect to such
Registrable Shares and use its best efforts to cause that Registration Statement
to become and remain effective for the period specified in paragraph (b) below;
(b) as expeditiously as possible prepare and file with the Commission any
amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep the
Registration Statement effective for a period ending on the earlier of (i) 30
days after the effective date (excluding any days on which the Company requires
the Rightsholders to cease sales of shares as provided below) or (ii) the date
on which all Registrable Shares registered under such Registration Statement
have been sold; provided, however, that the Company may by written notice
require that each Rightsholder who is selling shares pursuant to such
registration (a "Selling Holder") immediately cease sales of shares pursuant to
such Registration Statement at any time that (A) the Company becomes engaged in
a business activity or negotiation which is not disclosed in the Registration
Statement (or the prospectus included therein) and which the Company desires to
keep confidential for business purposes, (B) the Company determines that a
particular disclosure would be premature or would adversely affect the Company
or its business or prospects, or (C) the Registration Statement can no longer be
used under the existing rules and regulations promulgated under the Securities
Act. The Company shall not be required to disclose to the Selling Holder(s) the
reasons for requiring a suspension of sales hereunder, and the Selling Holder(s)
shall not disclose to any third party the existence of any such suspension;
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<PAGE>
(c) as expeditiously as possible furnish to each Selling Holder such
reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as the Selling Holder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares owned
by the Selling Holder; and
(d) as expeditiously as possible use its best efforts to register or
qualify the Registrable Shares covered by the Registration Statement under the
securities or Blue Sky laws of such states as the Selling Holders shall
reasonably request, and do any and all other acts and things that may reasonably
be necessary or desirable to enable the Selling Holders to consummate the public
sale or other disposition in such states of the Registrable Shares owned by the
Selling Holders; provided, however, that the Company shall not be required in
-------- -------
connection with this paragraph (d) to qualify as a foreign corporation or
execute a general consent to service of process in any jurisdiction.
If the Company has delivered preliminary or final prospectuses to the
Selling Holders and after having done so the prospectus is amended to comply
with the requirements of the Securities Act, the Company shall promptly notify
the Selling Holders and, if requested, the Selling Holders shall immediately
cease making offers of Registrable Shares and return all undistributed
prospectuses to the Company. The Company shall promptly provide the Selling
Holders with revised prospectuses and, following receipt of the revised
prospectuses, the Selling Holders shall be free to resume making offers of the
Registrable Shares.
5. Allocation of Expenses. The Selling Holders, on the one hand, and the
----------------------
Company, on the other hand, will share equally in all Registration Expenses of
all registrations under Section 2 of this Agreement; provided, however, that if
a registration is withdrawn at the request of the Rightsholders requesting such
registration and if the requesting holders elect not to have such registration
counted as a registration requested under Section 2, the requesting
Rightsholders shall pay the Registration Expenses of such registration pro rata
in accordance with the number of their Registrable Shares included in such
registration. For purposes of this Section 5, the term "Registration Expenses"
shall mean all expenses incurred by the Company in complying with this
Agreement, including without limitation all registration and filing fees,
exchange listing fees, printing expenses, fees and disbursements of counsel for
the Company, state Blue Sky fees and expenses, and the expense of any special
audits incident to or required by any such registration, but excluding
underwriting discounts, selling commissions and the fees and expenses of the
Selling Holders' own
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<PAGE>
counsel, all of which shall be borne by the Selling Holders.
6. Indemnification. In the event of any registration of any of the
---------------
Registrable Shares under the Securities Act pursuant to this Agreement, the
Company will indemnify and hold harmless the seller of such Registrable Shares,
each underwriter of such Registrable Shares, and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities Act or
the Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act, the Exchange Act, state securities or Blue Sky
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Registration
Statement under which such Registrable Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company will reimburse such seller,
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by such seller, underwriter or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
-------- -------
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or omission made in such
Registration Statement, preliminary prospectus or prospectus, or any such
amendment or supplement, in reliance upon and in conformity with information
furnished to the Company, in writing, by or on behalf of such seller,
underwriter or controlling person specifically for use in the preparation
thereof.
In the event of any registration of any of the Registrable Shares under the
Securities Act pursuant to this Agreement, each seller of Registrable Shares,
severally and not jointly, will indemnify and hold harmless the Company, each of
its directors and officers and each underwriter (if any) and each person, if
any, who controls the Company or any such underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which the Company, such directors and
officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under
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<PAGE>
which such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information furnished in writing to the Company by or on
behalf of such seller, specifically for use in connection with the preparation
of such Registration Statement, prospectus, amendment or supplement; provided,
--------
however, that the obligations of such Rightsholders hereunder shall be limited
- -------
to an amount equal to the proceeds to each Rightsholder of Registrable Shares
sold as contemplated herein.
Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
--------
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
-------- -------
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement unless and to the extent that the Indemnifying
Party is adversely affected by such failure. The Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
-------- -------
Indemnifying Party shall pay such expense if representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between the Indemnified Party and
any other party represented by such counsel in such proceeding. No Indemnifying
Party, in the defense of any such claim or litigation shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation, and no Indemnified Party
shall consent to entry of any judgment or settle such claim or litigation
without the prior written consent of the Indemnifying Party.
7. Indemnification with Respect to Underwritten Offering. In the event
-----------------------------------------------------
that Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Section 2(a), the Company agrees to enter into
an underwriting agreement containing customary representations and warranties
with
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<PAGE>
respect to the business and operations of an issuer of the securities being
registered and customary covenants and agreements to be performed by such
issuer, including without limitation customary provisions with respect to
indemnification by the Company of the underwriters of such offering.
8. Information by Holder. Each Rightsholder of Registrable Shares
---------------------
included in any registration shall furnish to the Company such information
regarding such holder and the distribution proposed by such holder as the
Company may reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this
Agreement.
9. "Stand-Off" Agreement. Each Rightsholder, if requested by an
--------------------
underwriter of Common Stock or other securities of the Company, shall agree not
to sell or otherwise transfer or dispose of any Registrable Shares or other
securities of the Company held by such Rightsholder for a specified period of
time (not to exceed 180 days) following the effective date of a Registration
Statement. Any such Stand-Off Agreement shall be in writing in a form
satisfactory to the Company and such underwriter. The Company may impose stop-
transfer instructions with respect to the Registrable Shares or other securities
subject to the foregoing restriction until the end of the stand-off period.
10. Effectiveness. This Agreement shall become effective upon the
-------------
occurrence of the Closing under the Purchase Agreement. If the Purchase
Agreement shall be terminated without the occurrence of such a Closing, this
Agreement (and all of the rights and obligations of the parties hereunder) shall
terminate simultaneously.
11. Transfers of Certain Rights; Additional Rightsholders.
-----------------------------------------------------
(a) General. The rights granted to each Rightsholder pursuant to the terms
-------
of this Agreement may be transferred by such Rightsholder to another
Rightsholder, to any affiliate of such Rightsholder, or to any member of the
immediate family of such Rightsholder, or any trust established for the benefit
of any of the foregoing; provided, however, that in the case of any transfer
-------- -------
referred to in this paragraph (a), the Company is given written notice by the
transferor at the time of such transfer stating the name and address of the
transferee and identifying the securities with respect to which such rights are
being assigned.
(b) Transferees. Any transferee to whom rights hereunder are transferred
-----------
shall, as a condition to such transfer, deliver to the Company a written
instrument by which such transferee agrees to be bound by the obligations
imposed
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<PAGE>
upon Rightsholders under this Agreement to the same extent as if such
transferee were a party hereto.
(c) Subsequent Transferees. A transferee to whom rights are transferred
----------------------
pursuant to this Section 11 may not again transfer such rights to any other
person or entity, other than as provided in (a) and (b) above.
12. No Assignment. Except as provided in Section 11 hereof, the rights
-------------
granted pursuant to this Agreement may not be transferred or assigned by any
Rightsholder.
13. Amendments. The provisions of this Agreement may be modified or
----------
amended at any time and from time to time only by an agreement or consent in
writing executed by the Company and the holders of a majority of the Registrable
Shares then outstanding; provided, however, that the registration rights granted
under this Agreement may be amended only in a manner which affects all
Registrable Shares in the same fashion.
14. Notices. All notices, requests, consents and other communications
-------
required to be given pursuant to this Agreement shall be in writing and shall be
given by personal delivery or by certified or registered mail, postage prepaid,
return receipt requested. Notices shall be deemed effective when personally
delivered or five days after being so mailed, as the case may be, to the parties
at the following respective addresses or at such other address of which either
party shall notify the other in accordance with this Section 14:
The Company: Renaissance Solutions, Inc.
Lincoln North
55 Old Bedford Road
Lincoln, Massachusetts 01773
Attention: President
With a copy to: Hal J. Leibowitz, Esq.
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
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<PAGE>
Any
Rightsholder: c/o C.M. Management Systems Ltd. Inc.
150 Federal Street
14th Floor
Boston, MA 02110
With a copy to: James C. Stokes, Esq.
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
15. Entire Agreement; Governing Law. This Agreement, together with
-------------------------------
the Purchase Agreement, embodies the entire agreement and understanding between
the parties, and supersedes all prior agreements and understandings relating to
the subject matter hereof. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the Commonwealth of Massachusetts,
without giving effect to conflict of laws provisions.
16. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. Headings. The headings of the sections, subsections, and
--------
paragraphs of this Agreement have been added for convenience only and shall not
be deemed to be a part hereof.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Renaissance Solutions, Inc.
By: ___________________________
Title:_________________________
STOCKHOLDERS:
_______________________________
Mark R. Bruneau
_______________________________
Andrew R. Belt
_______________________________
Frederique Bouty
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<PAGE>
EXHIBIT E
RENAISSANCE SOLUTIONS, INC.
EMPLOYMENT AGREEMENT
AGREEMENT made this ______ day of ____________, 19__, between RENAISSANCE
SOLUTIONS, INC., Delaware limited partnership ("Renaissance"), and NAME of CITY,
STATE (the "Employee").
WITNESSETH:
WHEREAS, Renaissance desires to employ the Employee, and the Employee
desires to be employed by Renaissance.
NOW, THEREFORE, in consideration of the mutual covenants and premises
herein contained, and for other valuable consideration, receipt of which is
hereby acknowledged, Renaissance and the Employee hereby agree as follows:
1. EMPLOYMENT.
Renaissance shall employ the Employee, and the Employee shall accept
employment from Renaissance, commencing on ______________ (the "Commencement
Date"), and ending on the date of termination provided for in Section 10 hereof.
the Employee shall devote his/her full time and efforts to the business and
affairs of Renaissance and faithfully perform, to the best of his/her ability,
such duties and responsibilities as shall from time to time be assigned to
him/her by any duly authorized officer or representative of Renaissance. The
Employee agrees to abide by the rules, regulations, instructions, personnel
practices and policies of Renaissance and any changes therein which may be
adopted from time to time by Renaissance. The Employee acknowledges receipt of
copies of all such rules and policies committed to writing as of the date of
this Agreement.
2. COMPENSATION OF EMPLOYEE; VACATION AND EXPENSES.
(a) For his/her services while employed by Renaissance, Renaissance shall
pay the Employee a salary at the rate of $_____________ per annum, payable in
accordance with Renaissance's standard payroll practices (the "Salary"). If the
Employee commences work on any day other than the first business day of the
applicable payroll period or terminates work on any day other than the last
business day of the applicable payroll period, his/her compensation for such
month will be prorated on the basis that the number of business days during such
period that the Employee is employed by Renaissance bears to the total number of
business days in such period.
<PAGE>
(b) The Employee shall be entitled to five business days of paid vacation
each year for each four (4) months of employment with Renaissance; provided
however, that if the Employee is employed by Renaissance for a continuous period
of five years after the Commencement Date, then he/she shall thereafter be
entitled to five business days of paid vacation for each three (3) months of
employment with Renaissance. If the Employee does not take the full number of
vacation days to which he/she is entitled at any time, such days will accrue for
his/her future use; provided, however, that not more than thirty (30) such
unused vacation days may accrue to the Employee. The Employee may take his/her
vacation days at such times as are mutually satisfactory to Renaissance and the
Employee.
(c) The Employee shall be entitled to participate in Renaissance's medical
and life insurance programs, if any, and other fringe benefits afforded by
Renaissance on terms no less favorable than those afforded to other similarly-
compensated Renaissance employees.
(d) Renaissance shall not reduce the Employee's compensation in any
employment year if the Employee is absent from work because of illness, injury
or other disability for ten or less days during such year. If the Employee is
absent from work because of illness, injury or other disability for more than
ten days in any employment year, his/her compensation for each month during such
year (commencing with the month in which the tenth such absence occurs) shall be
reduced by four and six-tenths percent (4.6%) times the number of such excess
days of absence in such month. The Employee may not accrue unused days of
absence for illness, injury or other disability from one employment year to any
succeeding employment year. For purposes of this Section 2(d), an employment
year shall begin on the Commencement Date and end on each anniversary thereof.
3. EXPENSES.
Renaissance will reimburse the Employee for all reasonable expenses which
he/she incurs in performing his/her duties for Renaissance upon presentation of
bills and vouchers with respect to such expenses, provided, that the incurring
of such expenses was authorized by Renaissance.
4. SOLE EMPLOYMENT.
So long as the Employee is employed by Renaissance, he/she shall not engage
directly or indirectly in any other business activity, whether or not such other
business activity is pursued for gain, profit or other pecuniary advantage,
except as consented to in writing in advance by Renaissance. However, nothing
herein shall be construed as preventing the Employee from investing his/her
assets in such form or manner as shall not require any material services on
his/her part in the operation of the affairs of the companies in which such
investments are made and provided that such companies do not compete with
Renaissance.
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<PAGE>
5. DISCLOSURE OF INFORMATION.
The Employee agrees that he/she will not, during the term of his/her
employment or at any time thereafter, use, furnish or disclose to anyone other
than Renaissance or its affiliated companies, other than in Renaissance's usual
course of business, any knowledge or information with respect to confidential
information relating to the business of Renaissance or its affiliates. All
materials and information obtained by the Employee in the course of his/her
employment are confidential and shall remain the exclusive property of
Renaissance. This provision shall not apply to any information which is now, or
subsequently becomes, in the public domain.
6. DEVELOPMENTS, KNOW-HOW AND MATERIALS.
Any and all developments, know-how and materials made, acquired, conceived,
reduced to practice, discovered or invented by the Employee, alone or with other
employees, while the Employee is employed by Renaissance (collectively,
"Materials"), shall become the exclusive property of Renaissance along with all
related intellectual property rights, including patents, copyrights and trade
secrets. The Employee agrees to notify Renaissance of the making, acquisition,
conception or possession of any Materials and to assign all such Materials and
rights therein to Renaissance without further compensation. The Employee gives
that, upon request, he/she will promptly make all disclosures, execute all
instruments and papers, and perform all acts necessary or desired by Renaissance
to vest and confirm in it, its successors, assigns and nominees all rights
created or contemplated by this Section 6 and which may be necessary or
desirable to enable Renaissance, its successors, assigns and nominees to secure
and enjoy the full benefit and advantages thereof, including any and all
applications, writings or other documents as may be necessary to apply for and
obtain any patent or copyright by Renaissance or any assignment thereof. The
Employee hereby waives any and all claims to moral rights which he/she may have
with respect to any Materials.
7. ENFORCEMENT.
The parties hereto acknowledge and agree that the Employee's services
hereunder are unique and extraordinary, which give the Employee a peculiar value
to Renaissance and its affiliates and subsidiaries, and for the loss of which
Renaissance cannot be reasonably or adequately compensated in damages; and
accordingly, the Employee acknowledges and agrees that a breach by him/her of
the provisions of his Agreement, including without limitation the provisions of
Sections 4, 5, 6 and 8 hereof, will cause Renaissance irreparable injury and
damage. The Employee therefor expressly agrees that Renaissance shall be
entitled to injunctive and/or other equitable relief in any court of competent
jurisdiction to prevent or otherwise restrain a breach of this Agreement or any
part hereof. The
-3-
<PAGE>
Employee further agrees that in the event of any such injunctive relief, he/she
will be able to engage in other business for the purpose of earning a
livelihood.
8. NON-COMPETITION.
(a) For a period of two years from and after the date of the termination,
for any reason, with or without cause, of the employee's employment with
Renaissance (the "Termination Date"), the employee shall not, as an individual,
partner, investor, officer or employee of a corporation or other entity, or in
any other capacity, directly or indirectly, (a) solicit, induce, attempt to
induce or encourage any other employee of Renaissance to terminate his/her
employment with Renaissance or (b) solicit, divert or take away, or attempt to
divert ot take away, the business or patronage of any of the clients, customers
or accounts, or prospective clients, customers or accounts, of Renaissance which
were contracted, solicited or served by the employee at any time during the 24-
month period immediately preceding the termination date (or, if shorter, the
period during which the employee was employed by Renaissance).
(b) The agreements of the Employees contained in the Section 8 shall be
construed as separate agreements covering each country (and, in the case of the
United States, each state and country) in which Renaissance does business, and
to the extent any of such agreements shall be illegal or unenforceable in anyone
country (or state or country) or shall be enforceable only for a term shorter
than the term set forth herein, the Employee's agreements shall be effective
with respect to each country (or state or country) or parts thereof for the
maximum period of time for which they can be enforced, such agreements with
respect to each country (and state and country) being construed as separable and
independent.
9. SURVIVAL.
The covenants contained in Sections 5, 6, 7 and 8 hereof shall survive any
termination of this Agreement or any termination of the Employee's employment
hereunder.
10. TERMINATION.
The Employee's employment hereunder shall terminate upon the occurrence of
any of the following events:
(a) On the 30th day after the date on which either Renaissance or the
Employee has given written notice to the other of its or his/her decision to
terminate such employment for any reason, whether with or without cause; or
-4-
<PAGE>
(b) On the day on which Renaissance delivers written notice to the Employee
that Renaissance believes that the Employee has acted in a manner detrimental to
Renaissance's best interests.
Upon the termination of the Employee's Employment under this Agreement,
Renaissance shall pay to the Employee the compensation and benefits otherwise
payable to him/her under Section 2 hereof through the last day of his/her actual
employment by Renaissance.
11. NOTICES.
All notices hereunder shall be given in writing and shall be deemed
effective upon personal delivery or three days following deposit in the United
States Post Office, by registered or certified mail, return receipt requested,
addressed to the other party at the address shown below, or at such other
address as may be designated in writing by either party to the other in the
manner set forth herein:
To Renaissance: Renaissance Solutions, Inc. To the Employee:
Lincoln North ----------------
55 Old Bedford Road Name
Lincoln, MA 01773
Attention: President ----------------
----------------
12. ADMINISTRATIVE PROVISIONS.
(a) This Agreement constitutes the entire agreement between the parties
and supersedes all prior agreements and understandings, whether written or oral,
relating to the subject matter of this Agreement.
(b) This Agreement may be terminated, altered, modified or changed only
by a writing signed by both parties hereto.
(c) This Agreement shall be construed and enforced in accordance with the
laws of the Commonwealth of Massachusetts.
(d) The waiver by Renaissance of any breach of any provision of this
Agreement by the Employee shall not operate or be construed as a waiver or
continuing waiver by Renaissance of the same or any subsequent breach of any
provision of this Agreement by the Employee.
(e) Judicial enforcement of this Agreement or any part thereof by either
of the parties hereto may be had in any appropriate court of the
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<PAGE>
Commonwealth of Massachusetts having jurisdiction over either party to this
Agreement or over the subject matter of this Agreement and, more particularly,
may be enforced by a proceeding for specific performance in any such court of
the Commonwealth of Massachusetts.
(f) In case any one or more of the provisions, or portions of provisions,
of this Agreement shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions, or portions
of provisions, contained herein shall not in any way be affected or impaired
thereby.
(g) The captions of the Sections of this Agreement are for convenience of
reference only and in no way define, limit or affect the scope or substance of
any Section of this Agreement.
13. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of both
parties and their respective successors and assigns, including any corporation
or partnership with which or into which Renaissance may be merged or which may
succeed to its assets or business; provided, however, that the obligations of
the Employee are personal and shall not be assigned by him/her.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and the year first above written.
RENAISSANCE SOLUTIONS, INC.
By: Renaissance Solutions, Inc.
its General Partner
By:
---------------------- ----------------------
Date
Title:
-------------------
EMPLOYEE:
------------------------------ ----------------------
Name Date
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<PAGE>
EXHIBIT F
Hale and Dorr LLP
Counsellors at Law
60 State Street, Boston, Massachusetts 02109
617-526-6000 . fax 617-526-5000
February 13, 1997
Mr. Mark R. Bruneau
Mr. Andrew R. Belt
Ms. Frederique Bouty
c/o C. M. Management Systems Ltd. Inc.
150 Federal Street
Boston, MA 02110
Dear Mr. Bruneau, Mr. Belt and Ms. Bouty:
This opinion is furnished to you pursuant to Section 6.2(c) of the Stock
Purchase Agreement dated as of February 13, 1997 (the "Purchase Agreement"),
among Renaissance Solutions, Inc., a Delaware corporation (the "Buyer"), C. M.
Management Systems Ltd. Inc., a Massachusetts corporation (the "Company"), and
you. Capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed to them in the Purchase Agreement.
We have acted as counsel to the Buyer in connection with the acquisition by
the Buyer of all of the outstanding capital stock of the Company (the
"Acquisition"). As such counsel, we have assisted in the preparation of the
Purchase Agreement, the Escrow Agreement and the Registration Rights Agreement
(collectively, the "Documents").
In connection with this opinion, we have also examined and are familiar
with and have relied upon the following documents:
(a) The Amended and Restated Certificate of Incorporation of the Buyer
(the "Charter");
(b) The Amended and Restated By-laws of the Buyer (the "By-laws");
(c) A Certificate of the Secretary of State of Delaware, dated as of a
recent date, certifying as to the legal existence and good
standing of the Buyer in Delaware (the "Good Standing
Certificate");
<PAGE>
February 13, 1997
Page 2
(d) A certificate of the Secretary of the Buyer attesting to the
incumbency of the Buyer's officers and the authenticity of the
resolutions authorizing the transactions contemplated by the
Purchase Agreement;
(e) Resolutions of the Board of Directors of the Buyer approving the
Acquisition and authorizing, among other things, the execution,
delivery and performance by the Buyer of the Purchase Agreement
and related documents;
(f) The Purchase Agreement;
(g) The Escrow Agreement;
(h) The Registration Rights Agreement; and
(i) Such other documents, opinions, instruments and certificates
(including, but not limited to, certificates of public officials
and officers of the Buyer) as we have considered necessary for
purposes of this opinion.
In our examination of the documents described above, we have assumed
the genuineness of all signatures, the legal capacity of each signatory to such
documents, the authenticity of all documents submitted to us as originals, the
conformity to original documents of documents submitted to us as certified,
facsimile or photostatic copies, and the authenticity of the originals of such
latter documents. We have assumed that the Documents accurately describe and
contain the mutual understanding of the parties as to all matters contained
therein, and that no other agreements or understandings exist between the
parties with respect to the Documents.
Insofar as this opinion relates to factual matters, information with
respect to which is in the possession of the Buyer, we have relied upon
certificates of officers of the Buyer, copies of which have previously been
provided to your counsel. We have not attempted to verify independently such
facts, although we know of no facts which lead us to question the accuracy of
such certificates.
Any reference herein to "the best of our knowledge," "our knowledge"
or to any matter "known to us," "of which we are aware" or "coming to our
attention" or any variation of any of the foregoing shall mean the conscious
awareness of the attorneys in this firm who have rendered substantive attention
to this transaction (including the preparation of the Documents) of the
existence or absence of any facts which would contradict our opinions set forth
below. We have not undertaken any independent investigation to determine the
existence or absence of such facts, and no inference as to our knowledge of the
existence or absence of such facts should be drawn from the fact of our
representation of the Buyer.
<PAGE>
February 13, 1997
Page 3
Without limiting the foregoing, with respect to our opinion in
paragraph 4 below, we have not conducted a search of any computer or electronic
databases, or of the dockets of any court or administrative or other regulatory
agency.
For purposes of this opinion, we have assumed that the Documents have
been duly authorized, executed and delivered by each of the signatories thereto
other than the Buyer, that the signatories thereto other than the Buyer have the
legal capacity and all requisite power and authority to effect the transactions
contemplated by the Documents and that the Documents are the valid, binding and
enforceable obligations of each of the signatories thereto other than the Buyer,
enforceable against them in accordance with their respective terms. We are
expressing no opinion herein as to the application of or compliance with any
federal, state or local law or regulation relating to the power, authority or
competence of any party to the Documents other than the Buyer.
Our opinions expressed in paragraph 1 below, insofar as they relate to
the due organization, legal existence and good standing of the Buyer, are based
solely on the Good Standing Certificate, are rendered as of the date thereof,
and are limited accordingly.
Our opinion in paragraph 2 below as to the number of shares of capital
stock of the Buyer outstanding and held in treasury as of February 12, 1997 and
the full payment therefor is based solely upon a certificate of the Buyer, a
copy of which is attached hereto as Exhibit A, and such opinion is rendered as
------- -
of February 12, 1997 and limited accordingly.
For the purposes of our opinions expressed in paragraphs 4 and 5
below, we are relying in part upon the representations and warranties of the
Company Stockholders set forth in Article III of the Purchase Agreement.
The opinions hereinafter expressed are qualified to the extent that
they may be subject to or affected by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, usury, fraudulent transfer or other laws affecting
the rights and remedies of creditors generally, (ii) statutory or decisional law
concerning recourse by creditors to security in the absence of notice or
hearing, and (iii) duties and standards imposed on creditors and parties to
contracts, including without limitation requirements of good faith,
reasonableness and fair dealing. We express no opinion as to the availability
of any equitable or specific remedy or defense upon any breach of any of the
covenants, warranties or other provisions contained in the Documents or any of
the other agreements, instruments or documents referred to herein or therein, or
of any rights granted pursuant to any of such agreements, instruments or
documents, or as to any other matters as to which we are opining herein,
inasmuch as the availability of such remedies or defenses may be subject to the
discretion of a court.
<PAGE>
February 13, 1997
Page 4
We express no opinion as to the laws of any state or jurisdiction
other than the state laws of the Commonwealth of Massachusetts, the General
Corporation Law statute of the State of Delaware and the federal laws of the
United States. Accordingly, to the extent that any other laws govern any of the
matters as to which we express an opinion below, we have assumed with your
permission and without independent investigation, that the laws of such
jurisdiction are identical to the state laws of the Commonwealth of
Massachusetts, and we express no opinion as to whether such assumption is
reasonable or correct.
We are expressing no opinion as to compliance by the Buyer with any
state or so-called "Blue Sky" securities laws, or with any state or federal
antifraud laws, in connection with the issuance of any shares of Buyer Common
Stock in connection with any Contingent Consideration paid as part of the
Acquisition, if any such shares are issued.
On the basis of and subject to the foregoing, we are of the opinion
that:
1. The Buyer is a corporation duly organized, legally existing and in
good standing under the laws of the State of Delaware. The Buyer has all
requisite corporate power and authority to carry on its business as, to our
knowledge, it is now conducted and to own and use its properties (as known to
us) in connection therewith.
2. The authorized capital stock of the Buyer consists of 20,000,000
shares of Common Stock, of which 9,430,483 shares are issued and outstanding and
none are held in treasury, and 2,000,000 shares of Preferred Stock, none of
which are issued and outstanding. All of the issued and outstanding shares of
capital stock of the Buyer are duly authorized, validly issued, fully paid and
nonassessable.
3. The Buyer has all requisite corporate power and authority to
execute and deliver the Purchase Agreement, the Escrow Agreement and the
Registration Rights Agreement and to perform its respective obligations
thereunder. The execution and delivery of the Purchase Agreement, the Escrow
Agreement and the Registration Rights Agreement and the performance of the
Purchase Agreement, the Escrow Agreement and the Registration Rights Agreement
and the consummation of the transactions contemplated thereby have been duly and
validly authorized by all necessary corporate action on the part of the Buyer.
The Purchase Agreement, the Escrow Agreement and the Registration Rights
Agreement have been duly and validly executed and delivered by the Buyer and
constitute valid and binding obligations of the Buyer, enforceable against the
Buyer in accordance with their respective terms (other than Section 6 of the
Registration Rights Agreement, as to which we express no opinion).
<PAGE>
February 13, 1997
Page 5
4. Except as set forth in the Purchase Agreement, neither the
execution and delivery by the Buyer of the Purchase Agreement, nor the
consummation by the Buyer of the transactions contemplated thereby, (i)
conflicts with or violates any provision of the Charter or the By-laws, (ii)
requires on the part of the Buyer any filing with, or permit, authorization,
consent or approval of, any Governmental Entity which has not been filed or
obtained, (iii) conflicts with, results in a breach of, constitutes (with or
without due notice or lapse of time or both) a default under, results in the
acceleration of, creates in any party the right to accelerate, terminate, modify
or cancel or requires any notice, consent or waiver (which has not been
obtained) under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest or other agreement or instrument filed as an
Exhibit to the Buyer Reports to which the Buyer is a party, or (iv) violates any
statute, rule or regulation, or any order, writ, injunction or decree known to
us specifically naming the Buyer or any of its properties or assets.
5. All authorizations, consents and approvals of all Federal and
state governmental agencies and authorities required in order to permit
consummation by the Buyer of the transactions contemplated by the Purchase
Agreement have been obtained.
This opinion is based upon currently existing statutes, rules,
regulations and judicial decisions and upon facts known to us on the date
hereof, and we disclaim any obligation to advise you of any change in any of
these sources of law or subsequent legal or factual developments which might
affect any matters or opinions set forth herein.
Please note that we are opining only as to the matters expressly set
forth herein, and no opinion should be inferred as to any other matters.
This opinion is furnished to you pursuant to Section 6.2(c) of the
Purchase Agreement and may not be relied upon by any other person or entity or
for any other purpose without our express prior written consent.
Very truly yours,
HALE AND DORR LLP
<PAGE>
EXHIBIT G
WAIVER AND TERMINATION AGREEMENT
Reference is hereby made to that certain Sale and Purchase Agreement (the
"Agreement"), dated as of August 6, 1993, by and among COBA-M.I.D., Inc., a
Georgia corporation, C.M. Management Systems Ltd. Inc., and Mark R. Bruneau,
Andrew R. Belt and Frederique Bouty (the "Stockholders").
Whereas, the Agreement provides for a payment by C.M. Management Systems
Ltd. Inc. to COBA-M.I.D., Inc. equal to 12% of the aggregate consideration paid
to the Stockholders in connection with, among other things, the sale of all of
the outstanding capital stock of C.M. Management Systems Ltd. Inc. (the "12%
Payment Obligation"); and
Whereas, Renaissance Solutions, Inc., a Delaware corporation
("Renaissance"), on February 3, 1997 purchased all of the outstanding capital
stock of COBA Consulting Limited, whereby COBA Consulting Limited became a
wholly-owned subsidiary of Renaissance; and
Whereas, COBA-M.I.D., Inc. is a wholly-owned subsidiary of COBA Consulting
Limited; and
Whereas, on the date hereof Renaissance is entering into a Stock Purchase
Agreement for the purpose of purchasing all of the outstanding capital stock of
C.M. Management Systems Ltd. Inc. (the "Stock Purchase"); and
Whereas, in connection with the Stock Purchase, Renaissance, C.M.
Management Systems Ltd. Inc., and the Stockholders desire to waive the 12%
Payment Obligation.
Now, therefore, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Renaissance hereby waives and agrees to direct COBA-M.I.D., Inc. to
waive the 12% Payment Obligation in connection with the Stock Purchase.
2. The undersigned agree that from and after the date hereof, the 12%
Payment Obligation under the Agreement shall be of no further force or effect.
3. If the termination of the 12% Payment Obligation shall require the
execution of any other documents or the taking of any other action on the part
of COBA-M.I.D., Inc., COBA Consulting Limited, C.M. Management Systems Ltd.
Inc., Renaissance or the Stockholders, Renaissance and the Stockholders hereby
agree to take all such actions necessary to cause such other documents to be
executed or such other actions to be taken.
<PAGE>
4. Renaissance agrees to indemnify and hold harmless the Stockholders,
their heirs, successors and assigns, and C.M. Management System Ltd. Inc. from
any claims made by COBA-M.I.D., Inc., after the date hereof, under the 12%
Payment Obligation.
IN WITNESS WHEREOF, this Waiver and Termination Agreement has been
executed as of this 13th day of February, 1997,
RENAISSANCE SOLUTIONS, INC.
By:________________________________
Title:______________________________
C.M. Management Systems Ltd. Inc.
By:________________________________
Title:______________________________
___________________________________
Mark R. Bruneau
___________________________________
Andrew R. Belt
___________________________________
Frederique Bouty
-2-
<PAGE>
EXHIBIT H
RETENTION AGREEMENT
THIS RETENTION AGREEMENT (the "Agreement"), made this _____ day of _______,
199 is entered into by and between Renaissance Solutions, Inc., a Delaware
corporation with its principal place of business at Lincoln North, 55 Old
Bedford Road, Lincoln, Massachusetts (the "Company"), and the individual whose
signature is set forth below (the "Employee").
Whereas, pursuant to a Stock Purchase Agreement, dated as of February 13
1997, by and among the Company, C.M. Management Systems Ltd. Inc. ("COBA"), Mark
R. Bruneau, Andrew R. Belt and Frederique Bouty (the "Agreement"), the Company
acquired all of the outstanding capital stock of the Company (the
"Acquisition"); and
Whereas, the Employee, at the time of the Acquisition, was an employee of
COBA; and
Whereas, after the Acquisition the Company desires that the Employee
continue to be employed by COBA and the Employee desires such employment,
subject to and in accordance with the terms set forth in this Agreement.
Now, therefore, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Signing Bonus. Upon execution of this Agreement, the Company shall pay
-------------
to the Employee a signing bonus in the amount of $100,000.
2. Annual Retention Bonus. The Company agrees to pay the Employee the sum
----------------------
set forth in Exhibit A hereto on each of the first and second anniversaries of
---------
the Closing Date (each, a "Payment Date"), provided that the Employee has been
continuously employed by the Company, or any subsidiary of the Company (whether
existing now or hereafter acquired or established) (a "Subsidiary"), during the
period commencing on the Closing Date and ending on each Payment Date. In the
event that the Employee's employment by the Company or any Subsidiary of the
Company is terminated or ceases, for any reason, prior to any such Payment Date,
the Employee shall not be entitled to any bonus under this Section 2 payable on
any Payment Date subsequent to the date of the termination or cessation of the
Employee's employment.
<PAGE>
3. No Employment Contract. The Employee acknowledges that this
----------------------
Agreement does not constitute a contract of employment and does not imply that
the Company will continue his or her employment for any period of time.
4. Proprietary Information and Developments. Concurrently with the
----------------------------------------
execution of this Agreement, the Employee shall enter into an Invention and Non-
disclosure Agreement, a copy of which is attached hereto as Exhibit B (the "Non-
------- -
disclosure Agreement").
5. Entire Agreement. This Agreement, together with the Non-disclosure
----------------
Agreement, constitutes the entire agreement between the parties and supersedes
all prior agreements and understandings, whether written or oral, relating to
the subject matter of this Agreement.
6. Amendment. This Agreement may be amended or modified only by a written
---------
instrument executed by all of the parties hereto.
7. Governing Law. This Agreement shall be construed, interpreted and
-------------
enforced in accordance with the internal laws (and not the law of conflicts) of
the Commonwealth of Massachusetts.
8. Successors and Assigns. This Agreement shall be binding upon and inure
----------------------
to the benefit of all of the parties hereto and their respective successors and
assigns, including any corporation with which or into which the Company may be
merged or which may succeed to its respective assets or business; provided,
however, that the obligations of the Employee are personal and shall not be
assigned by him.
9. Severability. The invalidly or unenforceability of any provision of
------------
this Agreement shall not affect the validly or enforceability of any other
provision of this Agreement.
10. Miscellaneous.
-------------
(a) No delay or omission by the Company in exercising any right under this
Agreement shall operate as a waiver of that or any other right. A waiver or
consent given by the Company on any one occasion shall be effective only in that
instance and shall not be construed as a bar or waiver of any right on any other
occasion.
(b) The captions of the sections of this Agreement are for convenience of
reference only and in no way define, limit or affect the scope or substance of
any section of this Agreement.
-2-
<PAGE>
(c) In case any provision of this Agreement shall be invalid, illegal or
otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
RENAISSANCE SOLUTIONS, INC.
By:________________________________
Name:
Title:
EMPLOYEE
___________________________________
-3-
<PAGE>
EXHIBIT A
Retention Bonus at start of year two: $100,000
Retention Bonus at start of year three: $100,000
-4-
<PAGE>
EXHIBIT B
INVENTION AND NON-DISCLOSURE AGREEMENT
--------------------------------------
This Agreement is made between Renaissance Solutions, Inc., a Delaware
corporation (hereinafter referred to collectively with its subsidiaries as the
"Company"), and ______________ (the "Employee").
In consideration of the employment or the continued employment of the
Employee by the Company, the Company and the Employee agree as follows:
1. Proprietary Information.
-----------------------
(a) The Employee agrees that all information, whether or not in writing, of
a private, secret or confidential nature concerning the Company's business,
business relationships or financial affairs (collectively, "Proprietary
Information") is and shall be the exclusive property of the Company. By way of
illustration, but not limitation, Proprietary Information may include
inventions, products, processes, methods, techniques, formulas, compositions,
compounds, projects, developments, plans, research data, clinical data,
financial data, personnel data, computer programs, customer and supplier lists,
and contacts at or knowledge of customers or prospective customers of the
Company. The Employee will not disclose any Proprietary Information to any
person or entity other than employees of the Company or use the same for any
purposes (other than in the performance of his duties as an employee of the
Company) without written approval by an officer of the Company, either during or
after his employment with the Company, unless and until such Proprietary
Information has become public knowledge without fault by the Employee.
(b) The Employee agrees that all files, letters, memoranda, reports,
records, data, sketches, drawings, laboratory notebooks, program listings, or
other written, photographic, or other tangible material containing Proprietary
Information, whether created by the Employee or others, which shall come into
his custody or possession, shall be and are the exclusive property of the
Company to be used by the Employee only in the performance of his duties for the
Company. All such materials or copies thereof and all tangible property of the
Company in the custody or possession of the Employee shall be delivered to the
Company, upon the earlier of (i) a request by the Company or (ii) termination of
his employment. After such delivery, the Employee shall not retain any such
materials or copies thereof or any such tangible property.
(c) The Employee agrees that his obligation not to disclose or to use
information and materials of the types set forth in paragraphs (a) and (b)
above, and his obligation to return materials and tangible property, set forth
in paragraph (b) above, also extends to such types of information, materials and
tangible property of
-5-
<PAGE>
customers of the Company or suppliers to the Company or other third parties who
may have disclosed or entrusted the same to the Company or to the Employee.
2. Developments.
------------
(a) The Employee will make full and prompt disclosure to the Company of all
inventions, improvements, discoveries, methods, developments, software, and
works of authorship, whether patentable or not, which are created, made,
conceived or reduced to practice by him or under his direction or jointly with
others during his employment by the Company, whether or not during normal
working hours or on the premises of the Company (all of which are collectively
referred to in this Agreement as "Developments").
(b) The Employee agrees to assign and does hereby assign to the Company (or
any person or entity designated by the Company) all his right, title and
interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications. However, this paragraph
2(b) shall not apply to Developments which do not relate to the present or
planned business or research and development of the Company and which are made
and conceived by the Employee not during normal working hours, not on the
Company's premises and not using the Company's tools, devices, equipment or
Proprietary Information. The Employee understands that, to the extent this
Agreement shall be construed in accordance with the laws of any state which
precludes a requirement in an employee agreement to assign certain classes of
inventions made by an employee, this paragraph 2(b) shall be interpreted not to
apply to any invention which a court rules and/or the Company agrees falls
within such classes. The Employee also hereby waives all claims to moral rights
in any Developments.
(c) The Employee agrees to cooperate fully with the Company, both during
and after his employment with the Company, with respect to the procurement,
maintenance and enforcement of copyrights, patents and other intellectual
property rights (both in the United States and foreign countries) relating to
Developments. The Employee shall sign all papers, including, without
limitation, copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights, and powers of attorney,
which the Company may deem necessary or desirable in order to protect its rights
and interests in any Development. The Employee further agrees that if the
Company is unable, after reasonable effort, to secure the signature of the
Employee on any such papers, any executive officer of the Company shall be
entitled to execute any such papers as the agent and the attorney-in-fact of the
Employee, and the Employee hereby irrevocably designates and appoints each
executive officer of the Company as his agent and attorney-in-fact to execute
any such papers on his behalf, and to take any and all actions as the Company
may deem necessary or desirable in order to protect its rights and interests in
any Development, under the conditions described in this sentence.
-6-
<PAGE>
3. Other Agreements.
----------------
The Employee hereby represents that, except as the Employee has disclosed
in writing to the Company, the Employee is not bound by the terms of any
agreement with any previous employer or other party to refrain from using or
disclosing any trade secret or confidential or proprietary information in the
course of his employment with the Company or to refrain from competing, directly
or indirectly, with the business of such previous employer or any other party.
The Employee further represents that his performance of all the terms of this
Agreement and as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information, knowledge or data
acquired by the Employee in confidence or in trust prior to his employment with
the Company, and the Employee will not disclose to the Company or induce the
Company to use any confidential or proprietary information or material belonging
to any previous employer or others.
4. United States Government Obligations.
------------------------------------
The Employee acknowledges that the Company from time to time may have
agreements with the other persons or with the United States Government, or
agencies thereof, which impose obligations or restrictions on the Company
regarding inventions made during the course of work under such agreements or
regarding the confidential nature of such work. The Employee agrees to be bound
by all such obligations and restrictions which are made known to the Employee
and to take all action necessary to discharge the obligations of the Company
under such agreements.
5. No Employment Contract.
----------------------
The Employee understands that this Agreement does not constitute a contract
of employment and does not imply that his employment will continue for any
period of time.
6. Miscellaneous.
-------------
(a) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(b) This Agreement supersedes all prior agreements, written or oral,
between the Employee and the Company relating to the subject matter of this
Agreement. This Agreement may not be modified, changed or discharged in whole
or in part, except by an agreement in writing signed by the Employee and the
Company. The Employee agrees that any change or changes in his duties, salary
or compensation after the signing of this Agreement shall not affect the
validity or scope of this Agreement.
-7-
<PAGE>
(c) This Agreement will be binding upon the Employee's heirs, executors and
administrators and will inure to the benefit of the Company and its successors
and assigns.
(d) No delay or omission by the Company in exercising any right under this
Agreement will operate as a waiver of that or any other right. A waiver or
consent given by the Company on any one occasion is effective only in that
instance and will not be construed as a bar to or waiver of any right on any
other occasion.
(e) The Employee expressly consents to be bound by the provisions of this
Agreement for the benefit of the Company or any subsidiary or affiliate thereof
to whose employ the Employee may be transferred without the necessity that this
Agreement be re-signed at the time of such transfer.
(f) The restrictions contained in this Agreement are necessary for the
protection of the business and goodwill of the Company and are considered by the
Employee to be reasonable for such purpose. The Employee agrees that any breach
of this Agreement is likely to cause the Company substantial and irrevocable
damage and therefore, in the event of any such breach, the Employee agrees that
the Company, in addition to such other remedies which may be available, shall be
entitled to specific performance and other injunctive relief.
(g) This Agreement is governed by and will be construed as a sealed
instrument under and in accordance with the laws of the Commonwealth of
Massachusetts. Any action, suit, or other legal proceeding which is commenced
to resolve any matter arising under or relating to any provision of this
Agreement shall be commenced only in a court of the Commonwealth of
Massachusetts (or, if appropriate, a federal court located within
Massachusetts), and the Company and the Employee each consents to the
jurisdiction of such a court.
-8-
<PAGE>
THE EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.
WITNESS: RENAISSANCE SOLUTIONS, INC.
Date:_______________________ By:______________________________
______________________________
(print name and title)
Date:_______________________ ______________________________
(signature)
-9-
<PAGE>
Exhibit 99
CONTACTS:
George McMillan, Chief Financial Officer February 14, 1997
Debra Bergevine, Director of For Immediate Release
Shareholder Relations
Renaissance Solutions, Inc.
617-259-8833
RENAISSANCE SOLUTIONS, INC.
NEWS RELEASE
RENAISSANCE SOLUTIONS, INC. ANNOUNCES ACQUISITIONS OF COBA
CONSULTING AND C.M. MANAGEMENT SYSTEMS
Lincoln, MA, February 14, 1997 -- Renaissance Solutions, Inc. (NASDAQ/RENS)
today announced that it has completed its previously announced acquisition of
COBA Consulting Limited (COBA), a London, England and Atlanta, Georgia based
strategic consulting firm providing strategy formulation, research and analysis,
and strategy implementation services to the telecommunications, financial
services, utilities and retail industries.
Under the terms of the definitive agreement signed in January, Renaissance
Solutions acquired all of the outstanding common stock of COBA for a purchase
price comprised of $11.9 million of cash plus 163,000 shares of Renaissance
Solutions common stock. Renaissance Solutions will also acquire certain non-
voting, convertible shares of COBA in 1998 and 1999 for a purchase price based
on COBA's actual financial performance in 1997 and 1998.
Renaissance today also announced that it has acquired C.M. Management Systems
Ltd. Inc., a Boston-based strategic consulting firm that conducts business under
the name of COBA-M.I.D. Boston. Both COBA-M.I.D. Boston and COBA are members of
an international network of affiliates providing consultative assistance in
strategy formulation, enterprise transformation, market and competitive analysis
and executive education.
Under the terms of the agreement, Renaissance Solutions acquired all of the
outstanding capital stock of C.M. Management Systems Ltd. Inc. for a purchase
price of $9.25 million and an earn-out of cash (or, in Renaissance's discretion,
cash and stock) based on the company's 1997 and 1998 performance.
C.M. Management Systems Ltd. Inc. had revenues of approximately $12.2 million
for the year ended December 31, 1996. The company has 41 full-time equivalent
employees.
"The addition of COBA-M.I.D. Boston builds on the acquisition of its sister
company, COBA," stated David Lubin, Co-Chairman of Renaissance Solutions. "Their
combined
<PAGE>
capabilities in strategy development and implementation provide a strong fit
with our existing operational consulting and technology services. COBA-M.I.D.
Boston's client concentration in telecommunications further strengthens
Renaissance's position in that strategically important industry sector."
Mark Bruneau, President of COBA-M.I.D. Boston, said today "this is a powerful
combination -- I believe that together we can offer what our telecommunications
and information technology clients need -- a combination of world class
strategic solutions and information technology."
Founded in 1993, Renaissance Solutions, Inc. develops technology-based business
solutions designed to enable its clients to improve management of their
strategic objectives, implement high performance work processes, and ensure
continuous growth of their skills and knowledge.
