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
November 13, 2001
CACI International Inc
(Exact name of registrant as specified in its Charter)
Delaware
(State or other jurisdiction of incorporation)
0-8401
(Commission File Number)
54-1345888
(IRS Employer Identification No.)
1100 N. Glebe Road
Arlington, Virginia 22201
(Address of principal executive offices)(ZIP code)
(703) 841-7800
(Registrant's telephone number, including area code)
ITEM 2: ACQUISITION OF ASSETS.
On November 1, 2001, CACI International Inc announced that it has completed its purchase of privately-held Digital Systems International Corporation ("DSIC"). The consideration paid to DSIC's shareholders at closing was $40,401,605, less certain deductions described in the Stock Purchase Agreement, which is attached as Exhibit 99.2 to this Current Report, and an additional $3,500,000 will be paid at each of the twelve- and eighteen-month anniversaries of the Closing Date. The purchase price was financed from CACI's line of credit with a group of banks.
DSIC has approximately 550 employees at locations in Virginia, Maryland, Alabama, California and South Carolina. The company focuses on high-level information technology services in the areas of enterprise resource planning systems, client server and web-enabled applications, enterprise networking and information assurance, process modeling and simulation methodology solutions, and acquisition/program management consulting services, primarily for the Federal Government. DSIC's revenue over the past 12 months was approximately $55 million.
A copy of the Registrant's press release regarding CACI's completion of the purchase of DSIC is attached as Exhibit 99.1 to this current report on Form 10-K.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS.
| 99.1 |
Press Release dated November 1, 2001, announcing completion of the acquisition of
Digital Systems International Corporation.
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| 99.2 |
Stock Purchase Agreement by and among the Registrant, CACI, INC.-FEDERAL,
Digital Systems International Corporation, Willie E. Woods, Brian J. Barry, and DSIC
Employee Stock Ownership Plan and Trust, dated as of October 31, 2001.
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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.
| CACI International Inc | |
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| Registrant | |
| By: | /s/ Jeffrey P. Elefante |
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Jeffrey P. Elefante
Executive Vice President, General Counsel and Secretary |
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Exhibit 99.1
CACI Completes Acquisition of
Digital Systems International Corporation
Arlington, VA - November 1, 2001 - CACI International Inc (NASDAQ: CACI) announced today it has completed the purchase of Digital Systems International Corporation (DSIC). The acquisition supports CACI's strategic growth plans to expand and grow its portfolio of systems integration, managed network services and information assurance capabilities and customers. The transaction is anticipated to be accretive to earnings during CACI's current fiscal year. The impact of the transaction on the Company's revenue and earnings was included in the Company's previously announced guidance.
DSIC, headquartered in Arlington, Virginia, has approximately 550 employees in locations in Virginia, Maryland, Alabama, South Carolina, and California. The company implements enterprise resource planning (ERP) systems, including large-scale financial and human resource systems and, e-procurement applications; develops client server and web-enabled applications; operates an enterprise networking and information assurance practice; solves complex business problems with a highly recognized process modeling and simulation methodology; and provides acquisition/program management consulting services, primarily for the Federal Government. Revenue for DSIC for the last 12 months was approximately $55 million.
Commenting on the transaction, Dr. J.P. London, Chairman and CEO of CACI International Inc, stated, "We welcome DSIC's employees to CACI. The addition of their superb skills and expertise will enhance CACI's solutions and broaden our customer base, particularly within our systems integration and managed network services lines of business. Acquisitions like this are a key part of our goal to reach $1 billion in revenues by FY 2005. We look forward to a successful relationship with DSIC's management team, employees, and their customers."
Guidance for Fiscal Year 2002
The company also reiterates its Q2 and full year FY02 guidance:
| Q2, FY02 | FY02 | |||
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| Revenue (in thousands) | $155,000 -- $162,000 | $630,000 -- $660,000 | ||
| Diluted earnings per share | $0.56 -- $0.61 | $2.48 -- $2.60 | ||
CACI International Inc, a member of the Russell 2000 and S&P SmallCap 600 indices, is a worldwide leader in information technology and communications solutions. Founded on simulation technology in 1962, the company has evolved a diverse solutions portfolio for today's net economy. From across the technology spectrum, CACI integrates the networks, systems, and software for telecommunications, e-Commerce, information assurance, and all forms of information management. CACI centers of excellence are unique in the industry, offering "try-before-buy" solutions so clients save time and resources. With approximately 5,000 employees and more than 90 offices in the U.S. and Europe, CACI meets complex client challenges with comprehensive, reliable solutions. Visit CACI on the web at www.caci.com.
There are statements made herein which may not address historical facts and, therefore, could be interpreted to be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. The factors that could cause actual results to differ materially from those anticipated include, but are not limited to, the following: regional and national economic conditions in the United States and United Kingdom (including the potential economic impact from livestock related diseases); changes in interest rates; currency fluctuations; failure to achieve contract awards in connection with recompetes for present business with the Department of Justice, the Federal Aviation Agency, the Defense Information Systems Agency, and others and/or competition for new business; the risks and uncertainties associated with client interest in and purchases of new products and/or services; continued funding of U.S. Government or other public sector projects in the event of a priority need for funds; government contract procurement such as bid protests and termination risks, including the possible discontinuance of the U.S. Government's Tobacco litigation; the results of the appeal of CACI International Inc ASBCA No. 53058; individual business decisions of our clients; paradigm shifts in technology; competitive factors such as pricing pressures and competition to hire and retain employees; our ability to complete acquisitions and successfully integrate appropriate to achievement of our strategic plans, including the DSIC acquisition; our ability to complete performance of fixed price contracts within contract value; material changes in laws or regulations applicable to our business; and our own ability to achieve the objectives of near term or long range business plans, particularly those relating to investments in new product development and new business initiatives, and other risks described in the Company's Securities and Exchange Commission filings.
# # #
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For investor information contact:
David Dragics Director, Investor Relations (703) 841-7835 ddragics@caci.com |
For other information contact:
Jody Brown Vice President, Public Relations (703) 841-7801 jbrown@caci.com |
Exhibit 99.2
CACI International Inc
CACI, INC.- FEDERAL
Digital Systems International Corporation
STOCK PURCHASE AGREEMENT
Table of Contents
| Article 1 | Definitions | ||
| 1.1 | Certain Matters of Construction | ||
| 1.2 | Cross References | ||
| 1.3 | Certain Definitions | ||
| Article 2 | The Purchase And Sale of Shares | ||
| 2.1 | Purchase of the Shares from the Stockholders | ||
| 2.2 | Purchase Price | ||
| 2.2.1 | The Aggregate Purchase Price | ||
| 2.2.2 | The Purchase Price Paid at the Closing | ||
| 2.2.3 | The Remaining Purchase Price | ||
| 2.3 | Additional Actions | ||
| 2.4 | Stockholders' Representative | ||
| 2.4.1 | Appointment | ||
| 2.4.2 | Authority | ||
| Article 3 | Representations And Warranties Of The Company | ||
| 3.1 | Corporate Status of the Company | ||
| 3.2 | Capital Stock | ||
| 3.2.1 | Authorized Stock of the Company | ||
| 3.2.2 | Options and Convertible Securities of the Company | ||
| 3.3 | Subsidiaries | ||
| 3.4 | Authority for Agreement; Noncontravention | ||
| 3.4.1 | Authority | ||
| 3.4.2 | No Conflict | ||
| 3.5 | Financial Statements | ||
| 3.6 | Absence of Material Adverse Changes | ||
| 3.7 | Absence of Undisclosed Liabilities | ||
| 3.8 | Compliance with Applicable Law, Charter and By-Laws | ||
| 3.9 | Litigation and Audits | ||
| 3.10 | Tax Matters | ||
| 3.10.1 | Filing of Returns | ||
| 3.10.2 | Payment of Taxes | ||
| 3.10.3 | Withholding | ||
| 3.10.4 | Assessments | ||
| 3.10.5 | Access to Returns | ||
| 3.10.6 | Definition of Taxes | ||
| 3.11 | Employee Benefit Plans | ||
| 3.11.1 | List of Plans | ||
| 3.11.2 | ERISA | ||
| 3.11.3 | Plan Determinations | ||
| 3.11.4 | Funding | ||
| 3.12 | Employment-Related Matters | ||
| 3.12.1 | Labor Relations | ||
| 3.12.2 | Employee List | ||
| 3.13 | |||
| 3.13.1 | Environmental Laws | ||
| 3.13.2 | Environmental Claims | ||
| 3.13.3 | No Basis for Claims | ||
| 3.14 | No Broker's or Finder's Fees | ||
| 3.15 | Assets Other Than Real Property | ||
| 3.15.1 | Title | ||
| 3.15.2 | Accounts Receivable | ||
| 3.15.3 | Condition | ||
| 3.16 | Real Property | ||
| 3.16.1 | Company Real Property | ||
| 3.16.2 | Company Leases | ||
| 3.16.3 | Condition | ||
| 3.17 | Agreements, Contracts and Commitments | ||
| 3.17.1 | Company Agreements | ||
| 3.17.2 | Validity | ||
| 3.17.3 | Schedule 3.17 | ||
| 3.18 | Intellectual Property | ||
| 3.18.1 | Right to Intellectual Property | ||
| 3.18.2 | No Conflict | ||
| 3.18.3 | Employee Agreements | ||
| 3.19 | Insurance Contracts | ||
| 3.20 | Banking Relationships | ||
| 3.21 | No Contingent Liabilities | ||
| Article 4 | Representations And Warranties Of Parent And Federal | ||
| 4.1 | Corporate Status of Parent and Federal | ||
| 4.2 | Authority for Agreement; Noncontravention | ||
| 4.2.1 | Authority of Parent | ||
| 4.2.2 | No Conflict | ||
| 4.3 | SEC Statements, Reports and Documents | ||
| 4.4 | Absence of Material Adverse Changes | ||
| Article 5 | Conduct Prior To The Closing Date | ||
| 5.1 | Conduct of Business of the Company | ||
| 5.2 | Conduct of Business of Parent | ||
| Article 6 | Additional Agreements | ||
| 6.1 | Exclusivity | ||
| 6.2 | Expenses | ||
| 6.2.1 | General | ||
| 6.2.2 | Updata Capital Fees | ||
| 6.2.3 | Covered Expenses | ||
| 6.2.4 | Uncovered Expenses | ||
| 6.3 | Indemnification | ||
| 6.3.1 | Stockholder Representative | ||
| 6.3.2 | Claims for Indemnification | ||
| 6.3.3 | Defense by Indemnifying Party | ||
| 6.3.4 | Limitation on Liability for Indemnity | ||
| 6.3.5 | Claims Period | ||
| 6.4 | Access and Information | ||
| 6.5 | Public Disclosure | ||
| 6.6 | No Solicitation of Employees | ||
| 6.7 | Further Assurances | ||
| 6.7.1 | Generally | ||
| 6.7.2 | Novation of the Material Contracts | ||
| 6.8 | Directors and Officers Insurance | ||
| Article 7 | Conditions Precedent | ||
| 7.1 | Conditions Precedent to the Obligations of Each Party | ||
| 7.1.1 | No Illegality | ||
| 7.1.2 | Government Consents | ||
| 7.1.3 | No Injunction | ||
| 7.2 | Conditions Precedent to Obligation of Parent and Federal to Consummate the Transaction | ||
| 7.2.1 | Representations and Warranties | ||
| 7.2.2 | Agreements and Covenants | ||
| 7.2.3 | Legal Opinion | ||
| 7.2.4 | Closing Documents | ||
| 7.2.5 | Third Party Consents | ||
| 7.2.6 | Diligence Review | ||
| 7,2,7 | Employment Agreements | ||
| 7.2.8 | Non-Compete, Non-Solicitation and Non-Disturbance Agreements | ||
| 7.2.9 | Material Adverse Effect | ||
| 7.2.10 | Net Assets | ||
| 7.3 |
Conditions to Obligations of the Company and the Stockholders to Consummate
the Transaction
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| 7.3.1 | Representations and Warranties | ||
| 7.3.2 | Agreements and Covenants | ||
| 7.3.3 | Legal Opinion | ||
| 7.3.4 | Closing Documents | ||
| 7.3.5 | Material Adverse Effect | ||
| 7.3.6 | Payment of Purchase Price | ||
| 7.3.7 | Transfer of the Assets | ||
| 7.3.8 | Transfer of the Insurance Policies | ||
| Article 8 | Survival Of Representations | ||
| 8.1 | The Company's Representations | ||
| 8.2 | Parent's Representations | ||
| Article 9 | Other Provisions | ||
| 9.1 | Termination Events | ||
| 9.2 | Notices | ||
| 9.3 | Entire Agreement | ||
| 9.4 | Assignability | ||
| 9.5 | Validity | ||
| 9.6 | Specific Performance | ||
| 9.7 | Governing Law | ||
| 9.8 | Counterparts | ||
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of October 31, 2001 (the "Agreement"), by and among CACI International Inc , a Delaware corporation ("Parent"), CACI, INC.-FEDERAL , a Delaware corporation and wholly-owned subsidiary of Parent ("Federal"), Digital Systems International Corporation , a Virginia corporation, and Willie E. Woods ("Woods"), Brian J. Barry ("Barry") and DSIC Employee Stock Ownership Plan and Trust ("ESOP") as stockholders of the Company (collectively, the "Stockholders").
W I T N E S S E T H
WHEREAS, as of the date hereof, each of the Stockholders respectively owns the number of issued and outstanding shares of Common Stock, $.01 par value per share ("Common Stock"), of the Company in each case as set forth opposite such Stockholder's name on Schedule A hereto as of the date hereof.
WHEREAS, the Stockholders desire to sell all of their shares of Common Stock (the "Shares").
WHEREAS, the respective boards of directors of the Company, Parent and Federal have determined that it is advisable that the Stockholders sell, and Federal purchase all of the Shares (the "Transaction") on the terms and conditions set forth herein and in accordance with the provisions of the General Corporation Law of the State of Delaware (the "DGCL") and Title 13.1 of the Code of Virginia (the "CV");
WHEREAS, Parent, Federal, Stockholders and the Company desire to make certain representations and warranties and other agreements in connection with the Transaction;
NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
ARTICLE 2
THE PURCHASE AND SALE OF SHARES
| 2.1 |
Purchase of the Shares from the Stockholders
. Subject to and upon the terms and
conditions of this Agreement, and on the basis of the representations, warranties,
covenants, and agreements herein contained, at the closing of the transactions contemplated
by this Agreement (the "Closing"), each Stockholder listed on Schedule A attached hereto
shall sell, transfer, convey or assign and deliver to Federal, and Federal shall purchase,
acquire and accept from each such Stockholder, the Shares to be sold by such Stockholder
to Federal as set forth opposite such Stockholder's name on Schedule A attached hereto,
free and clear of any and all liens, claims, encumbrances or rights of any third party. At the
Closing, each such Stockholder shall deliver to Federal certificates evidencing the Shares
being transferred by such Stockholder to Federal duly endorsed in blank or with stock
powers or other appropriate instruments of transfer duly executed by such Stockholder,
with signatures guaranteed. The Closing shall take place at the offices of Parent in
Arlington, Virginia, commencing at 9 a.m. local time on October 31, 2001, or on such
other date as the parties may agree after the satisfaction or waiver of all conditions to the
obligations of the parties to consummate the transactions contemplated hereby ("Closing
Date").
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| 2.2 | Purchase Price . | ||
| 2.2.1 |
The Aggregate Purchase Price.
The aggregate purchase price (the "Purchase
Price") to be paid by Federal for the Shares at the Closing shall be $47,000,000
(Forty Seven Million Dollars), subject to adjustment as provided below in this
subsection 2.2.1. All payments of the Purchase Price under this Section 2.2 shall be
made in immediately available funds wired to one or more accounts designated by
the Stockholders' Representative, by a certified check or by such other method as
may be agreed by the Stockholders' Representative and Federal. If the ESOP
Fairness Opinion provides for a value of the Company's stock that is greater than
$47 million, the a proportional share shall be paid to the ESOP as additional
Purchase Price (the "ESOP Additional Price"). Any ESOP Additional Price shall be
shared equally between CACI (50%) and Woods (50%) up to $1,000,000 of
increased cost of the ESOP shares. Any additional increase greater than $1,000,000
in the cost of purchasing the ESOP shares shall be paid by CACI.
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| 2.2.2 |
The Purchase Price Paid at the Closing
. $40,000,000 ("Forty Million Dollars) of
the total Purchase Price (the "First Payment"), less; (i) the amount of the fees owed
by the Company or the Stockholders to Updata Capital, Inc. which will be paid by
Federal directly to Updata Capital, Inc. pursuant to Section 6.2.2; (ii) the
$11,856.38 owed by Woods and Barry for additional Directors and Officers liability
insurance pursuant to Section 6.8 ; and (iii) up to $165,000 representing one-half of
the cost of environmental insurance policy premium pursuant to Section 6.4 shall be
paid on the Closing Date by Federal to the Stockholders in the respective amounts
and the representative installments set forth in Schedule A attached hereto, which
Schedule A shall provide that the ESOP's pro rata portion of the Purchase Price
shall be paid in full by the First Payment. The First Payment may be increased above
$40,000,000 by an amount equal to Federal's share of the ESOP Additional Price
determined pursuant to subsection 2.2.1 above. If there is an ESOP Additional
Price, the parties shall prepare and execute at Closing a revised Schedule A to
reflect the adjustments provided for herein and in subsection 2.2.1 above.
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| 2.2.3 |
The Remaining Purchase Price
. $3,500,000 (Three and a Half Million Dollars) of
the total Purchase Price plus interest as provided for herein (the "Second Payment")
shall be paid on the first anniversary of the Closing Date by Parent to Woods and
Barry in the respective amounts set forth in Schedule A attached hereto. The
remaining $3,500,000 (Three and a Half Million Dollars) of the Total Purchase
Price plus interest as provided for herein (the "Third Payment") shall be paid on the
date which is eighteen months after the Closing Date by Parent to Woods and Barry
in the respective amounts set forth in Schedule A. At the Closing, Parent shall
deliver to the Stockholders' Representative a promissory note bearing simple
interest at the rate of 4% per annum, substantially in form attached hereto as Exhibit
A (the "Note") evidencing Parent's obligation to make payments of the Purchase
Price under this Section 2.2.3 to Woods and Barry. Provided neither of Parent or
Federal is in breach of its obligations under this Section 2.2 and subject to all of the
other provisions of Section 6.3, Parent and Federal shall be entitled to offset any
Indemnification Claims made pursuant to Section 6.3 hereof against any payment
due to Woods and Barry under this Section 2.2.3, to the extent of their
indemnification obligations.
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| 2.3 |
Additional Actions
. If, at any time after the Closing Date, any further action is necessary
or desirable to carry out the purposes of this Agreement or to vest, perfect or confirm in
Federal title to or ownership or possession of the Shares acquired pursuant to this
Agreement, the Stockholders and the officers and directors of the Company and Federal are
fully authorized in their name and in the name of their respective corporations or otherwise
to take, and will take, all such lawful and necessary action, so long as such action is
consistent with this Agreement.
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| 2.4 | Stockholders' Representative . | ||
| 2.4.1 |
Appointment
. In order to administer efficiently the waiver of any condition to the
obligations of the Stockholders to consummate the transactions contemplated
hereby, the defense and/or settlement of any claims for which the Stockholders may
be required to indemnify Federal or the Company pursuant to Section 6.3 hereof,
and any other actions required to be taken by any Stockholder in connection
herewith, the Stockholders hereby designate and appoint Woods as their
representative and attorney-in-fact (in such capacity, the "Stockholders'
Representative").
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| 2.4.2 | Authority . By their execution of this Agreement, the Stockholders agree that: | ||
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Federal, Parent and the Company shall be able to rely conclusively without
further inquiry on the instructions and decisions of the Stockholders'
Representative acting in such capacity as to the settlement of any claims for
indemnification by Federal or the Company pursuant to Section 6.3 hereof
and as to any other action taken by the Stockholders' Representative
hereunder, and no party hereunder shall have any cause of action against
Federal or the Company for any action taken by Federal or the Company in
reliance upon the instructions or decisions of the Stockholders'
Representative; and
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| (b) |
All actions, decisions and instructions of the Stockholders' Representative
shall be conclusive and binding upon all of the Stockholders.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
All representations and warranties with respect to the Company made in this Agreement shall be understood to refer to the Company and Subsidiaries identified in Section 3.3 unless the context clearly indicates otherwise. Except for those representations and warranties expressly set forth in this Article 3, neither the Company nor any Stockholder makes any representations or warranties, express or implied, at law or in equity, of any kind or nature whatsoever concerning the organization, business, assets, liabilities and operations of the Company and any such other representations or warranties are hereby expressly disclaimed in full and for all time. The Company and each of the Stockholders jointly and severally represent and warrant to Parent and Federal as follows:
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND FEDERAL
Parent and Federal, jointly and severally, represent and warrant to the Company as follows:
| 4.1 |
Corporate Status of Parent and Federal
. Each Parent and Federal is a corporation duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
incorporation, with the requisite corporate power to own, operate and lease its properties
and to carry on its business as now being conducted.
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| 4.2 | Authority for Agreement; Noncontravention . | |
| 4.2.1 |
Authority of Parent
. Each of Parent and Federal has the corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the boards of directors of Parent and Federal and no other corporate
proceedings on the part of Parent or Federal are necessary to authorize the
execution and delivery of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement and the other agreements contemplated
hereby to be signed by Parent or Federal have been duly executed and delivered by
Parent and Federal, as the case may be, and constitute valid and binding obligations
of Parent and Federal, as the case may be, enforceable against Parent and Federal in
accordance with their terms, subject to the qualifications that enforcement of the
rights and remedies created hereby and thereby are subject to (a) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and other laws of
general application affecting the rights and remedies of creditors and (b) general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
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| 4.2.2 |
No Conflict
. Neither execution and delivery of this Agreement by Parent or
Federal, nor the performance by Parent or Federal of its obligations hereunder, nor
the consummation by Parent or Federal of the transactions contemplated hereby will
(a) conflict with or result in a violation of any provision of the charter documents or
by-laws of either Parent or Federal, or (b) with or without the giving of notice or
the lapse of time, or both, conflict with, or result in any violation or breach of, or
constitute a default under, or result in any right to accelerate or result in the
creation of any lien, charge or encumbrance pursuant to, or right of termination
under, any provision of any note, mortgage, indenture, lease, instrument or other
agreement, Permit, concession, grant, franchise, license, judgment, order, decree,
statute, ordinance, rule or regulation to which Parent, Federal or any of Parent's
other Subsidiaries is a party or by which any of them or any of their assets or
properties is bound or which is applicable to any of them or any of their assets or
properties. No authorization, consent or approval of, or filing with or notice to,
any Governmental Entity is necessary for the execution and delivery of this
Agreement by Parent or Federal or the consummation by Parent or Federal of the
transactions contemplated hereby, except for such consents, authorizations, filings,
approvals and registrations which if not obtained or made would not have a Parent
Material Adverse Effect.
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| 4.3 |
SEC Statements, Reports and Documents
. Parent has filed all required forms, reports,
statements and documents with the SEC since July 1, 1997. The documents so filed by
Parent and available in the public records of the SEC include (a) its Annual Reports on Form
10-K for the fiscal years ended June 2000 and June 30, 2001, respectively, (b) all other
forms, reports, statements and documents filed or required to be filed by it with the SEC
since July 1, 1997, and (c) all amendments and supplements to all such reports and
registration statements filed by Parent with the SEC (the documents referred to in clauses
(a), (b), and (c) being hereinafter referred to as the "Parent Reports"). The consolidated
balance sheet of Parent and its subsidiaries at June 30, 2001, including the notes thereto, is
hereinafter referred to as the "Parent Balance Sheet." Parent shall continue to cause all
required forms, reports, statements and documents to be filed with the SEC and to cause
such filings to be true and complete in all material respects, to and through Closing and the
date that the Note is paid in full.
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| 4.4 |
Absence of Material Adverse Changes
. Since the date of the Parent Balance Sheet,
Parent has not suffered any Parent Material Adverse Effect, nor has there occurred or arisen
any event, condition or state of facts of any character that could reasonably be expected to
result in a Parent Material Adverse Effect.
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ARTICLE 5
CONDUCT PRIOR TO THE CLOSING DATE
| 5.1 |
Conduct of Business of the Company
. Except as set forth on Schedule 5.1 hereto,
between the date of this Agreement and the Closing Date or the date, if any, on which this
Agreement is earlier terminated pursuant to its terms, the Company shall, except to the
extent that Parent shall otherwise consent in writing (such consent not to be unreasonably
withheld), (i) carry on its business in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted, pay its debts and taxes when due subject to good
faith disputes over such debts or taxes, pay or perform other material obligations when due,
except when subject to good faith disputes over such obligations, and use all commercially
reasonable efforts consistent with past practices and policies to preserve intact the
Company's present business organizations, keep available the services of its present officers
and employees and preserve its relationships with customers, suppliers and others having
business relationships with it, to the end that the Company's and each of its Subsidiaries'
goodwill and ongoing business be unimpaired at the Closing Date, and (ii) promptly notify
Parent of any event or occurrence which will have or could reasonably be expected to have a
Company Material Adverse Effect. In addition, between the date of this Agreement and the
Closing Date or the date, if any, on which this Agreement is earlier terminated pursuant to
its terms, the Company and each of its Subsidiaries shall not, except as set forth on Schedule
5.1 hereto or to the extent that Parent shall otherwise consent in writing (such consent not
to be unreasonably withheld):
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| (a) | amend its charter documents or by-laws; | ||
| (b) |
declare or pay any dividends or distributions on the Company's outstanding
shares of capital stock nor purchase, redeem or otherwise acquire for
consideration any shares of the Company's capital stock or other securities
except in accordance with agreements existing as of the date hereof;
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| (c) |
issue or sell any shares of its capital stock, effect any stock split or otherwise
change its capitalization as it exists on the date hereof, or issue, grant, or sell
any options, stock appreciation or purchase rights, warrants, conversion rights
or other rights, securities or commitments obligating it to issue or sell any
shares of its capital stock, or any securities or obligations convertible into, or
exercisable or exchangeable for, any shares of its capital stock, other than the
issuance of shares of Company Common Stock pursuant to the conversion,
exercise or exchange of securities therefore outstanding as of the date hereof
in accordance with their terms;
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| (d) |
borrow or agree to borrow any funds or voluntarily incur, or assume or
become subject to, whether directly or by way of guaranty or otherwise, any
obligation or Liability, except obligations incurred in the ordinary course of
business consistent with past practices;
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| (e) |
pay, discharge or satisfy any claim, obligation or Liability in excess of $25,000
(in any one case) or $50,000 (in the aggregate), other than the payment,
discharge or satisfaction in the ordinary course of business of obligations
reflected on or reserved against in the Company Balance Sheet, or incurred
since the date of the Company Balance Sheet in the ordinary course of
business consistent with past practices or in connection with this transaction;
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| (f) |
except as required by applicable law, adopt or amend in any material respect,
any agreement or plan (including severance arrangements) for the benefit of its
employees;
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| (g) |
sell, mortgage, pledge or otherwise encumber or dispose of any of its assets
which are material, individually or in the aggregate, to the business of the
Company, except in the ordinary course of business consistent with past
practices;
|
||
| (h) |
acquire by merging or consolidating with, or by purchasing any equity interest
in or a material portion of the assets of, any business or any corporation,
partnership interest, association or other business organization or division
thereof, or otherwise acquire any assets which are material, individually or in
the aggregate, to the business of the Company, except in the ordinary course
of business consistent with past practices;
|
||
| (i) |
increase the following amounts payable or to become payable: (i) the salary of
any of its directors or officers, other than increases in the ordinary course of
business consistent with past practices and not exceeding, in any case, five
percent (5%) of the director's or officer's salary on the date hereof, (ii) any
other compensation of its directors or officers, including any increase in
benefits under any bonus, insurance, pension or other benefit plan made for or
with any of those persons, other than increases that are provided in the
ordinary course of business consistent with past practices to broad categories
of employees and do not discriminate in favor of the aforementioned persons,
and (iii) the compensation of any of its other employees, consultants or agents
except in the ordinary course of business consistent with past practices;
|
||
| (j) |
dispose of, permit to lapse, or otherwise fail to preserve the rights of the
Company to use the Company Proprietary Rights or enter into any settlement
regarding the breach or infringement of, any Company Proprietary Rights, or
modify any existing rights with respect thereto, other than in the ordinary
course of business consistent with past practices, and other than any such
disposal, lapse, failure, settlement or modification that does not have and could
not reasonably be expected to have a Company Material Adverse Effect;
|
||
| (k) |
sell, or grant any right to exclusive use of, all or any part of the Company
Proprietary Rights;
|
||
| (l) |
enter into any contract or commitment or take any other action that is not in
the ordinary course of its business or could reasonably be expected to have an
adverse impact on the transactions contemplated hereunder or that would have
or could reasonably be expected to have a Company Material Adverse Effect;
|
||
| (m) |
amend in any material respect any agreement to which the Company is a party
the amendment of which will have or could reasonably be expected to have a
Company Material Adverse Effect;
|
||
| (n) |
waive, release, transfer or permit to lapse any claim or right (i) that has a
value, or involves payment or receipt by it, of more than $25,000 or (ii) the
waiver, release, transfer or lapse of which would have or could reasonably be
expected to have a Company Material Adverse Effect;
|
||
| (o) | take any action that would materially decrease the Company's Net Assets; | ||
| (p) |
make any change in any method of accounting or accounting practice other
than changes required to be made in order that the Company's financial
statements comply with GAAP; or
|
||
| (q) | agree, whether in writing or otherwise, to take any action described in this Section 5.1. | ||
| 5.2 |
Conduct of Business of Parent
. Between the date of this Agreement and the Closing Date
or the date, if any, on which this Agreement is earlier terminated pursuant to its terms,
Parent and Federal shall not, except to the extent that the Company shall otherwise consent
in writing (which consent is not to be unreasonably withheld), take any action that would
materially impair Federal's ability to pay the aggregate Purchase Price or otherwise to
perform its obligations under this Agreement. Further, between the date of this Agreement
and the Closing Date or the date, if any, on which this Agreement is earlier terminated
pursuant to its terms, Parent and Federal shall, except to the extent that the Company shall
otherwise consent in writing (such consent not to be unreasonably withheld) promptly notify
the Company and the Stockholders of any event or occurrence which will have or could
reasonably be expected to have an adverse effect on the ability of Federal and Parent to pay
the aggregate Purchase Price and otherwise to perform their respective obligations
hereunder.
|
||
ARTICLE 6
ADDITIONAL AGREEMENTS
| 6.1 |
Exclusivity
. From and after the date of this Agreement until the earlier of the Closing Date
or the termination of this Agreement in accordance with Article 9 hereof, but in any event at
least ninety (90) days after the date of the Letter of Intent, neither the Company nor the
Stockholders will, directly or indirectly, through its respective affiliates, agents, officers and
directors, directly or indirectly, solicit, initiate, or participate in discussions or negotiations
or otherwise cooperate in any way with, or provide any information to, any corporation,
partnership, person, or other entity or group concerning any tender offer, exchange offer,
merger, business combination, sale of substantial assets, sale of shares of capital stock, or
similar transaction involving the Company (all such transactions being referred to herein as
"Acquisition Proposals"). Notwithstanding the foregoing, the Company may furnish
information concerning its business, properties, or assets to and enter into negotiations with
a corporation, partnership, person, or other entity or group, if the party receives an
unsolicited Acquisition Proposal and outside counsel to the Company advises the
Company's board of directors in writing that the board's fiduciary responsibilities under
applicable law require that such information be provided or negotiations be held with the
person presenting the Acquisition Proposal in order to avoid a breach of such fiduciary
responsibilities. Notwithstanding the foregoing, in the event that the Company at any time
after the date of the Letter of Intent and before the earlier of the Closing Date or the
termination of this Agreement in accordance with Article 9 hereof, accepts an Acquisition
Proposal from any person or entity other than Parent, or the board of directors of the
Company fails, for any reason, to authorize the entering into this Agreement and the
consummation of the transactions contemplated hereby, or the board of directors of the
Company withdraws or modifies such authorization, the Parent shall be entitled, providing
that Parent is not in a material breach of any of its obligations hereunder, upon demand
submitted in a form of a notice to the Company (the "Demand Notice") to the payment of
the sum of $250,000. The Company shall make such payment within ten (10) days of the
receipt of the Demand Notice. In the event that the board of directors of Parent fails, for
reason other than (i) Company Material Adverse Effect or (ii) Parent reasonably believes
that one or more of the conditions set forth in Section 7.2 will not be satisfied at the time for
Closing, to authorize the entering into this Agreement and the consummation of the
transactions contemplated hereby or withdraws or modifies, for reason other than Company
Material Adverse Effect, such authorization, the Company shall be entitled, providing that
neither the Company nor the Stockholders are in a default under or in a breach of any
provision hereof, upon demand submitted in a form of a Demand Notice to Parent, to the
payment of the sum of $250,000.
|
|||
| 6.2 | Expenses . | |||
| 6.2.1 |
General
. Except as provided in this Section 6.2, each party hereto shall be
responsible for its own costs and expenses in connection with the Transaction,
including fees and disbursements of consultants, investment bankers and other
financial advisors, counsel and accountants ("Expenses"). Subject to 6.2.3 and
6.2.4, the Company shall bear all Expenses of the ESOP fairness opinion.
|
|||
| 6.2.2 |
Updata Capital Fees
. At the Closing, Federal shall pay $372,430 to Updata
Capital, Inc. which amount shall be deducted from the First Payment due to the
Stockholders at the Closing.
|
|||
| 6.2.3 |
Covered Expenses
. If the Net Assets of the Company at the Closing exceed
$15,000,000, which minimally shall include $4.7 million in cash assets, any Expenses
incurred by the Company or the Stockholders shall be paid out of such excess.
|
|||
| 6.2.4 |
Environmental Insurance Premium
. At Closing Woods and Barry shall pay up to
$165,000, representing one-half the premium for an environmental risk policy.
|
|||
| 6.2.5 |
Uncovered Expenses
. If the Net Assets of the Company at the Closing do not
exceed $15,000,000, which minimally shall include $4.7 million in cash assets, or
exceed $15,000,000 by an amount which is not sufficient to cover all Expenses
incurred by the Company or Stockholders, the Company and the Stockholders shall
ensure that any Expenses not covered from such excess pursuant to Section 6.2.1 are
paid at or before the Closing from the aggregate Purchase Price so that such excess
expenses incurred by the Company or Stockholders do not continue to be or do not
become the liability of the Company after the Closing.
|
|||
| 6.3 |
Indemnification
. ESOP shall not be subject to any indemnification obligations under this
Section 6.3. Subject to the terms of this Section 6.3, from and after the Closing Date,
Parent, Federal, the Company, each Subsidiary or Affiliate of Parent and their respective
directors, officers, employees, Affiliates, representatives, successor and assigns (collectively
"Parent Indemnified Parties") shall be entitled to payment and reimbursement from Woods
and Barry (collectively the "Parent Indemnifying Parties") of the amount of Loss suffered,
incurred or paid by any Parent Indemnified Party (subject to subsection 6.3.4), by reason of,
in whole or in part, any misrepresentation or inaccuracy in, or breach of, any representation
or warranty made by the Company in this Agreement or any Exhibits or Schedules hereto or
the certificates delivered pursuant to this Agreement Each such representation or warranty would read as if (i) made by such Parent Indemnifying Party, and (ii) all qualifications as to Knowledge of the Company contained in any such representation or warranty are taken into account. Subject to the terms of this Section 6.3 from and after the Closing Date, each Stockholder (collectively "Seller Indemnified Parties") shall be entitiled to payment and reimbursement from Parent, Federal, each subsidiary or Affiliate of Parent, and their respective successors and assigns (collectively the "Seller Indemnifying Parties") of the amount of Loss suffered, incurred or paid by any Seller Indemnified Party by reason of, in whole or in part, (i) any misrepresentation or inaccuracy in, or breach of any, representation or warranty contained in Section 4.2 hereof, in the certificate delivered pursuant to subsection 7.3.1, or in any closing document to be delivered to Company pursuant to subsection 7.3.4 any suits, claims, or causes of action made by shareholders of Parent, unless the basis of any such suit, claim, or cause of action was a misrepresentation or inaccuracy or a breach of any representation made by the Company in this Agreement, or any Exhibits or Schedules hereto or the certificates delivered pursuant to this Agreement.
|
|||
| 6.3.1 |
Stockholder Representative
. The Stockholder Representative, with full and
unqualified power to delegate to one or more Persons the authority granted to him
hereunder, shall have an authority
|
|||
| (a) |
to receive and to accept on behalf of each Stockholder any notice from any
person claiming to be an Indemnified Party given in accordance with the
terms of this Section 6.3 (and any notice given to the Stockholder
Representative shall be deemed to have been given to each Stockholder);
|
|||
| (b) |
to give on behalf of each Stockholder any notice, representation, demand, or
other communication that it may be necessary, desirable, or otherwise
appropriate to give to secure and to preserve for each Stockholder the benefit
of any policy or policies of insurance, surety, indemnification, or other
reimbursement for any amount for which the Stockholder may be liable
directly or indirectly under this Agreement ("Indemnification Insurance");
|
|||
| (c) |
to cooperate with any and all Indemnified Parties to investigate, negotiate,
settle, and compromise any claim of any Indemnified Party asserted under this
Agreement, and to execute on behalf of any Stockholder any agreement,
instrument, or other document that, in the sole discretion of the Stockholder
Representative, is necessary, desirable, or otherwise appropriate to effect any
such settlement or compromise;
|
|||
|
provided, however
, that the Stockholder Representative shall have no liability or
obligation to any Indemnified Party otherwise than and to the extent his individual
liability as a Stockholder.
|
||||
| 6.3.2 |
Claims for Indemnification
. Upon obtaining knowledge of any facts, claim or
demand which has given rise to, or could reasonably give rise to, a claim for
indemnification hereunder (referred to herein as an "Indemnification Claim"), the
Indemnified Party shall promptly give written notice of such facts, claim or demand
("Notice of Claim") to the party from whom indemnification is sought (the
"Indemnifying Party"). So long as the Notice of Claim is given by the Indemnified
Party in the Claims Period specified in Section 6.3.6, no failure or delay by the
Indemnified Party in the giving of a Notice of Claim shall reduce or otherwise affect
the Indemnified Party's right to indemnification except to the extent that the
Indemnifying Party has been prejudiced thereby.
|
|||
| 6.3.3 |
Defense by Indemnifying Party
. In the event of a claim or demand asserted by a
third party (a "Third Party Claim"), the Indemnifying Party acting through the
Indemnification Representative, if applicable, shall have the right, but not the
obligation, exercisable by written notice to the Indemnified Party within 10 days of
the date of the Notice of Claim concerning the commencement or assertion of any
Third Party Claim, to assume in the defense of such Third Party Claim. If the
Indemnifying Party gives such notice of intent to defend, the Indemnifying Party shall
assume the defense thereof as follows: (i) the Indemnifying Party will defend the
Indemnified Party against the matter with counsel compensated by and chosen by
Indemnifying Party, which choice of counsel is subject to the reasonable satisfaction of Indemnified Party; (ii) the Indemnified Party may retain separate co-counsel at the sole cost and expense of Indemnified Party; (iii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the matter without the written consent of the Indemnifying Party; and (iv) the Indemnifying Party will not consent to the entry of any judgment with respect to the mattrer, or enter into any settlement that does not include a provision whereby the plaintiff or claimant in the matter releases the Indemnified Party from all liability with respect thereto, without the written consent of the Indemnified Party. If, however, no Indemnifying Party notifies the Indemnified Party within 10 days after Indemnified Party has given notice of the matter, that the Indemnifying Party is assuming the defense thereof, then the Indemnified Party shall defend against, or enter into any settlement with respect to the matter. The Indemnified Party shall not settle such Third Party Claim without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
|
|||
| 6.3.4 |
Limitation on Liability for Indemnity
. The Indemnified Parties shall not be
entitled to indemnification pursuant to this Section 6.5 until the aggregate amount of
all losses, expenses, liabilities and other damages suffered by the Indemnified Parties
exceeds $250,000 (including attorney's fees and expenses incurred in connection
therewith) (the "Indemnity Basket") whereupon the Indemnified Parties shall be
entitled to indemnification hereunder for the aggregate amount of all of such losses,
expenses, liabilities and other damages suffered by the Indemnified Parties or any
Indemnified Party, including $125,000 of the Indemnity Basket of $250,000. Any
payments made or costs incurred by Parent and Federal in excess of the Company's
reserve of $25,000 relating to the wrongful termination claim of Michael Lynch appearing on Schedule 3.9 shall be paid by Woods and Barry without regard to the Indemnity Basket. The Indemnity Basket shall be determined without regard to any materiality qualification contained in any representation or warranty. ESOP shall not be subject to any indemnification obligations under this Section 6.3 The liability of any Stockholder, other than ESOP, with respect to any claim under this Section 6.3 shall be calculated as a
pro rata
portion of the amount of the claim equal to the fraction a numerator of which shall be the number of Shares held by such Stockholder on the Closing Date and the denominator of which shall be the number of Shares held by all Stockholders, other than ESOP, on the Closing Date; and the aggregate liability of any Stockholder, other than ESOP, under this Section 6.3 shall not in any event exceed the aggregate Purchase Price to which that Stockholder is entitled pursuant to Section 2.2. Providing the Indemnification Claim is made on or before the first anniversary of the Closing Date, the aggregate liability of all the Stockholders, other than ESOP, for indemnification under this Section 6.3 shall not exceed $15,000,000. Providing the Indemnification Claim is made after the first anniversary of the Closing Date, the aggregate liability of all the Stockholders, other than ESOP, for indemnification under this Section 6.3 shall not exceed $10,000,000 less any Indemnification Claim made prior to the first anniversary of the Closing Date. Provided that Parent and Federal are not otherwise in default of their obligations under Section 2.2 above, Parent and Federal shall be entitled to deduct the amount of indemnification to which the Indemnified Party is entitled under this Section 6.3, providing such claim is made within eighteen months after the Closing Date, and provided further that such claim is not disputed and the amount has been finally determined, from any amounts owing to the Stockholders pursuant to Section 2.2.
|
|||
| 6.3.5 |
Claims Period
. Any claim for indemnification under this Section 6.3 must be
asserted by written notice on or before the date that is 24 months after the Closing
Date.
|
|||
| 6.3.6 |
SAP Indemnification
. Parent and Federal agree to hold the Stockholders harmless
and to indemnify them against all claims, liabilities, costs and expenses of any nature
incurred by them as a result of claim, action or proceeding against them alleging any
liability, responsibility or obligation under Section 13 of the Asset Purchase
Agreement dated January 15, 2001 ("SAP Purchase Agreement") after the Closing
Date. Without limiting the generality of the forgoing and in addition to the
foregoing, Parent and Federal agree to hold the Stockholders harmless and
indemnify them against all claims, liabilities, costs and expenses of any nature
incurred by them and accruing after the Closing Date and resulting from Parent's or
Federal's breach or any (i) restrictive covenants (including covenants not to compete) running in SAP's favor; (ii) failure to perform under any covenant (including any covenants to perform or make collections on behalf of SAP); and (iii) representation or warranty as to which Parent or Federal shall assume control for compliance thereof. Woods and Barry agree to hold Parent and Federal harmless and to indemnify them against all claims, liabilities, costs and expenses of any nature incurred by them as a result of claim, action or proceeding against them alleging any liability, responsibility or obligation under Section 13 of the SAP Purchase Agreement and accruing on or before the Closing Date. Without limiting the generality of the foregoing and in addition to the foregoing, Woods and Barry agree to hold the Parent and Federal harmless and to indemnify them against all claims, liabilities, costs and expenses of any nature incurred by them and accruing on or before the Closing Date and resulting from the Company's breach of any (i) restrictive covenants (including covenants not to compete) running in SAP's favor; (ii) failure to perform under any covenant (including any covenant to perform or make collections on behalf of SAP; and (iii) representation or warranty as to which Company assumed control for compliance thereof.
|
|||
| 6.4 |
Access and Information
. The Company shall afford to Parent and to a reasonable number
of its officers, employees, accountants, counsel and other authorized representatives full and
complete access, upon 24 hours advance telephone notice, during regular business hours,
throughout the period prior to the earlier of the Closing Date or the termination of this
Agreement pursuant to its terms, to its offices, properties, books and records and those of
its Subsidiaries, and shall use reasonable efforts to cause its representatives and independent
public accountants to furnish to Parent such additional financial and operating data and other
information as to its business, customers, vendors and properties and those of its
Subsidiaries as Parent may from time to time reasonably request. Notwithstanding the
foregoing, all visits to any Company office will be coordinated and conducted so as to not be distruptive to the operations of the Company and to preserve the confidentiality of the transactions contemplated hereby. In addition, with the prior consent of the Company, Parent and Federal shall be permitted to meet with the Company's significant customers, including American Management Systems and EDS.
|
|||
| 6.5 |
Public Disclosure
. Except as otherwise required by law, any press release or other public
disclosure of information regarding the proposed transaction (including the negotiations with
respect to the Transaction and the terms and existence of this Agreement) shall be developed
by Parent, subject to the Company's review. The Company, the Stockholders and Parent
agree that each party's non-disclosure obligations contained in Section 7, paragraph H. of
the Letter of Intent shall remain in full force and effect in accordance with the terms thereof
and hereof.
|
|||
| 6.6 |
No Solicitation of Employees
. Parent and Federal agree that between the date of this
Agreement and the Closing Date or the date two years after the date, if any, on which this
Agreement is earlier terminated pursuant to its terms, whichever period is longer, neither
Parent, Federal, nor any Affiliate shall solicit, induce or recruit any of the employees or
consultants who provide the services to the Company on the date hereof and whose names
appear on the Employee List or are otherwise provided to Federal in writing before the
Closing Date, or within five (5) business days of any termination of this Agreement to leave
their employment, otherwise than in the course of engaging in general advertisements or
solicitations not directed specially to such employees or consultants;
provided, however,
that
nothing in this Section 6.6 shall prohibit Parent and Federal from making general
employment solicitations in the media or over the internet and hiring any person who
responds to such general solicitation.
|
|||
| 6.7 | Further Assurances . | |||
| 6.7.1 |
Generally
. Subject to terms and conditions herein provided and to the fiduciary
duties of the board of directors and officers or representatives of any party, each of
the parties agrees to use its commercially reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
this Agreement and the transactions contemplated hereby. In case at any time any
further action, including, without limitation, the obtaining of waivers and consents
under any agreements, material contracts or leases and the execution and delivery of
any licenses or sublicenses for any software, is necessary, proper or advisable to
carry out the purposes of this Agreement, the proper officers and directors or
representatives of each party to this Agreement are hereby directed and authorized
to use their reasonable best efforts to effectuate all required action.
|
|||
| 6.7.2 |
Novation of the Material Contracts
. Each party agrees to use its best
reasonable efforts to effect the novation of each Material Contract that may require
novation under its terms or under applicable laws or regulations, and further agrees
to provide all documentation necessary to effect each such novation, including,
without limitation, all instruments, certifications, requests, legal opinions, audited
financial statements, and other documents required by Part 42 of Federal
Acquisition Regulation to effect a novation of any contract with the Government of
the United States. In particular and without limiting the generality of the foregoing,
the Company shall continue to communicate with responsible officers of the
Government of the United States from time to time as may be appropriate and
permissible, to request speedy action on any and all requests for consent to
novation. Neither the Company nor any Stockholder makes any representation or
warranty that any such novation will in fact be obtained.
|
|||
| 6.7.3 |
Termination of ESOP.
Exhibit C hereto contains the post closing treatment of the
ESOP that the Company, Parent, and Federal shall follow, subject to advice of
counsel and other advisors. Parent and Federal covenant to follow such plan unless
the Stockholder Representative consents in writing to any such proposed deviation,
which consent shall not be unreasonably withheld, conditioned or delayed.
|
|||
| 6.8 |
Directors and Officers Insurance
. Federal agrees that it shall continue to provide a
directors and officers liability insurance to the persons acting as directors and officers of the
Company on the date hereof and on the Closing Date and through 60 months thereafter, in
the amounts and on the terms substantially the same as the terms and amounts of the
directors and officers liability insurance policy of the Company in effect on the Closing Date;
provided, however, that the total cost of the first 24 months of such insurance shall not
exceed $15,000 per annum and the additional cost of $11,856.38 shall be borne by Woods
and Barry.
|
|||
| 6.9 | Collection of Receivables . | |||
| 6.9.1 |
Parent and Federal will use commercially reasonable efforts to collect all Company
receivables in accordance with the collection practices that they follow with respect
to their own accounts receivable or in accordance with the past practice of the
Company. The Parent Indemnified Parties, shall, if at all permitted hereunder, first
offset indemnification claims made with respect to Loss resulting from the breach of
warranty under Section 3.15.2 against amounts owed Woods and Barry under the
Second Payment to the extent of such Loss, on the date the Second Payment is due.
To the extent that employees of the Company who were responsible for collections
before the Closing continue to be employed by the Company, by Parent, or by
Federal, Parent and Federal will continue their responsibility for collections for a
period of no less than six months. In the event that Parent or Federal collects an
unrecoverable receivable after recovering such unrecoverable receivable from
Woods or Barry, Parent or Federal shall remit such collection amounts, pro rata, to
Woods and Barry. In the event that an uncollectable receivable is a commercial
receivable, Parent and Federal shall assign such receivable to Woods.
|
|||
| 6.9.2 |
After Closing Parent or Federal shall provide to Woods, on a monthly basis for a
period of six months, a report showing the status of the outstanding aging of the
accounts receivables that finally were reported by the Company to Parent and
Federal as of the Closing.
|
|||
| 6.9.3 |
Upon seeking payment for an uncollectable receivable from Woods or Barry, Parent
or Federal shall provide to Woods or Barry information relating to the receivable
and Federal's collection effort of such receivable. Woods or Barry may contact
Luther Bell, CACI Director of Cash Management, or a designated successor
regarding CACI collection efforts of Company accounts receivable.
|
|||
| 6.10 |
Closing Date Balance Sheet
. On or before a date sixty (60) days following the Closing
Date, Parent, Federal, Stockholders and the Company shall prepare and execute jointly a
Closing Date Balance Sheet which shall reflect the parties agreement as to a final calculation
of the value of the Company's Net Assets, exclusive of Selected Assets and the Value of the
Insurance Policies.
|
|||
ARTICLE 7
CONDITIONS PRECEDENT
ARTICLE 8
SURVIVAL OF REPRESENTATIONS
| 8.1 |
The Company's Representations
. All representations and warranties made by the
Company and the Stockholders in this Agreement, or any certificate or other writing
delivered by the Company or any of its Affiliates pursuant hereto or in connection herewith
shall survive the Closing and any investigation at any time made by or on behalf of Parent
and shall terminate on the date which is 24 months after the Closing Date (except that
Indemnified Party claims pending on such date continue until resolved). The covenants
made by the Company or the Stockholders in this Agreement or any certificate or other
writing delivered by the Company or any of its Affiliates pursuant hereto or in connection
herewith shall survive the Closing and any investigation at any time made by or on behalf of
Parent.
|
| 8.2 |
Parent's Representations
. All representations and warranties made by Parent and Federal
in this Agreement or any certificate or other writing delivered by Parent, Federal or any of
their respective Affiliates pursuant hereto or in connection herewith shall survive the Closing
and any investigation at any time made by or on behalf of the Company and shall terminate
on the date when all amounts due under the Note were paid in full (except that Company
claims pending on such date shall continue until resolved). The covenants made by the
Parent in this Agreement or any certificate or other writing delivered by the Parent, Federal
and their respective Affiliates pursuant hereto or in connection herewith shall survive the
Closing and any investigation at any time made by or on behalf of the Company.
|
ARTICLE 9
OTHER PROVISIONS
| 9.1 |
Termination Events
. This Agreement may be terminated and the Transaction abandoned
at any time prior to the Closing Date, provided however that upon any such termination the
surviving obligations of the Parties under the Letter of Intent, including the obligations of
confidentiality and non-solicitation, shall continue in full force and effect in accordance with
the terms of the Letter of Intent:
|
||
| (a) | by mutual written consent of Parent and the Company; | ||
| (b) |
by Parent if there has been a breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of the
Company or the Stockholders and such breach has not been cured within ten
business days after written notice to the Company (provided, that neither
Parent nor Federal is in material breach of the terms of this Agreement, and
provided further, that no cure period shall be required for a breach which by
its nature cannot be cured) such that the conditions set forth in Section 7.2.1
or Section 7.2.2 hereof, as the case may be, will not be satisfied;
|
||
| (c) |
by Parent, if the Company, its board of directors or the Stockholders shall
have (
i
) withdrawn, modified or amended in any material respect the
approval of this Agreement or the transactions contemplated herein, or (
ii
)
taken any public position inconsistent with its approval or recommendation,
including, without limitation, having failed (without the consent of Parent)
after a reasonable period of time to reject or disapprove any Acquisition
Proposal (or after a reasonable period of time to recommend to its
shareholders such rejection or disapproval), and in that event the Company
shall pay to Parent the amount pursuant to Section 6.1;
|
||
| (d) |
by the Company if there has been a breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of Parent or
Federal and such breach has not been cured within ten business days after
written notice to Parent (provided, that the Company is not in material
breach of the terms of this Agreement, and provided further, that no cure
period shall be required for a breach which by its nature cannot be cured)
such that the conditions set forth in Section 7.3.1 or Section 7.3.2 hereof, as
the case may be, will not be satisfied;
|
||
| (e) |
by the Company, if the Company accepts an Acquisition Proposal for any
reason, including pursuant to a good-faith determination by its Board of
Directors, after consulting with counsel, that not to accept the Acquisition
Proposal would constitute a breach of the Directors' fiduciary duty under
VC;
provided, however,
that in that event the Company shall pay to Parent
the amount pursuant to Section 6.1;
|
||
| (f) |
by the Company, if Parent or Federal or the Board of Directors of either
makes any public statement or notifies the Company to the effect that either
Parent or Federal does not intend to consummate the stock purchases
contemplated by this Agreement substantially as provided in this Agreement,
and in that event the Company shall be entitled to the payment provided in
Section 6.1, subject to the terms and conditions stated in that section;
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| (g) |
by any party hereto if: (i) there shall be a final, non-appealable order of a
federal or state court in effect preventing consummation of the Transaction;
(ii) there shall be any final action taken, or any statute, rule, regulation or
order enacted, promulgated or issued or deemed applicable to the
Transaction by any Governmental Entity which would make consummation
of the Transaction illegal or which would prohibit Parent's or Federal's
ownership or operation of all or a material portion of the stock or assets of
the Company, or compel Parent or Federal to dispose of or hold separate all
or a material portion of the business or assets of the Company or Parent or
Federal as a result of the Transaction; or
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| (h) |
by any party hereto if the Transaction shall not have been consummated by
December 1, 2001, provided that the right to terminate this Agreement
under this Section 9.1(g) shall not be available to any party whose failure to
fulfill any material obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing Date to occur on or before such date.
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| 9.2 |
Notices
. All notices and other communications hereunder shall be in writing and shall be
deemed given if delivered by hand sent via a reputable nationwide courier service or mailed
by registered or certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like notice) and shall
be deemed given on the date on which so hand-delivered or on the third business day
following the date on which so mailed or sent:
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| To Parent and Federal : | ||
|
CACI International Inc
1100 North Glebe Road Arlington, VA 22201 Attention: Dr. J. P. London, Chairman |
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| with copies to: | ||
|
Jeffrey P. Elefante
Executive Vice President, General Counsel and Secretary CACI International Inc 1100 North Glebe Road Arlington, VA 22201 David W. Walker, Esq. Foley, Hoag & Eliot LLP One Post Office Square Boston, MA 02109 |
||
| To the Company : | ||
|
Digital Systems International Corporation
4301 North Fairfax Drive, Suite 725 Arlington, VA 22203 Attention: Willie E. Woods, President |
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| with copies to: | ||
|
James M. Lewis, Esq.
Holland & Knight LLP 1600 Tysons Boulevard, Suite 700 McLean, VA 22102 |
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| To any of the Stockholders : at his address set forth in Schedule A. | ||
| 9.3 |
Entire Agreement
. Unless otherwise herein specifically provided, this Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the subject
matter hereof, including the Letter of Intent. Each party hereto acknowledges that, in
entering this Agreement and completing the transactions contemplated hereby, such party
is not relying on any representation, warranty, covenant or agreement not expressly stated
in this Agreement or in the agreements among the parties contemplated by or referred to
herein.
|
| 9.4 |
Assignability
. This Agreement is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder, except as otherwise expressly provided
herein. Neither this Agreement nor any of the rights and obligations of the parties
hereunder shall be assigned or delegated, whether by operation of law or otherwise,
without the written consent of all parties hereto.
|
| 9.5 |
Validity
. The invalidity or unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provisions of this Agreement, each of
which shall remain in full force and effect.
|
| 9.6 |
Specific Performance
. The parties hereto acknowledge that damages alone may not
adequately compensate a party for violation by another party of this Agreement.
Accordingly, in addition to all other remedies that may be available hereunder or under
applicable law, any party shall have the right to any equitable relief that may be appropriate
to remedy a breach or threatened breach by any other party hereunder, including the right
to enforce specifically the terms of this Agreement by obtaining injunctive relief in respect
of any violation or non-performance hereof.
|
| 9.7 |
Governing Law
. This Agreement shall take effect and shall be construed as a contract
under the laws of the Commonwealth of Virginia.
|
| 9.8 |
Counterparts
. This Agreement may be executed in one or more counterparts, all of which
together shall constitute one and the same agreement.
|
IN WITNESS WHEREOF, the parties have duly executed this Stock Purchase Agreement under seal as of the date first above written.
| CACI International Inc | ||
| By: | /s/ Stephen L. Waechter | |
|
|
||
| Title: | ||
| CACI, INC.-FEDERAL | ||
| By: | /s/ Stephen L. Waechter | |
|
|
||
| Title: | ||
| Digital Systems International Corporation | ||
| By: | /s/ Willie Woods | |
|
|
||
| Title: CEO | ||
| /s/ Willie Woods | ||
|
|
||
| Willie E. Woods | ||
| /s/ Brian J. Barry | ||
|
|
||
| Brian J. Barry | ||
| DSIC Employee Stock Ownership Plan & Trust | ||
| By: | /s/ Joseph E. Armstead, Jr., Trustee | |
|
|
||
| Trustee | ||