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EXHIBIT 1
STOCK TRANSFER AGREEMENT
This Stock Transfer Agreement dated as of February 10, 1999 among
Government Technology Services, Inc., a Delaware corporation ("GTSI") and BTG,
Inc., a Virginia corporation ("BTG"). Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Asset Purchase Agreement
dated as of February 12, 1998 among GTSI, BTG and certain BTG subsidiaries (the
"Purchase Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement, GTSI purchased substantially
all of the assets of the Division;
WHEREAS, concurrently with the execution of the Purchase Agreement, GTSI
and the BTG Group entered into certain ancillary agreements, including the
Escrow Agreement, Trademark License Agreement, Database and Software Agreement,
Standstill Agreement, Transition Services Agreement, Lockbox Agreement, Sales
Commission and Bonus Agreement, Royalty Subcontracts, Novation Subcontracts,
Novation Agreements, Warehouse Sublease Agreement, Chattanooga Sublease
Agreement and Assignment and Assumption of the Germany Lease (collectively, with
the Purchase Agreement, the "Transaction Documents"); and
WHEREAS, concurrently herewith, GTSI, BTG, BTG Technology Systems, Inc.,
a Virginia corporation ("BTG Systems"), and Concept Automation, Inc. of America,
a Virginia corporation (together with BTG and BTG Systems, the "BTG Group") are
executing and closing an Agreement dated the date hereof (the "Agreement")
resolving certain disagreements among them regarding their respective rights and
obligations under certain Transaction Documents, and the Agreement contemplates
that GTSI and BTG shall concurrently execute and close this Stock Transfer
Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements set
forth herein, the parties hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS; CLOSING
SECTION 1.01. DEFINITIONS
(a) The following terms used herein shall have the following meanings:
"Affiliate" means with respect to any Person, any Person now or hereafter
controlling, controlled by or under common control with such Person.
"Common Stock" means common stock, par value $.005 per share, of GTSI.
"Escrow Shares" means the 300,000 shares of Common Stock held by the
Escrow Agent in accordance with the Escrow Agreement and being released to BTG
concurrently with the Closing pursuant to the Agreement.
"GTSI Note" means the promissory note in the form attached hereto as
Exhibit 1.
"GTSI Shares" means the Optioned Shares, the Repurchased Shares and the
Transferred Shares.
"Lien" means any adverse claim, restriction on voting or transfer or
pledge, lien, mortgage, hypothecation, collateral assignment, charge,
encumbrance, easement, covenant, restriction, title defect, encroachment or
security interest of any kind.
"Optioned Shares" means the 1,300,000 shares of Common Stock acquired by
BTG pursuant to the Purchase Agreement, including the Escrow Shares, which are
subject to the Repurchase Option.
"Person" means and includes an individual, a partnership, a joint
venture, a corporation, a limited liability company, an unincorporated
organization or a government or a department or agency thereof.
"Repurchased Shares" means the 400,000 shares of Common Stock acquired by
BTG pursuant to the Purchase Agreement which are being repurchased by GTSI in
accordance with Section 2.02.
"Transferred Shares" means the 200,000 shares of Common Stock acquired by
BTG pursuant to the Purchase Agreement which are being transferred to GTSI in
accordance with Section 2.01.
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(b) The following terms shall have the meanings assigned to such terms
in the following Sections:
Term
----
Section
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Agreement Recitals
BTG Recitals
BTG Group Recitals
Closing 1.02
Option Period 3.01(a)
Option Price 3.01(a)
Per Share Amount 3.02(a)
Purchase Agreement Recitals
Repurchase Option 3.01(a)
Transaction Documents Recitals
SECTION 1.02. CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Arent Fox
Xxxxxxx Xxxxxxx & Xxxx, PLLC, 0000 Xxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. at
10:30 a.m. local time, simultaneously with the execution and delivery of this
Stock Transfer Agreement, the Agreement and the Ancillary Agreements (as defined
in the Agreement); provided, however, that the parties intend that the Closing
shall deemed to be effective, and the transactions contemplated hereby shall be
deemed to occur simultaneously at 5:00 p.m. local time on the date hereof.
ARTICLE II
THE TRANSFERRED SHARES AND THE REPURCHASED SHARES
SECTION 2.01. TRANSFERRED SHARES. At the Closing, BTG shall transfer to
GTSI, at no cost to GTSI, the Transferred Shares, free and clear of all Liens,
by delivering to GTSI certificates representing the Transferred Shares duly
endorsed for transfer in blank or with assignment separate from certificates
duly endorsed, with all necessary transfer tax stamps, if any, affixed or
provided for.
SECTION 2.02. REPURCHASED SHARES. At the Closing, (a) BTG shall sell to
GTSI, and GTSI shall purchase from BTG, the Repurchased Shares, free and clear
of all Liens, by delivering to GTSI certificates representing the Repurchased
Shares duly endorsed for transfer in blank or with assignment separate from
certificates
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duly endorsed, with all necessary transfer tax stamps, if any, affixed or
provided for, and (b) in payment therefor, GTSI shall deliver the GTSI Note to
BTG.
ARTICLE III
THE OPTIONED SHARES
SECTION 3.01. REPURCHASE OPTION.
(a) BTG hereby grants to GTSI the exclusive option (the
"Repurchase Option") to purchase all or any part of the Optioned Shares for a
per share price (the "Option Price") of $5.25 at any time or from time to time
until the fifth anniversary of the Closing (the "Option Period") by delivery of
written notice to BTG specifying the number of Optioned Shares being purchased
and the date, no more than 10 days after such notice, on which payment therefor
will be made. The closing on the purchase and sale of such Optioned Shares shall
be held at GTSI's principal office on the date specified in such notice. At such
closing, certificates representing the Optioned Shares to be sold shall be
delivered to GTSI, duly endorsed for transfer in blank or with assignment
separate from certificates duly endorsed, with all necessary transfer tax
stamps, if any, affixed or provided for, against delivery of payment in
immediately available funds or a promissory note, as provided below, of an
amount equal to the product of the number of Optioned Shares being purchased and
the Option Price. All Optioned Shares purchased pursuant to the Repurchase
Option shall be delivered by BTG to GTSI free and clear of all Liens. Payment by
GTSI upon exercise of the Repurchase Option shall be in immediately available
funds unless notice of exercise of the Repurchase Option is delivered to BTG on
or before December 31, 1999, in which case payment in connection with such
notice may be made, in GTSI's discretion, either in immediately available funds
or by the delivery of a promissory note substantially in the form of Exhibit 2
hereto, the terms of which (depending on the number of Optioned Shares
purchased) shall be as set forth on Exhibit 3 hereto.
(b) If after the Closing the number of shares of Common Stock
represented by the original number of Optioned Shares is increased or decreased
as a result of any increase or decrease in the number of issued shares of Common
Stock resulting from the declaration of a dividend or the making of a
distribution on the outstanding Common Stock, the subdivision or
reclassification of the outstanding Common Stock into a greater number of shares
or the combination or reclassification of the outstanding Common Stock into a
smaller number of shares, the Option Price shall be adjusted by multiplying the
Option Price in effect immediately prior to such adjustment by a fraction, the
numerator of which shall be the number of Optioned Shares issuable upon the
exercise of the Repurchase Option immediately prior to such adjustment, and the
denominator of which shall be the number of Optioned Shares issuable upon the
exercise of the Repurchase Option immediately thereafter.
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(c) The parties agree that, effective as of the Closing,
Section 2.02 of the Standstill Agreement shall be amended to delete clauses (b)
and (d) therefrom, so that transfers described therein will thereafter require
the prior written consent of GTSI duly authorized by a majority of the members
of the GTSI Board.
(d) BTG agrees to provide written notification to GTSI of BTG's
bona fide intention to dispose of or otherwise transfer any GTSI Shares pursuant
to Section 2.02(c) of the Standstill Agreement no less than 10 business days
prior to the intended disposition or transfer. GTSI shall have the absolute
right, but not the obligation, in its sole discretion to exercise the Repurchase
Option at any time prior to the date of such intended disposition with respect
to any Repurchase Shares covered by such notification.
(e) BTG agrees that it shall be a condition to any permitted
Transfer (as defined in the Standstill Agreement) under Section 2.02(a) or (e)
of the Standstill Agreement that the transferee agree in writing to be bound by
the terms of the Repurchase Option.
(f) Subject to the terms and conditions of this Section
2.02(f), the parties agree that BTG may solicit a bona fide, third party buyer
("Prospective Buyer") for all or part of the Optioned Shares. If BTG delivers a
written notice to GTSI identifying the Prospective Buyer, the number of Optioned
Shares proposed to be purchased by the Prospective Buyer, and the proposed
price, terms of sale and closing date, accompanied by a copy of the written
offer (the "Offer") signed by the Prospective Buyer with respect to such
proposed purchase, GTSI shall have the right, but not the obligation, in its
sole discretion, and the Offer must so reflect, to exercise the Repurchase
Option with respect to the Optioned Shares which are the subject of the Offer
and immediately thereafter to sell such Optioned Shares to the Prospective Buyer
on the same terms and conditions as are set forth in the Offer. Closing on the
purchase of the Optioned Shares by GTSI shall be held in accordance with the
provisions set forth in Section 3.01(a) and closing on the sale of such Optioned
Shares to the Prospective Buyer shall be held at the same location immediately
thereafter. If GTSI exercises the Repurchase Option and sells the Optioned
Shares to the Prospective Buyer in accordance with this Section 3.01(f), the
payment from BTG to GTSI under Section 3.02(a) shall not be required with
respect to such transaction. GTSI agrees to consider in good faith any Offer
properly delivered to it hereunder, subject to its absolute discretion to reject
any such Offer. If GTSI rejects an Offer, BTG must retain the Optioned Shares in
accordance with the terms of this Agreement.
SECTION 3.02. SALE OF OPTIONED SHARES BY BTG.
(a) If BTG sells during the Option Period any of the Optioned
Shares as permitted under the Standstill Agreement, BTG agrees as a condition to
any such sale to pay to GTSI concurrently with or prior to such sale an amount
in
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cash equal to the product of the number of Optioned Shares being sold and $0.50
(the "Per Share Price").
(b) If after the Closing the number of shares of Common Stock
represented by the original number of Optioned Shares is increased or decreased
as a result of any increase or decrease in the number of issued shares of Common
Stock resulting from the declaration of a dividend or the making of a
distribution on the outstanding Common Stock, the subdivision or
reclassification of the outstanding Common Stock into a greater number of shares
or the combination or reclassification of the outstanding Common Stock into a
smaller number of shares, the Per Share Price shall be adjusted by multiplying
the Per Share Price in effect immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of Optioned Shares issuable
upon the exercise of the Repurchase Option immediately prior to such adjustment,
and the denominator of which shall be the number of Optioned Shares issuable
upon the exercise of the Repurchase Option immediately thereafter.
SECTION 3.03. STOCK LEGEND. On the date of the Closing, BTG shall cause
the certificates evidencing the Optioned Shares to be tendered to GTSI's
transfer agent, First Union National Bank, which shall issue to BTG stock
certificates of the same denomination in exchange therefor bearing the following
modified legends:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE
STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT UPON DELIVERY TO
THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY IN FORM AND
SUBSTANCE TO IT THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF
A STANDSTILL AGREEMENT DATED FEBRUARY 12, 1998 BY AND BETWEEN THE
CORPORATION AND BTG, INC. AND MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE
THEREWITH.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF
A STOCK TRANSFER AGREEMENT DATED FEBRUARY 10, 1999 BY AND BETWEEN BTG,
INC., AND THE CORPORATION AND MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE
THEREWITH.
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ARTICLE IV
REPRESENTATIONS OF BTG
SECTION 4.01. AUTHORIZATION, BINDING OBLIGATIONS AND NO CONFLICTS. BTG
has full power and authority to enter into this Stock Transfer Agreement and to
perform the transactions contemplated hereby. This Stock Transfer Agreement has
been duly authorized, executed and delivered by BTG and is a valid and binding
obligation of BTG. The execution, delivery and performance by BTG of this Stock
Transfer Agreement, the fulfillment of and compliance with the terms and
provisions hereof, and the consummation by BTG of the transactions contemplated
hereby do not require any consent or approval other than that which has been
obtained, conflict with or result in a breach by BTG of any of the terms or
provisions of, or constitute a default under, any applicable law, rule, or
regulation or any applicable decree, judgment or order of any court, federal or
state regulatory body, administrative agency or other governmental body having
jurisdiction over BTG, or the certificate of incorporation or bylaws of BTG.
SECTION 4.02. DISCLOSURE. BTG acknowledges that it has received adequate
access to financial and other information concerning GTSI and the GTSI Shares
and has had the opportunity to ask questions of and receive answers from GTSI
concerning such stock and to obtain therefrom any additional information
necessary to make an informed decision regarding the disposition of such stock
hereunder. BTG has received copies of each report, registration statement and
definitive proxy statement filed by GTSI with the Securities and Exchange
Commission since March 31, 1997.
SECTION 4.03. ACCREDITED INVESTOR. BTG has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks with respect to the disposition of the GTSI Shares. BTG is an
"accredited investor" as that term is defined in Rule 501 of Regulation D
promulgated under the Securities Act.
SECTION 4.04. TITLE; BENEFICIAL OWNERSHIP. BTG has good, valid and
marketable title to the GTSI Shares, free and clear of all Liens, with full
right and lawful authority to sell and transfer the GTSI Shares to GTSI under
this Stock Transfer Agreement, and BTG is transferring such title to the
Transferred Shares and the Repurchased Shares to GTSI at the Closing. Except
with respect to the GTSI Shares, no member of the BTG Group or any Affiliate
thereof beneficially owns any Common Stock or has the right to acquire under any
circumstance any Common Stock. No member of the BTG Group is a party to a
written or oral agreement with respect to the GTSI Shares except for this Stock
Transfer Agreement, the Agreement and the Transaction Documents.
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SECTION 4.05. ABSENCE OF LITIGATION. There is no action, suit, claim,
arbitration, proceeding or investigation, at law or in equity, or before or by
any court, arbitrator or governmental authority, pending, or, to the knowledge
of any member of the BTG Group, threatened or reasonably anticipated against,
affecting or involving any member of the BTG Group, wherein an unfavorable
decision, ruling or finding would adversely affect the validity or
enforceability of, or the authority or ability of BTG to perform its obligations
under, this Stock Transfer Agreement.
ARTICLE V
REPRESENTATIONS OF GTSI
SECTION 5.01. AUTHORIZATION, BINDING OBLIGATIONS AND NO CONFLICTS. GTSI
has full power and authority to enter into this Stock Transfer greement and to
perform the transactions contemplated hereby. This Stock Transfer Agreement has
been duly authorized, executed and delivered by GTSI and is a valid and binding
obligation of GTSI. The execution, delivery and performance by GTSI of this
Stock Transfer Agreement, the fulfillment of and compliance with the terms and
provisions hereof, and the consummation by GTSI of the transactions contemplated
hereby do not require any consent or approval other than that which has been
obtained, conflict with or result in a breach by GTSI of any of the terms or
provisions of, or constitute a default under, any applicable law, rule, or
regulation or any applicable decree, judgment or order of any court, federal or
state regulatory body, administrative agency or other governmental body having
jurisdiction over GTSI, or the certificate of incorporation or bylaws of GTSI.
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SECTION 5.02. ABSENCE OF LITIGATION. There is no action, suit, claim,
arbitration, proceeding or investigation, at law or in equity, or before or by
any court, arbitrator or governmental authority, pending, or, to the knowledge
of GTSI, threatened or reasonably anticipated against, affecting or involving
GTSI, wherein an unfavorable decision, ruling or finding would adversely affect
the validity or enforceability of, or the authority or ability of GTSI to
perform its obligations under, this Stock Transfer Agreement.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. ENTIRE AGREEMENT. This Stock Transfer Agreement, together
with the Agreement and the Ancillary Agreements, constitute the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior written and oral and all contemporaneous oral agreements and
understandings with respect to the subject matter hereof.
SECTION 6.02. NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be given,
if to BTG, to:
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
BTG, Inc.
0000 Xxxxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
telecopier: (000) 000-0000
with a copy to:
Xxxxxxx Xxx, Esq.
General Counsel
BTG, Inc.
0000 Xxxxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
telecopier: (000) 000-0000
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if to GTSI, to:
X. Xxxxx Young
President and Chief Executive Officer
Government Technology Services, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000-0000
telecopier: (000) 000-0000
with a copy to:
Xxxxxx X. XxXxxxxx
Arent Fox Xxxxxxx Xxxxxxx & Xxxx, PLLC
0000 Xxxxxxxxxxx Xxx., X.X.
Xxxxxxxxxx, XX 00000-0000
telecopier: (000) 000-0000
or such other address as such party may hereafter specify for the purpose by
notice to the other parties hereto. Each such notice, request or other
communication shall be effective (a) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this section and the appropriate
telecopy confirmation is received, or (b) if given by any other means, when
delivered at the address specified in this Section.
SECTION 6.03. NO WAIVERS. No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
SECTION 6.04. SUCCESSORS AND ASSIGNS. The provisions of this Stock
Transfer Agreement shall be binding upon and inure to the benefit of parties
hereto and their respective successors and assigns, provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Stock Transfer Agreement without the consent of the other parties hereto;
provided, however, that, without the prior consent of GTSI, BTG may collaterally
assign their rights hereunder, subject to the terms and conditions hereunder and
without relieving BTG of any obligation or liability hereunder, to a financing
institution or federal lending agency, as used in 31 U.S.C. Section 3527 and 41
U.S.C. Section 15, as security for BTG's obligations to such financing
institution or agency.
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SECTION 6.05. GOVERNING LAW. This Stock Transfer Agreement shall be
construed in accordance with and governed by the law of the Commonwealth of
Virginia regardless of the law that might otherwise govern under principles of
conflicts of laws applicable thereto, except with respect to matters of
corporate law as they apply to GTSI, which shall be governed by the Delaware
General Corporation Law.
SECTION 6.06. COUNTERPARTS; EFFECTIVENESS. This Stock Transfer Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Stock Transfer Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto.
SECTION 6.07. EXPENSES. Except as otherwise provided in this Stock
Transfer Agreement, each party will be solely responsible for such party's
legal, accounting, and other costs and expenses associated with the transactions
contemplated by this Stock Transfer Agreement. If any action at law or in equity
is necessary to enforce or interpret the terms of this Stock Transfer Agreement,
the prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
SECTION 6.08. TERMS GENERALLY. The definitions in Article I shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including" shall
be deemed to be followed by the phrase "without limitation." All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Stock Transfer
Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with generally accepted accounting principles.
SECTION 6.09. NO THIRD-PARTY BENEFICIARIES. This Stock Transfer Agreement
shall not confer any rights or remedies upon any Person other than the parties
and their respective successors and permitted assigns.
SECTION 6.10. SPECIFIC PERFORMANCE. Each of the parties acknowledges and
agrees that the other party would be damaged irreparably in the event any of the
provisions of this Stock Transfer Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the parties
agrees that the other party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Stock Transfer Agreement and to
enforce specifically this Stock Transfer Agreement and the terms and provisions
hereof in any action instituted in any court of the United States or any state
thereof having
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jurisdiction over the parties and the matter (subject to the provisions set
forth in Section 6.11), in addition to any other remedy to which it may be
entitled, at law or in equity.
SECTION 6.11. JURISDICTION. Each of the parties consents to the exclusive
jurisdiction of the federal courts of the Eastern District of Virginia for any
legal action, suit or proceeding arising out of or in connection with this Stock
Transfer Agreement or the transactions contemplated hereby, and agrees that any
such action, suit, or proceeding may be brought only in such courts. If such
forum is not available, each of the parties consents to the exclusive
jurisdiction of the Circuit Court of Fairfax County, Virginia, for any such
action, suit or proceeding. Each of the parties further waives any objection to
the laying of venue for any suit, action or proceeding in such courts. Each of
the parties agrees to accept and acknowledge service of any and all process that
may be served in any suit, action or proceeding. Each of the parties agrees that
any service of process upon it mailed by registered or certified mail, return
receipt requested to such party at the address provided in Section 6.02 shall be
deemed in every respect effective service of process upon such party in any such
suit, action or proceeding. Each of the parties agrees to waive any right it
might have to a trial by jury in any such suit, action or proceeding.
SECTION 6.12. FURTHER ASSURANCES. Each of the parties shall, without
further consideration, use reasonable efforts to execute and deliver to the
other such additional documents and take such other action as the other may
reasonably request to carry out the intent of this Agreement and the
transactions contemplated hereby.
SECTION 6.13. SURVIVAL. The representations, warranties and covenants of
GTSI and BTG contained in this Stock Transfer Agreement shall survive the
Closing.
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IN WITNESS WHEREOF, the parties hereto have caused this Stock Transfer
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
GOVERNMENT TECHNOLOGY SERVICES, INC.,
a Delaware corporation
By:
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Xxxxxxx X. Xxxxxxxx
Chief Financial Officer
BTG, INC.,
a Virginia corporation
By:
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Xxxxxx X. Xxxxxxx, President and
Chief Executive Officer
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