Exhibit 2.1
FOURTH AMENDMENT TO THE AGREEMENT AND PLAN OF REORGANIZATION
This Fourth Amendment (the "Amendment"), dated as of December 27, 2001, is
to the Agreement and Plan of Reorganization, as amended by the First Amendment,
the Second Amendment, and the Third Amendment, by and among XXXXXXXXXX.XXX, INC.
a Delaware corporation ("Newco Parent"), DYNCORP MANAGEMENT RESOURCES INC., a
Virginia corporation (the "Company"), NEWPORT ACQUISITION CORP., a Delaware
corporation ("Newco"), and DYNCORP, a Delaware corporation ("Company Parent")
(the "Reorganization Agreement"). Following further discussions between the
parties after execution of the Reorganization Agreement, the parties determined
it to be in the best interests of all such parties to make certain changes to
the Reorganization Agreement agreed to by the parties named below, and such
parties hereby agree as follows:
Section 1
1.1 Termination of Merger Agreement. The Agreement and Plan of
Merger, dated as of April 25, 2001, by and between the Company, Newco Parent,
Company Parent and Newco (the "Merger Agreement"), is hereby terminated in its
entirety.
1.2 Adoption of New Merger Agreement. The Company, Newco Parent,
Company Parent and TekInsight Services, Inc., a Delaware corporation ("Tek"),
hereby agree to enter into a new Agreement and Plan of Merger (the "New Merger
Agreement"), in substantially the form attached to this Amendment as Exhibit A
hereto, to replace the terminated Merger Agreement.
1.3 Substitution of Parties. By its execution of this Fourth
Amendment, Tek becomes a successor in interest to Newco and shall have all the
rights and obligations of Newco under the Agreement. Thereupon, Newco shall have
no further rights or obligations under the Agreement. all references to Newco in
the Agreement shall be deemed references to Tek.
Section 2
2.1 Working Capital Facility. Section 4.17 of the Reorganization
Agreement is hereby amended to read as follows:
Newco Parent shall use its best efforts to have secured, no
later than 90 days following the Closing, a firm irrevocable financing
commitment and/or credit facilities on prevailing market terms and
conditions under which, collectively, no less than $15 million of
financing will be available to Newco to support and finance its
operations for a period of at least 2 years subsequent to the Closing
(the "Financing").
2.2 Non-Competition Provisions. Section 4.21 of the Reorganization
Agreement is hereby amended to read as follows:
Company Parent agrees that neither it nor any of its
Subsidiaries shall, for a period of three (3) years after the Closing
Date, compete directly or indirectly with Newco or Newco Parent and its
Subsidiaries (including, without limitation, by seeking business
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opportunities, responding to requests for bids or other proposals, and
by performing contracts) for revenue producing service contracts with
state and local government agencies in the state and local government
markets (which shall refer to vertical lines of business and not
geographic areas) in which the Company and Newco Parent's Subsidiaries
are actively engaged in business as of the Closing Date; provided,
however, that such restriction shall not apply, and Company Parent and
its Subsidiaries shall be free at all times to pursue and perform any
and all of the following contracts secured before, during and after
the aforementioned restriction period:
(a) Contracts and business in the health-related, transportation,
law enforcement and public safety, and education-related markets
pursued by Company Parent's Subsidiaries, AdvanceMed Corporation,
DynRide LLC, DynCorp Information and Enterprise Technology, Inc. and
DynCorp Information Systems, and their successors in interest,
respectively;
(b) Any and all business that is conducted by Company Parent or
any of its Subsidiaries under or in connection with, or as an
outgrowth of, any federal government contract regardless of when
awarded to Company Parent or a Subsidiary;
(c) Any and all business that is conducted by Company Parent or
any of its Subsidiaries under any non-federal government contract that
is in effect as of the Closing Date (other than contracts that are
currently being performed, or are presently contemplated to be
performed, by the Company);
(d) Any and all business that is conducted at any time by any
business or entity that may be acquired by Company Parent or any of
its Subsidiaries, so long as the aggregate revenue of such business or
entity from contracts with state and local governments does not
exceed, in the year of acquisition, more than the lesser of 15% of
total annual revenue of such acquired business or entity or
$7,500,000;
(e) Any and all business that is conducted by an Affiliate of
Company Parent that is not a Subsidiary consolidated with Company
Parent (or its parent) for financial reporting purposes;
(f) Any and all business that is conducted by (i) any Subsidiary
of Company Parent subsequent to Company Parent's complete divestiture
of such Subsidiary or (ii) any non-affiliated third party that
purchases any portion of Company Parent's or any of its Subsidiaries'
business;
(g) Any and all business under contracts or proposals of any
Subsidiary of Company Parent (other than the Company) outstanding as
of the Closing Date with other than state and local government
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agencies, but for services ultimately beneficial, directly or
indirectly, to a state or local government;
(h) Contracts to provide information technology desk top or
"seat" management hardware and services to a state or local government
agency if, after reasonable notice of the opportunity by Company
Parent or a Subsidiary to Newco or Newco Parent, Newco or Newco Parent
has failed to actively seek or pursue such opportunity;
(i) Investments in any business that may be involved in providing
services to state and local government agencies so long as the
securities of such businesses are publicly traded and the aggregate
investment by Company Parent does not exceed 1% of the total
outstanding securities in which the investment is made;
(j) Contracts and business in the aviation support, operations,
maintenance and training; airport operations and management; security
services and training; facility and equipment maintenance and
management; logistics support; [non-software] engineering support
services; and construction and construction management markets pursued
by Company Parent's Subsidiaries, DynCorp Technical Services LLC and
DynCorp International LLC; and
(k) Contracts and business with the Commonwealth of Puerto Rico
and its agencies and instrumentalities;
provided further, however, that such restriction shall not apply to any
entity which may acquire the stock or a substantial portion of the assets
of Company Parent or one or more of its Subsidiaries, where such business
or activities are carried on by such entity or its subsidiaries or
affiliates other than Company Parent or the current Subsidiaries of Company
Parent.
Section 3
3.1 Conditions Precedent to Obligations of the Company and Company Parent.
Subsection 5.2(c) of the Reorganization Agreement is hereby deleted and replaced
by the word "Reserved".
Section 4
4.1 Conditions Precedent to Obligations of Newco Parent and Newco.
(a) Subsection 5.3(d) of the Reorganization Agreement is hereby
amended to read as follows:
DynRide LLC ("DynRide"), a Delaware limited liability company
which is a wholly owned subsidiary of Company Parent, shall have
transferred, assigned, and conveyed to the Company and its successors
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all of DynRide's interest in and title to its transportation brokerage
software program, including delivery of source Code but excluding any
right to the name "DynRide" (the "DynRide Technology"), for a
contingent payment of 50% of the first $3,600,000 of the Company's or
its successors' in interest, without duplication, net profits before
interest, taxes, depreciation, and amortization from the sale, use, or
licensing of the Technology to third-parties from and after the date
of such agreement ("net profits") plus 10% of the net profit after the
first $3,600,000 of net profit; provided, however, that such
contingent payments shall not apply to net profits earned after the
fifth anniversary of such agreement.
(b) Subsection 5.3(f) of the Reorganization Agreement is hereby
deleted and replaced by the word "Reserved".
Section 5
5.1 Registration Rights Agreement. The form of Registration Rights
Agreement attached to the Reorganization Agreement as Annex C thereto is hereby
deleted in its entirety and replaced with the form of Registration Rights
Agreement attached to this Amendment as Exhibit B hereto.
5.2 Transition Services Agreement. The form of Transition Services
Agreement attached to the Reorganization Agreement as Annex E thereto is hereby
deleted in its entirety and replaced with the form of Transition Services
Agreement in the form attached to this Amendment as Exhibit C hereto.
Section 6
6.1 Company Parent hereby consents to and waives compliance with Section
4.7(b) of the Reorganization Agreement with respect to:
(a) The purchase by Newco Parent from Exodus Communications, Inc.
("Exodus") of certain assets related to the Exodus Gulf Services business
unit operating in Louisiana, Alabama and Mississippi, substantially in
accordance with the terms and conditions set forth in that certain Letter
of Intent, dated September 28, 2001 and filed as an exhibit to Newco
Parent's Form 8-K filed with the Securities and Exchange Commission on
November 2, 2001, pursuant to appropriate definitive agreements to be
negotiated and entered into by Newco Parent and Exodus in connection
therewith; and
(b) The issuance and sale by Newco Parent, to holders of its 8% and
12% Convertible Notes (the "Notes") certain warrants issued in connection
therewith (the "Warrants"), of an aggregate of up to 617,628 shares of its
Class A common stock, par value $0.0001 per share (the "Class A common
stock"), as more fully described on Exhibit D hereto, upon conversion or
exercise, as applicable, of the Notes and Warrants. Upon the exercise of
such Warrants, Newco Parent shall issue Additional Consideration, as
stipulated in Article VI, Section 8 of the New Merger Agreement.
6.2 Notwithstanding anything set forth in this Amendment, the
Reorganization Agreement, the New Merger Agreement or in any document or
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agreement executed in connection therewith, Company Parent hereby acknowledges
and agrees that, in connection with this Amendment, the number of shares of
Class B common stock, par value $0.0001 per share (the "Class B common stock"),
to be issued to Company Parent upon consummation of the transactions
contemplated by the New Merger Agreement has been appropriately increased to
give effect to the issuance, pursuant to the transactions described in Section
4.1(b), of (a) 604,000 shares of Class A common stock on the basis of $1,057,000
principal amount of Notes being converted to shares of Class A common stock at
the rate of $1.75 per share, and (b) 411,765 shares of Class A common stock on
the basis of $700,000 principal amount of Notes being converted to shares of
Class A common stock at the rate of $1.70 per share; and that, upon such actual
issuance and sale of shares of Class A common stock following the effective date
of the Merger, Company Parent will not be entitled to be issued any additional
shares of Class B common stock or other securities of Newco Parent solely as a
result thereof.
6.3 Company Parent hereby consents to, and waives compliance with Section
4.15 of the Reorganization Agreement with respect to, Tek changing its corporate
name to either "DynTek Management Resources, Inc." or "DynTek Services, Inc.";
provided, that if the Reorganization Agreement is terminated for any reason
prior to the consummation of the transactions contemplated thereby, Tek shall
promptly change its name so that its name does not contain the word "Dyn" or any
variation thereon.
Section 7
7.1 Newco Parent and Newco hereby waive compliance with Section 5.3(a) and
5.3(c) of the Reorganization Agreement with respect to any adverse circumstances
or Material Adverse Effect relating to the Company's Non-Emergency
Transportation contracts with the Commonwealth of Virginia and the State of
Illinois and the termination of the Company's subcontract with CIBRE Enterprise
Solutions (a successor in interest to ARIS Corporation) to provide support for
Colorado data systems (collectively, the "Three Contracts"). Newco Parent and
Newco hereby confirm that they have been afforded and have exercised full
opportunity to examine all financial and other information pertaining to the
Three Contracts and to interview the project management teams responsible for
the Company's performance of the Three Contracts for all periods prior to the
date of this Fourth Amendment.
Section 8
8.1 Except as specifically modified by this Amendment, the Reorganization
Agreement in its current form shall be unaltered and shall remain in full force
and effect in accordance with its terms.
Section 9
9.1 Counterparts. This Amendment may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterparts.
9.2 Entire Agreement. This Amendment and the documents and instruments and
other agreements among the parties hereto as contemplated by or referred to
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herein, constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, it being understood that except as specifically modified by this
Amendment, the terms and conditions of the Merger Agreement remain in full force
and effect in accordance with their terms.
9.3 Severability. In the event that any provision of this Amendment or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Amendment will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Amendment with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
9.4 Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of laws.
9.5 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Amendment
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
9.6 Definitions. All capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the Merger Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized respective officers as of the date first
written above.
XXXXXXXXXX.XXX, INC.
By:/s/Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx, President
DYNCORP MANAGEMENT RESOURCES INC.
By:/s/X. Xxxxxxxxxx Xxxxxx
--------------------------------
X. Xxxxxxxxxx Xxxxxx, Secretary
NEWPORT ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx, President
DYNCORP
By:/s/ X. Xxxxxxxxxx Xxxxxx
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X. Xxxxxxxxxx Xxxxxx,
Vice President & Secretary
TEKINSIGHT SERVICES, INC.
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx, President
EXHIBIT A
New Merger Agreement
AGREEMENT AND PLAN OF MERGER OF
DYNCORP MANAGEMENT RESOURCES INC.
WITH AND INTO TEKINSIGHT SERVICES, INC.
AGREEMENT AND PLAN OF MERGER ("Plan of Merger") dated as of December 27,
2001 by and among DynCorp Management Resources Inc. ( "DMR"), a Virginia
corporation having its principal executive office at 00000 Xxxxx Xxxxxxx Xxxxx,
Xxxxxx, Xxxxxxxx 00000, Xxxxxxxxxx.xxx, Inc. ("TekInsight"), a Delaware
corporation having its principal executive office at 00000 Xxx Xxxxxx Xxxxxx,
Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, DynCorp ("DynCorp"), a Delaware corporation
having its principal executive office at 00000 Xxxxx Xxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxx 00000 and TekInsight Services, Inc. ("DynTek"), a Delaware corporation
and a direct wholly owned subsidiary of TekInsight, having its principal
executive office at 00000 Xxx Xxxxxx Xxx., Xxxxx 000, Xxxxxx, XX 00000.
WITNESSETH
WHEREAS, the respective Boards of Directors of DMR, DynCorp, DynTek and
TekInsight deem the merger of DMR with and into DynTek, under and pursuant to
the terms and conditions herein set forth or referred to, desirable and in the
best interests of the respective corporations and their respective shareholders,
and the respective Boards of Directors of DMR, DynCorp, DynTek and TekInsight
have adopted resolutions approving this Plan of Merger and an Agreement and Plan
of Reorganization dated of even date herewith, as amended ("Reorganization
Agreement");
WHEREAS, the Plan of Merger has been adopted by the unanimous consent of
the shareholders of DMR and DynTek; and
WHEREAS, the parties hereto intend that the Merger shall qualify as a
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended ("the Code").
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto do hereby agree as follows:
I. MERGER
Subject to the terms and conditions of this Plan of Merger, at the
Effective Time (as hereinafter defined), DMR shall be merged with and into
DynTek, pursuant to the provisions of, and with the effect provided in the
Delaware General Corporation Law and the Code of Virginia (said transaction
being hereinafter referred to as the "Merger"). At the Effective Time, the
separate existence of DMR shall cease and DynTek, as the surviving entity, shall
continue unaffected and unimpaired by the Merger. (DynTek as existing at and
after the Effective Time being hereinafter sometimes referred to as the
"Surviving Corporation").
II. CERTIFICATE OF INCORPORATION AND BY-LAWS
The Certificate of Incorporation and the Bylaws of DynTek in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and the Bylaws of the Surviving Corporation, in each case until
amended in accordance with applicable law.
III. BOARD OF DIRECTORS
The directors and officers of the Surviving Corporation shall be the
officers and directors of DynTek in office immediately prior to the Effective
Time, each to hold office in accordance with the Certificate of Incorporation
and Bylaws of the Surviving Corporation.
IV. CAPITAL
At the Effective Time, all of the shares of capital stock of DynTek issued
and outstanding immediately prior to the Effective Time shall remain outstanding
and unchanged by virtue of the Merger and shall constitute all of the issued and
outstanding shares of capital stock of the Surviving Corporation.
V. INITIAL CONVERSION AND EXCHANGE OF COMPANY SHARES
1. Merger Consideration. At the Effective Time, all of the outstanding
common stock of DMR, par value $1.00 per share ("DMR Common Stock"), issued and
outstanding immediately prior to the Effective Time (subject to Section 6 of
this Article 5), shall, by virtue of the Merger, automatically and without any
action on the part of the holder thereof, become and be converted into the
Initial Merger Consideration (as defined below) and the right to receive the
Additional Merger Consideration (as defined below) and TekInsight shall deliver
certificates representing such Initial Merger Consideration to DynCorp. The
Initial Merger consideration and the Additional Merger Consideration are
collectively referred to herein as the "Merger Consideration."
2. Initial Merger Consideration. The Initial Merger Consideration shall be
a number of shares of Class B common stock of TekInsight, par value $0.0001 per
share ("TekInsight Class B Stock"), equal to two-thirds of the number of
TekInsight Outstanding Share Equivalents (as defined below) outstanding
immediately prior to the Effective Time. The "TekInsight Outstanding Share
Equivalents" shall mean all outstanding shares of common stock of TekInsight,
plus all shares of common stock of TekInsight that may be issued upon
conversion, redemption or exchange of or otherwise with respect to any
outstanding shares of preferred stock of TekInsight, XxxXxxxxx.Xxx, Inc. or any
other company that was a Subsidiary of TekInsight at the time of issuance of
such shares ,plus the following shares underlying those convertible notes issued
in connection with the 2001 Bridge Financing: 604,000 shares issued based upon
an indebtedness to equity conversion ratio of $1.75 and 411,765 shares issued
based upon an indebtedness to equity conversion ratio of $1.70. If the notes are
held until maturity, and are converted at a ratio of $1.50 per share, an
additional 100,667 shares of Class B common stock shall be issued.
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3. Treasury Stock. At the Effective Time, all shares of DMR Common Stock
held in the treasury of DMR shall be cancelled and no cash, stock or other
property shall be delivered in exchange therefor.
4. Stock Transfers. At the Effective Time, the stock transfer books of DMR
shall be closed and no transfer of DMR Common Stock shall thereafter be made or
recognized. If, after the Effective Time, certificates representing such shares
are presented for transfer to the Surviving Corporation, they shall be cancelled
and exchanged for the Merger Consideration as provided herein.
5. Changes in TekInsight Common Stock. In the event that prior to the
Effective Time, the outstanding shares of common stock shall of any class or
series of TekInsight have been increased, decreased or changed into or exchanged
for a different number or kind of shares or securities by reorganization,
recapitalization, reclassification, stock dividend, stock split or other like
changes in TekInsight's capitalization, then an appropriate and proportionate
adjustment shall be made to the Merger Consideration.
6. Fractional Shares. Notwithstanding any other provision hereof, each
holder of shares of DMR Common Stock who would otherwise have been entitled to
receive pursuant to this Article 5 a fraction of a share of TekInsight Class B
Stock (after taking into account all certificates delivered by such holder)
shall receive, in lieu thereof, cash in an amount equal to such fraction of a
share of TekInsight Class B Stock multiplied by the market value (as defined
below) of TekInsight Class A Stock (as defined below). The "market value" of
TekInsight Class B Stock shall be the last reported sale price of the TekInsight
Common Stock on the Nasdaq Small Cap Market for the trading day immediately
preceding the date on which the Effective Time occurs. No such holder shall be
entitled to dividends, voting rights or any other shareholder right in respect
of such fractional share.
7. Lost, Stolen or Destroyed Certificates. In the event any certificate
representing DMR Common Stock shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such certificate
to be lost, stolen or destroyed and, if required by TekInsight, the posting by
such person of a bond in such amount as TekInsight may reasonably direct as
indemnity against any claim that may be made against it with respect to such
certificate, TekInsight will issue in exchange for such lost, stolen or
destroyed certificate the shares of TekInsight Class B Stock constituting the
Merger Consideration and cash in lieu of fractional shares deliverable in
respect thereof pursuant to this Plan of Merger.
VI. ADDITIONAL ISSUANCES OF NEWCO PARENT CLASS B STOCK
1. Dilutive Issuances. Subject to Article VI, Section 9 below, if and
whenever on or after the Effective Time, TekInsight issues or sells any shares
of its Class A common stock, par value $0.0001 per share ("TekInsight Class A
Stock"), pursuant to any Stock Equivalents (as defined below) at a price per
share less than the per share Fair Market Value (as defined below) of the
TekInsight Class A Stock at the time of issue or sale, then upon such issue or
sale (a "Dilutive Issuance"), DynTek shall issue to DynCorp for no additional
consideration such number of shares of TekInsight Class B Stock as equal the
Additional Merger Consideration (as defined below) with respect to such Dilutive
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Issuance. DynTek shall issue such Additional Merger Consideration and deliver
the corresponding TekInsight Class B Stock certificate within 90 days after the
Dilutive Issuance but in any event prior to the first Trigger Date after such
Dilutive Issuance.
2. Issuance. The issuance of certificates for shares of TekInsight Class B
Stock issued under this Article VI will be made without charge to DynCorp for
any issuance tax in respect thereof or other cost incurred by TekInsight in
connection with such issuance of shares of TekInsight Class B Stock. Each share
of TekInsight Class B Stock issued hereunder will be fully paid and
nonassessable and free from all liens and charges with respect to the issuance
thereof.
3. Reservation of TekInsight Class B Stock. TekInsight shall at all times
reserve and keep available out of its authorized but unissued shares of
TekInsight Class B Stock solely for the purpose of issuance hereunder, such
number of shares of TekInsight Class B Stock as may be issuable hereunder,
subject to Section 9 of this Article VI. TekInsight shall take all such actions
as may be necessary to assure that all such shares of TekInsight Class B Stock
may be so issued without violation of any applicable law or governmental
regulation or any requirements of any domestic securities exchange upon which
shares of TekInsight Common Stock may be listed.
4. Fractional Shares. If the determination of the Additional Merger
Consideration has the result that a fractional share of Class B Stock would be
issuable, TekInsight will at the time of the issuance of the Additional Merger
Consideration, deliver to DynCorp cash in lieu of such fractional share in an
amount equal to the Fair Market Value of the TekInsight Class A Stock into which
such fractional shares are convertible.
5. Determination of Consideration Received. If any shares of TekInsight
Class A Stock are issued or sold or deemed to have been issued or sold for cash,
the consideration received therefor will be deemed to be the net amount received
by TekInsight. In case any shares of TekInsight Class A Stock are issued or sold
for a consideration other than cash, the amount of the consideration other than
cash received by TekInsight will be the fair market value of such consideration.
If such consideration is in the form a security traded in a market identified in
the definition of Fair Market Value below, then the fair market value of such
security shall be its Fair Market Value. If such consideration is neither cash
nor in the form a security defined in the immediately preceding sentence, then
its fair market value shall be determined by agreement between TekInsight and
DynCorp or, failing such agreement, by an independent appraiser appointed by
agreement of TekInsight and DynCorp.
6. Reorganization, Reclassification, Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of TekInsight's assets to another Person or other
transaction which is effected in such a way that holders of TekInsight Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for TekInsight Common
Stock is referred to herein as "Organic Change." Prior to the consummation of
any Organic Change, TekInsight will make appropriate provision (in form and
substance reasonably satisfactory to DynCorp) with respect to DynCorp's rights
and interests to ensure that the provisions of this Article VI will be
applicable with respect to shares of stock, securities or assets issued in
connection with the Organic Change, or payable as a result of the Organic Change
with respect to or in exchange for shares of TekInsight Common Stock, in each
case in respect of Stock Equivalents. TekInsight will not effect any such
Organic Change, unless prior to the consummation thereof, the successor entity
(if other than TekInsight) resulting from such Organic Change or the corporation
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purchasing such assets in the Organic Change agrees by written instrument (in
form and substance reasonably satisfactory to DynCorp) to issue to DynCorp
shares of capital stock of the successor entity with respect to Stock
Equivalents of the successor entity received in exchange for, as a result of a
conversion of, Stock Equivalents that are subject to the provisions hereof, on
equivalent terms as herein.
7. Notices. Immediately upon any Dilutive Issuance, TekInsight will give
written notice thereof to DynCorp, setting forth in reasonable detail the terms
of the Dilutive Issuance and certifying the calculation of the Additional Merger
Consideration to be issued to DynCorp. TekInsight will also give written notice
to DynCorp at least 20 days prior to any Trigger Event.
8. Definitions. All Capitalized terms not otherwise defined herein shall
have the meanings ascribed thereto in the Reorganization Agreement. As used in
this Article VI, the following terms have meanings set forth below:
"Additional Merger Consideration" means, with respect to a Dilutive
Issuance, such number of shares of TekInsight Class B Stock that equal forty
percent (40%) of the quotient obtained by dividing (a) (i) the aggregate of the
Fair Market Value per share of the TekInsight Class A Stock issued in the
Dilutive Issuance minus (ii) the net consideration received by TekInsight
(determined in accordance with Article VI, Section 5) by (b) the Fair Market
Value per share of the TekInsight Class A Stock at the time of the Dilutive
Issuance.
"Fair Market Value" of any security means the closing price of such
security's sales on the principal domestic securities market (including Nasdaq)
on which such security may at the time be listed, or if there has been no such
sales on any measuring day, the average of the highest bid and lowest asked
prices on such market at the end of the day, or, if on any measuring day such
security is not so listed, the average of the hightest bid and lowest asked
prices in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization, in each
such case averaged over a period of thirty (30) days consisting of the day as of
which "Fair Market Value" is being determined and the 29 consecutive business
days prior to such day.
"Person" means an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
"Stock Equivalents" means any option, warrant, right or similar security or
claim, outstanding at the Effective Time, exercisable into, exchangeable for, or
convertible into shares of TekInsight Common Stock or securities that are
exercisable into, exchangeable for, or convertible into TekInsight Common Stock,
excluding stock options covering not more than 2,000,000 shares of TekInsight
Class A Stock granted to employees of TekInsight pursuant to its 1992 Stock
Option Plan and excluding any shares of preferred stock of Newco or TekInsight
used to calculate the number of TekInsight Outstanding Share Equivalents.
"Trigger Event" means any of the following: (i) the date on which
TekInsight closes its books or takes a record (A) with respect to any dividend
or distribution upon TekInsight Common Stock or (B) for determining rights of
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stockholders to vote with respect to any matter at any annual or special meeting
of stockholders of TekInsight or (ii) the date on which any Organic Change,
dissolution or liquidation will take place.
9. Restrictions. Notwithstanding anything hereto to the contrary, (i) no
issuance of Additional Merger Consideration shall be made after the fifth
anniversary of the Effective Time, (ii) in no event shall the numbers of shares
of TekInsight Class B Stock issued as Additional Merger Consideration exceed the
number of shares of TekInsight Class B Stock issued as Initial Merger
Consideration, each as adjusted for any reorganization, recapitalization,
reclassification, stock dividend, stock split or other like changes in
TekInsight's capitalization, and (iii) DynCorp may not assign its right to
receive the Additional Merger Consideration (other than by operation of law).
VII. EFFECTIVE TIME OF THE MERGER
A certificate of merger evidencing the transactions contemplated herein
shall be delivered to the Delaware Secretary of State for filing and articles of
merger evidencing the transactions contemplated herein shall be delivered to the
State Corporation Commission of Virginia, each as provided in the Reorganization
Agreement. The Merger shall be effective at the time and on the date specified
in such certificate of merger and articles of merger (such date and time being
herein referred to as the "Effective Time").
VIII. CONDITIONS PRECEDENT
The obligations of DMR, DynCorp, Dyntek and TekInsight to effect the Merger
as herein provided shall be subject to satisfaction, unless duly waived, of the
conditions to the obligations of such person set forth in Article V of the
Reorganization Agreement.
IX. TERMINATION
Anything contained in the Plan of Merger to the contrary notwithstanding,
and notwithstanding adoption hereof by the shareholders of DMR or DynTek, this
Plan of Merger may be terminated and the Merger abandoned as provided in the
Reorganization Agreement.
X. NAME
At the time of the Merger, the name of the Surviving Corporation shall be
changed to DynTek Services, Inc.
XI. MISCELLANEOUS
1. This Plan of Merger may be amended or supplemented at any time prior to
the Effective Time by mutual agreement of DMR, DynCorp, DynTek and TekInsight.
Any such amendment or supplement must be in writing and approved by their
respective Boards of Directors and/or by officers authorized thereby.
2. Any notice or other communication required or permitted under this Plan
of Merger shall be given, and shall be effective, in accordance with the
provisions of the Reorganization Agreement.
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3. The headings of the several Articles herein are inserted for convenience
of reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Plan of Merger.
4. This Plan of Merger shall be governed by and construed in accordance
with the laws of Delaware applicable to the internal affairs of DMR and DynTek.
5. Merger This Plan of Merger, taken together with the Reorganization
Agreement, shall constitute a plan of reorganization within the meaning of
Section 1.368-2(g) of the Treasury Regulations promulgated under the Code.
[Remainder of this page left intentionally blank.]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Plan of Merger to be executed in counterparts by their
duly authorized officers, all as of the day and year first above written.
DYNCORP MANAGEMENT
RESOURCES INC.
By /s/ Xxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President
TEKINSIGHT SERVICES, INC.
By /s/ Xxxxxx X. Xxxx
------------------------------
Name: Xxxxxx X. Xxxx
Title: CEO
XXXXXXXXXX.XXX, INC.
By /s/ Xxxxxx X. Xxxx
------------------------------
Name: Xxxxxx X. Xxxx
Title: CEO
DYNCORP
By /s/ Xxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President
-8-
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of December 27,
2001, by and between XxxXxxxxxx.xxx, Inc., a company organized under the laws of
the State of Delaware (the "Company"), and DynCorp, a company organized under
the laws of the State of Delaware (the "Holder").
WHEREAS, the respective Boards of Directors of the Company, the Holder,
TekInsight Services, Inc. ("Services"), a wholly-owned subsidiary of the
Company, and DynCorp Management Resources, Inc. ("DMR"), a wholly-owned
subsidiary of the Holder, have approved an Agreement and Plan of Reorganization
(the "Reorganization Agreement") and have adopted a related Agreement and Plan
of Merger dated as of the date hereof (together with the Reorganization
Agreement, the "Merger Agreements"), providing for certain transactions pursuant
to which DMR would be merged with and into Services (the "Merger");
WHEREAS, pursuant to the Merger, the Company will issue certain shares of
its Class B common stock, par value, $0.0001 per share, ("Class B Common Stock")
to the Holder as set forth in the Merger Agreements;
WHEREAS, the parties desire to set forth the rights of the Holder and the
obligations of the Company with respect to the registration of Registrable
Securities (as defined herein) pursuant to the Securities Act (as defined
herein);
NOW THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
Section 1. Definitions.
------------
As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under the Exchange Act.
"Class A Common Stock" shall mean the shares of Class A common stock, par
value $0.0001 per share, of the Company.
"Class B Common Stock" shall have the meaning set forth in the preamble.
"Company" shall have the meaning set forth in the preamble and shall also
include the Company's successors.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Holder" shall have the meaning set forth in the preamble and shall also
include any successor, assignee or transferee who shall hereafter hold the
Registrable Securities as set forth in Section 6(d).
"Incidental Registration" shall mean a registration required to be effected
by the Company pursuant to Section 2(b).
"Incidental Registration Statement" shall mean a registration statement of
the Company, as provided in Section 2(b), which covers any of the Registrable
Securities on an appropriate form in accordance with the Securities Act and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Person" shall mean any individual, limited or general partnership, limited
liability company, corporation, trust, joint venture, association, joint stock
company or unincorporated organization.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary Prospectus, and any such Prospectus as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities and by all other
amendments and supplements to such Prospectus, including post-effective
amendments, and in each case all material incorporated by reference therein.
"Registrable Securities" shall mean, collectively, (i) the shares of Class
A Common Stock into which shares of Class B Common Stock as of the date hereof
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are convertible pursuant to the Company's certificate of incorporation (the
"Shares"), (ii) any stock or other securities into which or for which the Shares
may hereafter be changed, converted or exchanged, (iii) any other securities
issued or distributed in respect of the Shares by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization,
reorganization, merger, consolidation or otherwise and (iv) any other securities
into which or for which shares of any other successor securities are received in
respect of any of the foregoing (i) through (iii); provided that in the event
that any Registrable Securities (as defined without giving effect to this
proviso) are being registered pursuant hereto, the Holder may include in such
registration (subject to the limitations of this Agreement otherwise applicable
to the inclusion of Registrable Securities) any shares of Class A Common Stock
or securities acquired in respect thereof thereafter acquired by the Holder,
which shall also be deemed to be "Shares," and accordingly Registrable
Securities, for purposes of such registration. Registrable Securities will cease
to be Registrable Securities when (i) a Registration Statement covering such
Registrable Securities has been declared effective under the Securities Act and
they have been disposed of pursuant to such effective Registration Statement,
(ii) such Registrable Securities are distributed, or distributable, to the
public pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act or otherwise transferred in a manner that results in the
transferred security being delivered not being subject to transfer restrictions
under the Securities Act, or (iii) such Registrable Securities shall have ceased
to be outstanding.
"Registration Expenses" shall mean (i) all registration, listing,
qualification and filing fees (including NASD filing fees), (ii) fees and
disbursements of counsel for the Company, (iii) accounting fees incident to any
such registration, (iv) blue sky fees and expenses (including counsel fees in
connection with the preparation of a Blue Sky Memorandum and legal investment
survey and NASD filings), (v) all expenses of any Persons in preparing or
assisting in preparing, printing, distributing, mailing and delivering any
Registration Statement, any Prospectus, any underwriting agreements, transmittal
letters, securities sales agreements, securities certificates and other
documents relating to the performance of and compliance with this Agreement,
(vi) the expenses incurred in connection with making road show presentations and
holding meetings with potential investors to facilitate the distribution and
sale of Registrable Securities which are customarily borne by the issuer, (vii)
underwriter fees, excluding discounts and commissions, and (viii) all internal
expenses of the Company (including all salaries and expenses of officers and
employees performing legal or accounting duties); provided, however,
Registration Expenses shall not include any Selling Expenses.
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"Registration Statement" shall mean any registration statement of the
Company which covers any Registrable Securities and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Related Securities" shall mean any securities of the Company similar or
identical to any of the Registrable Securities including, without limitation,
Class A Common Stock, Class B Common Stock and all options, warrants, rights and
other securities convertible into, or exchangeable or exercisable for Class A
Common Stock or Class B Common Stock (other than any of the foregoing to be
offered or sold to officers, directors or employees as compensation).
"Required Registration" shall mean a registration required to be effected
pursuant to Section 2(a).
"Required Registration Statement" shall mean a Registration Statement which
covers the Registrable Securities requested to be included therein pursuant to
the provisions of Section 2(a) on an appropriate form (in accordance with
Section 4(a) hereof) pursuant to the Securities Act, and which form shall be
available for the sale of the Registrable Securities in accordance with the
intended method or methods of distribution thereof, and all amendments and
supplements to such Registration Statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Selling Expenses" shall mean underwriting discounts, selling commissions
and stock transfer taxes applicable to the shares registered by the Holder.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Underwriter" shall have the meaning set forth in Section 5(a).
"Underwritten Offering" shall mean a sale of securities of the Company to
an Underwriter or Underwriters for reoffering to the public.
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Section 2. Registration Under the Securities Act.
--------------------------------------
(a) Required Registration.
----------------------
(i) Right to Require Registration. At any time following the date hereof
(subject to extension in accordance with the penultimate paragraph of this
Section 2(a)(i)), the Holder shall have the right to request in writing (a
"Request") (which Request shall specify the Registrable Securities intended to
be disposed of by the Holder and the intended method of distribution thereof)
that the Company register the Registrable Securities of the Holder by filing
with the SEC a Required Registration Statement. Upon the receipt of such a
Request, the Company will, not later than the 60th calendar day after the
receipt of such a Request by the Company, cause to be filed with the SEC a
Required Registration Statement covering the Registrable Securities which the
Company has been so requested to register in such Request. The Required
Registration Statement will provide for the registration under the Securities
Act of the Registrable Securities which the Company has been so requested to
register by the Holder, subject to the limitations of this Section, to the
extent necessary to permit the disposition of such Registrable Securities in
accordance with the intended methods of distribution thereof specified in such
Request and the Company shall use its reasonable best efforts to have such
Required Registration Statement declared effective by the SEC as soon as
practicable thereafter and, subject to Section 2(a)(iii), to keep such Required
Registration Statement continuously effective for a period of at least 60
calendar days (or, in the case of an Underwritten Offering, such period as the
Underwriters shall reasonably require) following the date on which such Required
Registration Statement is declared effective (or such shorter period which will
terminate when all of the Registrable Securities covered by such Required
Registration Statement have been sold pursuant thereto), including, if
necessary, by filing with the SEC a post-effective amendment or a supplement to
the Required Registration Statement or the related Prospectus or any document
incorporated therein by reference or by filing any other required document or
otherwise supplementing or amending the Required Registration Statement, if
required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Required Registration Statement
or by the Securities Act, the Exchange Act, any state securities or blue sky
laws or any rules and regulations thereunder.
The Company shall not be required to effect, pursuant to this Section 2(a)
more than two (2) registrations requested by the Holder. A Request which does
not result in an effective registration under the Securities Act shall not be
counted in determining whether these registrations have occurred.
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A Request may be withdrawn prior to the filing of the Required Registration
Statement by the Holder (a "Withdrawn Request") and a Required Registration
Statement may be withdrawn prior to the effectiveness thereof by the Holder (a
"Withdrawn Required Registration"). A withdrawal shall not be treated as a
Required Registration which shall have been effected pursuant to the immediately
preceding paragraph.
The Holder shall not, without the Company's consent, be entitled to deliver
a Request for a Required Registration if less than 90 calendar days have elapsed
since (A) the effective date of a prior Required Registration Statement or (B)
in the case of a Required Registration which is effected other than by means of
an Underwritten Offering, the sale by Holder of its Registrable Securities
pursuant thereto or the Required Registration Statement ceasing to be effective
under the Securities Act or (C) the date of withdrawal of a Withdrawn Required
Registration.
Notwithstanding the foregoing, the Company may delay the filing or the
effectiveness of any Required Registration Statement for a period not to exceed
90 days (a "Blackout Period") if the Board of Directors of the Company, in its
reasonable judgment, determines that such registration would interfere with any
pending material financing, acquisition, corporate reorganization or any other
material corporate development involving the Company or any of its subsidiaries
or would require premature disclosure thereof; provided, however, that the
aggregate number of days included in all Blackout Periods during any consecutive
12 months shall not exceed 90 days.
The registration rights granted pursuant to the provisions of this Section
2(a) shall be in addition to the registration rights granted pursuant to the
other provisions of this Section 2.
(ii) Priority in Required Registrations. If a Required Registration
involves an Underwritten Offering, and the sole Underwriter or the lead managing
Underwriter, as the case may be, of such Underwritten Offering shall advise the
Company in writing on or before the date five (5) days prior to the date then
scheduled for such offering that, in its opinion, the amount of Registrable
Securities requested to be included in such Required Registration exceeds the
amount which can be sold in such offering without adversely affecting the
success of the distribution of the Registrable Securities being offered, the
Company will include in such Required Registration only the amount of
Registrable Securities that the Company is so advised can be sold in such
offering; provided, however, that the Company shall be required to include in
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such Required Registration: first, all Registrable Securities requested to be
included in the Required Registration by the Holder, second, if all Registrable
Securities requested to be included in the Required Registration by the Holder
can be so included, all other securities requested, in accordance with any
registration rights which are granted in compliance with Section 6(a), to be
included in such Required Registration which are of the same class as the
Registrable Securities and, to the extent not all such securities can be
included in such Required Registration, the number of securities to be included
shall be allocated pro rata among the holders thereof requesting inclusion in
such Required Registration on the basis of the number of securities requested to
be included by all such holders.
(iii) Shelf Registration. If, at the time the Company registers the
Registrable Securities under the Securities Act pursuant to this Section 2(a),
the sale or other disposition of such Registrable Securities by the Holder may
be made pursuant to a Registration Statement on Form S-3 (or any successor form
that permits the incorporation by reference of future filings by the Company
under the Exchange Act), then such Required Registration Statement, unless
otherwise directed by the Holder, shall be filed as a "shelf" Registration
Statement pursuant to Rule 415 under the Securities Act (or any successor rule).
Any such shelf registration shall cover the disposition of all Registrable
Securities in one or more underwritten offerings, block transactions, broker
transactions, at-market transactions and in such other manner or manners as may
be specified by the Holder. Notwithstanding the requirements in the first
paragraph of Section 2(a)(i) with respect to the period of effectiveness of any
Required Registration Statement, the Company shall use its reasonable best
efforts to keep such "shelf" registration continuously effective as long as the
delivery of a Prospectus is required under the Securities Act in connection with
the disposition of the Registrable Securities registered thereby and, in
furtherance of such obligation, shall supplement or amend such Registration
Statement if, as and when required by the rules, regulations and instructions
applicable to the form used by the Company for such registration or by the
Securities Act or by any other rules and regulations thereunder applicable to
shelf registrations. On one occasion during each twelve months such shelf
Registration Statement remains effective, upon the Holder's receipt of notice of
the decision of the Board of Directors as specified in the fifth paragraph of
Section 2(a)(i) above, the Holder will refrain from making any sales of
Registrable Securities under the shelf Registration Statement for a period of up
to 90 days.
(b) Incidental Registration.
-------------------------
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(i) Right to Include Registrable Securities. If at any time the Company
proposes to register any Related Securities under the Securities Act (other than
(A) any registration of public sales or distributions solely by and for the
account of the Company of securities issued (x) pursuant to any employee benefit
or similar plan, including employee stock and stock option plus, or any dividend
reinvestment plan or (y) in any acquisition by the Company or (B) pursuant to
Section 2(a) hereof), either in connection with a primary offering for cash for
the account of the Company or a secondary offering or a combination thereof, the
Company will, each time it intends to effect such a registration, give written
notice to the Holder at least ten (10) business days prior to the initial filing
of a Registration Statement with the SEC pertaining thereto, informing the
Holder of its intent to file such Registration Statement and of the Holder's
rights to request the registration of the Registrable Securities held by the
Holder under this Section 2(b) (the "Company Notice"). Upon the written request
of the Holder made within seven (7) business days after any such Company Notice
is given (which request shall specify the Registrable Securities intended to be
disposed of by the Holder and, unless the applicable registration is intended to
effect a primary offering of Class A Common Stock for cash for the account of
the Company, the intended method of distribution thereof), the Company will use
its reasonable best efforts to effect the registration under the Securities Act
of all Registrable Securities which the Company has been so requested to
register by the Holder to the extent required to permit the disposition (in
accordance with the intended methods of distribution thereof or, in the case of
a registration which is intended to effect a primary offering for cash for the
account of the Company, in accordance with the Company's intended method of
distribution) of the Registrable Securities so requested to be registered,
including, if necessary, by filing with the SEC a post-effective amendment or a
supplement to the Incidental Registration Statement or the related Prospectus or
any document incorporated therein by reference or by filing any other required
document or otherwise supplementing or amending the Incidental Registration
Statement, if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Incidental Registration
Statement by the Securities Act, any state securities or blue sky laws, or any
rules and regulations thereunder; provided, however, that if, at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the Incidental Registration Statement filed in connection
with such registration, the Company shall determine for any reason not to
register or to delay registration of such securities, the Company may, at its
election, give written notice of such determination to the Holder and,
thereupon, (A) in the case of a determination not to register, the Company shall
be relieved of its obligation to register any Registrable Securities in
connection with such registration (but not from its obligation to pay the
Registration Expenses incurred in connection therewith) and (B) in the case of a
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determination to delay such registration, the Company shall be permitted to
delay registration of any Registrable Securities requested to be included in
such Incidental Registration Statement for the same period as the delay in
registering such other securities.
The registration rights granted pursuant to the provisions of this Section
2(b) shall be in addition to the registration rights granted pursuant to the
other provisions of this Section 2.
(ii) Priority in Incidental Registrations. If a registration pursuant to
this Section 2(b) involves an Underwritten Offering of the securities so being
registered, whether or not for sale for the account of the Company, and the sole
Underwriter or the lead managing Underwriter, as the case may be, of such
Underwritten Offering shall advise the Company in writing (with a copy to the
Holder) on or before the date five (5) days prior to the date then scheduled for
such offering that, in its opinion, the amount of securities (including
Registrable Securities) requested to be included in such registration exceeds
the amount which can be sold in (or during the time of) such offering without
adversely affecting the success of the distribution of the securities being
offered, then the Company will include in such registration first, all the
securities entitled to be sold pursuant to such Registration Statement without
reference to the incidental registration rights of any holder (including the
Holder), second, the amount of Registrable Securities requested by the Holder to
be included in such registration and third, the amount of other securities
requested to be included in such registration that the Company is so advised can
be sold in (or during the time of) such offering, allocated, if necessary, pro
rata among the holders thereof requesting such registration on the basis of the
number of the securities beneficially owned at the time by the holders
requesting inclusion of their securities; provided, however, that in the event
the Company determines, by virtue of this paragraph, not to include in any such
registration all of the Registrable Securities of the Holder requested to be
included in such registration, the Holder may, upon written notice to the
Company given within three (3) business days of the time the Holder first is
notified of such matter, reduce the amount of Registrable Securities it desires
to have included in such registration, whereupon only the Registrable
Securities, if any, it desires to have included will be so included.
(c) Expenses. The Company agrees to pay all Registration Expenses in
connection with (i) each of the two (2) registrations requested pursuant to
Section 2(a) and (ii) each registration as to which the Holder requests
inclusion of Registrable Securities pursuant to Section 2(b). All Selling
Expenses relating to securities registered on behalf of the Holder shall be
borne by the Holder.
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(d) Effective Registration Statement; Suspension. Subject to the third
paragraph of Section 2(a)(i), a Registration Statement pursuant to Section 2(a)
will not be deemed to have become effective (and the related registration will
not be deemed to have been effected) unless it has been declared effective by
the SEC prior to a request by the Holder that such Registration Statement be
withdrawn; provided, however, that if, after it has been declared effective, the
offering of any Registrable Securities pursuant to such Registration Statement
is interfered with by any stop order, injunction or other order or requirement
of the SEC or any other governmental agency or court, any period during which
use of such Registration Statement shall be so interfered with shall be treated
as a Suspension Period as defined in the second paragraph of this Section 2(d).
Any period during which the Company fails to keep any Required Registration
Statement effective and usable for resale of Registrable Securities shall be
referred to as a "Suspension Period." A Suspension Period shall (a) commence on
and include the earlier of the date that (i) the Company gives notice or (ii)
the Holder is advised by counsel or the SEC, in either case, that a Required
Registration Statement is no longer effective or usable for resale of
Registrable Securities and (b) end on and including the date when the Holder
either receives copies of the supplemented or amended Prospectus contemplated by
Section 4(j) or is advised in writing by the Company (having a reasonable basis
to so advise) that the use of the Prospectus may be resumed. In the event of one
or more Suspension Periods, the applicable time period referenced in the first
paragraph of Section 2(a)(i)) shall be extended by the number of days included
in each Suspension Period, and, in the event any Suspension Period occurs sooner
than 30 days after the end of the previous Suspension Period or 30 days after
the initial effectiveness of any Required Registration Statement, none of the
days between such Suspension Periods (as the case may be) or prior to such
Suspension Period shall be included in computing such applicable time period.
(e) Selection of Underwriters. At any time or from time to time, the Holder
may elect to have its Registrable Securities sold in an Underwritten Offering
and may select the investment banker or investment bankers and manager or
managers that will serve as lead and co-managing Underwriters with respect to
the offering of its Registrable Securities, subject to the consent of the
Company which shall not be unreasonably withheld.
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Section 3. Registration Procedures.
-------------------------
In connection with the obligations of the Company pursuant to Section 2,
the Company shall use its reasonable best efforts to effect or cause to be
effected the registration of the Registrable Securities under the Securities Act
to permit the sale of such Registrable Securities by the Holder in accordance
with its intended method of distribution, and the Company shall:
(a) (i) subject to Section 2(a)(iii), prepare and file a Registration
Statement with the SEC which (x) shall be on Form S-3 (or any successor to such
form), if available, and otherwise on Form S-1, (y) shall be available for the
sale or exchange of the Registrable Securities in accordance with the intended
method or methods of distribution by the Holder and (z) shall comply as to form
with the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith and all other information
reasonably requested by the lead managing Underwriter or sole Underwriter, if
applicable, to be included therein, (ii) use its reasonable best efforts to
cause such Registration Statement to become effective and remain effective in
accordance with Section 2, (iii) use its reasonable best efforts not to take any
action that would cause a Registration Statement to contain a material
misstatement or omission or to be not effective and usable for resale of
Registrable Securities during the period that such Registration Statement is
required to be effective and usable and (iv) cause each Registration Statement
and the related Prospectus and any amendment or supplement thereto, as of the
effective date of such Registration Statement, amendment or supplement (x) to
comply in all material respects with any requirements of the Securities Act and
the rules and regulations of the SEC and (y) not to contain any untrue statement
of a material fact required to be stated therein or necessary to make the
statements therein not misleading;
(b) subject to paragraph (j) of this Section 4, prepare and file with the
SEC such amendments and post-effective amendments to each such Registration
Statement, as may be necessary to keep such Registration Statement effective for
the applicable period; cause each such Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by each
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the Holder as set forth in such
registration statement;
(c) furnish to the Holder and to each Underwriter of an Underwritten
Offering of Registrable Securities, if any, without charge, as many copies of
each Prospectus, including each preliminary Prospectus, and any amendment or
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supplement thereto and such other documents as the Holder or Underwriter may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities; the Company hereby consents to the use of the
Prospectus, including each preliminary Prospectus, by the Holder and each
Underwriter of an Underwritten Offering of Registrable Securities covered by the
Prospectus or the preliminary Prospectus (and the Holder hereby agreeing not to
make a broad public dissemination of a form of preliminary Prospectus which is
designed to be a "quiet filing" without the Company's consent, such consent to
not be withheld unreasonably);
(d) (i) use its reasonable best efforts to register or qualify the
Registrable Securities, no later than the time the applicable Registration
Statement is declared effective by the SEC, under all applicable state
securities or "blue sky" laws of such jurisdictions as each Underwriter, if any,
or the Holder, shall reasonably request; (ii) use its reasonable best efforts to
keep each such registration or qualification effective during the period such
Registration Statement is required to be kept effective; and (iii) do any and
all other acts and things which may be reasonably necessary or advisable to
enable each such Underwriter, if any, and the Holder to consummate the
disposition in each such jurisdiction of such Registrable Securities owned by
such Underwriter or the Holder; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation or as a dealer in securities in
any jurisdiction in which it is not so qualified or to consent to be subject to
general service of process (other than service of process in connection with
such registration or qualification or any sale of Registrable Securities in
connection therewith) in any such jurisdiction;
(e) notify the Holder promptly, and, if requested by the Holder, confirm
such advice in writing, (i) when a Registration Statement has become effective
and when any post-effective amendments and supplements thereto become effective,
(ii) of the issuance by the SEC or any state securities authority of any stop
order, injunction or other order or requirement suspending the effectiveness of
a Registration Statement or the initiation of any proceedings for that purpose,
(iii) if, between the effective date of a Registration Statement and the closing
of any sale of securities covered thereby pursuant to any agreement to which the
Company is a party, the representations and warranties of the Company contained
in such agreement cease to be true and correct in all material respects or if
the Company receives any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose and (iv) of the happening of any
event during the period a Registration Statement is effective as a result of
which such Registration Statement or the related Prospectus contains any untrue
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statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading;
(f) furnish counsel for each such Underwriter, if any, and for the Holder
copies of any request by the SEC or any state securities authority for
amendments or supplements to a Registration Statement and Prospectus or for
additional information;
(g) use its reasonable best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible time;
(h) upon request, furnish to the sole Underwriter or lead managing
Underwriter of an Underwritten Offering of Registrable Securities, if any,
without charge, at least one signed copy of each Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits; and furnish to
the Holder, without charge, at least one conformed copy of each Registration
Statement and any post-effective amendment thereto (without documents
incorporated therein by reference or exhibits thereto, unless requested);
(i) cooperate with the Holder and the sole Underwriter or lead managing
Underwriter of an Underwritten Offering of Registrable Securities, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations (consistent with
the provisions of the governing documents thereof) and registered in such names
as the Holder or the sole Underwriter or lead managing Underwriter of an
Underwritten Offering of Registrable Securities, if any, may reasonably request
at least three business days prior to any sale of Registrable Securities;
(j) upon the occurrence of any event contemplated by paragraph (e)(iv) of
this Section, use its reasonable best efforts to prepare a supplement or
post-effective amendment to a Registration Statement or the related Prospectus,
or any document incorporated therein by reference, or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a material
fact, or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
-13-
(k) enter into customary agreements (including, in the case of an
Underwritten Offering, underwriting agreements in customary form, and including
provisions with respect to indemnification and contribution in customary form
and consistent with the provisions relating to indemnification and contribution
contained herein) and take all other customary and appropriate actions in order
to expedite or facilitate the disposition of such Registrable Securities and in
connection therewith:
(l) make such representations and warranties to the Holder and the
Underwriters, if any, in form, substance and scope as are customarily made by
issuers to underwriters in similar underwritten offerings;
(m) obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the lead managing Underwriter, if any, and as applicable)
addressed to the Holder and the Underwriters, if any, covering the matters
customarily covered in opinions requested in sales of securities or underwritten
offerings and such other matters as may be reasonably requested by the Holder
and Underwriters;
(n) obtain comfort letters and updates thereof from the Company's
independent certified public accountants addressed to the Holder, if
permissible, and the Underwriters, if any, which letters shall be customary in
form and shall cover matters of the type customarily covered in comfort letters
to underwriters in connection with primary underwritten offerings;
(o) to the extent requested and customary for the relevant transaction,
enter into a securities sales agreement with the Holder and such representative
of the Holder as the Holder selects, relating to the Registration and providing
for, among other things, the appointment of such representative as agent for the
Holder for the purpose of soliciting purchases of Registrable Securities, which
agreement shall be customary in form, substance and scope and shall contain
customary representations, warranties and covenants; and
(p) deliver such customary documents and certificates as may be reasonably
requested by the Holder or by the managing Underwriters, if any.
The above shall be done (i) at the effectiveness of such Registration Statement
(and each post-effective amendment thereto) in connection with any registration
required hereunder, and (ii) at each closing under any underwriting or similar
agreement, as and to the extent required thereunder;
-14-
(q) make available for inspection by representatives of the Holder and any
Underwriters participating in any disposition pursuant to a Registration
Statement and any counsel or accountant retained by the Holder or Underwriters,
all relevant financial and other records, pertinent corporate documents and
properties of the Company and cause the respective officers, directors and
employees of the Company to supply all information reasonably requested by any
such representative, Underwriter, counsel or accountant in connection with a
Registration Statement;
(r) (i) within a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus, provide copies of such document to the
Holder and to counsel to the Holder and to the Underwriter or Underwriters of an
Underwritten Offering of Registrable Securities, if any; fairly consider such
reasonable changes in any such document prior to or after the filing thereof as
the counsel to the Holder or the Underwriter or the Underwriters may request and
not file any such document in a form to which the Holder, or any Underwriter
shall reasonably object; and make such of the representatives of the Company as
shall be reasonably requested by the Holder being registered or any Underwriter
available for discussion of such document;
(ii) within a reasonable time prior to the filing of any document which is
to be incorporated by reference into a Registration Statement or a Prospectus,
provide copies of such document to counsel for the Holder; fairly consider such
reasonable changes in such document prior to or after the filing thereof as
counsel for the Holder or such Underwriter shall request; and make such of the
representatives of the Company as shall be reasonably requested by such counsel
available for discussion of such document;
(s) cause all Registrable Securities to be listed on the [Nasdaq Small Cap
Market] and any securities exchange on which securities of the same class issued
by the Company are then so qualified or listed if so requested by the Holder or
if so requested by the Underwriter or Underwriters of an Underwritten Offering
of Registrable Securities, if any;
(t) otherwise use its reasonable best efforts to comply with all applicable
rules and regulations of the SEC, including making available to its security
holders an earnings statement covering at least 12 months which shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
-15-
(u) cooperate and assist in any filings required to be made with the NASD
and in the performance of any due diligence investigation by any Underwriter in
an Underwritten Offering; and
(v) use its reasonable best efforts to facilitate the distribution and sale
of any Registrable Securities to be offered pursuant to this Agreement,
including without limitation by making road show presentations, holding meetings
with potential investors and taking such other actions as shall be reasonably
requested by the Holder or the lead managing Underwriter of an Underwritten
Offering.
The Holder agrees, as a condition to the registration obligations with
respect to the Holder provided herein, to furnish to the Company such
information regarding the Holder required to be included in the Registration
Statement, the ownership of Registrable Securities by the Holder and the
proposed distribution by the Holder of such Registrable Securities as the
Company may from time to time reasonably request in writing.
The Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph (e)(iv) of this
Section, the Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the affected Registration Statement until the Holder's
receipt of the copies of the supplemented or amended Prospectus, contemplated by
paragraph (j) of this Section, and, if so directed by the Company, the Holder
will deliver to the Company (at the expense of the Company), all copies in its
possession, other than permanent file copies then in the Holder's possession, of
the Prospectus covering such Registrable Securities which was current at the
time of receipt of such notice.
Section 4. Indemnification; Contribution.
------------------------------
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Person who participates as an underwriter (any such Person
being an "Underwriter"), the Holder and their respective partners, directors,
officers and employees and each Person, if any, who controls any Holder or
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act as follows:
(i) against any and all losses, liabilities, claims, damages, judgments and
reasonable expenses whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement pursuant to which Registrable Securities were registered under the
-16-
Securities Act, including all documents incorporated therein by reference, or
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a material
fact contained in any Prospectus, including all documents incorporated therein
by reference, or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(ii) against any and all losses, liabilities, claims, damages, judgments
and reasonable expenses whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any other claim
whatsoever based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, if such settlement is effected with the written
consent of the Company; and
(iii) against any and all reasonable expense whatsoever, as incurred
(including fees and disbursements of counsel), incurred in investigating,
preparing or defending against any litigation, investigation or proceeding by
any governmental agency or body, commenced or threatened, in each case whether
or not such Person is a party, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under subparagraph (j) or (ii)
above; provided, however, that this indemnity agreement does not apply to the
Holder or Underwriter with respect to any loss, liability, claim, damage,
judgment or expense to the extent arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Prospectus, or the omission
or alleged omission therefrom of a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in any such case made in reliance upon and in conformity
with written information furnished to the Company by the Holder or Underwriter
expressly for use in a Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto); and provided further, in
the case of an offering that is not an Underwritten Offering, the Company will
not be liable to the Holder under the indemnity agreement in this Section 4(a)
for any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense that arises out of the Holder's failure to send or give a
copy of the final Prospectus (as its may then be amended or supplemented) to the
Person asserting an untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the sale of the
Registrable Securities to such Person if such statement or omission was
-17-
corrected in such final Prospectus (as it may then be amended or supplemented)
and the Company has previously furnished copies thereof in accordance with this
Agreement.
(b) Indemnification by the Holder. The Holder agrees to indemnify and hold
harmless the Company, and each Underwriter and each of their respective
partners, directors, officers and employees (including each officer of the
Company who signed the Registration Statement), and each Person, if any, who
controls the Company or any Underwriter within the meaning of Section 15 of the
Securities Act, against any and all losses, liabilities, claims, damages,
judgments and expenses described in the indemnity contained in paragraph (a) of
this Section (provided that any settlement of the type described therein is
effected with the written consent of the Holder), as incurred, but only with
respect to untrue statements or alleged untrue statements of a material fact
contained in any Prospectus or the omissions or alleged omissions therefrom of a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, in any such case made
in reliance upon and in conformity with written information furnished to the
Company by the Holder expressly for use in such Registration Statement (or any
amendment thereto) or such Prospectus (or any amendment or supplement thereto).
(c) Conduct of Indemnification Proceedings. Each indemnified party or
parties shall give reasonably prompt notice to each indemnifying party or
parties of any action or proceeding commenced against it in respect of which
indemnity may be sought hereunder, but which it or they may have under this
indemnity agreement, except to the extent that the indemnifying party is
materially prejudiced by such failure to give notice. If the indemnifying party
or parties so elects within a reasonable time after receipt of such notice, the
indemnifying party or parties may assume the defense of such action or
proceeding at such indemnifying party's or parties' expense with counsel chosen
by the indemnifying party or parties and approved by the indemnified party
defendant in such action or proceeding, which approval shall not be unreasonably
withheld; provided, however, that, if such indemnified party or parties
determines in good faith that a conflict of interest exists and that therefore
it is advisable for such indemnified party or parties to be represented by
separate counsel or that, upon advice of counsel, there may be legal defenses
available to it or them which are different from or in addition to those
available to the indemnifying party, then the indemnifying party or parties
shall not be entitled to assume such defense and the indemnified party or
parties shall be entitled to separate counsel (limited in each jurisdiction to
one counsel for all Underwriters and another counsel for all other indemnified
parties under this Agreement) at the indemnifying party's or parties' expense.
If an indemnifying party or parties is not so entitled to assume the defense of
-18-
such action or does not assume such defense, after having received the notice
referred to in the first sentence of this paragraph, the indemnifying party or
parties will pay the reasonable fees and expenses of counsel for the indemnified
party or parties (limited in each jurisdiction to one counsel for all
Underwriters and another counsel for all other indemnified parties under this
Agreement). No indemnifying party or parties will be liable for any settlement
effected without the written consent of such indemnifying party or parties,
which consent shall not be unreasonably withheld. If an indemnifying party is
entitled to assume, and assumes, the defense of such action or proceeding in
accordance with this paragraph, such indemnifying party or parties shall not,
except as otherwise provided in this subsection (c), be liable for any fees and
expenses of counsel for the indemnified parties incurred thereafter in
connection with such action or proceeding.
(d) Contribution. (i) In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
this Section is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms in respect of any
losses, liabilities, claims, damages, judgments and expenses suffered by an
indemnified party referred to therein, each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, liabilities,
claims, damages, judgments and expenses in such proportion as is appropriate to
reflect the relative fault of the Company on the one hand and of the Holder
(including, in each case, that of their respective officers, directors,
employees and agents) on the other, in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages, judgments
or expenses, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the Holder (including, in
each case, that of their respective officers, directors, employees and agents)
on the other, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company, on the one hand, or by or on behalf of the Holder, on the other, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, liabilities, claims, damages, judgments and
expenses referred to above shall be deemed to include, subject to the
limitations set forth in paragraph (c) of this Section, any legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any action or claim.
-19-
(ii) The Company and the Holder agree that it would not be just and
equitable if contribution pursuant to this paragraph (d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in sub-paragraph (i) above.
Notwithstanding the provisions of this paragraph (d), in the case of
distributions to the public, the Holder shall not be required to contribute any
amount in excess of the amount by which (A) the total price at which the
Registrable Securities sold by the Holder and distributed to the public were
offered to the public exceeds (B) the amount of any damages which Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(iii) For purposes of this Section, each Person, if any, who controls the
Holder or an Underwriter within the meaning of Section 15 of the Securities Act
(and their respective partners, directors, officers and employees) shall have
the same rights to contribution as the Holder or Underwriter; and each director
of the Company, each officer of the Company who signed the Registration
Statement and each Person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act, shall have the same rights to contribution
as the Company.
Section 5. Miscellaneous.
--------------
(a) No Inconsistent Agreements. The Company will not on or after the date
of this Agreement enter into any agreement which conflicts with the provisions
of this Agreement or which grants registration or similar rights inconsistent
with the rights herein.
(b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company has obtained the written consent of the Holder.
(c) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand delivery, telex, telecopier or any
courier guaranteeing overnight delivery (i) if to the Holder, at the most
current address given by the Holder to the Company by means of a notice given in
accordance with the provisions of this paragraph (c), which address initially
is, the address of the Holder in the stock or warrant records of the Company or
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(ii) if to the Company, at 00000 Xxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, XX
00000, Attention: Xxx Xxxxxxx, and thereafter at such other address, notice of
which is given in accordance with the provisions of this paragraph (c).
All such notices and communications shall be deemed to have been duly given
at the time delivered by hand, if personally delivered; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and on the next business
day, if timely delivered to a courier guaranteeing overnight delivery.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties without the need for an express assignment. If any successor, assignee
or transferee of the Holder shall acquire Registrable Securities in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such Person shall conclusively be deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and to receive the benefits hereof. For purposes of this Agreement,
"successor" for any entity other than a natural person shall mean a successor to
such entity as a result of such entity's merger, consolidation, liquidation,
dissolution, sale of substantially all of its assets or similar transaction.
(e) Counterparts. This Agreement may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but all of which counterparts, taken together, shall constitute
one and the same instrument.
(f) Descriptive Headings, Etc. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Agreement
otherwise requires: (1) words of gender shall be deemed to include each other
gender; (2) words using the singular or plural number shall also include the
plural or singular number, respectively; (3) the words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section and paragraph references are to the Articles,
Sections and paragraphs to this Agreement unless otherwise specified; (4) the
word "including" and words of similar import when used in this Agreement shall
mean "including, without limitation," unless otherwise specified; (5) "or" is
not exclusive; and (6) provisions apply to successive events and transactions.
-21-
(g) Severability. In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the other remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any way
impaired, it being intended that all rights, powers and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF).
(i) Specific Performance. The parties hereto acknowledge that there would
be no adequate remedy at law if any party fails to perform in any material
respect any of its obligations hereunder, and accordingly agree that each party,
in addition to any other remedy to which it may be entitled at law or in equity,
shall be entitled to compel specific performance of the obligations of any other
party under this Agreement in accordance with the terms and conditions of this
Agreement in any court of the United States or any State thereof having
jurisdiction.
(j) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the Company and the Holder with respect to
such subject matter.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
XXXXXXXXXX.XXX, INC.
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By: /s/Xxxxxx X. Xxxx
------------------------------------
Name: Xxxxxx X. Xxxx
Title:Chief Executive Officer
DYNCORP
By: /s/ X. Xxxxxxxxxx Xxxxxx
-------------------------------------
Name: X. Xxxxxxxxxx Xxxxxx
Title:Vice President & Secretary
-23-
EXHIBIT C
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT (this "Agreement") is made as of
December 27, 2001, by and among XxxXxxxxxx.xxx, Inc. ("TekInsight"), DynCorp
("DynCorp"), and TekInsight Services, Inc. as of the date of this Agreement
("DynTek", and collectively with TekInsight and DynCorp, the "Parties").
Capitalized terms used but not defined herein have the meanings set forth in the
Agreement and Plan of Reorganization (the "Reorganization Agreement") and the
related Agreement and Plan of Merger (together with the Reorganization
Agreement, the "Merger Agreements"), dated as of April 25, 2001, as amended, by
and among TekInsight, DynCorp, DynTek and DynCorp Management Resources, Inc.
(the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to Sections 5.2 and 5.3 of the Reorganization Agreement,
it is a condition precedent to the obligation of the parties thereto that
DynCorp, TekInsight and DynTek enter into this Agreement to provide certain such
post-closing services to DynTek.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the Parties do hereby agree as follows:
Section 1. Services.
--------------------------
(a) During the Term (as defined in Section 6 hereof), DynCorp shall provide
to DynTek the following services (the "Services"): (i) accounting services
described on Exhibit A hereto, (ii) the information technology services
described on Exhibit B hereto, (iii) bid and proposal services described on
Exhibit C hereto and (iv) the right to occupy a portion of the premises
described on Exhibit D subject to the terms set forth thereon, in each case,
such services to be provided for the periods set forth in the applicable
Exhibit. Exhibits A through D are hereby incorporated herein by reference and
are collectively referred to herein as Schedule A.
(b) DynCorp agrees to perform or cause to be performed all Services under
this Agreement with reasonable care, using that degree of skill and attention it
has exercised with respect to the operations of the Company prior to the
Closing, and to the same extent and in the same manner that it provided the
Services to the Company prior to the Closing Date. Under no circumstances shall
DynCorp be required to provide Services hereunder (i) not being provided, or
having been provided, to the Company on and/or within nine (9) months prior to
the date hereof, (ii) to entities other than DynTek, (iii) to an extent greater
than being provided, or having been provided, on or within nine (9) months prior
to the date hereof, or (iv) in support of operations conducted at locations not
being supported on or within nine (9) months prior to the date hereof. If and to
the extent that DynTek changes in any material respect the manner in which
DynTek conducts business from the manner conducted by the Company prior to the
-2-
Closing Date and such changes materially impact or affect the nature or delivery
of the Services by DynCorp, then DynTek and DynCorp hereby agree to discuss any
necessary or appropriate changes in the Services or the manner in which they are
performed so as to determine whether, how, and the terms upon which the Services
or are to be provided given such changes.
Section 2. Fees.
----------------------
(a) DynCorp shall provide the Services in exchange for the applicable fees
therefor as set forth in Schedule A or B, as applicable. In addition, DynTek
shall reimburse DynCorp for any licensing, permit or usage fees imposed by, and
any out-of-pocket expenses payable to, any third party that is not an affiliate
of DynCorp that are necessary for DynCorp to provide the Services during the
Term.
(b) Not more than 30 days following the end of each calendar month during
the term of this Agreement, DynCorp shall deliver an invoice to DynTek for the
Services performed under this Agreement and the estimated fees and out-of-pocket
expenses related thereto incurred during the preceding calendar month which are
reimbursable under the terms of this Agreement. DynTek shall pay each such
invoice in full within 30 days after its receipt thereof. Following the end of
each fiscal year of DynCorp, estimated fees shall be reconciled with DynCorp's
actual costs for the period, and DynCorp shall deliver a reconciliation invoice
to DynTek. If the aggregate actual costs exceed the estimated fees for the
period, DynTek shall pay the amount of the difference to DynCorp; if the
aggregate actual costs are less than the estimate fees, company Parent shall pay
DynTek the amount of the difference. DynTek shall pay all federal, state, and
local taxes based upon or arising out of the Services rendered under this
Agreement other than any taxes based upon or imposed on gross receipts, net
income, net worth or net profits of DynCorp. If DynTek fails to pay any amount
within 45 days of its receipt of the invoice therefor, then, in addition to any
other remedies available, DynCorp may (a) apply an interest charge, against the
amount past due, at the rate of 1% percent per month (or fraction thereof), not
to exceed the maximum legal rate, until paid, (b) suspend performance following
30 days' prior written notice to DynTek, (c) terminate this Agreement without
incurring further liability to DynTek pursuant to the provisions set forth below
in Section 6, and (d) immediately exercise its right to offset any amounts
currently maintained by DynCorp against amounts past due.
Section 3. Termination or Reduction of Services. Upon DynTek's written
notice delivered from time to time to DynCorp to terminate or reduce the scope
of provision of any Service, DynCorp will terminate or reduce the scope of, as
applicable, the provision or performance of such Service as soon as is
reasonably practicable, but in any event not later than 30 days after such
notice is given; provided, however, that DynTek shall provide at least 30 days
written notice of any termination of its occupancy of certain premises as
described on Exhibit D. For any Services terminated or reduced in accordance
with this Section at any time other than on the last day of a calendar month,
all monthly fees shall be prorated, or, in the case of the reduction in a level
of service, reduced proportionately to reflect such reduction in service level,
based on the actual number of days during which the applicable Services were
performed or provided divided by the actual number of days in the calendar month
in which such Services are terminated or reduced.
-3-
Section 4. Indemnification.
---------------------------------
(a) Each of DynTek and DynCorp shall indemnify and hold harmless the other
and its respective Affiliates from and against any and all losses, claims,
expenses and liabilities incurred as a result of any breach by such indemnifying
party of its obligations hereunder.
(b) Except for remedies that cannot be waived as a matter of law (and
injunctive or provisional relief) the indemnities provided in this Agreement
shall be the sole and exclusive remedy of the indemnified party for claims or
other actions or proceedings to which the applicable indemnifying party's
indemnification obligations hereunder may apply.
Section 5. Disclaimer; Limited Liability.
-----------------------------------------------
(a) EXCEPT AS PROVIDED IN SECTION 1(B), COMPANY PARENT MAKES NO EXPRESS OR
IMPLIED REPRESENTATIONS, WARRANTIES OR GUARANTEES RELATING TO THE SERVICES TO BE
PERFORMED UNDER THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES
REGARDING QUALITY, SUITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE (IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE).
(b) IN NO EVENT SHALL THE PARTIES AND/OR THEIR AFFILIATES OR ANY OF THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE REGARDLESS OF
THE FORM OF ACTION OR LEGAL THEORY FOR INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND RELATED TO THE PERFORMANCE OR
NON-PERFORMANCE OF THIS AGREEMENT INCLUDING, WITHOUT LIMITATION, LOST PROFITS,
LOSS OF DATA (OTHER THAN LIABILITY FOR THE COST OF REENTRY OF SUCH DATA) OR
BUSINESS INTERRUPTION, EXCEPT TO THE EXTENT THAT SUCH DAMAGES ARE AWARDED TO A
THIRD PARTY.
(c) THE CUMULATIVE LIABILITY OF COMPANY PARENT FOR ALL DIRECT DAMAGES
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND REGARDLESS OF THE FORM
OF ACTION OR LEGAL THEORY SHALL NOT EXCEED THE AMOUNT OF FEES PAID TO COMPANY
PARENT HEREUNDER. THE PARTIES UNDERSTAND THE LIMITATION ON DAMAGES DESCRIBED
HEREIN TO BE A REASONABLE ALLOCATION OF RISK AND THE PARTIES EXPRESSLY CONSENT
WITH RESPECT TO SUCH ALLOCATION OF RISK. IN ALLOCATING RISK UNDER THIS
AGREEMENT, THE PARTIES AGREE THAT THE DAMAGE LIMITATION SET FORTH ABOVE SHALL
-4-
APPLY TO ANY ALTERNATIVE REMEDY ORDERED BY A COURT IN THE EVENT SUCH COURT
DETERMINES THAT THE SOLE AND EXCLUSIVE REMEDY PROVIDED FOR IN THIS AGREEMENT
FAILS OF ITS ESSENTIAL PURPOSE.
(d) COMPANY PARENT AND/OR ITS AFFILIATES SHALL NOT BE LIABLE TO NEWCO FOR
ANY LOSSES RELATING TO THE PERFORMANCE OR NON-PERFORMANCE OF THE SERVICES,
UNLESS SUCH LOSSES ARE THE DIRECT RESULT OF WILLFUL OR RECKLESS CONDUCT OR GROSS
NEGLIGENCE ON THE PART OF COMPANY PARENT AND/OR ITS AFFILIATES.
(e) The Parties shall cooperate with each other with respect to resolving
any claim or liability between each other, including by making commercially
reasonable efforts to mitigate or resolve any claim or liability.
Section 6. Effective Date; Service Period. This Agreement shall become
effective, without further action by any Party, upon the Closing Date or on such
other date as DynTek and DynCorp may agree to in writing (the "Effective Date").
The Services shall commence upon the Effective Date and the Services shall
continue for a period ending no later than the 12-month anniversary of the
Effective Date (the "Term"), except as otherwise expressly provided herein or in
Schedule A with respect to specific Services. Further, either DynTek or DynCorp
may terminate the Services following written notice to the other upon the
material breach or failure by the other Party to perform its obligations arising
under this Agreement (including any nonpayment within 45 days of receipt of an
appropriate invoice as referred to in Section 2 above), which material breach or
failure (other than non-payment) is not cured within 30 days after written
notice of such breach or failure is given by the non-breaching party to the
breaching party, or, in the case of nonpayment, which nonpayment is not cured
within ten days after written notice is given.
Section 7. Guarantee. TekInsight hereby irrevocably, unconditionally and
without limit guarantees the timely and complete fulfillment of all obligations
of DynTek hereunder.
Section 8. Notice. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to the others
shall be in writing and delivered in person or by courier, telegraphed, telexed
or by facsimile or email transmission (with confirmation back of delivery) or
mailed by certified mail, postage prepaid, return receipt requested (such mailed
notice to be effective on the date such receipt is acknowledged), as follows:
If to DynTek or TekInsight: XxxXxxxxxx.xxx, Inc.
00000 Xxx Xxxxxx Xxx., Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx Xxxx, President
Facsimile No.: (000) 000-0000
Email: xxxxx@xxxxxxxxxx.xxx
-5-
With copies to: Xxxxx Xxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esquire
Facsimile No: (000) 000-0000
Email: Xxxxxxxxx@Xxxxxxxxxxxx.xxx
If to DynCorp: DynCorp
00000 Xxxxx Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: X. Xxxxxxxxxx Xxxxxx
Vice President & Secretary
Facsimile No. (000) 000-0000
Email: xxxxx.xxxxxx@xxxxxxx.xxx
With copies to: DynCorp
00000 Xxxxx Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
Senior Vice President & General Counsel
Facsimile No. (000) 000-0000
Email: xxxxx.xxxxxxxxx@xxxxxxx.xxx
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
Section 9. No Third Party Beneficiaries. Except as expressly provided
herein, nothing herein is intended to confer upon any person, other than the
parties and their respective permitted assignees, any rights, obligations or
liabilities under or by reason of this Agreement.
Section 10. No Assignment. Neither this Agreement nor any rights or
obligations hereunder shall be assignable by either of the parties hereto;
provided that DynCorp may delegate all or any portion of its obligations to
perform Services under this Agreement to one or more of its Affiliates, it being
understood that DynCorp shall be responsible for the performance of its
obligations under this Agreement notwithstanding any such delegation.
Section 11. Independent Contractor. The parties hereto understand and agree
that this Agreement does not make either of them an agent or legal
representative of the other for any purpose whatsoever. No party is granted, by
this Agreement or otherwise, any right or authority to assume or create any
obligation or responsibility, express or implied, on behalf of or in the name of
any other party, or to bind any other party in any manner whatsoever. The
parties expressly acknowledge (i) that DynCorp is an independent contractor with
respect to DynTek in all respects, including, without limitations the provision
-6-
of the Services and (ii) that the parties are not partners, joint venturers,
employees or agents of or with each other.
Section 12. Non-Waiver. No failure on the part of a party to exercise any
remedy or right under this Agreement and no delay in the exercise of any such
remedy or right shall operate as a waiver.
Section 13. Modifications, Amendments and Waivers. This Agreement may be
amended, modified, or supplemented only by written agreement of the parties.
Section 14. Severability. Any provision of this Agreement which is held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
Section 15. Force Majeure. Neither DynTek nor DynCorp shall be liable for
any default or delay in the performance of its obligations under this Agreement
for any period to the extent that such default or delay is caused, directly or
indirectly, by any "force majeure" event, including but not limited to: (a)
fire, flood, elements of nature or other acts of God; (b) any outbreak or
escalation of hostilities, war, acts of terrorism, riots or civil disorders in
any country; (c) any act or omission of (in the case of DynCorp) DynTek or any
of its Affiliates or (in the case of DynTek) DynCorp or any of its Affiliates
or, in either case, of any governmental authority; (d) any labor disputes
(whether or not the employees' demands are reasonable or within a party's power
to satisfy); or (e) nonperformance by a third party or any similar cause beyond
the control of a party, such as fluctuations in telecommunications or other
equipment. In any such event, the party obligated to perform the obligation
shall be excused from any further performance and observance of all obligations
so affected only for as long as such circumstances prevail and such party
continues to use commercially reasonable efforts to recommence performance or
observance as soon as practicable.
Section 16. Governing Law. This Agreement and the legal relations between
the parties shall be governed by, and construed and enforced in accordance with,
the laws of the State of Virginia applicable to contracts made and performed in
such State and without regard to conflicts of laws doctrines.
Section 17. Counterparts This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
[Remainder of this page left intentionally blank.]
-7-
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
DynCorp
By /s/ X. Xxxxxxxxxx Xxxxxx
------------------------------------------
Name: X. Xxxxxxxxxx Xxxxxx
Title: Vice President and Secretary
TekInsight Services, Inc.
By /s/ Xxxxx Xxxx
------------------------------------------
Name: Xxxxx Xxxx
Title:President
XxxXxxxxxx.xxx, Inc.
By /s/ Xxxxx Xxxx
------------------------------------------
Name: Xxxxx Xxxx
Title:President
SCHEDULE A
EXHIBIT A
Accounting Services
1. Company parent hereby grants the services of its Accounting services on
an "as needed basis" for the period of 12 months after the closing of the
merger. These services may include the following services provided to DMR
currently which include payroll, accounts payable, general ledger and treasury.
DynTek shall have the right to use these services to the same extent and in the
same manner as using currently prior to the closing date of the merger.
2. The rates for these services shall be as described on Schedule B hereto.
3. These services may be discontinued per Section 3 of the Transition
Services Agreement to which this schedule is attached.
SCHEDULE A
EXHIBIT B
Information Technology Services
1. Company parent hereby grants the services of its Management Information
Systems Department on an "as needed basis" for the period of time DynTek
occupies the office space of the parent. These services may include the
following services provided to DMR currently which include infrastructure voice
and data support, IT support, Enterprise support and server management. DynTek
shall have the right to use these services to the same extent and in the same
manner as using currently prior to the closing date of the merger.
2. The rates for these services shall be as described on Schedule B hereto.
3. These services may be discontinued per Section 3 of the Transition
Services Agreement to which this schedule is attached.
SCHEDULE A
EXHIBIT C
Bid and Proposal Services
1. Company parent hereby grants the services of its I&ET Bid and Proposal
Services Center on a "cost reimburseable, as needed basis" for the period of
time DynTek occupies the office space of the parent. These services may include
the following services provided to DMR currently which include proposal
production, graphics, desktop publishing, writers, editors and consultants.
DynTek shall have the right to use these services to the same extent and in the
same manner as using currently prior to the closing date of the merger.
2. It is understood by both parties that these labor services are to be
furnished on a cost reimburseable basis, and that the rates shown in paragraph 3
of Exhibit C represent current averages that may be used for DynTek's estimating
purposes. Travel and other charges will be charged and reimbursed based on
actual costs. The actual cost for the services shall be billed and paid in
accordance with the terms of Paragraph 2 of the Transition Services Agreement to
which this schedule is attached. The rates are valid for estimating purposes
through December 31, 2001, and will be revised annually
3. The rates for these Proposal Service Center services, per hour or
fraction thereof, are shown below.
Graphics $ 68
Publishers $ 63
Editor/Writers $ 77
Director $ 130
Managers $ 106
Consultants same hourly rate as charged to DynCorp I&ET
4. Capture managers are not a part of the Proposal Service Center and will
be provided on an as available basis. For estimating purposes, the following
rate may be used.
Capture Manager $82/hour
In addition to salary, capture managers are incentivized based upon the DynCorp
I&ET Business Development Executive Compensation Plan. NEWCO agrees to pay the
commissions earned under this Plan to DynCorp I&ET for payment to the applicable
capture manager.
SCHEDULE A
EXHIBIT D
Real Estate Services
1. DynCorp hereby grants a license to permit the use by the employees of
DynTek that were formerly employees of the Company (as well as members of DynTek
management and other employees of DynTek on a guest or visiting basis from time
to time) to occupy and use the office space currently being occupied by the
Company located at 00000 Xxxxx Xxxxxxx Xx., xx Xxxxxx, Xxxxxxxx, comprising
approximately 4,292 square feet (the "Premises") through [last day of
anniversary month of the merger], 2002 (the "Occupancy Period"); provided
however that the the Occupancy Period shall automatically be extended on a
month-to-month basis thereafter unless either DynCorp or DynTek gives 90 days'
written notice to the other that it does not intend that the Occupancy Period
shall be further extended; and provided further however that in the event
DynCorp sells, assigns or terminates its interest in the Premises, whether owned
or leased, during the Occupancy Period, DynCorp shall have the right upon 90
days' notice to DynTek to terminate DynTek's right and license to occupy and use
the Premises and TekInsight shall cause DynTek to, and DynTek shall, promptly
vacate the Premises. DynTek shall have to right to occupy and use the Premises
(and related common facilities, maintenance and support services) to the same
extent and in the same manner as the Company occupied and used such premises
(and related common facilities, maintenance and support services) prior to the
Closing Date. In accordance with the terms of Paragraph 2 of the Transition
Services Agreement to which this Schedule is attached, DynTek may reduce its
occupancy and use of the Premises at a minimum of 1000 square feet; provided,
however, that if DynTek reduces its occupancy of the Premises, DynCorp shall
have the right upon 90 days' notice to DynTek to change the location of the
Premises to another DynCorp office space in Northern Virginia, subject to the
same terms and conditions as applicable to the Premises; provided, further, that
any reduction in occupancy and use of the Premises must be of contiguous space.
2. The rent for the Premises shall be $2.90 per square foot per month and
shall be billed and paid in accordance with the terms of Paragraph 2 of the
Transition Services Agreement to which this Schedule is attached. DynCorp shall
continue to cause utilities and services to be provided to DynTek's employees
and other occupants invited by DynTek at the Premises at no additional cost and
at substantially their former level or amount prior to the Closing Date, as
applicable.
3. DynTek shall comply with and abide by, and cause its employees, agents
and guests to comply with and abide by, all reasonable rules and regulations
relating to the Premises.
4. DynTek shall not be permitted to make any modification or attach any
substantial fixtures or equipment to any Premises, either initially or at any
other time during the term of the Agreement, without DynCorp's and, if required,
the landlord's prior written approval.
5. DynTek will comply with all non-monetary provisions of the effective
lease, to which DynCorp is a party, relating to the Premises.
6. DynTek shall carry commercial general liability insurance ("Liability
Insurance") with a limit of at least $1,000,000 (combined single limit for
bodily injury and property damage). DynTek's Liability Insurance is primary to
DynCorp's Liability Insurance for occurrences in the Premises. The insurer must
be licensed in the State of Virginia, give DynCorp thirty (30) days' notice of
cancellation or reduction in coverage, and furnish DynCorp certificates of
coverage on request. Under the Liability Insurance policy, the inclusion of
additional insureds must not affect coverage for the named insured for claims
made regarding this Agreement and the Premises against it by additional insureds
where the claims would have been covered under the policy had the additional
insured not been included. DynTek shall carry property insurance with respect to
its furniture, fixtures and equipment providing "all risk" coverage. DynTek may
use blanket policies. DynTek shall name DynCorp as an additional insured on its
Liability Insurance and property insurance with respect to the Premises.
7. DynCorp shall not be liable for any loss or damage of or to the Premises
or the fixtures or equipment of DynTek or the possessions of any person
contained therein or any loss suffered by DynTek or invitees of DynTek caused by
fire or any other hazards. DynCorp shall not be liable to DynTek or its
employees for any loss or damage occasioned by failure to keep any Premises in
repair, and shall not be liable for any damage done from plumbing, water, heat,
air conditioning, electricity, gas, steam pipes of any kind, running or leaking
of any wash stand or wastepipe, stairs, ramps, railings, walls, the backing up
of any sewer pipe or downspout, water coming through or being on the roof, or
broken glass in, above, upon, below or about the Premises, or from any damage
arising from acts of DynCorp unless any of the aforesaid is caused by the gross
negligence or willful misconduct of DynCorp, its employees, agents or
subcontractors.
8. At the expiration of the Occupancy Period or any earlier termination of
the Transition Services Agreement as it relates to the Premises, DynTek shall
surrender peaceful possession of the Premises and may, at its expense, remove
its personal property and, in the event of such removal, shall repair any damage
caused by such removal.
9. If by fire or other casualty or any condemnation event, the Premises, or
some portion of the DynCorp's leased or owned space but not the Premises is
destroyed or damaged, DynCorp shall, in its sole discretion, have the right to
terminate the right and license cof DynTek to occupy the Premises and DynTek
shall promptly vacate same.
EXHIBIT B
Fees
Except as specifically set forth to the contrary in Schedule A, the fees for the
services provided hereunder shall be a pro rata portion of DynCorp's actual
costs for the services and charged to DynTek on a non-discriminatory basis. An
extract of DynCorp's Cost Accounting Standards Board Disclosure Statement
follows this page. Such costs are estimated in advance for billing, but
reconciled following the end of the fiscal year. Also following this page, for
illustrative purposes only, is an extract of DynCorp's G&A charges to DMR for
the month of June 2001.
Service Center - Software licenses, maintenance and service support
The allocation bases are as listed.
Software Package Basis for Charge
---------------- ----------------
Deltek Total cost
Hyperion Enterprise Total Cost
PeopleSoft HR/Benefits/Payroll
The allocation base for the PeopleSoft HR/Benefits/Payroll
module is the monthly weighted average headcount of segments
utilizing the modules. All allocations to I&ET segments are
aggregated and transferred to I&ET Home Office.
General Ledger Service Center
The General Ledger Service Center is allocated to the
benefiting segments and home offices based on specific
identification with any remaining costs not specifically
identifiable allocated by segment in proportion of the
identifiable portion to the whole. All segments participate in
this Service Center except Norco, Ft. Xxxxxx, DynMcDermott,
and DynKePro will not participate in this pool. All
allocations to I&ET segments are aggregated and transferred to
I&ET Home Office.
Accounts Payable Service Center - Reston
The Accounts Payable Service Center - Reston is allocated to
the benefiting segments, Corporate, DI&ET Home
Office, Enterprise Services, Information Technology, DMR, Seat
Management, DynTel, DynPort Vaccine Company (DVC) and
AdvanceMed LLC based on percentage of number of vouchers. All
allocations to I&ET segments are aggregated and transferred to
I&ET Home Office.
Payroll Service Center - Reston
The Payroll Service Center - Reston is allocated to the
benefiting segments, Corporate, DI&ET Home Office, Enterprise
Services, Information Technology, Norco, DynTel, Seat
Management, DynKePro, DMR, DynPort Vaccine Company (DVC) and
AdvanceMed LLC (XX Xxxxxxx and ES Rocky Flats excluded) based
on percentage of cumulative weighted average monthly headcount
of the benefiting segments. All allocations to I&ET segments
are aggregated and transferred to I&ET Home Office.
MIS - Server Management
The allocation base is personal computers in the Metro area..
MIS - Infrastructure Management - Data
The allocation base is PeopleSoft users. All allocations to
I&ET segments are aggregated and transferred to I&ET Home
Office.
MIS - Infrastructure Management - Voice
The allocation base is telephone lines. All allocations to
I&ET segments are aggregated and transferred to I&ET Home
Office.
MIS - Enterprise Systems
The allocation base is PeopleSoft users. All allocations to
I&ET segments are aggregated and transferred to I&ET Home
Office.
MIS - Customer Support
The allocation base is personal computers in the Metro area.
All allocations to I&ET segments are aggregated and
transferred to I&ET Home Office.
The Metro area is Xxxxxx Xxxxxx, Plaza America, and Xxxxxxxxx
Ave. office buildings.
G&A ALLOCATION SUMMARY
DMR (For illustrative purposes only)
Month of June 2001
Divisional G&A: amounts in dollars ($)
------------------------------------------------------------------------------------------------------
Current Prior Monthly
Allocation Y-T-D Y-T-D Allocation
------------------------------------------------------------------------------------------------------
General ledger Service Center 63,986.79 53,942.87 10,043.92
------------------------------------------------------------------------------------------------------
Accounts Payable Service Center 26,576.23 21,435.00 5,141.23
------------------------------------------------------------------------------------------------------
Payroll Service Center 9,015.95 7,287.08 1,728.87
------------------------------------------------------------------------------------------------------
PeopleSoft (HR/Payroll) 1,866.68 1,546.11 320.57
------------------------------------------------------------------------------------------------------
PeopleSoft (Financial) 0.00 0.00
------------------------------------------------------------------------------------------------------
MIS Deltek 1,027.38 541.04 486.34
------------------------------------------------------------------------------------------------------
MIS Hyperion 1,221.99 2,048.97 (826.98)
------------------------------------------------------------------------------------------------------
MIS Enterprise Systems 3,313.90 2,795.73 518.17
------------------------------------------------------------------------------------------------------
MIS Infrastructure - Data 1,185.64 1,059.70 125.94
------------------------------------------------------------------------------------------------------
MIS Customer Support Center 8,557.76 6,302.73 2,255.03
------------------------------------------------------------------------------------------------------
MIS Server Management 9,789.85 7,181.47 2,608.38
------------------------------------------------------------------------------------------------------
MIS Infrastructure Management - Voice 4,984.65 3,107.82 1,876.83
------------------------------------------------------------------------------------------------------
MIS Training 0.00 0.00
------------------------------------------------------------------------------------------------------
PeopleSoft User Support 3,445.67 2,743.19 702.48
------------------------------------------------------------------------------------------------------
Facilities Allocation 76,379.94 63,558.55 12,821.39
------------------------------------------------------------------------------------------------------
211,352.43 173,550.26 37,802.17
----------------------------------------------------
Corporate G&A:
------------------------------------------------------------------------------------------------------
Current Prior Monthly
Allocation Y-T-D Y-T-D Allocation
------------------------------------------------------------------------------------------------------
Business Development 9,811.89 9,049.45 762.44
------------------------------------------------------------------------------------------------------
Human Resources 9,465.36 7,361.24 2,104.12
------------------------------------------------------------------------------------------------------
Resystemization 10,604.36 7,880.14 2,724.22
------------------------------------------------------------------------------------------------------
MIS Corporate HR Support 1,018.37 1,087.58 (69.21)
------------------------------------------------------------------------------------------------------
Residual 128,177.46 109,354.46 18,823.00
------------------------------------------------------------------------------------------------------
159,077.44 134,732.87 24,344.57
----------------------------------------------------
EXHIBIT D
TekInsight
Short-term Notes Payable 11-01-01
Exercise Exercise Conversion Convert to
Name Date Amount Warrants Price Cost Price Equity
---- ---- ------ -------- ----- ---- ----- ------
Somerall 8/21/01 57,000 18,981 1.50 28,472 1.75 32,571
Xxxxxxxx 8/6/01 100,000 33,300 1.50 49,950 1.75 57,143
Xxxxxxxx 8/30/01 150,000 49,950 1.50 74,925 1.75 85,714
Xxxxxxxx 10/11/01 750,000 249,750 1.50 374,625 1.75 428,571
---------------------------------------------------------- ------------------
Sub-total 1,057,000 351,981 527,972 604,000
---------------------------------------------------------- ------------------
Xxxxxxxxx 10/01/01 200,000 59,333 1.70 100,866 1.70 117,647
Xxxxxxxxx 11/01/01 500,000 148,333 1.70 252,165 1.70 294,118
---------------------------------------------------------- ------------------
Sub-total 700,000 207,666 353,031 411,765
---------------------------------------------------------- ------------------
Total investors 1,757,000 559,647 881,003 1,015,765
----------------------------------------------------------
Placement fee (175,700) 57,981 1.50 86,972
-------------------------------------------------------------------------------
Total 1,581,300 617,628 967,974 1,015,765
-------------------------------------------------------------------------------
Warrants at $1.50 409,962
Warrants at $1.70 207,666
-------------
617,628
-------------
At November 1, 2001, such notes bear interest at 8% (Xxxxxxxxx) and 12% per
annum during a term of 90 days. If the Company completes an equity financing of
over $10 million during the term of the notes, outstanding principal and accrued
interest of the notes shall become convertible into the Company's Class A common
stock at $1.70 per share (Xxxxxxxxx) or at a price that is the lower of (i)
$1.75 per share, or (ii) a price that is equivalent to the terms of the
financing. At the due date, if the notes have not been previously converted, at
the election of the investors either (i) the outstanding principal and accrued
interest on the notes shall be converted into the Company's Class A common stock
at a price of $1.70 (Xxxxxxxxx) or $1.50 per share, or (ii) the Company shall
make a cash repayment of outstanding principal and accrued interest to the
investors. In connection with the acquisition of these notes, the investors
received a warrant to acquire one-third of a share of Class A common stock for
each dollar of note principal, bearing an exercise price of $1.70 (Xxxxxxxxx) or
$1.50 per share and being exercisable for three years. The Company paid a
finder, who is also a related-party director of the Company, a cash fee of ten
percent (10%) of the proceeds from the note issuance. The Company also issued
warrants to purchase 58,000 shares of the Company's Class A common stock,
exercisable at a price of $1.50 per share for five years, to an unrelated
third-party consultant for services related to structuring the notes offering.
