EXHIBIT 10.1
STOCK PURCHASE
AND
SETTLEMENT AGREEMENT
THIS AGREEMENT entered into this 20th day of August, 2002, by and
between DynCorp ("DynCorp") and DynTek, Inc. ("DynTek");
WITNESSETH
WHEREAS effective December 27, 2001, DynCorp Management Resources, Inc.
("DMR"), a subsidiary of DynCorp, merged into a subsidiary of DynTek, such
merger being hereinafter referred to as the "Merger"; and
WHEREAS, subsequent to the consummation of the Merger, DynCorp has made
a strategic decision to reduce its ownership interest in DynTek and to withdraw
from participation on DynTek's board of directors; and
WHEREAS, DynCorp wishes to sell to DynTek, and DynTek has agreed to
purchase from DynCorp, certain Class B Common Shares of DynTek owned by DynCorp,
on such terms and conditions as are hereinafter set forth, including the
issuance to DynCorp of certain warrants for the future purchase of DynTek Common
Shares; and
WHEREAS as part of this transaction, the parties, without admitting any
fault, culpability or liability, wish to settle and resolve any and all claims,
liabilities and causes of action that may now exist or hereafter arise, that are
or would be in any way related to the DMR contract with the Commonwealth of
Virginia for non-emergency transportation brokerage services (the "VA NET
Contract") or the Merger, or any other matter related to or arising out of the
Merger transaction or the past dealings between the parties hereto, including
direct and derivative-type claims;
NOW THEREFORE, for good and valuable consideration as hereinafter
described, the parties do hereby agree as follows:
1. PURCHASE OF SHARES. DynCorp will sell to DynTek, and DynTek will purchase
from DynCorp, at the Closing hereafter specified, a total of 8,000,000
shares of DynTek Class B Common Shares (the "Purchased Shares") for a
per-share consideration of $0.625 and a total consideration of $5,000,000,
such consideration to be paid by delivery of a Note in the form of Exhibit
A hereto.
2. SETTLEMENT OF VA NET CONTRACT EXPENSE AND OTHER DISPUTES. For and in
consideration of the respective undertakings of the parties described
herein, including DynCorp's agreement to make the Settlement Payment
described below, DynCorp and DynTek hereby agree to forever settle, resolve
and release one another from any and all claims, liabilities, causes of
action or other rights, whether presently known or hereafter arising, that
relate to any matter prior to the execution of this Agreement, except those
liabilities that are described in Section 2.2 below and the specific
provisions of that certain Agreement and Plan of Reorganization between the
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parties dated April 25, 2001, as amended (the "Merger Agreement") that are
described in Section 5 hereof, it being expressly understood that such
payment is in consideration of VA NET Contract expenses that were
unanticipated at the time of the Merger.
2.1. The Settlement Payment shall be $5,000,000 including the $1,000,000
payment previously made on DynTek's behalf to MTM on July 19, 2002.
2.2. This settlement and release excludes any and all liability that may be
incurred by DynCorp or DynTek under surety or other bonds preserved by
DynCorp pursuant to Section 4.16 of the Merger Agreement or the
DynCorp Guarantee hereafter defined, which liability DynTek has
expressly assumed under Section 4.16 and Section 4.19 of the Merger
Agreement, both of which Sections will survive this Agreement and
remain in full force and effect in accordance with their terms.
2.3. In furtherance of this settlement, the parties will at Closing execute
and deliver to one another a copy of the form of General Release
attached as Exhibit B to this Agreement.
2.4. All other provisions of this Agreement to the contrary
notwithstanding, the $4,000,000 of proceeds representing the balance
of the Settlement Payment will be made directly by DynCorp on DynTek's
behalf to the vendors and creditors of DynTek identified in Part 1 of
Exhibit C hereto. In this regard, DynTek will certify to DynCorp in
writing at the Closing the identity of such payee, the amount to be
paid, and the date the valid billing for such payment was first
received and booked by DynTek. DynCorp shall be entitled to access to
such confirming information from DynTek's books and records as may be
reasonably necessary to enable DynCorp to verify the accuracy of each
payee's entitlement.
3. WARRANTS. DynTek shall issue to DynCorp detachable warrants to purchase
7,500,000 DynTek Common Shares, at an exercise price of $4.00 per share, to
be exercised within three years following the closing date. The form of
such warrants shall be as set forth in Exhibit D hereto.
4. CONDITIONS PRECEDENT TO CLOSING. The obligations of the parties to close
the transaction shall be subject to the following conditions precedent:
4.1. Prior to closing, DynTek shall have taken steps to implement a program
of permanent cost savings, the effect of which would reasonably be
expected to result in $3.0 million of permanent annual cost savings
(excluding cost savings identified or implemented since June 2002
through the date of this Agreement); provided that if such program is
not sufficient to make DynTek's earnings before interest, taxes,
depreciation and amortization ("EBITDA") positive (after payment of
all currently projected interest expense) within 90 days following the
closing, DynTek shall take steps to implement a further program of
permanent cost savings of at least an additional $1.0 million.
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4.2. The DynTek Chief Executive Officer shall have consented in writing to
the amendment of his Employment Contract so that his incentive
compensation for DynTek fiscal years 2003 and 2004 shall be subject to
the achievement of targets of DynTek EBITDA determined by the
Compensation Committee of DynTek's Board of Directors, which targets
will be designed to assure that no bonuses are paid in excess of
salary unless and until positive EBITDA from the DynTek consolidated
business are sufficient to create shareholder value while at the same
time assuring that all cash obligations of DynTek are met in a timely
fashion.
4.3. A Special Committee of the Board of Directors of DynTek shall have
been formed and said Committee and the full Board of DynTek shall have
approved this Agreement and the various transactions described herein.
In this connection, DynTek shall have delivered to DynCorp certified
resolutions of the Special Committee of the DynTek Board appointed to
consider and approve the DynCorp/DynTek settlement, and the full
DynTek Board, confirming in language that is acceptable to DynTek,
DynCorp and the counsel for the Committee and DynTek Board, that the
settlement described in this Agreement is fair and reasonable to
DynTek and its stockholders, and that all interests of DynTek have
been satisfied on reasonable and fair terms, on an arm's length basis,
and that the settlement represented by this Agreement and the Release
attached hereto will, upon execution, constitute a full and complete
accord and satisfaction of any and all rights of DynTek, it
subsidiaries and affiliates, the DynTek stockholders, and their
successors, heirs and/or legal representatives that are described
herein or in Exhibit B hereto.
4.4. DynCorp shall have received a copy of an amendment to the loan
agreement between a subsidiary of DynTek and Foothill Capital
Corporation ("Foothill") in the form set forth in Exhibit E, duly
executed
4.5. At the closing, DynTek shall either (a) present to DynCorp reasonable
evidence that the respective customers for the Virginia Contract and
North Carolina Contract, as such terms are defined in the Assignment
and Termination Agreement dated as of July 12, 2002 (the "TechServ
Agreement"), between DynTek and DynCorp TechServ LLC ("TechServ") have
agreed to the assignment of such contracts under such terms as have
released TechServ from any further obligations thereunder or (b) enter
into and execute appropriate agreements to reassign either or both of
the said contracts to TechServ.
4.6. Ernst & Young LLP shall have received from DynTek's President and
Chief Financial Officer a fully executed representation letter with
respect to the DMR December 27, 2001 financial statement audit that is
acceptable to Ernst & Young.
4.7. DynTek's President and Chief Financial Officer shall have delivered to
DynCorp a certification dated as of the closing confirming the
accuracy of all of the DynTek representations and warranties as of
that date.
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5. COVENANTS CONCERNING VA NET CONTRACT. The parties recognize that DynCorp
continues to have liability under a Labor and Material Payment Bond issued
by National Union Fire Insurance Company of Pittsburgh, PA ("AIG") on July
2, 2001 to the Commonwealth of Virginia in connection with the 2000 award
to DMR of the VA NET Contract ("AIG Bond"), and under a separate November
28, 2000 DynCorp guarantee issued to the Commonwealth of Virginia
guaranteeing DMR's performance on such Contract ("DynCorp Guarantee"). The
parties further acknowledge that under Section 4.16 and Section 4.19 of the
Merger Agreement, DynTek has the obligation to indemnify DynCorp and
replace the AIG Bond and DynCorp Guarantee. Accordingly, the parties agree
as follows with respect to the VA NET Contract:
5.1. DynTek agrees that it shall not through June 2003 make any change to
the size or composition of the VA NET Contract project management team
without the consent of DynCorp.
5.2. DynTek will provide to DynCorp by the 20th of each calendar month
commencing in August 2002 the prior calendar month financial reports
on all aspects of the VA NET Contract reflecting total receipts, cost
of revenue, overhead costs, provider costs, satisfactory evidence of
payment of expenses under the contract, and any other relevant
information concerning contract operations, claims, or disputes with
the Commonwealth of Virginia. DynCorp shall be entitled to audit
and/or examine all such DynTek records upon reasonable notice and
during regular business hours.
5.3. DynCorp will have the right to review and approve all modifications to
the VA NET Contract or any settlement, which modification or
settlement would increase DynCorp's liability thereunder, with the
Commonwealth or any vendor thereunder so long as the DynCorp Guarantee
or the AIG Bond remain outstanding; provided that such review and
approval will not be unreasonably withheld or delayed. Moreover,
DynTek will not submit a proposal for a follow-on VA NET Contract
beyond June 2003 unless the DynCorp Guarantee and AIG Bond are no
longer outstanding.
6. OTHER COVENANTS. DynTek further agrees to take the following actions
subsequent to Closing.
6.1. As soon as practicable following receipt by Ernst & Young of the
letter described in Section 4.5, DynCorp will use its best efforts to
cause Ernst & Young to deliver to DynTek (i) the audited balance
sheets of DMR as of December 27, 2001and the related statements of
operations, changes in stockholders' equity and cash flows for the
years ended of December 27, 2001 (collectively, the "Financial
Statements") and (ii) Ernst & Young's consent to the inclusion of the
Financial Statements in DynTek's SEC filings as appropriate.
6.2. On or before October 1, 2002, DynTek will pay all outstanding amounts
owed DynCorp under the Transition Services Agreement attachment to the
Merger Agreement, and shall remove its personnel from the DynCorp
facility at 00000 Xxxxx Xxxxxxx Xxxxx. As of this date, all of
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DynCorp's obligations under the Transition Services Agreement shall
terminate; provided that the obligation of DynTek to compensate
DynCorp for services rendered thereunder shall continue in accordance
with the Transition Services Agreement terms until all amounts due are
paid in full.
6.3. In the event DynTek proposes at any time that DynCorp continues to own
common shares of DynTek to issue additional DynTek common shares such
that DynCorp's total fully diluted ownership of DynTek (including
securities issuable upon exercise of the warrants described in Section
3) would be less than 25%, DynTek shall immediately notify DynCorp and
give DynCorp a right of first refusal for 5 business days after its
receipt of written notice to purchase such additional common shares,
or a portion thereof, for the same consideration as would be obtained
from third party subscribers. If such right is not exercised by
DynCorp within such 5-day period, it shall be null and void.
6.4. Neither party shall make any public announcement or disclosure
regarding the provisions of this transaction or this Agreement without
the written consent of the other party; provided, however, that that
either party shall have the right to make such public announcement as
it may deem appropriate to comply with applicable law, including
applicable securities laws.
6.5. DynTek shall recommend EBITDA targets to its Compensation Committee
that are consistent with the terms of the consent described in Section
4.2 above and shall make no bonus or incentive payment to its Chief
Executive Officer for fiscal years 2003 and 2004 that are inconsistent
with such guidelines.
6.6. In the event either of both of the said contracts referred to in
Section 4.5 is re-assigned to TechServ, DynCorp shall cause TechServ
to subcontract 100% of the work thereunder to DynCorp Systems &
Solutions LLC ("DS&S"), a subsidiary of DynCorp, at a contract price
equal to 98% of TechServ's receipts thereunder and shall cause DS&S in
turn to subcontract 100% of the work thereunder to DynTek at a
contract price equal to the amount DS&S receives from TechServ.
6.7. Until the Note has been paid in full, DynTek shall continue to
maintain, and cause each of its subsidiaries to continue to maintain,
a system of accounting established and administered in accordance with
sound business practices to permit preparation of consolidated and
consolidating financial statements in conformity with generally
accepted accounting principles and each of the financial statements
described below shall be prepared from such system and records. DynTek
shall deliver or cause to be delivered to DynCorp:
(a) MONTHLY REPORTS. As soon as practicable, and in any event no
later than thirty (30) days following the end of each calendar
month, (i) the consolidated balance sheet as of the end of such
month, and income statement for the month and for the fiscal
year-to-date, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the
previous fiscal year and the corresponding figures from the
consolidated financial forecast, certified by its Chief Executive
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Officer and Chief Financial Officer as fairly presenting the
consolidated financial position of DynTek and its subsidiaries as
at the date indicated, and the results of their operations for
the periods indicated; and (ii) a schedule detailing DynTek's
selling, general, and administrative expenses for the month and
fiscal year to date, setting forth in each case in comparative
form the corresponding figures for the corresponding periods of
the previous fiscal year and the corresponding figures from the
consolidated financial forecast, certified by its Chief Executive
Officer and Chief Financial Officer as being accurate and
complete.
(b) QUARTERLY REPORTS. As soon as practicable, and in any event no
later than two Business Days after the date required for filing
quarterly reports on Form 10-Q in accordance with the rules of
the Securities and Exchange Commission, the consolidated balance
sheets of DynTek and its subsidiaries as at the end of such
period (i) for such fiscal quarter and (ii) for the period
beginning on the first day of such fiscal year and ending on the
last day of such fiscal quarter, together with the related
consolidated statements of income and cash flow for such periods,
setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous fiscal year
and the corresponding figures from the consolidated financial
forecast for the current fiscal year, certified by its Chief
Financial Officer as fairly presenting the consolidated financial
position of DynTek and its subsidiaries as at the dates indicated
and the results of their operations and cash flow for the fiscal
quarters indicated, subject to normal year end adjustments.
(c) ANNUAL REPORTS. As soon as practicable, and in any event no
later than two Business Days after the date required for filing
annual reports on Form 10-K in accordance with the rules of the
Securities and Exchange Commission, (i) the consolidated and
consolidating balance sheets of DynTek and its subsidiaries as at
the end of such fiscal year and the related consolidated and
consolidating statements of income, stockholders' equity and cash
flow for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the previous
fiscal year and the corresponding figures from the consolidated
financial forecast for the current fiscal year, and (ii) a report
with respect to such consolidated financial statements of an
independent certified public accountant reasonably acceptable to
DynCorp, which report shall be unqualified and shall state that
such financial statements fairly present the consolidated
financial position of DynTek and its subsidiaries as at the dates
indicated and the results of their operations and cash flow for
the periods indicated in conformity with GAAP (except for changes
with which such independent certified public accountant, if
applicable, shall concur and which shall have been disclosed in
the notes to the financial statements) and that the examination
by such accountants in connection with such consolidated
financial statements has been made in accordance with generally
accepted auditing standards.
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(d) OFFICER'S CERTIFICATE. Together with each delivery of any
financial statement pursuant to subsection (a) and (b) of this
Section, (i) a certificate signed by the Chief Executive Officer
or the Chief Financial Officer of DynTek (an "Officer's
Certificate") stating that the signatory thereto has reviewed the
terms of this Agreement and has made, or caused to be made under
his/her supervision, a review in reasonable detail of the
transactions and consolidated and consolidating financial
condition of DynTek and its subsidiaries during the accounting
period covered by such financial statements, that such review has
not disclosed the existence during or at the end of such
accounting period, and that such person does not have knowledge
of the existence as at the date of such Officer's Certificate, of
any condition or event which constitutes an Event of Default or
of Default (each as defined in the loan agreement entered into
between Foothill and a subsidiary of DynTek (the "Foothill loan
agreement"), or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and
what action DynTek or any of its subsidiaries has taken, is
taking and proposes to take with respect thereto; and (ii) an
Officer's Certificate setting forth calculations (with such
specificity as DynCorp may reasonably request) for the period
then ended which demonstrate compliance, when applicable, with
the provisions of the Foothill loan agreement.
(e) BUDGETS; BUSINESS PLANS; FINANCIAL PROJECTIONS. As soon as
practicable and in any event no later than January 31, 2003 and
fifteen (15) days after the end of each fiscal year of DynTek
ending in 2003 and thereafter, a consolidated plan and financial
forecast, prepared in accordance with DynTek's normal accounting
procedures applied on a consistent basis, for the five (5) fiscal
year period commencing in the fiscal year in which delivered,
including, without limitation, (i) forecasted consolidated
balance sheets and statements of cash flow and income statement
of DynTek for such fiscal years, (ii) forecasted consolidated and
consolidating statement of cash flow and income statement of
DynTek and its subsidiaries for and as of the end of each fiscal
month of such fiscal years, (iii) the amount of forecasted
capital expenditures for such fiscal years, and (iv) forecasted
compliance with the provisions of Section 6.9 each of the
foregoing prepared for each fiscal month in the first fiscal year
of such five fiscal year period.
(f) EVENTS OF DEFAULT. Promptly upon any of the Chief Executive
Officer or Chief Financial Officer of DynTek obtaining knowledge
of any condition or event which constitutes an Event of Default
or Default under the Foothill loan agreement, DynTek shall
deliver to DynCorp an Officer's Certificate specifying (i) the
nature and period of existence of any such Event of Default,
Default, condition, or event; (ii) the notice given or action
taken by such person in connection therewith; and (iii) what
action DynTek has taken, is taking, and proposes to take with
respect thereto.
(g) FOOTHILL AGREEMENT DOCUMENTS. DynTek shall deliver a copy of the
following, promptly upon its receipt thereof (where applicable),
and concurrently with its delivery thereof (where applicable), to
DynCorp: (i) each material notice or other material communication
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delivered by or on behalf of DynTek to any person in connection
with the Foothill loan agreement, and (ii) each material notice
or other material communication received by DynTek from any
person in connection with the Foothill loan agreement.
(h) OTHER INFORMATION. Promptly upon receiving a request therefor
from DynCorp, DynTek shall prepare and deliver to DynCorp such
financial statements and other information with respect to DynTek
or any of its Subsidiaries as from time to time may be reasonably
requested by DynCorp.
6.8. Until the Note has been paid in full, the maximum amount of accounts
payable that may be aged over 60 days from the date of invoice (other
than invoices that DynTek is disputing in good faith) shall be not
more than the amounts set forth below as of the end of each
corresponding month:
August 2002 $1,500,000
September 2002 $1,000,000
October 2002 $1,000,000
November 2002 $750,000
December 2002 $500,000
January 2003 and thereafter $100,000
6.9. Commencing with DynTek's fiscal quarter ending December 31, 2002 and
until the Note has been paid in full, the ratio of DynTek's EBITDA to
interest expense and scheduled principal payments on the Note shall be
no less than 1.1:1.0.
7. PROVISIONS OF MERGER AGREEMENT.
7.1. Except as otherwise provided in Section 7.2 below, all further
obligations of the parties pursuant to the Merger Agreement shall be
deemed to be discharged, fulfilled, released, extinguished, and of no
further effect as of the closing of this transaction, including
without limitation the provisions of Section 4.21.
7.2. The parties' obligations and rights under Sections 4.9, 4.10, 4.11,
4.12, 4.16 and 4.19 of the Merger Agreement shall not be released but
shall remain in full force and effect in accordance with their terms.
Moreover, the Transition Services Agreement, Exhibit C to the Merger
Agreement, shall remain in full force and effect until midnight
September 15, 2002, after which time all obligations of DynCorp
thereunder shall cease and shall be considered covered by DynTek's
General Release; provided, however, that DynTek shall continue to be
obligated to perform all of its obligations under the Transition
Services Agreement. Finally, the Registration Rights Agreement,
Exhibit B to the Merger Agreement, shall not be released or terminated
but shall remain in full force and effect in accordance with its
terms, subject only to such changes thereto as are referenced in this
Agreement.
8. REPRESENTATIONS AND WARRANTIES. Each party represents and warrants that the
following statements as to itself are true, correct, and complete:
8.1. Organization and Good Standing. It is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Delaware. It has full corporate power to carry on their business
activities as now conducted. It has, since its incorporation, complied
in all material respects with all laws, regulations, ordinances, and
orders applicable to its business activities and properties. It is
entitled to own, lease, or operate the properties they now own, lease,
or operate. It is further qualified and licensed to do business and
are in good standing in each other jurisdiction in which the nature of
its business makes such qualification or licensing necessary.
8.2. No Material Adverse Developments. DynTek knows of no developments
regarding its business or prospects that individually or taken
together would have a material adverse impact on the business,
financial standing or affairs of DynTek, except as described and
disclosed in DynTek's past filings with the Securities Exchange
Commission or as disclosed to DynCorp in writing prior to the
execution of this Agreement. As of the date of this Agreement, there
are no uncured Events of Default under the Foothill loan agreement.
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8.3. Due Diligence and VA NET Contract EAC. The December 17, 2001 estimate
of the cost at completion of the VA NET Contract ("EAC"), which was
jointly prepared by DynCorp and DynTek (then known as XxxXxxxxxx.xxx,
Inc.), was accurate and complete as of such date to the best of
DynTek's knowledge and belief at such time. DynTek was afforded full
and complete access prior to December 27, 2001 to all DMR and VA NET
Contract records, personnel and information, and there is no basis for
suggesting that DynCorp or DMR failed in any way to fully disclose any
and all relevant information regarding its operations or the VA NET
Contract or its future prospects. DynTek executives participated fully
in the December 17, 2001 EAC review meeting and concurred with the
formal acceptance of that EAC as appropriate given the then existing
circumstances impacting the performance of the VA NET Contract.
8.4. No Conflict. The execution, delivery and performance of this Agreement
and Exhibits A, B and D hereto do not and will not (i) conflict with
the certificate of incorporation or by-laws of the parties; (ii)
constitute a tortious interference with any contractual obligation of
the parties or conflict with, result in a breach of or constitute
(with or without notice or lapse of time or both) a default under any
contractual obligation of the parties; (iii) result in or require the
creation or imposition of any lien whatsoever upon any of the property
or assets of the parties; or (iv) require any approval of the parties'
shareholders which has not been obtained.
8.5. Authority. The parties have the full right, power, and authority to
execute and deliver this document and Exhibits A, B and D, to perform
their obligations hereunder, and to consummate the transactions
contemplated hereby. The execution, delivery, and performance of this
Agreement, the Release, the Warrant, the Note, and all the other
transactions and obligations herein provided for have been duly
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authorized by all necessary corporate action on their part. This
Agreement, the Release, the Warrant, and the Note constitute the
legal, valid, and binding obligation of the parties, enforceable
against them in accordance with their terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies and
defenses.
8.6. Investment Intent. Each of DynCorp and any permitted transferee of the
Warrant, as of the date hereof and as of the date of (and as a
condition to) each transfer and/or exercise of the Warrant, (a) is
acquiring the Warrant and/or the shares issuable upon exercise thereof
(collectively, the "Securities"), as applicable, for its own account
for investment purposes only and not with a present view to any resale
or distribution thereof within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), in violation thereof, (b)
possesses such knowledge and experience in financial and business
matters as to enable it to evaluate the merits and risks of an
investment in the Securities, (c) understands and is able to bear the
economic risk involved in acquiring the Securities, including any loss
relating to or arising out of such investment, (d) understands and
agrees that the Securities are not registered under the Securities Act
or any other securities law and may not be offered, sold, pledged or
conveyed unless such Securities are registered under the Securities
Act or an exemption from the registration requirements of the
Securities Act is available, (e) is an "accredited investor" (as such
term is defined in Rule 501 promulgated under the Securities Act), and
(f) has been given the opportunity to ask questions of, and receive
answers from, DynTek concerning the terms of the Securities and to
obtain such additional written information, to the extent DynTek
possesses such information or can acquire it without unreasonable
effort or expense, necessary to verify the accuracy of the same as it
desires in order to evaluate the investment in the Securities.
8.7. Aged Payables. DynTek's schedule of aged payables, attached hereto as
Exhibit F, is true and correct as of the date thereof.
9. UNDERSTANDINGS REGARDING DYNCORP'S REMAINING CLASS B COMMON SHARES. DynCorp
agrees that on the closing date, it shall convert its existing Class B
Common Shares of DynTek into Class A Common Shares of DynTek.
9.1. DynTek agrees to facilitate such conversion and by December 31, 2002
to have used its best efforts to register and list for trading on the
NASDAQ exchange all DynTek common shares held by DynCorp immediately
after the closing.
9.2. On or before the closing, the DynCorp nominated directors shall resign
from the DynTek Board; provided, however, that DynTek agrees that its
directors and officers liability insurance will continue to be
available to the former DynCorp directors and that DynTek will
continue to renew its directors and officers coverage for at least
five years following the closing so long as the renewal premium does
not exceed 200% of the current premium.
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10. CLOSING AND TERMINATION OF AGREEMENT. Subject to the prior satisfaction of
all conditions precedent, set forth in Section 4 hereto, the closing will
take place at the offices of DynCorp, 00000 Xxxxx Xxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxx, promptly following satisfaction of the condition set forth in
Section 4.4; provided that if no closing occurs before September 15, 2002
this Agreement and all obligations hereunder shall terminate, and shall be
of no further force or effect.
11. MISCELLANEOUS PROVISIONS.
11.1. Standstill Agreement. Except as permitted herein or in Exhibit D
hereto, DynCorp agrees that it will not for a period of 2 years from
the date of this Agreement purchase any DynTek voting securities
without the approval of the DynTek Board of Directors.
11.2. Covenant Against Litigation. DynTek and DynCorp each agree on behalf
of themselves and all Settling Parties not to initiate, file,
commence, or otherwise sponsor directly or indirectly, any lawsuit,
arbitration, claim or other proceeding, whether legal or equitable in
nature, that in any way relate to the matters released in the General
Releases, Exhibit B hereto, provided, that nothing herein will
preclude a party from enforcing a provision of this Agreement or such
General Releases. In the event of a breach of this covenant, the
non-breaching party shall be entitled to seek and obtain an injunction
in the United States District Court for the Eastern District of
Virginia and recover any and all damages and costs related to such
injunctive relief.
11.3. Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered
personally or sent by facsimile transmission or overnight express or
by registered or certified mail, postage prepaid, addressed as
follows:
DynCorp: DynTek, Inc.
00000 Xxxxx Xxxxxxx Xxxxx 00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000 Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx Attn: Xxxxxx X. Xxxx
Senior Vice President President & Chief Executive
& General Counsel Officer
fax: (000) 000-0000 fax: (000) 000-0000
With a copy to:
Xxxxx Peabody LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esquire
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or
sent by facsimile transmission or overnight express or by registered or
certified mail, postage prepaid, addressed as follows:
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11.4. Entire Agreement. This Agreement, together with the Exhibits hereto
and all documents specifically incorporated herein by reference,
contains the entire agreement between DynCorp and DynTek with respect
to the transactions contemplated herein and supersede all previous
written or oral negotiations, commitments, and understandings.
11.5. Counterparts; Execution by Facsimile. This Agreement may be executed
in two or more counterparts, manually or by facsimile transmission,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
11.6. Survival of Representations. All the representations, warranties,
covenants, and understandings contained on this Agreement shall
survive the execution of this Agreement, and, without limitation, the
representations and warranties shall survive so long as any applicable
statute of limitations or right of action pertaining thereto, whether
or not asserted, shall endure. No performance or execution of this
Agreement in whole or in part by a party hereto shall constitute a
waiver by such party or stop such party from asserting its rights
hereunder, nor shall a waiver of or failure to exercise one or more
rights hereunder constitute a waiver of any other rights.
11.7. Governing Law and Jurisdiction. This Agreement shall be governed by
and construed in accordance with the internal laws of the Commonwealth
of Virginia applicable to agreements made and to be performed entirely
within the Commonwealth of Virginia without regard to principles of
conflicts of law. Both parties irrevocably submit to the exclusive
jurisdiction of the state courts of the Commonwealth of Virginia
located in Arlington, Virginia or the United States Federal District
Court located in the Eastern District of Virginia for the purposes of
any suit, action or other proceeding arising out of or in connection
with this Agreement. Each party further agrees that service of any
process, summons, notice or document by U.S. registered mail to a
party's address set forth in the Agreement shall be effective service
of process for any action, suit or proceeding in the Commonwealth of
Virginia with respect to any matters to which it has submitted to
jurisdiction as set forth above in the immediately preceding sentence.
EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO TRIAL
BY JURY AND ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT
OR PROCEEDING ARISING OUT OF THIS AGREEMENT IN ANY SUCH COURT AND
HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT
TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR
PROCEEDING BROUGHT IN SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. The prevailing party in any such action will be awarded its
reasonable damages, costs, and expenses (including attorneys' fees)
incurred in prosecuting or defending such litigation.
11.8. Interpretation. The section headings contained in this Agreement are
for reference purposes only and shall not affect the interpretation of
this Agreement. All references to section number refer to sections of
this Agreement, except as otherwise specified. All references in this
Agreement to gender shall be deemed to include all genders, and all
references in the singular or plural shall be deemed to include the
plural and singular, as appropriate. Whenever the words "include",
"includes", or "including" are used, they shall be deemed to be
followed by the words "without limitation". The language used in this
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Agreement will be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict
construction will be applied against any person.
11.9. Severability. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for
any reason whatsoever, such illegality or invalidity shall not affect
the validity of the remainder of this Agreement.
11.10. Assignment. No party hereto may assign or delegate or otherwise
transfer any of its rights or obligations hereunder without the prior
written consent of the other party hereto, and any agreement, act, or
deed purporting to effect any such assignment, delegation, or transfer
without such prior written consent shall be void; provided however
that such prohibition shall not exclude assignment by operation of
law, such as by merger of a party into another corporation.
11.11. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, the settling parties, and their
respective successors and assigns.
11.12. No Third-Party Beneficiaries. The provisions of this Agreement are
intended solely for the benefit of the parties hereto, and no other
party is entitled to any rights, benefits, or privileges created
hereunder.
11.13. Amendments and Waivers. This Agreement may not be modified or
amended except by a writing or writings signed by the party against
whom any modification or amendment is asserted or sought to be
enforced. No waiver by any party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first mentioned above.
DYNCORP DYNTEK, INC.
By: /s/ Xxxxx X. Xxxxxxxxx By: /s/ Xxxxx Xxxxxxx
------------------------------ --------------------------
Name: Xxxxx X. Xxxxxxxxx Name: Xxxxx Xxxxxxx
Its: Senior Vice Preside Its: Chief Financial Officer
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