Exhibit 2.1
Execution Version
STOCK PURCHASE AGREEMENT
Dated as of April 14, 2008
by and among
VSE CORPORATION,
XXXXX XXX XXXXXXX REVOCABLE TRUST,
XXXXX X. XXXXXXX
AND
G&B SOLUTIONS, INC.
ARTICLE 1. CERTAIN MATTERS OF CONSTRUCTION AND
DEFINITIONS 1
ARTICLE 2. THE PURCHASE AND SALE OF THE SHARES 1
2.1 Purchase of the Shares 1
2.2 Purchase Price 2
2.2.1 General 2
2.2.2 Payment of Purchase Price 2
2.2.3 Estimated Closing Statement;
Adjustment of Initial Purchase Price 2
2.2.4 Adjustments to Purchase Price 2
2.3 The Closing 4
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND SELLER 4
3.1 Corporate Status of the Company 4
3.2 Capital Stock of the Company 4
3.2.1 Authorized Stock and Ownership 4
3.2.2 Options and Convertible Securities
of the Company 5
3.3 No Subsidiaries 5
3.4 Authority for Agreement; Noncontravention 5
3.4.1 Authority 5
3.4.2 No Conflict 5
3.5 Financial Statements 6
3.6 Absence of Material Adverse Changes 6
3.7 Absence of Undisclosed Liabilities 6
3.8 Books and Records 7
3.9 Accounts Receivable 7
3.10 No 8(a) Certification; Compliance with
Applicable Laws, Organizational Documents 7
3.11 Litigation and Audits 7
3.12 Tax Matters 8
3.12.1 Filing of Returns 8
3.12.2 Payment of Taxes 8
3.12.3 Withholding 8
3.12.4 Assessments 9
3.12.5 Access to Returns 9
3.12.6 Miscellaneous Items 9
3.12.7 No Tax Sharing Agreement 9
3.12.8 Certain Income Items and Deductions 10
3.12.9 Certain Stock Distributions 10
3.12.10 Affiliated Group 10
3.12.11 Certain Disputes and Claims 10
3.12.12 Code Section 382 Ownership Change 10
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3.12.13 Unclaimed Property 11
3.12.14 S Corporation Status 11
3.13 Employee Benefit Plans 11
3.13.1 List of Plans 11
3.13.2 ERISA 11
3.13.3 Plan Determinations 12
3.13.4 Funding 12
3.13.5 Welfare Plans 13
3.14 Employment-Related Matters 13
3.14.1 Labor Relations 13
3.14.2 Employee List 14
3.15 Environmental 14
3.15.1 Environmental Laws 14
3.15.2 Environmental Claims 14
3.15.3 No Basis for Claims 14
3.15.4 Disclosure of Information 15
3.15.5 Encumbrances 15
3.15.6 Transportation of Materials of
Environmental Concern 15
3.16 No Broker's or Finder's Fees 15
3.17 Assets Other Than Real Property 15
3.17.1 Title 15
3.17.2 Closing Date Assets 15
3.17.3 Condition 16
3.18 Real Property 16
3.18.1 Company Real Property 16
3.18.2 Company Leases 16
3.18.3 Condition 17
3.19 Contracts, Agreements and Commitments 17
3.19.1 Company Contracts 17
3.19.2 Validity 19
3.19.3 Third-Party Consents 19
3.20 Intellectual Property 19
3.20.1 Right to Intellectual Property 19
3.20.2 No Conflict 19
3.20.3 Employee Agreements 21
3.21 Insurance Contracts 21
3.22 Banking Relationships 21
3.23 No Contingent Liabilities 21
3.24 Absence of Certain Relationships 21
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3.25 Sensitive Payments 21
3.26 Government Contracts 22
3.26.1 Generally 22
3.26.2 Bids and Awards 22
3.26.3 Compliance with Law and Regulation
and Contractual Terms; Inspection
and Certification 22
3.26.4 Disputes, Claims and Litigation 23
3.26.5 Sanctions 24
3.26.6 Terminations 24
3.26.7 Within the Scope 24
3.26.8 Assignments 24
3.26.9 Property 24
3.26.10 National Security Obligations 25
3.26.11 Credentials 25
3.26.12 Export Compliance 25
3.26.13 No Contingent Fees 25
3.27 No Additional Representations and Warranties 25
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER 25
4.1 Corporate Status of Buyer 25
4.2 Authority for Agreement; Noncontravention 25
4.2.1 Authority of Buyer 26
4.2.2 No Conflict 26
4.3 Compliance with Applicable Laws 26
4.4 Buyer's Acknowledgment 26
4.5 Investment Intent 27
ARTICLE 5. ADDITIONAL AGREEMENTS 27
5.1 Expenses 27
5.2 Indemnification 27
5.2.1 Indemnification of Buyer
Indemnified Parties 27
5.2.2 Indemnification of Seller
Indemnified Parties 28
5.2.3 Claims for Indemnification 28
5.2.4 Defense by Indemnifying Party 28
5.2.5 Limitation on Liability for
Indemnification 29
5.2.6 Claims Period and IPP Escrow Amount 30
5.2.7 Subrogation 30
5.2.8 Exclusive Remedies 30
5.2.9 Right of Offset 30
5.2.10 Treatment of Indemnity Payments
Between the Parties 31
5.2.11 Mitigation 31
5.2.12 No Double Recovery 31
5.3 Public Disclosure and Confidentiality 31
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5.4 Employees and Company Plans 31
5.5 Further Assurances 32
5.5.1 Generally 32
5.5.2 Consents 32
5.6 Tax Matters 32
5.6.1 Code Section 338(h)(10) Election 32
5.6.2 Termination of Tax Year and
Responsibility for Filing Tax
Returns for Periods through Closing
Date 33
5.6.3 Audits 34
5.6.4 Tax-Sharing Agreements 35
5.6.5 Tax Indemnification 35
5.6.6 Straddle Period 35
5.6.7 Cooperation on Tax Matters 35
5.6.8 Certain Taxes 36
5.7 Mutual Releases 36
5.7.1 By Seller 36
5.7.2 By the Company 36
5.8 Certain Post-Closing Covenants 36
5.8.1 Non-Competition 37
5.8.2 Noninterference with Business 37
5.8.3 Confidentiality 37
5.8.4 Injunctive Relief For Breach 37
5.9 Seller's Right of Audit 37
5.10 Termination of LKB Employment Agreement 38
5.11 Termination of Shareholder Agreement 38
5.12 Retention Agreements 38
5.12.1 Retention Agreement 38
5.12.2 Assignment 38
ARTICLE 6. CLOSING DOCUMENTS BEING DELIVERED 39
6.1 Documents Being Delivered by the Parties 39
6.1.1 Government Filings 39
6.1.2 Escrow Agreement 39
6.1.3 Flow of Fund Statement 39
6.1.4 Closing Certificates 39
6.1.5 Employment Agreement 39
6.1.6 Non-Foreign Affidavit 39
6.1.7 IRS Form 8023 39
6.1.8 Termination of Phantom Stock Plan 40
6.1.9 Memorandum of Agreement 40
6.1.10 Closing Letter 40
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6.1.11 Delivery of Shares 40
6.1.12 Payment of Purchase Price 40
ARTICLE 7. SURVIVAL OF REPRESENTATIONS AND COVENANTS 40
7.1 The Company's and Seller's Representations
and Covenants 40
7.2 Buyer's Representations and Covenants 40
ARTICLE 8. OTHER PROVISIONS 41
8.1 Notices 41
8.2 Entire Agreement 42
8.3 Assignability 42
8.4 Validity 42
8.5 Specific Performance 42
8.6 U.S. Currency 42
8.7 Governing Law 42
8.8 Counterparts 42
8.9 Waiver 42
8.10 Joint and Several Liability 43
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EXHIBITS
A Form of Escrow Agreement
B Form of Employment Agreement with Xxxxx X. Xxxxxxx
SCHEDULES
Schedule 1.3(c) Competitive Activity
Schedule 1.3(d) Company Engagement
Schedule 3.1 Qualification
Schedule 3.2.2 Capital Stock
Schedule 3.4.2 Violations and Conflicts
Schedule 3.5 Balance Sheets
Schedule 3.6 Dividends; Distributions
Schedule 3.7 Liabilities
Schedule 3.9 Accounts Receivable
Schedule 3.10 Permits
Schedule 3.11 Claims, Proceedings and Disputes
Schedule 3.13.1 Company Plans
Schedule 3.13.4 Changes to Company Plans
Schedule 3.13.6 Termination of Company Plans
Schedule 3.14.1 Employee Matters
Schedule 3.14.2 Employee List
Schedule 3.17.1 Title to Assets
Schedule 3.17.2(c) Tangible Personal Property
Schedule 3.17.2(e) Governmental Entity-Owned Property
Schedule 3.18.2 Company Leases
Schedule 3.19.1 Company Contracts
Schedule 3.19.2 Breach of Company Contracts
Schedule 3.19.3 Third Party Consents
Schedule 3.20.1 Company Proprietary Rights
Schedule 3.20.2 Intellectual Property
Schedule 3.20.2(c) Licenses
Schedule 3.20.2(f) Exceptions to Ownership of Company
Proprietary Rights
Schedule 3.20.2(g) Claims Against Company Proprietary
Rights
Schedule 3.20.2(k) Restrictive Agreements
Schedule 3.20.3(a) Exceptions to Employee Confidentiality
Agreements
Schedule 3.20.3(b) Form of Employee Confidentiality
Agreement
Schedule 3.20.3(c) Form of Consulting Agreement
Schedule 3.21 Company Insurance Contracts
Schedule 3.22 Financial Institutions
Schedule 3.24 Interest in Subcontracts, Suppliers and
Customers
Schedule 3.26.1(a) Government Contracts
Schedule 3.26.1(b) Active Government Contracts with Current
Issues
Schedule 3.26.2 Claims for Price Adjustment
Schedule 3.26.3 Reviews of Government Contracts
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Schedule 3.26.4 Claims Relating to Government Contracts
Schedule 3.26.5 Notices of Default or for Similar Matters for
Government Contracts
Schedule 3.26.6 Termination of Company Government Contracts
Schedule 3.26.7 Certain Transactions with Government Entities
Schedule 3.26.8 Assignments of Government Contracts
Schedule 5.12 Retention Bonus Recipients
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STOCK PURCHASE AGREEMENT
Stock Purchase Agreement, dated as of April 14, 2008
("Agreement"), by and among VSE Corporation, a Delaware
corporation ("Buyer"), Xxxxx X. Xxxxxxx, as Trustee of Xxxxx X.
Xxxxxxx Revocable Trust ("LKB Trust"), Xxxxx X. Xxxxxxx ("LKB"
and, together with LKB Trust, "Seller") and G&B Solutions, Inc. a
Virginia corporation (the "Company").
RECITALS
R.1 The Company is primarily engaged in the business of
providing information technology solution services primarily for
the United States Government.
R.2 The LKB Trust owns all of the Company's outstanding
capital stock, consisting of 50 Shares of outstanding common
stock, without par value (collectively the "Shares").
R.3 Buyer desires to purchase the Shares from Seller and
Seller desires to sell the Shares to Buyer.
R.4 Seller and the Company's board of directors have
determined that it is advisable, in connection with the above-
referenced purchase and sale of Shares, to consummate certain
other transactions (collectively with such purchase and sale of
the Shares, the "Transactions"), all on the terms and conditions
set forth herein.
R.5 The Parties desire to make certain representations,
warranties, covenants and other agreements in connection with the
Transactions.
NOW, THEREFORE, in consideration of the mutual promises
hereinafter set forth and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the
Parties, intending to be legally bound, agree as follows:
ARTICLE 1. CERTAIN MATTERS OF CONSTRUCTION AND DEFINITIONS
Certain matters of construction of this Agreement and the
definition of capitalized terms used herein but not otherwise
defined in Articles 1 through 9 are set forth in Schedule 1.
ARTICLE 2. THE PURCHASE AND SALE OF THE SHARES
2.1 Purchase of the Shares. Upon the terms and subject to
the conditions set forth herein, at the closing of the
Transactions taking place on the date of this Agreement (the
"Closing"), Buyer shall purchase and acquire from Seller, and
Seller shall sell and transfer to Buyer all of the Shares for the
consideration specified in Section 2.2, free and clear of any and
all Encumbrances.
2.2 Purchase Price.
2.2.1 General. On the terms and subject to the
conditions set forth herein, as full consideration for the
Shares, Buyer shall pay:
(a) $19,500,000, subject to adjustment pursuant
to Section 2.2.3 (the "Initial Purchase Price"); and
(b) the amounts, up to an aggregate maximum of
$4,200,000, payable, if any, pursuant to Section 2.2.2(b)
(collectively, the "Earnout Payments") (the Initial Purchase
Price, subject to adjustments pursuant to Sections 2.2.3 and
2.2.4, plus any Earnout Payments paid or payable hereunder are
collectively referred to herein as the "Purchase Price").
2.2.2 Payment of Purchase Price. Buyer shall pay
the Purchase Price as follows:
(a) At the Closing, Buyer shall pay the Initial
Purchase Price as follows:
(i) $1,950,000 of the Initial Purchase Price
to the Escrow Agent to hold and disburse pursuant to Section 5.2
and the Escrow Agreement ("IPP Escrow Amount");
(ii) $649,500 of the Initial Purchase Price
to the Escrow Agent to hold and disburse pursuant to Section 5.12
and the Escrow Agreement ("Retention Escrow Amount" and, together
with the IPP Escrow Amount, the "Escrow Amount"); and
(iii) the balance of the Initial Purchase
Price to Seller.
(b) After the Closing, Buyer will pay Earnout
Payments to Seller as may be required by and in accordance with
Schedule 2.2.2(b).
2.2.3 Estimated Closing Statement; Adjustment of
Initial Purchase Price. Prior to the Closing Date, the Company
shall provide to Buyer in reasonable detail statements of (a)
an estimated Closing Balance Sheet (the "Estimated Closing
Balance Sheet") and (b) an estimate of the Closing Net Working
Capital (the "Estimated Closing Net Working Capital"). If the
Estimated Net Working Capital is less than $4,300,000, the
Initial Purchase Price shall be decreased by the amount by
which the Estimated Net Working Capital is less than $4,300,000
(the "Initial Purchase Price Adjustment").
2.2.4 Adjustments to Purchase Price.
2.2.4.1 Closing Balance Sheet; and Closing Net
Working Capital. Within 75 days after the Closing Date, Buyer,
working with the Company's Controller, shall prepare or cause to
be prepared and shall deliver to Seller in reasonable detail (a)
the Closing Balance Sheet and (b) the Closing Net Working Capital
(the statements referenced in foregoing clauses (a) and (b),
collectively the "Closing Statements").
2.2.4.2 Review of Closing Statements. Seller, upon
receipt of the Closing Statements, shall (a) review the Closing
Statements and, (b) to the extent Seller may deem necessary, make
reasonable inquiry of Buyer and its accountants (if any are used
) in respect of the preparation of the Closing Statements. In
connection with such inquiry, Seller and its advisers shall have
access as promptly as reasonably practicable upon prior notice
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and during normal business hours to books, papers and records of
the Company and its accountants (if any are used) relating to the
preparation of the Closing Statements, including worksheets and
other computations. The Closing Statements shall be final,
binding and conclusive upon, and deemed accepted by, Seller
unless Seller shall have notified Buyer in reasonable detail of
any Seller objections thereto within 30 days after receipt of the
Closing Statements (the "Seller Objection").
2.2.4.3 Disputes. If a Seller Objection is
provided, Buyer shall have 20 days to review and respond to the
Seller Objection, and Buyer and Seller shall attempt to resolve
the differences underlying the Seller Objection within 20 days
following completion of Buyer's review of the Seller Objection.
Disputes between Buyer and Seller which are not resolved by them
within such 20-day period shall be referred no later than such
20th day for decision to an independent accounting firm of
national reputation mutually acceptable to Buyer and Seller (the
"Arbiter") who shall act as arbitrator and determine, based
solely on presentations by Seller and Buyer and only with respect
to the remaining differences so submitted. If Buyer and Seller
cannot agree upon the selection of the Arbiter within five
Business Days, BDO Xxxxxxx shall serve as the Arbiters hereunder.
The Arbiter shall deliver its written determination as to whether
and to what extent, if any, the Closing Statements requires
adjustment to Buyer and Seller no later than the 30th day after
the remaining differences underlying the Seller Objection are
referred to the Arbiter, or such longer period of time as the
Arbiter determines is necessary. The Arbiter's determination
pursuant to this Section 2.2.4 shall be final, conclusive and
binding upon the Parties, absent manifest error. The fees and
expenses of the Arbiter shall be allocated to the Parties as
determined (as set forth in the final determination) by the
Arbiter based upon the relative success (in terms of percentages)
of each Party's claims. For example, if the final determination
reflects a 60%-40% determination of the Parties' claims, the
Arbiter would allocate expenses 40% to the Party whose claim was
determined to be 60% successful and 60% to the Party whose claim
was determined to be 40% successful. Buyer and Seller shall make
readily available to the Arbiter all relevant information, books
and records and any work papers relating to the Closing
Statements and all other items reasonably requested by the
Arbiter. In no event may the Arbiter's resolution of any
difference be for an amount which is outside the range of Buyer's
and Seller's disagreement.
2.2.4.4 Final Closing Statements. Each of the
Closing Statements shall become final, conclusive and binding
upon the Parties upon the earliest of (a) Seller's failure to
provide a Seller Objection within the period permitted under
Section 2.2.4.2, (b) the agreement between Buyer and Seller with
respect thereto, and (c) the decision by the Arbiter with respect
to any disputes under Section 2.2.4.3. The Closing Statements
(a) as submitted to Seller with its failure to object thereto
within the period permitted under Section 2.2.4.2, or (b) as
adjusted pursuant to the agreement of Seller and Buyer or (c) the
decision of the Arbiter, shall constitute the final, conclusive
and binding Closing Statements referred to herein as the "Final
Closing Statements."
2.2.4.5 Adjustment Amount. The Purchase Price
shall be adjusted as follows:
(a) If the Closing Net Working Capital is less
than the Estimated Closing Net Working Capital, the Purchase
Price shall be decreased by the amount by which the Closing Net
Working Capital is less than the Estimated Net Working Capital.
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(b) If the Closing Net Working Capital is greater
than the Estimated Closing Net Working Capital, the Purchase
Price shall be increased by the amount by which the Closing Net
Working Capital is greater than the Estimated Net Working
Capital, but in no event shall it be increased more than the
Initial Purchase Price Adjustment.
2.2.4.6 Adjustments to the Purchase Price. As soon
as practicable (but not more than five Business Days) after the
date on which the Final Closing Statements shall have been
determined in accordance with this Section 2.2.4, (a) Seller
shall pay to Buyer by wire transfer the amount, if any, by which
the adjustments to the Purchase Price pursuant to Section 2.2.4.5
result in a net decrease of the Purchase Price, which shall
constitute an immediate decrease of the Purchase Price in such
amount, or (b), as the case may be, Buyer shall pay to Seller,
the amount, if any, by which the adjustments to the Purchase
Price pursuant to Section 2.2.4.5 result in a net increase of the
Purchase Price, which shall constitute an immediate increase of
the Purchase Price in such amount.
2.3 The Closing. The Closing is occurring as of the date
of this Agreement (the "Closing Date").
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
SELLER
The Company and Seller, jointly and severally, represent and
warrant to Buyer as follows:
3.1 Corporate Status of the Company. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Virginia with the requisite
corporate power to own, operate and lease its properties and to
carry on its business as currently being conducted. Except as
set forth in Schedule 3.1, the Company is duly qualified or
licensed to do business as a foreign corporation and is in good
standing in all jurisdictions in which the character of the
properties owned or held under lease by the Company or the nature
of the business transacted by the Company makes qualification,
respectively, necessary. All jurisdictions in which the Company
is qualified to do business are set forth on Schedule 3.1.
3.2 Capital Stock of the Company.
3.2.1 Authorized Stock and Ownership. The
authorized capital stock of the Company consists of 5,000
shares of common stock, without par value, of which a total of
50 Shares are issued and outstanding. All of the Shares have
been duly authorized and validly issued, were not issued in
violation of any Person's preemptive rights, and are fully paid
and nonassessable. LKB Trust owns all of the Shares of record
and beneficially. Upon consummation of the Closing, Buyer will
own all of the Company's outstanding capital stock, free and
clear of any and all Encumbrances.
3.2.2 Options and Convertible Securities of the
Company. Except as set forth on Schedule 3.2.2, (a) there are
no outstanding subscriptions, options, warrants, conversion
rights or other rights, securities, agreements or commitments
obligating the Company to issue, sell or otherwise transfer any
of its capital stock, or any securities or obligations
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convertible into, or exercisable or exchangeable for, any
Shares or other capital stock of the Company, (b) since
December 31, 2001, the Company has not issued, sold, or
otherwise transferred of any of its capital stock and (c) there
are no voting trusts or other agreements or understandings to
which the Company or Seller is a party with respect to the
voting of the Shares, and the Company is not a party to or
bound by any outstanding restrictions, options or other
obligations, agreements or commitments to sell, repurchase,
redeem or acquire any outstanding Shares or other equity
securities of the Company.
3.3 No Subsidiaries. The Company does not have any
Subsidiaries and does not otherwise own or have a contractual
right or obligation to acquire any capital stock or other
securities of any Person.
3.4 Authority for Agreement; Noncontravention.
3.4.1 Authority. The Company has the corporate
power and authority to enter into and deliver this Agreement,
to perform its obligations hereunder and to consummate the
Transactions to the extent of its obligations hereunder.
Seller has full power and authority to enter into and deliver
this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of
this Agreement by the Company and its consummation of the
Transactions, to the extent of its obligations hereunder, has
been duly and validly authorized by the board of directors the
Company and no other corporate proceedings on the part of the
Company are necessary to authorize the execution and delivery
of this Agreement and the consummation of the Transactions, to
the extent of its obligations hereunder. This Agreement and,
when executed and delivered, the other agreements contemplated
hereby to be signed by the Company and Seller have been, or
with respect to such other agreements, will be duly executed
and delivered by the Company and Seller and constitute valid
and binding obligations of the Company and Seller enforceable
against the Company and Seller in accordance with their terms.
3.4.2 No Conflict. Except as set forth on Schedule
3.4.2, neither the execution and delivery of this Agreement or
the other agreements contemplated hereby to be signed by the
Company and Seller, nor the performance by the Company and
Seller of their respective obligations hereunder or thereunder,
nor the consummation by the Company, and Seller of the
Transactions, to the extent of their respective obligations
hereunder or thereunder, will (a) in respect of the Company and
Seller, conflict with or result in a violation of any provision
of their articles or certificates of incorporation or by-laws
or other organizational documents (collectively,
"Organizational Documents"), (b) with or without the giving of
notice or the lapse of time, or both, conflict with, or result
in any violation or breach of, or constitute a default under,
or result in any right to accelerate or result in the creation
of any Encumbrance pursuant to, or right of termination under,
any provision of any note, mortgage, indenture, lease,
instrument or other agreement, permit, concession, grant,
franchise, license, judgment, order, decree, statute,
ordinance, rule or regulation to which the Company or Seller is
a party or by which it or any of its assets or properties is
bound or which is applicable to it or any of its assets or
properties. Except as set forth in Schedule 3.4.2, no
authorization, consent or approval of, or filing with or notice
to, any Governmental Entity is necessary for the execution and
delivery of this Agreement or any or the other agreements
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contemplated hereby to be signed by the Company or Seller or
for the consummation of the Transactions by the Company and
Seller.
3.5 Financial Statements. Schedule 3.5 sets forth the
balance sheets of the Company as of December 31, 2007 (the
"Audited Balance Sheet") and 2006, statements of operations and
cash flow of the Company for the fiscal years ended December 31,
2007 and 2006, as audited by Argy, Xxxxxx & Xxxxxxxx, P.C.,
certified public accountants, and the unaudited balance sheet of
the Company as of February 29, 2008 (the "Balance Sheet Date")
and the unaudited statements of operations, net working capital
and cash flow for the two months then ended, and such balance
sheets and statements of operations, net working capital and cash
flow are accurate and complete. Collectively, the financial
statements referred to in the immediately preceding sentence are
sometimes referred to herein as the "Company Financial
Statements," and the Company's balance sheet as of February 29,
2008 is referred to herein as the "Company Balance Sheet." Each
of the balance sheets included in the Company Financial
Statements (including any related notes) fairly presents in all
material respects the financial position of the Company as of its
date, and the other statements included in the Company Financial
Statements (including any related notes) fairly present in all
material respects the statements of operations, net working
capital, and cash flow, as the case may be, of the Company for
the periods therein set forth, in each case in accordance with
GAAP subject, in the case of the Company's unaudited balance
sheet as of the Balance Sheet Date, to normal year-end audit
adjustments (all except as otherwise stated therein) and to the
fact that such unaudited balance sheet lacks footnotes and other
presentation items.
3.6 Absence of Material Adverse Changes. Since the Balance
Sheet Date, the Company has not suffered any Company Material
Adverse Effect, nor has there occurred or arisen any event,
condition or state of facts of any character that would
reasonably be expected to result in a Company Material Adverse
Effect. Except for the transactions referenced in Schedule 3.6,
since the Balance Sheet Date, there have been no dividends or
other distributions declared or paid in respect of, or any
repurchase or redemption by the Company of, any Common Stock or
other capital stock of the Company, or any commitment relating to
any of the foregoing.
3.7 Absence of Undisclosed Liabilities. The Company has no
liabilities or obligations, fixed, accrued, contingent or
otherwise (collectively, "Liabilities"), that are not fully
reflected or provided for on, or disclosed in the notes to, the
Company Balance Sheet, except (a) Liabilities incurred in the
ordinary course of business since the Company Balance Sheet Date,
none of which individually or in the aggregate has had or could
reasonably be expected to have a Company Material Adverse Effect,
(b) Liabilities expressly disclosed in Schedule 3.7, and (c)
except as disclosed on Schedule 3.7, obligations to perform after
the Closing Date any Company Contracts to which Company is a
party, but only to the extent such obligations first accrue after
the Closing Date and do not involve a breach or violation of such
Company Contract on or prior to the Closing Date.
3.8 Books and Records. The books of account, minute books,
stock record books and other records of the Company, all of which
have been made available to Buyer, are complete and correct in
all respects and have been maintained in accordance with sound
business practices. The actions reflected in the Company's
minute books are accurate and complete records of the meetings
reported in such minute books, and, except where the failure to
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do so will not have a Company Material Adverse Effect, no meeting
of any Company stockholders in their capacities as stockholders
of the Company, the Company's board of directors in their
capacities as directors (the "Company Board") or committee of the
Company Board has been held for which minutes have not been
prepared and are not contained in such minute books. At the
Closing, all of those books and records will be in the Company's
possession.
3.9 Accounts Receivable. All accounts receivable of the
Company that are reflected on the Company Balance Sheet, the
Closing Balance Sheet or on the Company's accounting records as
of the Closing Date (collectively, the "Accounts Receivable")
represented or represent valid obligations arising from sales
actually made or services actually performed in the ordinary
course of business. Unless paid prior to the Closing Date, the
Accounts Receivable as shown on the Closing Balance Sheet are, or
will be as of the Closing Date, to the Company's Knowledge and
Seller's Knowledge, collectible in an amount of not less than
ninety-nine percent thereof. As of the Closing Date, the average
"days aged" of Accounts Receivable shall not have increased by
more than five percent since February 29, 2008. There is no
contest, claim or right of set-off, other than returns in the
ordinary course of business, under any Company Contract with any
obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable. Schedule 3.9 contains a
complete and accurate list of all Accounts Receivable as of March
19, 2008, which list sets forth the aging of such Accounts
Receivable.
3.10 No 8(a) Certification; Compliance with Applicable Laws,
Organizational Documents. Except as otherwise set forth in
Schedule 3.10, the Company has all requisite licenses, and
permits from all Governmental Entities (collectively, "Permits")
necessary to conduct its business as currently conducted, and to
own, lease and operate its properties in the manner currently
held and operated. The Company is in compliance with all the
terms and conditions related to such Permits. There are no
proceedings in progress, pending or, to the Company's Knowledge
and Seller's Knowledge, threatened, which may result in
revocation, cancellation, suspension, or any adverse modification
of any of such Permits. Except as set forth in Schedule 3.10,
the Company's business has been since December 31, 2001, and is
currently being conducted in compliance with all Applicable Laws,
Permits or other authorizations of any Governmental Entity. The
Company is not in default or violation of any provision of its
Organizational Documents.
3.11 Litigation and Audits. Except for any claim, action,
suit or proceeding set forth on Schedule 3.11, (a) there is no
investigation by any Governmental Entity with respect to the
Company pending or, to the Company's Knowledge and Seller's
Knowledge, threatened, nor has any Governmental Entity indicated
to the Company an intention to conduct the same; (b) there is no
claim, action, suit, arbitration or proceeding pending or, to the
Company's Knowledge and Seller's Knowledge, threatened against or
involving the Company, or any of its assets or properties, at law
or in equity, or before any arbitrator or Governmental Entity and
(c) there are no judgments, decrees, injunctions or orders of any
Governmental Entity or arbitrator outstanding against the
Company.
3.12 Tax Matters.
3.12.1 Filing of Returns. The Company has prepared
and filed on a timely basis with all appropriate Governmental
Entities all returns in respect of Taxes that the Company is
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required to file on or prior to the Closing, and all such
returns are correct and complete. The Company has received no
claim in writing from any Governmental Entity in a jurisdiction
(domestic or foreign) where the Company does not file returns
in respect of Taxes that the Company is or may be subject to
taxation in such jurisdiction; and to the Company's Knowledge
and Seller's Knowledge, based on personal contact with any
agent of such Governmental Entities, no such Governmental
Entity has asserted or is considering asserting such a claim.
To the Company's Knowledge there are no ongoing audits of such
returns of Taxes. All deficiencies proposed in writing by any
Governmental Entity and agreed to by the Company (as opposed to
any deficiencies proposed in writing by any Governmental Entity
and being contested in good faith by the Company) as a result
of such audits have been paid.
3.12.2 Payment of Taxes. The Company has paid in
full all Taxes due and owing by it on or before the Closing
(whether or not shown on any Tax return) and, in the case of
Taxes accruing for the period ending on or before the Closing
that are not due on or before the Closing, the Company has made
adequate provision (not including any provision for deferred
Taxes established to reflect timing differences between book
and Tax income) in the Company's books and records and on the
face of its financial statements (rather than in any notes
thereto) for such payment. There are no Encumbrances on any of
the assets of the Company that arose in connection with any
failure (or alleged failure) to pay any Tax. Since the Balance
Sheet Date, the Company has not incurred any Liability for
Taxes arising from extraordinary gain or loss as that term is
used in GAAP, outside the ordinary cause of its business.
There is no dispute or claim concerning any Tax Liability of
the Company claimed or raised by any Governmental Entity in
writing or, to the Company's Knowledge or Seller's Knowledge,
orally. The Company has received no indication in writing from
any Governmental Entity that there exists any proposed tax
assessment against the Company; and to the Company's Knowledge
and Seller's Knowledge, there is no proposed tax assessment
against the Company.
3.12.3 Withholding. The Company has withheld from
each payment made or owing to any of its current or former
employees, officers, directors, independent contractors,
creditors, Seller, or other third party all amounts required by
Applicable Laws to be withheld and has, where required,
remitted such amounts within the applicable periods to the
appropriate Governmental Entities. All Forms W-2 and 1099
required to be filed by or on behalf of the Company have been
properly completed and timely filed. The Company has timely
paid all amounts required by Applicable Laws to be paid by the
Company to any Governmental Entity in respect of taxation of
Seller (or any former shareholder) on Seller's (or any such
former shareholder's) distributive share of the Company's
income. No portion of the Purchase Price is subject to the Tax
withholding provision of Code Section 3406 or Subchapter A of
chapter 3 of the Code or of any other Tax law.
3.12.4 Assessments. There are no assessments of the
Company with respect to Taxes that have been issued and are
outstanding. Since December 31, 2002, no Governmental Entity
has examined or audited the Company in respect of Taxes. Since
December 31, 2002, the Company has received no indication in
writing from any Governmental Entity (a) indicating an interest
to open an audit or review in respect of Taxes, (b) requesting
information relating to Tax matters, (c) noticing a deficiency
or proposed adjustment for any amount of Taxes proposed,
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asserted or addressed. The Company has not executed or filed
any agreement extending the period of assessment or collection
of any Taxes.
3.12.5 Access to Returns. Buyer has been provided
with a copy of or access to all federal, state, local and
foreign Tax returns filed by the Company since January 1, 2002.
Buyer has been provided with a copy of or access to all
assessments, extensions and waivers resulting from any audits
of the Company by a Governmental Entity in respect of Taxes,
and all such assessments and related penalties and interest
have been paid in full, except for immaterial amounts being
contested in good faith by the Company.
3.12.6 Miscellaneous Items. The Company is not a
party to any agreement, contract, arrangement or plan that has
resulted or could result (determined regardless of whether or
not the Company is or has been otherwise subject to the Code
Sections 280G or 162(m)), separately or in the aggregate, in
the payment of (a) any "excess parachute payment" within the
meaning of Code Section 280G (or any corresponding provision of
state, local or foreign law) and (b) any amount that will not
be fully deductible as a result of Code Section 162 (m) (or any
corresponding provisions of state, local or foreign Tax law).
The Company is not and has not been a member of an affiliated
group filing a consolidated federal income tax return. The
Company has no Liability for the Taxes of any Person other than
itself under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise.
3.12.7 No Tax Sharing Agreement. The Company is not
and never has been a party to or otherwise bound by any income
Tax-sharing agreement or similar agreement or, with respect to
Taxes other than income taxes, any tax-sharing or similar
Contract other than any Contract the primary purpose of which
is not the allocation or payment of Tax Liability and in which
such provisions regarding tax Liability are typical of such
type of Contracts. Any income Tax-sharing agreement or similar
agreement (and, with respect to Taxes other than income Taxes,
any Tax-sharing or similar Contract other than any Contract the
primary purpose of which is not the allocation or payment of
Tax Liability and in which such provisions regarding tax
Liability are typical of such type of Contracts) to which the
Company is, was or may have been a party shall be terminated as
of the Closing Date and shall have no further effect for any
taxable year (whether the current year, a future year or a past
year) so that after the Closing the Company shall not, except
as set forth on the face of the Closing Balance Sheet, have any
Liability under any income Tax-sharing agreement or similar
agreement (or, with respect to Taxes other than income Taxes,
any Tax-sharing or similar Contract other than any Contract the
primary purpose of which is not the allocation or payment of
Tax Liability and in which such provisions regarding tax
Liability are typical of such type of Contracts).
3.12.8 Certain Income Items and Deductions. The
Company will not be required to include any item of income in,
or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing
Date as a result of any:
(a) change in method of accounting for a taxable
period ending on or prior to the Closing Date;
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(b) "closing agreement" as described in Code
Section 7121 (or any corresponding or similar provision of state,
local or foreign income Tax law) executed on or prior to the
Closing Date;
(c) intercompany transactions or any excess loss
account described in Treasury Regulations under Code Section 1502
(or any corresponding or similar provision of state, local or
foreign income Tax law);
(d) installment sale or open transaction
disposition made on or prior to the Closing Date; or
(e) prepaid amount received on or prior to the
Closing Date.
3.12.9 Certain Stock Distributions. The Company has
not distributed stock of another Person, nor has had its stock
distributed by another Person, in a transaction that was
purported or intended to be governed in whole or in part by
Code Sections 355 or 361.
3.12.10 Affiliated Group. Each Affiliated Group of
which the Company is or was a member has filed all income Tax
Returns that it was required to file for each taxable period
during which the Company was a member of the group. All such
Tax Returns were correct and complete (a) in all respects
insofar as they relate to the Company and (b) in all material
respects insofar as they do not relate to the Company. All
income Taxes owed by any Affiliated Group (whether or not shown
on any Tax Return) have been paid for each taxable period
during which the Company was a member of the Affiliated Group.
3.12.11 Certain Disputes and Claims. Neither the
Company or Seller expects any Governmental Entity to assess any
additional income Taxes against any Affiliated Group for any
taxable period during which the Company was a member of the
Affiliated Group. There is no dispute or claim concerning any
income Tax Liability of any Affiliated Group for any taxable
period during which the Company was a member of the Affiliated
Group either (a) claimed or raised by any Governmental Entity
in writing or (b) to the Seller's Knowledge or the Company's
Knowledge based upon personal contact with any agent of such
Governmental Entity. No member of an Affiliated Group has
waived any statute of limitations in respect of any income
Taxes or agreed to any extension of time with respect to a
income Tax assessment or deficiency for any taxable period
during which the Company was a member of the Affiliated Group.
3.12.12 Code Section 382 Ownership Change. Neither
the Company nor Seller has undergone a Code Section 382
ownership change since December 31, 2000.
3.12.13 Unclaimed Property. The Company has no
assets that may constitute unclaimed property under Applicable
Laws. Without limiting the generality of the foregoing, the
Company has established and followed procedures to identify any
unclaimed property and, to the extent required by Applicable
Laws, remit such unclaimed property to the respective
Governmental Entity. The Company's records are adequate to
permit Governmental Entities or outside auditors to confirm the
foregoing representations and warranties of this Section
3.12.13.
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3.12.14 S Corporation Status. The Company shall not
be liable for any Tax under Code Section 1374 in connection
with the deemed sale of the Company's assets (including the
assets of any qualified subchapter S subsidiary) caused by the
Section 338(h)(10) Election. The Company (and any predecessor
of the Company) has been a validly electing "S Corporation"
within the meaning of Code Sections 1361 and 1362 ("S
Corporation") at all times since its (or, if earlier, any
predecessor's) formation, and the Company will be an S
Corporation up to and, if the Section 338(h)(10) Election is
made, including the Closing Date. Neither the Company nor any
of its predecessors has since September 30, 1982 (a) acquired
assets from another corporation in a transaction in which the
tax basis of the Company (or its predecessor, as the case may
be) for the acquired assets was determined, in whole or in
party, by reference to the tax basis of the acquired assets (or
any other property) in the hands of the transferor, or (b)
acquired the stock of any corporation that is a "qualified
subchapter S subsidiary" within the meaning of Code Section
1361 (b)(3)(B).
3.13 Employee Benefit Plans.
3.13.1 List of Plans. Schedule 3.13.1 contains a
correct and complete list of all pension, profit sharing,
retirement, deferred compensation, welfare, legal services,
medical, dental or other employee benefit or health insurance
plans, life insurance or other death benefit plans, disability,
stock option, stock purchase, stock compensation, bonus,
vacation pay, severance pay and other similar plans, programs
or agreements, relating to any Persons employed by the Company
or in which any Person employed by the Company is eligible to
participate and which is currently maintained or that was
maintained at any time since January 1, 2007, by the Company or
any ERISA Affiliate, or pursuant to which the Company has or
may reasonably be expected to have any Liability (collectively,
the "Company Plans"). The Company has made available to Buyer
complete copies, as of the date hereof, of all of the Company
Plans that have been reduced to writing, together with all
documents establishing or constituting any related trust,
annuity contract, insurance contract or other funding
instrument, and summaries of those that have not been reduced
to writing. The Company has made available to Buyer complete
copies of current plan summaries, employee booklets, personnel
manuals and other material documents or written materials
concerning the Company Plans that are in the possession of the
Company as of the date hereof. The Company does not have and
has never had any "defined benefit plans" as defined in ERISA
Section 3(35).
3.13.2 ERISA. Neither the Company nor any ERISA
Affiliate of the Company has incurred any "withdrawal
liability" calculated under Code Section 4211 and there has
been no event or circumstance which would cause them to incur
any such Liability. Neither the Company nor any ERISA
Affiliate of the Company has ever maintained a Company Plan
providing health or life insurance benefits to former
employees, other than as required pursuant to Code Section
4980B or to any state law conversion rights. No Company Plan
previously maintained by the Company or its ERISA Affiliates
which was subject to ERISA has been terminated; no proceedings
to terminate any such plan have been instituted within the
meaning of Subtitle C of Title IV of ERISA; and no reportable
event within the meaning of Section 4043 of said Subtitle C of
Title IV of ERISA with respect to which the requirement to file
a notice with the Pension Benefit Guaranty Corporation has not
been waived has occurred with respect to any such Company Plan,
and no Liability to the Pension Benefit Guaranty Corporation
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has been incurred by the Company or its ERISA Affiliates. With
respect to all the Company Plans, the Company and every ERISA
Affiliate of the Company is in compliance with all requirements
prescribed by all Applicable Laws, and has in all respects
performed all obligations required to be performed by it.
Neither the Company nor any ERISA Affiliate of the Company, nor
any of their directors, officers, employees or agents, nor, to
the Company's Knowledge, any trustee or administrator of any
trust created under the Company Plans, has engaged in or been a
party to any "prohibited transaction" as defined in Code
Section 4975 which could subject the Company or its Affiliates,
directors or employees or the Company Plans or the trusts
relating thereto or any party dealing with any of the Company
Plans or trusts to any tax or penalty on "prohibited
transactions" imposed by Code Section 4975. Neither the
Company Plans nor the trusts created thereunder have incurred
any "accumulated funding deficiency," as such term is defined
in Code Section 412 and regulations issued thereunder, whether
or not waived.
3.13.3 Plan Determinations. Each Company Plan
intended to qualify under Code Section 401(a) has been
determined by the Internal Revenue Service ("IRS") to so
qualify, and the trusts created thereunder have been determined
to be exempt from Tax under Code Section 501(a); copies of all
determination or opinion letters which have been received by
the Company have been delivered to Buyer, and Seller has not
taken any action, or received any notification of any action
taken by any other Person since the date of such determination
or opinion letters which might cause the loss of such
qualification or exemption. With respect to each Company Plan
which is a qualified profit sharing plan, all employer
contributions accrued for plan years ending prior to the
Closing under the Company Plan terms and Applicable Laws have
been made.
3.13.4 Funding. Except as set forth on Schedule
3.13.4:
(a) all contributions, premiums or other payments
due or required to be made to the Company Plans as of the date
hereof have been made as of the date hereof or are properly
reflected on the Company Balance Sheet;
(b) there are no actions, liens, suits or claims
(other than routine claims for benefits) pending or, to the
Company's Knowledge and Seller's Knowledge, threatened with
respect to any Company Plan;
(c) no event has occurred, and there exists no
condition or set of circumstances, which presents a material risk
of a partial termination (within the meaning of Code Section
411(d)(3)) of any Company Plan;
(d) each Company Plan that is a "group health
plan" (as defined in Section 607(1) of ERISA) has been operated
at all times in substantial compliance with the provisions of
COBRA and any applicable, similar state law; and
(e) with respect to any Company Plan that is
qualified under Code Section 401(k), individually and in the
aggregate, no event has occurred, and there exists no condition
or set of circumstances in connection with which the Company
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could be subject to any Liability (except Liability for benefits
claims and funding obligations payable in the ordinary course)
under ERISA, the Code or any other Applicable Laws.
3.13.5 Welfare Plans. With respect to any Company
Plan that is an employee welfare benefit plan (within the
meaning of Section 3(1) of ERISA) (a "Welfare Plan"), (a) each
Welfare plan for which contributions are claimed by the Company
as deductions under any provision of the Code is in compliance
with all applicable requirements pertaining to such deduction,
(b) with respect to any welfare benefit fund (within the
meaning of Code Section 419 related to a Welfare Plan, there is
no disqualified benefit (within the meaning of Code Section
4976(b) that would result in the imposition of a Tax under Code
Section 4976(a), (c) any Company Plan that is a group health
plan (within the meaning of Code Section 4980B(g)(2) complies,
and in each and every case has complied, with all of the
applicable material requirements of COBRA, the Family Medical
Leave Act of 1993, the Health Insurance and Portability and
Accountability Act of 1996, the Women's Health and Cancer
Rights Act of 1996, the Newborns' and Mothers' Health
Protection Act of 1996, and any similar provisions of state law
or foreign law applicable to employees of the Company or any
ERISA Affiliate of Company. None of the Company Plans promises
or provides retiree medical or other retiree welfare benefits
to any Person except as required by Applicable Laws, and
neither the Company nor ERISA Affiliate of the Company has
represented, promised or contracted (whether in oral or written
form) to provide such retiree benefits to any employee, former
employee, director, consultant or other Person, except to the
extent required by statue. No Company Plan or employment
agreement provides health benefits that are not insured through
an insurance contract. Except as set forth on Schedule 3.13.5,
each Company Plan is amendable and terminable unilaterally by
the Company at any time without Liability to the Company as a
result thereof (except for the usual and ordinary
administrative costs related thereto) and no Company Plan, plan
documentation or agreement, summary plan description or other
written communication distributed generally to employees by its
terms prohibits the Company from amending or terminating any
such Company Plan.
3.14 Employment-Related Matters.
3.14.1 Labor Relations. Except to the extent set
forth on Schedule 3.14.1: (a) the Company is not a party to any
collective bargaining agreement or other contract or agreement
with any labor organization or other representative of any of
the employees of the Company; (b) there is no labor strike,
dispute, slowdown, work stoppage or lockout that is pending or,
to the Company's Knowledge and Seller's Knowledge, threatened
against or otherwise affecting the Company, and the Company has
not experienced the same; (c) except as has occurred in the
ordinary course of the Company's business without any resulting
Liability of the Company, the Company has not closed any plant
or facility, effectuated any layoffs of employees or
implemented any early retirement or separation program at any
time, nor has the Company planned or announced any such action
or program for the future with respect to which the Company has
any Liability; and (d) all salaries, wages, vacation pay,
bonuses, commissions and other compensation due from the
Company to the employees of the Company before the date hereof
have been paid or accrued as of the date hereof.
3.14.2 Employee List. Set forth on Schedule 3.14.2
is a list containing the name of each employee of the Company,
whether full-time or part time, and each such employee's
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position, starting employment date and annual salary as of the
date indicated thereon ("Employee List"). The Employee List is
correct and complete as of the date of the Employee List. No
third party has asserted in writing any claim, or, to the
Company's Knowledge and Seller's Knowledge, has any reasonable
basis to assert any valid claim, against the Company that
either the continued employment by, or association with, the
Company of any of the current officers or employees of, or
consultants to, the Company contravenes any agreements or
Applicable Laws regarding unfair competition, trade secrets or
proprietary information.
3.15 Environmental.
3.15.1 Environmental Laws. (a) The Company is in
compliance with all applicable Environmental Laws in effect on
the date hereof; (b) the Company has not received any written
communication that alleges that the Company is not in
compliance with all applicable Environmental Laws in effect on
the date hereof; (c) there are no circumstances that may
prevent or interfere with compliance in the future with all
applicable Environmental Laws; (d) all Permits and other
Governmental Entity authorizations currently held by the
Company pursuant to the Environmental Laws are in full force
and effect, the Company is in compliance with all of the terms
of such Permits and authorizations, and no other Permits or
authorizations are required by the Company for the conduct of
its business on the date hereof; and (e) the management,
handling, storage, transportation, treatment, and disposal by
the Company of all Materials of Environmental Concern has been
in compliance with all applicable Environmental Laws.
3.15.2 Environmental Claims. There is no
Environmental Claim pending or, to the Company's Knowledge and
Seller's Knowledge, threatened against or involving the Company
or against any Person whose Liability for any Environmental
Claim the Company has or may have retained or assumed either
contractually or by operation of law.
3.15.3 No Basis for Claims. To the Company's
Knowledge and Seller's Knowledge, there are no past or current
actions or activities by the Company, or any circumstances,
conditions, events or incidents, including the storage,
treatment, release, emission, discharge, disposal or
arrangement for disposal of any Material of Environmental
Concern, whether or not by the Company, that could reasonably
form the basis of any Environmental Claim against the Company
or against any Person whose Liability for any Environmental
Claim the Company may have retained or assumed either
contractually or by operation of law, including the storage,
treatment, release, emission, discharge, disposal or
arrangement for disposal of any Material of Environmental
Concern or any other contamination or other hazardous
condition, whether caused by the Company or not related to the
premises at any time occupied by the Company. Without limiting
the generality of the foregoing, the Company has not received
any notices, demands, requests for information, investigations
pertaining to compliance with or Liability under Environmental
Law or Materials of Environmental Concern, nor, to the
Company's Knowledge and Seller's Knowledge, are any such
notices, demands, requests for information or investigations
threatened.
-14-
3.15.4 Disclosure of Information. The Company has
made available to Buyer all environmental investigations,
studies, audits, tests, reviews and other analyses conducted in
relation to Environmental Laws or Materials of Environmental
Concern pertaining to the Company or any property or facility
now or previously owned, leased or operated by the Company that
are in the possession, custody, or control of the Company.
3.15.5 Encumbrances. No Encumbrance relating to or
in connection with any Environmental Claim, Environmental Law,
or Materials of Environmental concern has been filed or has
been attached to any of the property or assets which are owned,
leased or operated by the Company.
3.15.6 Transportation of Materials of Environmental
Concern. Since December 31, 2001, the Company has not used,
handled, generated, produced, manufactured, treated, stored,
disposed of, recycled or transported any Materials of
Environmental Concern, whether on behalf of the Company or any
other Person, in violation of any Environmental Laws, and there
has been no Release or threatened Release of any Materials of
Environmental Concern beneath or from any real property
operated or formerly owned or operated by the Company.
3.16 No Broker's or Finder's Fees. The Company has not paid
or become obligated to pay any fee or commission to any broker,
finder, financial advisor, intermediary or other Person in
connection with the Transactions and giving effect to the
consummation of the Closing will not cause the Company to be so
obligated.
3.17 Assets Other Than Real Property.
3.17.1 Title. The Company has good, valid and
marketable title to all of the tangible assets shown on the
Company Balance Sheet, in each case, free and clear of any
Encumbrance, except for (a) assets disposed of since Balance
Sheet Date in the ordinary course of business and in a manner
consistent with past practices, (b) Liabilities and
Encumbrances reflected in the Company Balance Sheet or
otherwise in the Company Financial Statements, (c) Permitted
Encumbrances, and (d) Liabilities and Encumbrances set forth on
Schedule 3.17.1.
3.17.2 Closing Date Assets.
(a) As of the Closing Date, the Company will have
good, valid and marketable title to all of its assets, including
those assets shown on the Final Closing Balance Sheet, in each
case free and clear of any Encumbrances other than Permitted
Encumbrances.
(b) The Company's inventory has been paid for by
the Company, consists of a quality and quantities which are
usable and saleable upon customary terms and conditions in the
ordinary course of business and meet all customer and warranty
standards and requirements.
(c) Schedule 3.17.2(c) lists all tangible
personal property (other than Inventory) which is owned by the
Company. Considered as a whole, such personal property is in
satisfactory operating condition, subject to ordinary wear, tear,
and obsolescence.
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(d) The Company's assets include all right, title
and interest in and to all assets that are used in or that are
being held for use or are otherwise necessary in the operation,
as currently conducted by the Company, of its business.
(e) Schedule 3.17.2(e) contains a complete and
correct list of all Governmental Entity-owned property or
Governmental Entity-furnished equipment, including tooling and
test equipment, provided under, necessary to perform the
obligation under, or for which the Company could be held
accountable under, the Government Contracts and such Governmental
Entity-owned property is maintained by the Company in accordance
with government-approved property management system.
3.17.3 Condition. All facilities, equipment and
personal property owned by the Company and regularly used in
its business is in satisfactory operating condition and repair,
ordinary wear and tear excepted, which wear and tear, taken in
the aggregate, is not material to the Company and does not
affect the Company's obligations to consummate the Transactions
and otherwise perform under this Agreement.
3.18 Real Property.
3.18.1 Company Real Property. The Company does not
own and has never owned any real property.
3.18.2 Company Leases. Schedule 3.18.2 lists all of
the Company Leases. Complete copies of the Company Leases, and
all material amendments thereto (which are identified on
Schedule 3.18.2) have been made available by the Company to
Buyer. The Company Leases grant leasehold estates free and
clear of all Encumbrances (except Permitted Encumbrances)
granted by or caused by the actions of the Company. The
Company Leases are in full force and effect and are binding and
enforceable against each of the parties thereto in accordance
with their respective terms and conditions. Neither the
Company nor, to the Company's Knowledge and Seller's Knowledge,
any other Person to a Company Lease, has committed a breach or
default under any Company Lease, nor has there occurred any
event that with the passage of time or the giving of notice or
both would constitute such a breach or default. Schedule
3.18.2 identifies each Company Lease the provisions of which
would be adversely affected by the Transactions and each
Company Lease that requires the consent of any third Person in
connection with the Transactions. No construction, alteration
or other leasehold improvement work with respect to the real
property covered by any of the Company Leases remains to be
paid for or to be performed by the Company. Except as set
forth on Schedule 3.18.2, no Company Leases have an unexpired
term which, including any renewal or extensions of such term
provided for in the Company Lease, could exceed 365 days.
3.18.3 Condition. All leasehold improvements and
fixtures, or parts thereof, used by the Company in the conduct
of its business are in satisfactory operating condition and
repair, ordinary wear and tear excepted, and are insured with
coverages that are usual and customary for similar properties
and similar businesses or are required, pursuant to the Company
Leases, to be insured by third Persons.
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3.19 Contracts, Agreements and Commitments.
3.19.1 Company Contracts. Except as set forth on
Schedule 3.19.1, the Company is not a party to:
(a) any bonus, deferred compensation, pension,
severance, profit-sharing, stock option, employee stock purchase
or retirement plan, Contract or arrangement or other employee
benefit plan or arrangement;
(b) any employment Contract with any current
employee, officer, director or consultant (or former employees,
officers, directors and consultants to the extent there remain at
the date hereof obligations to be performed by the Company);
(c) any Company Contract for personal services or
employment with a term of service or employment specified in the
Contract or any Contract for personal services or employment in
which the Company has agreed on the termination of such Contract
to make any payments greater than those that would otherwise be
imposed by Applicable Laws;
(d) any Company Contract of guarantee or
indemnification;
(e) any Company Contract containing a covenant
limiting or purporting to limit the freedom of the Company to
compete with any Person in any geographic area or to engage in
any line of business;
(f) any lease other than the Company Leases under
which the Company is lessee that involves, in the aggregate,
payments of $25,000 or more per annum, or of $50,000 or more for
the remaining term of the Company Lease or is material to the
conduct of the Company's business;
(g) any joint venture or profit-sharing Company
Contract or similar Contract ;
(h) except for trade indebtedness incurred in the
ordinary course of business and equipment leases entered into in
the ordinary course of business, any loan or credit Contract
providing for the extension of credit to the Company or any
instrument evidencing or related in any way to indebtedness
incurred in the acquisition of companies or other entities or
indebtedness for borrowed money by way of direct loan, sale of
debt securities, purchase money obligation, conditional sale,
guarantee, or otherwise that individually is in the amount of
$25,000 or more;
(i) any license Contract, either as licensor or
licensee, involving payments (including past payments) of $25,000
in the aggregate or more, or any material distributor, dealer,
reseller, franchise, manufacturer's representative, or sales
agency or any other similar material Contract;
(j) any Company Contract granting exclusive
rights to, or providing for the sale of, all or any portion of
the Company Proprietary Rights;
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(k) any Company Contract or arrangement providing
for the payment of any commission or similar payment based on
sales or contract awards other than to employees of the Company;
(l) any Company Contract for the sale by the
Company of materials, products, services or supplies that
involves future payments to the Company of more than $25,000;
(m) other than the Company Leases, any Company
Contract for the purchase by the Company of any materials,
equipment, services, or supplies that either (i) involves a
binding commitment by the Company to make future payments in
excess of $25,000 and cannot be terminated by it without penalty
upon 30 days or less notice or (ii) was not entered into in the
ordinary course of business;
(n) any Company Contract or arrangement with any
third Person for such third party to develop any intellectual
property or other asset expected to be used or currently used or
useful in the Company's business;
(o) any Company Contract or commitment for the
acquisition, construction or sale of fixed assets owned or to be
owned by the Company that involves future payments by it of more
than $25,000;
(p) any Company Contract or commitment to which
current or former directors, officers or Affiliates of the
Company (or directors or officers of an Affiliate of the Company)
are also parties;
(q) any Company Contract not described above
(ignoring, solely for this purpose, any dollar amount thresholds
in those descriptions) involving the payment or receipt by the
Company of more than $100,000, other than the Company Leases;
(r) any Company Contract not described above that
was not made in the ordinary course of business and that is
material to the Company's financial condition, business,
operations, assets, results of operations; or
(s) any Company Contract that provides for any
continuing or future obligation of the Company, involving
Liability of the Company of more than $25,000, actual or
contingent, including any continuing representation or warranty
and any indemnification obligation, in connection with the
disposition of any business or assets of the Company.
3.19.2 Validity. All Company Contracts, including
the Company Contracts required to be set forth on Schedule
3.19.1 are valid and in full force and effect. Since January
1, 2005, the Company has not, nor, to the Company's Knowledge,
has any other party thereto, breached any provision of, or
defaulted under the terms of any such Contract except as set
forth on Schedule 3.19.2 or have been cured or waived, and the
Company has not received any "notice to cure" or a similar
notice from any Governmental Entity requesting performance
under any Contract between the Company and such Governmental
Entity.
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3.19.3 Third-Party Consents. Schedule 3.19.3
identifies each Contract and other document that requires that
notice be provided to a third Person or the consent of a third
Person, including Governmental Entities, in connection with the
Transactions.
3.20 Intellectual Property.
3.20.1 Right to Intellectual Property. Except as
set forth on Schedule 3.20.1, the Company owns, or has, fully
paid, rights to use, all patents, trademarks, trade names,
service marks, copyrights, and any applications therefore,
maskworks, net lists, schematics, technology, know-how,
computer software programs or applications (in both source code
and object code form), and tangible or intangible proprietary
information or material (excluding Commercial Software) that
are used in the business of the Company as currently conducted
(the "Company Proprietary Rights"). The Commercial Software
used in the Company's business has been acquired and used by
the Company on the basis of and in accordance with a valid
license from the manufacturer or the dealer authorized to
distribute such Commercial Software, free and clear of any
claims or rights of any third parties. The Company is not in
breach of any of the terms and conditions of any such license
and has not been infringing upon any rights of any third
parties in connection with its acquisition or use of the
Commercial Software.
3.20.2 No Conflict.
(a) Set forth on Schedule 3.20.2 is a complete
list of all patents, trademarks, registered copyrights, trade
names and service marks, and any applications therefore, included
in the Company Proprietary Rights, specifying, where applicable,
the jurisdictions in which each such Company Proprietary Right
has been issued or registered or in which an application for such
issuance and registration has been filed, including the
respective registration or application numbers and the names of
all registered owners.
(b) None of the Company's currently marketed
software products has been registered for copyright protection
with the United States Copyright Office or any foreign offices
nor has the Company been requested to make any such registration.
(c) Set forth on Schedule 3.20.2(c) is a complete
list of all material licenses, sublicenses and other Contracts as
to which the Company is a party and pursuant to which the Company
or any other Person is authorized to use any Company Proprietary
Right (excluding "end-user licenses") or other trade secret
material to the business of the Company, and includes the
identity of all parties thereto, a description of the nature and
subject matter thereof, the applicable royalty and the term
thereof.
(d) The Company is not in violation of any
license, sublicense or other Contract described on such list
except such violations as do not materially impair the Company's
rights under such license, sublicense or agreement.
(e) The execution and delivery of this Agreement
by the Company, and the consummation of the Transactions, will
neither cause the Company to be in violation or default under any
such license, sublicense or other Contract, nor entitle any other
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party to any such license, sublicense or agreement to terminate
or modify such license, sublicense or other Contract.
(f) Except as set forth on Schedule 3.20.2(f),
the Company is the sole and exclusive owner or licensee of, with
all right, title and interest in and to (free and clear of any
and all Encumbrances), the Company Proprietary Rights, and has
sole and exclusive rights (and is not contractually obligated to
pay any compensation to any third party in respect thereof) to
the use thereof or the material covered thereby in connection
with the services or products in respect of which the Company
Proprietary Rights are being used.
(g) Except as set forth on Schedule 3.20.2(g), no
claims with respect to the Company Proprietary Rights have been
asserted or, to the Company's Knowledge and Seller's Knowledge,
are threatened by any Person nor, to the Company's Knowledge and
Seller's Knowledge, are there any valid grounds for any bona fide
claims to the effect that the manufacture, sale, licensing or
use of any of the products of the Company as currently
manufactured, sold or licensed or used or proposed for
manufacture, use, sale or licensing by the Company infringes on
any copyright, patent, trademark, service xxxx or trade secret,
against the use by the Company of any trademarks, service marks,
trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in
the Company's business as currently conducted or as proposed to
be conducted by the Company, or challenging the ownership by the
Company, or the validity or effectiveness of any of the Company
Proprietary Rights.
(h) The Company has no material registered
trademarks, service marks and copyrights.
(i) To the Company's Knowledge and Seller's
Knowledge, there is no material unauthorized use, infringement or
misappropriation of any of the Company Proprietary Rights by any
third party, including any employee or former employee of the
Company.
(j) No Company Proprietary Right or product of
the Company is subject to any outstanding decree, order,
judgment, or stipulation restricting in any manner the licensing
thereof by the Company.
(k) Except as set forth on Schedule 3.20.2(k),
the Company has not entered into any agreement under which the
Company is restricted from selling, licensing or otherwise
distributing any of its products to any class of customers, in
any geographic area, during any period of time or in any segment
of the market.
(l) The Company's products, packaging and
documentation contain copyright notices sufficient to maintain
copyright protection on the copyrighted portions of the Company
Proprietary Rights.
3.20.3 Employee Agreements. Except as set forth on
Schedule 3.20.3(a), each employee and officer of the Company
has executed a confidentiality agreement in substantially the
form of Schedule 3.20.3(b) and each consultant has entered into
a consulting agreement in substantially the form of Schedule
3.20.3(c). To the Company's Knowledge, no employee, officer or
consultant of the Company is in violation of any employment or
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consulting contract, proprietary information and inventions
agreement, non-competition agreement, or any other contract or
agreement relating to the relationship of any such employee,
officer or consultant with the Company or any previous
employer.
3.21 Insurance Contracts. Schedule 3.21 lists all contracts
of insurance and indemnity in force at the date hereof with
respect to the Company. Such contracts of insurance and
indemnity and those shown in other Schedules (collectively, the
"Company Insurance Contracts") insure against such risks, and are
in such amounts, as are disclosed on such Schedules. All of the
Company Insurance Contracts are in full force and effect, and to
the Company's Knowledge and Seller's Knowledge, there are no
defaults thereunder by the Company which could permit the insurer
to deny payment of claims thereunder. The Company has not
received notice from any of its insurance carriers that any
insurance premiums will be materially increased in the future or
that any insurance coverage provided under the Company Insurance
Contracts will not be available in the future on substantially
the same terms as now in effect. The Company has not received or
given a notice of cancellation with respect to any of the Company
Insurance Contracts.
3.22 Banking Relationships. Schedule 3.22 shows the names
and locations of all banks, trust companies and other financial
institutions in which the Company has accounts, lines of credit
or safety deposit boxes and, with respect to each account, line
of credit or safety deposit box, the names of all Persons
authorized to draw thereon or to have access thereto.
3.23 No Contingent Liabilities. The Company has no
contingent or conditional Liabilities of any kind arising from or
in connection with any acquisition of a Person or a line of
business by the Company.
3.24 Absence of Certain Relationships. Except as set forth
on Schedule 3.24, to the Company's Knowledge and Seller's
Knowledge none of (a) the Company, (b) any officer of the
Company, (c) Seller, or (d) any member of the immediate family of
the individuals listed in clauses (b) or (c) of this Section
3.24, has any financial or employment interest in any
subcontractor, supplier, or customer of the Company (other than
equity holdings in publicly held companies of less than two
percent of the outstanding capital stock of any such publicly
held company).
3.25 Sensitive Payments. Neither the Company nor any
Affiliate of the Company, nor any other Person associated with or
acting for or on behalf of the any of the foregoing, has directly
or indirectly taken any action which would cause the Company to
be in violation of the United States Foreign Corrupt Practices
Act of 1977, as amended. Neither the Company, nor any Affiliate
of the Company, nor any other Person associated with or acting
for or on behalf of any of the foregoing, has directly or
indirectly (a) made any contribution, gift, bribe, rebate,
payoff, influence payment, kick-back, or other payment to any
Person, private or public, regardless of form, whether in money,
property or services (i) to obtain favorable treatment in
securing business, (ii) to pay for favorable treatment for
business secured, (iii) to obtain special concessions or for
special concessions already obtained, for or in respect of the
Company or any Affiliate of the Company, or (iv) in violation of
any Applicable Laws, or (b) established or maintained any fund or
asset that has not been recorded in the Company's books and
records.
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3.26 Government Contracts.
3.26.1 Generally. Each Company Contract and other
Company Engagement that is a Government Contract (each an
"Active Government Contract") is listed on Schedule 3.26.1(a)
and identified as a Government Contract. Each Company
Completed Engagement that is or was a Government Contract is
referred to herein as a "Completed Government Contract." Also
listed on Schedule 3.26.1(a) and identified as a Government Bid
is each outstanding quotation bid or proposal for a Government
Contract involving the Company's business. Listed on Schedule
3.26.1(b) is each Active Government Contract under which to the
Company's Knowledge and Seller's Knowledge, the Company
currently is experiencing, or is likely to experience either
cost, schedule, technical or quality problems.
3.26.2 Bids and Awards. To the Company's Knowledge
and Seller's Knowledge except as set forth on Schedule 3.26.2,
(a) each Active Government Contract and each Completed
Government Contract (collectively, the "Government Contracts")
was legally awarded, (b) no such Active Government Contract
(or, where applicable, the prime contract with the United
States Government under which such Government Contract was
awarded) is the subject of bid or award protest proceedings,
and (c) no such Active Government Contract (or, where
applicable, the prime contracts with the United States
Government under which such Government Contract was awarded) is
reasonably likely to become the subject to bid or award protest
proceedings. Except as set forth on Schedule 3.26.2, to the
Company's Knowledge and Seller's Knowledge, no facts exist
which would reasonably be expected give rise to a claim for
price adjustment under the Truth in Negotiations Act or to any
other request for a reduction in the price of any Government
Contracts.
3.26.3 Compliance with Law and Regulation and
Contractual Terms; Inspection and Certification. Except as set
forth on Schedule 3.26.3, the Company has complied with all
applicable statutory and regulatory requirements pertaining to
the Government Contracts to which it is a party, including the
Armed Services Procurement Act, the Federal Property and
Administrative Services Act, the Federal Acquisition Regulation
(the "FAR"), the FAR cost principles, and the Cost Accounting
Standards. To the Company's Knowledge and Seller's Knowledge,
the Company has complied with all terms and conditions,
including all clauses, provisions, specifications, and quality
assurance, testing and inspection requirements of the
Government Contracts, whether incorporated expressly, by
reference or by operation of Applicable Law. To the Company's
Knowledge and Seller's Knowledge, all facts set forth in or
acknowledged by any representations, certifications or
disclosure statements made or submitted by or on behalf of the
Company in connection with any Government Contract and its
quotations, bids and proposals for Government Contracts were
current, accurate and complete as of the date of their
submission. To the Company's Knowledge and Seller's Knowledge,
the Company has complied with all applicable representations,
certifications and disclosure requirements under all Government
Contracts and each of its quotations, bids and proposals for
Government Contracts. To the Company's Knowledge and Seller's
Knowledge, no facts exist which could reasonably be expected to
give rise to Liability to the Company under the False Claims
Act which would reasonable be expected to result in a Company
Liability. Except as described in Schedule 3.26.3, the Company
has not undergone and is not undergoing any, review,
inspection, investigation, survey or examination of records
relating to any Government Contract. No audit, review,
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inspection, investigation, survey or examination of records
described in Schedule 3.26.3 has revealed any fact, occurrence,
or practice which would reasonably be expected to adversely
affect the assets, business or financial statement of the
Company, or its continued eligibility to receive and perform
Government Contracts. To the Company's Knowledge and Seller's
Knowledge, the Company has not made any payment, directly or
indirectly, to any Person in violation of Applicable Laws,
including laws relating to bribes, gratuities, kickbacks,
lobbying expenditures, political contributions and contingent
fee payments. To the Company's Knowledge and Seller's
Knowledge, the Company has complied with all applicable
requirements under each Government Contract relating to the
safeguarding of and access to classified information. The
Company's cost accounting purchasing, inventory and quality
control systems are in compliance with all applicable
government procurement statutes and regulations and with the
requirements of the Government Contracts.
3.26.4 Disputes, Claims and Litigation. Except as
described in Schedule 3.26.4, to the Company's Knowledge and
Seller's Knowledge, there are neither outstanding claims or
disputes against the Company relating to any Government
Contract nor any facts or allegations that would reasonably be
expected to give rise to such a claim or dispute in the future.
Except as described in Schedule 3.26.4, to the Company's
Knowledge and Seller's Knowledge, there are neither any
outstanding claims or disputes relating to any Government
Contract which, if resolved unfavorably to the Company, would
increase by five percent or more the Company's cost to complete
performance of any task order under such Government Contract
above the amounts set forth in the estimates to complete
previously prepared by the Company and delivered to Buyer for
the Government Contract, nor any reasonably foreseeable
expenditures which would increase by five percent or more the
cost to complete performance of any task order under Government
Contract above the amounts set forth in the estimates to
complete described above. The Company has not been nor is
currently under any administrative, civil or criminal
investigation or indictment disclosed to the Company involving
alleged false statements, false claims or other misconduct
relating to any Government Contract or quotations, bids and
proposals for Government Contracts, and to the Company's
Knowledge and Seller's Knowledge, there is no basis for any
such investigation or indictment. The Company has not been nor
is currently a party to any administrative or civil litigation
involving alleged false statements, false claims or other
misconduct relating to any Government Contract or quotations,
bids and proposals for Government Contracts, and to the
Company's Knowledge and Seller's Knowledge, there is no basis
for any such proceeding. Except as described in Schedule
3.26.4, neither the United States Government nor any prime
contractor or higher-tier subcontractor under a Government
Contract has withheld or set off, or attempted to withhold
(other than the hold-backs pursuant to contracts in the
ordinary course of business) or set-off, material amounts of
money otherwise acknowledged to be due to the Company under a
Government Contract. Except as described in Schedule 3.26.4,
neither the United States Government nor any prime contractor
or higher-tier subcontractor under an Active Government
Contract has questioned or disallowed any material costs
claimed by the Company under any Government Contract, and to
the Company's Knowledge and Seller's Knowledge, there is no
fact or occurrence that would reasonably be expected to be a
basis for disallowing any such costs.
3.26.5 Sanctions. Neither the United States
Government nor any prime contractor or higher-tier
subcontractor under a Government Contract nor any other Person
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has notified the Company, of any actual or alleged violation or
breach of any statute, regulation, representation,
certification, disclosure obligation, contract term, condition,
clause, provision or specification except where such violation
or breach would reasonably be expected to be immaterial.
Except as set forth on Schedule 3.26.5, the Company has not
received any show cause, cure, deficiency, default or similar
notices relating to any Government Contract. Neither the
Company nor any director, officer, employee, consultant or
Affiliate thereof has been or is not currently suspended,
debarred or, to the Company's Knowledge and Seller's Knowledge,
proposed for suspension or debarment from contracting with any
Governmental Entities, and to the Company's Knowledge and
Seller's Knowledge, no facts exist which could cause or give
rise to such suspension or debarment or proposed suspension or
debarment. No determination of non-responsibility has ever
been issued against the Company with respect to any quotation,
bid or proposal for a Government Contract.
3.26.6 Terminations. Except as set forth on
Schedule 3.26.6, no Company Government Contract relating to the
Company's business has been terminated for default or
convenience since December 31, 2001. The Company has not
received any notice in writing terminating or indicating an
intent to terminate any active Government Contract for
convenience.
3.26.7 Within the Scope. Except as set forth in
Schedule 3.26.7, there has been no allegation, charge or
finding ( internal or external to the Company), or, to
Company's Knowledge and Seller's Knowledge, investigation or
report (internal or external to the Company) since December 31,
2003 to the effect that the Company has been, or may have been,
a party, to any task order or delivery order, under a multiple
award schedule contract or any other Government Contract, where
the goods or services purchased, or identified to be purchased,
by a Government Entity under such task order or delivery order
are or were not reasonably within the statement of work
contained in the multiple award schedule contract or other
government Contract under which the task order or delivery
order was issued.
3.26.8 Assignments. Except as set forth on Schedule
3.26.8, the Company has not made any assignment of any
Government Contract or of any right, title or interest in or to
any Company Government Contract to any Person. The Company has
not entered into any financing arrangements with respect to the
performance of any Government Contract.
3.26.9 Property. The Company is in compliance with
all Applicable Laws with respect to the possession and
maintenance of all government-furnished property (as defined in
the FAR).
3.26.10 National Security Obligations. The Company
is in compliance with all Applicable Laws regarding national
security, including those obligations specified in the National
Industrial Security Program Operating Manual, DOD 5220.22-M
(February 2006), and any supplements, amendments or revised
editions thereof.
3.26.11 Credentials. To the Company's Knowledge and
Seller's Knowledge, each Company employee performing services
related to a Company Government Contract possessed (during the
time of such perform) all of the required credentials (e.g.,
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education and experience) and security clearances specified in
or required by such Company Government Contract. To the
Company's Knowledge and Seller's Knowledge, there is no
existing information, fact, condition or circumstance that
would cause the Company to lose its facility security
clearances.
3.26.12 Export Compliance. To the Company's
Knowledge and Seller's Knowledge, the Company is in compliance
with all Applicable Laws regarding US export control, including
in respect of US Department of State International Trafficking
in Arm Regulations, US Department of Commerce Export
Administration regulations, US/Canada Joint Certification
Program and US Customs requirements.
3.26.13 No Contingent Fees. No facts, events or
other circumstances exist that violate or otherwise constitute
a basis on which the United States Government or any other
Person might reasonably claim to violate, the covenant against
contingent fees under any Company Government Contract or
Company Engagement, or 10 U.S.C. 2306, 41 U.S.C. 254(a) as
implemented in FAR 3.402.
3.27 No Additional Representations and Warranties. Except
for the representations and warranties set forth in this Article
3 or in any certificate given in respect of this Article 3,
neither the Company, Seller, nor any other Person on behalf of
the Company or Seller makes any other representations or
warranties, written or oral, statutory, express or implied, with
respect to (a) Seller or the Company, or the Company's business,
operations, assets, liabilities, condition (financial or
otherwise) or prospects of the Company, (b) the negotiation,
execution, delivery or performance of this Agreement by the
Company and Seller or (c) the continuation of the Company's
Government Contracts or task orders after the Closing.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Corporate Status of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware, with the requisite corporate power to
own, operate and lease its properties and to carry on its
business as currently being conducted. Buyer is duly qualified
to do business in the Commonwealth of Virginia.
4.2 Authority for Agreement; Noncontravention.
4.2.1 Authority of Buyer. Buyer has the corporate
power and authority to enter into this Agreement, to consummate
its obligations hereunder and to consummate the Transactions.
The execution, delivery and performance of this Agreement and
the consummation of the Transactions have been duly and validly
authorized by Buyer's board of directors and no other corporate
proceedings on the part of Buyer is necessary to authorize the
execution, delivery and performance of this Agreement and the
consummation of the Transactions. This Agreement and, when
executed and delivered, the other agreements contemplated
hereby to be signed by Buyer have been or, when executed and
delivered, will be duly executed and delivered by Buyer as the
case may be, and constitute valid and binding obligations of
Buyer as the case may be, enforceable against Buyer in
accordance with their terms.
-i-
4.2.2 No Conflict. Neither execution and delivery
of this Agreement by Buyer nor the performance by Buyer of its
obligations hereunder, nor the consummation by Buyer of the
Transactions will (a) conflict with or result in a violation of
any provision of Buyer's certificate of incorporation or
by-laws, or (b) with or without the giving of notice or the
lapse of time, or both, conflict with, or result in any
violation or breach of, or constitute a default under, or
result in any right to accelerate or result in the creation of
any Encumbrance pursuant to, or right of termination under, any
provision of any note, mortgage, indenture, lease, instrument
or other agreement, Permit, concession, grant, franchise,
license, judgment, order, decree, statute, ordinance, rule or
regulation to which Buyer is a party or by which any of its
assets or properties is bound or which is applicable to Buyer
or any of its assets or properties. No authorization, consent
or approval of, or filing with or notice to, any Governmental
Entity is necessary for the execution and delivery of this
Agreement by Buyer or the consummation by Buyer of the
Transactions, except for such consents, authorizations,
filings, approvals and registrations which if not obtained or
made would not have a Buyer Material Adverse Effect.
4.3 Compliance with Applicable Laws. Buyer is in
compliance in all material respects with all Applicable Laws and
with all rules and regulations of all national securities
exchanges upon which Buyer's stock is listed. All filings and
disclosures made by Buyer pursuant to the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended, or the rules or
regulations of such national securities exchanges were true and
correct in all material respects as of the time that they were
made, except to the extent any were discovered to be incorrect
and have been corrected by Buyer in the manner required by the
Applicable Law or exchange.
4.4 Buyer's Acknowledgment. Buyer acknowledges that,
except as expressly provided in this Agreement, neither Seller
nor the Company has made, and the Company and Seller hereby
expressly disclaim and negate, and Buyer hereby expressly waives,
any representation or warranty, express, implied, at common law,
by statute or otherwise relating to, and Buyer hereby expressly
waives and relinquishes any and all rights, claims and causes of
action against Seller, the Company, its Affiliates and their
respective representatives in connection with, the accuracy,
completeness, or materiality of any information, data or other
materials (written or oral) heretofore furnished to Buyer and its
representatives by or on behalf of Seller or the Company. Buyer
acknowledges that the Government Contracts may be terminated for
convenience at any time by the pertinent Governmental Authority,
and that any Government Contract or task orders under any
Government Contract awarded based upon Company's 8(a)
certification may be subject to termination unless the Small
Business Administration issues waivers to permit the continuation
of such task orders by Company after the Closing. Without
limiting any representations and warranties contained in Article
3, and except as expressly set forth in this Agreement, Buyer
acknowledges that neither Company nor Seller nor any of Company's
Representatives makes or shall be deemed to have made any
representations or warranties, express or implied, at law or in
equity, of any kind or nature whatsoever concerning or as to any
law or regulation affecting the Government Contracts that may be
promulgated or become effective after the Closing. Buyer
acknowledges that there are uncertainties inherent in attempting
to make any projections, budgets, or forecasts or in the accuracy
of such other forward-looking financial information and actual
results of operations may differ materially from any such
-26-
projections, budgets or forecasts or as contained in such other
forward-looking financial information.
4.5 Investment Intent.
(a) Buyer is acquiring the Shares for its own
account for investment and not for distribution, assignment or
resale to others;
(b) Buyer acknowledges that the issuance of the
Shares has not been registered under the Securities Act in
reliance upon an exemption therefrom for nonpublic offerings,
acknowledges that the Shares may not be sold or otherwise
transferred unless such sale or other transfer is registered
under the Securities Act or an exemption from registration is
available (and a legend evidencing such restrictions will be
placed on any certificates evidencing the Shares); and
(c) Buyer is an "accredited investor" as that
term is defined in Rule 501 of Regulation D promulgated under the
Securities Act.
ARTICLE 5. ADDITIONAL AGREEMENTS
5.1 Expenses. Except as otherwise provided in Sections 5.2
and 5.6.8, each Party shall be responsible for its own costs and
expenses in connection with the Transactions, including fees and
disbursements of consultants, investment bankers and other
financial advisers, counsel and accountants ("Expenses").
5.2 Indemnification.
5.2.1 Indemnification of Buyer Indemnified Parties.
Subject to this Section 5.2, from and after the Closing Date,
Seller shall indemnify, defend and hold harmless Buyer and the
Company and their respective directors, officers, employees,
representatives, successor and assigns (collectively "Buyer
Indemnified Parties") in respect of, and Buyer Indemnified
Parties shall be entitled to payment and reimbursement from
Seller (collectively the "Seller Indemnifying Parties") of the
amount of, all Losses suffered, incurred by any Buyer
Indemnified Party, by reason of, in whole or in part, or
arising from, in whole or in part, (a) any breach by Seller of
any covenant, agreement or obligation in this Agreement, or (b)
any misrepresentation or inaccuracy in, or breach of, any
representation or warranty made by the Company or Seller in
this Agreement or any certificate delivered pursuant Article 6.
Notwithstanding anything herein to the contrary, in determining
if there is a misrepresentation or inaccuracy in, or a breach
of, a representation or warranty in Article 3 or a certificate
given pursuant to Section 7.2.1, each representation or
warranty referenced in clause (c) of the immediately preceding
sentence shall read as if made by such Seller Indemnifying
Party.
5.2.2 Indemnification of Seller Indemnified
Parties. Subject to this Section 5.2 from and after the
Closing Date, Buyer shall indemnify, defend and hold harmless
Seller (collectively "Seller Indemnified Parties") in respect
of, and Seller Indemnified Parties shall be entitled to payment
and reimbursement from Buyer and its respective successors and
assigns (collectively the "Buyer Indemnifying Parties") of the
amount of all Losses suffered, incurred or paid by any Seller
Indemnified Party by reason of, in whole or in part, or arising
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from, in whole or in part, (a) any breach by Buyer of any
covenant, agreement or obligation of Buyer in this Agreement,
and (b) any misrepresentation or inaccuracy in, or breach of
any, representation or warranty contained in Article 4 or in
any certificate of Buyer delivered pursuant to Article 6.
5.2.3 Claims for Indemnification. When a Person
entitled to indemnification under this Section 5.2
("Indemnified Person") obtains reasonably sufficient knowledge
of any facts, claim or demand which has given rise to, or would
reasonably give rise to, a claim for indemnification hereunder
(referred to herein as an "Indemnification Claim"), such
Indemnified Party shall promptly thereafter give notice of such
facts, claim or demand ("Notice of Claim") to the Party from
whom indemnification is sought under this Section 5.2 (the
"Indemnifying Party"). So long as the Notice of Claim is given
by the Indemnified Party in the Claims Period specified in
Section 5.2.6, no failure or delay by the Indemnified Party in
the giving of a Notice of Claim shall reduce or otherwise
affect the Indemnified Party's right to indemnification except
to the extent, if any, that the Indemnifying Party has been
materially prejudiced thereby.
5.2.4 Defense by Indemnifying Party.
(a) If a claim or demand is asserted by a third
Person against an Indemnified Person (a "Third Party Claim"), the
Indemnifying Party shall, except as otherwise provided in Section
5.2.4(b), have the right, but not the obligation, exercisable by
notice to the Indemnified Party within 10 days of the date of the
Notice of Claim concerning the commencement or assertion of any
Third Party Claim, to assume the defense of such Third Party
Claim.
(b) The Seller Indemnifying Parties shall not
have such right or opportunity to assume and control the defense
of any such Third Party Claim, but shall have the right to
participate in the defense of such Third Party Claim and shall
pay the reasonable fees and expenses of counsel retained by the
Buyer Indemnified Party in respect of the Third Party Claim if
(i) such Third Party Claim relates to, or arises in connection
with, any criminal proceeding, indictment, investigation, or
civil action by any Governmental Entity other than inquiries or
audits in the ordinary course of business, or (ii) such Third
Party Claim alleges Losses in excess of the then available funds
held in Escrow (after deducting the full amount of all pending
Indemnification Claims), (iii) such Third Party Claim seeks an
injunction or other equitable relief against the Buyer
Indemnified Party, or (iv) the Buyer Indemnifying Parties fail to
conduct the defense of such Third Party Claim actively and
diligently.
(c) If the Buyer Indemnified Party assumes and
controls the defense of a Third Party Claim pursuant to Section
5.2.4(b), the Buyer Indemnified Party shall permit the Seller
Indemnifying Parties to participate in the defense of such claim,
to have reasonable access to all documents and personnel involved
in such claim and to discuss its views and positions with the
Buyer Indemnified Party. The Buyer Indemnified Party agrees, in
connection with any such Third Party Claim, to work cooperatively
and in good faith with the Seller Indemnifying Parties consistent
with the best interest of the Buyer Indemnified Party.
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(d) If the Indemnifying Party is entitled under
this Section 5.2.4 to assume the defense of the respective Third
Party Claim and gives such notice of intent to defend, the
Indemnifying Party shall assume the defense thereof as follows:
(i) the Indemnifying Party will defend the Indemnified Party
against the matter with counsel compensated by and chosen by
Indemnifying Party, which choice of counsel is subject to the
reasonable satisfaction of Indemnified Party; (ii) the
Indemnified Party may retain separate co-counsel at the sole cost
and expense of Indemnified Party; (iii) the Indemnified Party
will not consent to the entry of any judgment or enter into any
settlement with respect to the matter without the consent of the
Indemnifying Party; and (iv) the Indemnifying Party will not
consent to the entry of any judgment with respect to the matter,
or enter into any settlement that does not include a provision
whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all Liability with respect thereto,
without the consent of the Indemnified Party, which consent shall
not be unreasonably withheld or delayed if such settlement only
requires the payment by one or more Indemnifying Parties of a
monetary amount, does not include a statement as to admission of
fault, culpability or failure to act by or on behalf of such
Indemnified Party, and the Indemnified Party could not reasonably
believe that the settlement would be detrimental to the
Indemnified Party's reputation or continuing business.
(e) If a Third Party Claim is made and no
Indemnifying Party notifies the Indemnified Party within 10 days
after the Indemnified Party has given notice of the matter that
the Indemnifying Party is assuming the defense thereof, the
Indemnified Party shall defend against, or enter into any
settlement with respect to the matter. The Indemnified Party
shall not settle such Third Party Claim without the prior consent
of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.
5.2.5 Limitation on Liability for Indemnification.
5.2.5.1 Buyer Indemnity Deductible. Except for
Share Ownership Claims, the Buyer Indemnified Parties shall not
be entitled to indemnification pursuant to this Section 5.2 in
respect of a misrepresentation or inaccuracy in, or breach of, a
representation or warranty referenced in clause (b) of Section
5.2.1 until the aggregate amount of all Losses suffered, incurred
or paid by one or more Buyer Indemnified Parties exceeds $150,000
(the "Buyer Indemnity Deductible") and thereafter to the extent
that Losses exceed $150,000.
5.2.5.2 Certain Caps on Indemnification Liability.
Except for Share Ownership Claims and claims based on Seller's
fraud, the aggregate Liability of Seller under this Section 5.2
in respect of a misrepresentation or inaccuracy in, or breach of,
any representation or warranty referenced in clause (b) of
Section 5.2.1 shall not exceed $4,500,000. In no event shall the
total indemnification Liability of Seller under this Agreement
(including all such Liability under this Section 5.2, Liability
for Share Ownership Claims, Liability for claims based on
Seller's fraud, and Liability claims based on Taxes under Section
5.6) exceed in the aggregate the cash amount paid or payable to
Seller in respect of the Purchase Price. Furthermore, until the
IPP Escrow Amount, minus the amount of pending Indemnification
Claims against such funds under this Section 5.2, is not greater
than zero, Buyer Indemnified Parties shall be entitled under this
Section 5.2 only to look to the IPP Escrow Amount for
indemnification of their claims.
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5.2.6 Claims Period and IPP Escrow Amount.
(a) Except for (i) Share Ownership Claims, (ii)
Indemnification Claims in respect of Sections 3.12, 3.13 or 3.15
and (iii) Indemnification Claims based on Seller's fraud, any
Indemnification Claim in respect of a misrepresentation or
inaccuracy in, or breach of, any representation or warranty
referenced in clause (b) or Section 5.2.1 or in Article 4 must be
asserted by notice on or before the end of the 540th day after the
Closing Date. Any (i) Share Ownership Claim, (ii)
Indemnification Claims in respect of Sections 3.12, 3.13 or 3.15
and (iii) Indemnification Claims based on Seller's fraud must be
made before the expiration of the applicable statute of
limitations for the respective claims.
(b) Any Buyer Indemnified Party entitled to
payment for an Indemnification Claim shall be entitled to such
payment from the IPP Escrow Amount provided, that as of 5:00 p.m.
Washington D.C. time on October 13, 2009, any remaining balance
of the IPP Escrow Amount, less the amount of any pending
Indemnification Claim of one or more Buyer Indemnified Parties,
shall be disbursed and released to Seller pursuant to the Escrow
Agreement.
5.2.7 Subrogation. Upon making an indemnity
payment pursuant to this Section 5.2, the Indemnifying Party
will, to the extent of such payment, be subrogated to all
rights of the Indemnified Party against any third party in
respect of the damages to which the payment is related.
Without limiting the generality of any other provision hereof,
each such Indemnified Party and Indemnifying Party will duly
execute upon request all instruments reasonably necessary to
evidence and perfect the above described subrogation rights.
5.2.8 Exclusive Remedies. The remedies provided
for in this Section 5.2 shall be, except as otherwise provided
in Section 5.6, the sole and exclusive remedies of the Parties
and their respective officers, directors, employees, agents,
representatives, successors and assigns for any breach of or
inaccuracy in any representation or warranty contained in this
Agreement or any certificate delivered at Closing; provided,
however, that nothing herein is intended to waive any claims
for fraud or waive any equitable remedies to which a Party may
be entitled.
5.2.9 Right of Offset. Buyer may offset any amount
to which Buyer is entitled under this Article 5 against any
amounts otherwise payable hereunder by Buyer to Seller,
including Earnout Payments and any and all other payments
pursuant to Section 2.2, but subject to the terms and
conditions of Section 5.2.
5.2.10 Treatment of Indemnity Payments Between the
Parties. Unless otherwise required by Applicable Laws, all
indemnification payments shall constitute adjustments to the
Purchase Price for all Tax purposes, and no Party shall take
any position inconsistent with such characterization
5.2.11 Mitigation. While no Indemnified Party shall
be obligated to incur more than de minimis out of pocket
expense in doing so, and the failure to incur more than such de
minimis expense shall not adversely affect any Indemnified
Party's rights and benefits to indemnification under this
Section 5.2, each Indemnified Party shall otherwise use
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reasonable commercial efforts to mitigate any Loss which may
form the basis of any claim under this Section 5.2.
5.2.12 No Double Recovery. Notwithstanding anything
herein to the contrary, no Party will be entitled to payment
for an Indemnification Claim under either Section 5.2 or 5.6 to
the extent such Party or its Affiliate has otherwise been
indemnified for the related Losses under Sections 2.2.4, 5.2 or
5.6.5
5.3 Public Disclosure and Confidentiality. Except as
otherwise required by Applicable Laws Seller shall not announce
or disclose to any other Person the terms or conditions of this
Agreement or the Transactions without the prior consent of Buyer
(which shall not be unreasonably withheld); provided further that
the foregoing shall not apply to any information that is publicly
available other than as a result of unauthorized disclosure by
Seller or any other Person. Except as disclosure may be required
by Applicable Laws, any press release or other public disclosure
of information regarding the Transactions shall be developed by
Buyer; provided that the initial press release regarding the
Transactions shall be subject to Seller's review.
5.4 Employees and Company Plans. Buyer shall not during
the first 180 days after the Closing Date engage in any
substantial layoff or firing of employees of the Company (except
for any employees fired for cause or lack of performance and
employees laid off as a result of a termination or modification
of a Government Contract). Employees of the Company who continue
to be employed by Buyer, the Company or any of its Affiliates
following the Closing will be given full credit for their years
of service with the Company before the Closing for purposes of
vesting and eligibility to participate in Benefit Plans, leave
and programs of Buyer and its Affiliates that are made available
to such employees after the Closing. Through at least December
31, 2008, Buyer agrees to maintain (a) the Company's health
insurance plan, and (b) levels of employee benefits (other than
compensation and equity-based benefits) that are, in the
aggregate, not materially less favorable to those provided by the
Company prior to Closing Date. Buyer agrees that, with the
approval of the plan administrator of Buyer's tax-qualified
401(k) plan (the "Buyer's 401(k) Plan"), Buyer will consider
causing the Buyer's 401(k) Plan to accept rollovers or direct
rollovers of "eligible rollover distributions" within the meaning
of Code Section 402(c) made with respect to the Company's
employees pursuant to the Company's fund or otherwise provide
benefits accrued on or before the Closing Date by the employees
under the Company's 401(k) Plan.
5.5 Further Assurances.
5.5.1 Generally. In case at any time after the
Closing Date the Parties shall determine that any further
action, including the obtaining of any required Governmental
Entity approvals, and waivers and consents under any
agreements, material contracts or leases and the execution and
delivery of any licenses or sublicenses for any software, is
necessary, proper or advisable to carry out the purposes of
this Agreement, the proper officers and directors or
representatives of each Party to this Agreement are hereby
directed and authorized to use their reasonable best efforts to
effectuate all required action.
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5.5.2 Consents. After the Closing each Party
agrees to use its best reasonable efforts to obtain any
consents, notices or waivers as reasonably requested by Buyer.
5.6 Tax Matters.
5.6.1 Code Section 338(h)(10) Election.
(a) At Buyer's option, Seller shall join Buyer in
making an election under Code Section 338(h)(10) (and any
corresponding election under state, local or foreign law) with
respect to the purchase and sale of Shares hereunder (the
"Section 338(h)(10) Election"). If the Section 338(h)(10)
Election is made, the Purchase Price and Liabilities of the
Company (plus other relevant items) will be allocated by Buyer to
the Company's assets for all purposes in a manner consistent with
Code Sections 338 and 1060. Buyer, the Company and Seller shall
file all Tax Returns (including any amended returns and claims
for refund) and information reports consistent with such
allocation of the Purchase Price and Liabilities of the Company
(plus other relevant items) to the Company's assets. Unless
otherwise required by Applicable Laws, the Escrow Amount and the
Earnout Payments shall be applied as partial consideration for
"Section 197 intangibles" as defined in Code Section 197(d),
except to the extent that the Liabilities of the Company and the
portion of the Initial Purchase Price paid to Seller at Closing
pursuant to Section 2.2.2(a)(ii) are less than the values of the
other assets of the Company as determined pursuant to the second
preceding sentence). Buyer will have the sole responsibility for
assuring that the Section 338(h)(10) Election is duly and timely
made so long as Seller fulfills its obligations under this
Section 5.6.1(a).
(b) If Buyer makes the Section 338(h)(10)
Election, Buyer shall, as compensation to Seller for the
additional Taxes owed by Seller as a result of the Section
338(h)(10) Election, pay to Seller, in cash, as additional
consideration for the sale of the Shares to Buyer, the amount of
additional consideration necessary to cause Seller's after-Tax
net proceeds from the sale of the Shares to be equal to the
after-Tax net proceeds that Seller would have received had the
Section 338(h)(10) Election not been made, taking into account
all federal, state and local tax implications, including the
additional Tax owed by the Seller due to receiving the foregoing
additional cash consideration (the "Tax Adjustment"), such
determination to be made as if Seller is a resident of Virginia
regardless of whether or not that is the case. Seller shall
provide a schedule setting forth its computation of its proposed
amount of the Tax Adjustment within 20 days after Buyer has
notified Seller of the allocation of the Purchase Price to the
Company's assets. Buyer may object to such schedule by written
notice to Seller. Any disputes as to such schedule, if not
resolved by Buyer and Seller within 20 days after Buyer's notice
of objection, shall be resolved by the Arbiter, as defined in
Section 2.2.4.3. To the extent that, as a result of the Section
338(h)(10) Election, more tax basis is allocated to the Escrow
Amount and the Earnout Payments than would otherwise have been
the case had such Section 338(h)(10) Election not been made, the
computation of the Tax Adjustment shall take into account and
give effect to such additional basis as if recovered currently.
Buyer shall pay the Tax Adjustment to Seller on or before the
later of the due date for the filing of the Form 8023 with
respect to the Section 338(h)(10) Election or the determination
of the Tax Adjustment except to the extent that a portion of the
Tax Adjustment is attributable to a difference in the state
income tax rate payable by Seller depending on whether or not the
Section 338(h)(10) Election is made, or to items of ordinary
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income that under the installment sale rules do not have to be
recognized on the Closing Date, in which case such portion of the
Tax Adjustment shall be paid within 20 days after payment of the
associated portion of the Escrow Amount and/or Earnout Payment.
(c) Buyer covenants that it will not and will not
cause or permit the Company to (i) take any action on the Closing
Date other than in the ordinary course of business consistent
with past custom and practice or as contemplated by this
Agreement, including, without limitation, the actual distribution
of any dividend or the actual redemption of any stock, which
would result in any Tax Liability to the Sellers, or (ii) make
any election or deemed election under Section 338 of the Code on
the Closing Date other than the Section 338(h)(10) Election or
amend any Tax return of the Company on the Closing Date, in each
case without Seller's prior written consent, which shall not be
unreasonably withheld.
5.6.2 Termination of Tax Year and Responsibility
for Filing Tax Returns for Periods through Closing Date. The
Company has made an election to be treated as an S corporation
under Section 1362 of the Code. Buyer and Seller agree and
intend that, pursuant to the Code and applicable regulations
thereunder, if the Section 338(h)(10) Election is made, the
Company's taxable year shall terminate at the end of the
Closing Date and if no such election is made, such taxable year
shall terminate at the end of the day before the Closing Date.
The Company (under the reasonable supervision of Seller and
using Argy, Xxxxxx & Xxxxxxxx, PC as tax preparer at Seller's
expense) will prepare and timely file the necessary Tax returns
for the year ending at the end of the Closing Date or, as the
case may be, at the end of the day before the Closing Date and
such Tax returns must be prepared in a manner consistent with
the prior Tax returns of the Company unless otherwise required
by Applicable Laws and shall deliver to Seller copies of such
returns on or before the 15th Business Day before they are to
be filed with the applicable Governmental Entity and the
Company, unless otherwise required by Applicable Law, will make
such revisions to such Tax returns as are reasonably requested
by Seller, subject to Section 5.6.1(a) relating to the
allocation of the Purchase Price and Liabilities of the Company
to the Company's Assets in the event the Section 338(h)(10)
Election is made. For these purposes, the Parties agree and
intend that the Company's income be allocated between the
taxable year ending on or, as the case may be, on the day
before, the Closing Date, and the taxable year beginning the
following day according to its normal tax accounting rules as
set forth in Code Section 1362(e)(3)(A) and, if required
therefor, Buyer and Seller shall enter into the elections
described in Code Section 1362(e)(3)(B) and/or Code Section
1377(a)(2). Seller hereby assumes the responsibility for all
federal and state income taxes for all periods prior to or
ending on the Closing Date, including, if the Section
338(h)(10) Election is made, any Tax on Seller's income, gain
or other tax item resulting from such election, subject to
Buyer's obligations under Section 5.6.1 and unless accrued for
and reflected as a Liability on the Closing Statements. The
Company will be responsible for paying any Company-level Tax
triggered as a result of the Section 338(h)(10) Election except
to the extent that it is credited against Seller's income Tax
or that it is imposed under Code Section 1374 or any analogous
provision of state or local law. Seller shall have the sole
responsibility and right to the settling of all examinations
with Governmental Entities for income tax returns for periods
ending prior to or on the Closing Date, and Seller shall,
subject to Section 5.6.1 regarding the allocation of the
Purchase Price if the Section 338(h)(10) Election is made, have
the right and obligation to contest, compromise or pay any
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alleged claim or deficiency, provided that any compromise or
payment shall not increase the Taxes for the Company or Buyer,
or otherwise adversely affect the Company, for any period
subsequent to the Closing Date or affect the amount of the Tax
Adjustment or the Company-level Taxes for which the Company is
responsible pursuant to the previous sentence without Buyer's
prior written consent, which shall not be unreasonably withheld
and provided further that Seller shall take any action that
Buyer may reasonably request with respect to such examinations
that would affect the amount of such Tax Adjustment or such
Company-level Taxes and would not otherwise increase Seller's
Taxes. Buyer shall provide prompt notice to Seller of any
audits or examinations, or requests therefor, for periods
ending prior to or on the Closing Date, or claims of assessment
or deficiencies as to the Company for such periods. Buyer will
cause the Company to prepare and timely file Tax returns of the
Company for any Straddle Period, such returns to be prepared in
a manner consistent with the prior such Tax returns of the
Company unless otherwise required by Applicable Law or Buyer's
method of accounting, to deliver to Seller copies of such
returns on or before the 15th Business Day before they are to be
filed with the appropriate Governmental Entity, and, unless
otherwise required by Applicable Laws or Buyer's method of
accounting, to make such revisions to such returns as are
reasonably requested by Seller, subject to Section 5.6.1(a)
relating to the allocation of the Purchase Price and
Liabilities of the Company to the Company's Assets in the event
a Section 338(h)(10) Election is made. Buyer shall have the
sole responsibility and right to the settling of all
examinations with Governmental Entities for income tax returns
for periods ending after the Closing Date, including those that
come within Straddle Periods, and Buyer shall, subject to
Section 5.6.1 regarding the allocation of the Purchase Price if
the Section 338(h)(10) Election is made, have the right and
obligation to contest, compromise or pay any alleged claim or
deficiency, provided that any compromise or payment shall not
materially increase the Taxes for Seller, or otherwise
materially adversely affect Seller, for any period ending prior
to or on the Closing Date without Seller's prior written
consent, which shall not be unreasonably withheld.
5.6.3 Audits. Seller shall allow the Company and
its counsel to participate in any audit of Seller's federal
income Tax returns to the extent that such Tax returns relate
to the Company. Seller shall not settle any such audit in a
manner that would adversely affect the Company after the
Closing Date without Buyer's prior consent, which consent shall
not be unreasonably withheld. The Company and Buyer shall
allow Seller and its counsel to participate in any audit of the
Company's Tax returns to the extent that such Tax returns
relate to or otherwise adversely affect Seller. The Company
and/or Buyer shall not settle any such audit in a manner that
would adversely affect Seller for any period ending prior to or
on the Closing Date without Seller's prior consent, which
consent shall not be unreasonably withheld.
5.6.4 Tax-Sharing Agreements. All income tax-
sharing agreement or arrangements (and, with respect to Taxes
other than income Taxes, all tax-sharing agreements or similar
Contracts other than any Contract the primary purpose of which
is not the allocation or payment of Tax Liability and in which
such provisions regarding tax Liability are typical of such
type of Contracts) with respect to or involving the Company
shall be terminated as of the Closing Date and, after the
Closing Date, the Company shall not be bound thereby or have
any Liability thereunder.
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5.6.5 Tax Indemnification. Seller shall jointly
and severally indemnify the Buyer Indemnified Parties and hold
them harmless from and against any Loss attributable to (a) any
Taxes (or the non-payment thereof) of the Company for all the
taxable periods ending on or before the Closing Date and the
portion through the end of the Closing Date for any taxable
period that includes (but does not end on) the Closing Date
("Pre-Closing Tax Period"), (b) all Taxes of any member of an
affiliated, consolidated, combined or unitary group of which
the Company is or was a member on or prior to the Closing Date,
including pursuant to Treasury Regulation 1.1502-6 or any
analogous or similar state, local, or foreign law or
regulation, and (c) any and all Taxes of any Person (other than
the Company) imposed on the Company as a transferee or
successor, by contract or pursuant to any law, rule or
regulations, which Taxes relate to an event or transaction
occurring before the Closing; provided, however, that in the
case of clauses (a), (b) and (c) above, Seller shall be liable
only to the extent that such Taxes exceed the amount, if any,
reserved for such Taxes (excluding any reserve for deferred
Taxes established to reflect timing difference between book and
Tax income) on the face of the Closing Balance Sheet (rather
than in any notes thereto) and taken into account in
determining the Purchase Price adjustment provided in Sections
2.2.4. Seller shall reimburse for any Taxes of the Company
that are the responsibility of Seller within 15 Business Days
after payment of such Taxes by any one or more the Buyer
Indemnified Parties.
5.6.6 Straddle Period. If any taxable period
includes (but does not end on) the Closing Date (a "Straddle
Period"), the amount of any Taxes based on or measured by
income or receipts of the Company for the Pre-Closing Tax
Period shall be determined based on an interim closing of the
books as of the close of business on the Closing Date and the
amount of other Taxes of the Company for a Straddle Period that
relates to the Pre-Closing Tax Period shall be deemed to be the
amount of such Tax for the entire taxable period multiplied by
a fraction in the numerator of which is the number of days in
the taxable period ending on the Closing Date and the
denominator of which is the number of days in such Straddle
Period.
5.6.7 Cooperation on Tax Matters.
(a) The Parties shall cooperate fully, as and to
the extent reasonably requested by the other Party, in connection
with the filing of Tax returns and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include
the retention and (upon the other Party's request) the provision
of records and information reasonably relevant to any such audit,
litigation, or other proceeding and making employees available on
a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Company and
Seller agree (i) to retain all books and records with respect to
Tax matters pertinent to the Company relating to any taxable
period beginning before the Closing Date until expiration of the
statute of limitations (and any extensions thereof) of the
respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (ii) to
give Seller reasonable notice prior to transferring, destroying
or discarding any such books and records and, if Seller so
requests, allow Seller to take possession of such books and
records.
(b) Subject to Applicable Laws, the Parties
further agree, upon request, to use their best efforts to obtain
any certificate or other document from any Governmental Entity or
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any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including with respect
to the Transactions).
5.6.8 Certain Taxes. All transfer, documentary,
sales, use, stamp, registration Taxes and registration fees
payable in respect of the Transactions shall be paid by Seller.
This arrangement does not apply to any other Taxes.
5.7 Mutual Releases.
5.7.1 By Seller. Seller hereby remises, releases
and forever discharges the Company and its successors and
assigns of and from any and all manner of action and actions,
cause and causes of actions, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, executions, claims and demands of any
kind and nature whatsoever in law or in equity known or unknown
against the Company which Seller ever had or may hereafter have
with respect to any act or omission to act of the Company
before the date hereof, including any claims to any commissions
or any portion of the revenue or profits of the Company or any
equity interest in the Company, except to the extent of any
obligation of the Company to Seller (i) under this Agreement or
any other documents executed in connection with the closing of
the Transactions, (ii) under the Employment Agreement, and
(iii) except in respect of any breach by the Company or Seller
of any representations, warranties, covenants, obligations or
agreements contained herein, any and all indemnification and
other rights, benefits and claims of Seller under the Company's
Organizational Documents.
5.7.2 By the Company. The Company hereby remises,
releases and forever discharges Seller of and from any and all
manner of action and actions, cause and causes of actions,
suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies,
executions, claims and demands of any kind and nature
whatsoever in law or in equity known or unknown against Seller
which the Company ever had or may hereafter have with respect
to any act or omission to act of Seller before the date hereof
as a stockholder, director, officer or employee of the Company,
except to the extent of any Liability of Seller to Buyer or the
Company (i) under this Agreement or any other documents or
instruments executed in connection with the closing of the
Transactions, and (ii) under the Employment Agreement.
5.8 Certain Post-Closing Covenants.
5.8.1 Non-Competition. Subject to the terms and
conditions hereof, Seller covenants and agrees that, during the
Restricted Period, Seller shall not engage in a Competitive
Activity or be Associated with a Competitive Activity.
5.8.2 Noninterference with Business. During the
Restricted Period, Seller agrees that Seller shall not directly
or indirectly:
(a) solicit, induce or attempt to induce any
employee, consultant or independent contractor to terminate or
breach an employment, contractual or other relationship with the
Company or Buyer;
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(b) contact any customer who was a customer of
the Company as of the Closing Date for the purpose of diverting
or taking away business from the Company or Buyer; or
(c) (i) directly or indirectly contact any of the
Company's or Buyer's then current customers for the purpose of
diverting or taking away business from the Company or Buyer; or
(ii) otherwise interfere with, impair, disrupt or damage the
Company's or Buyer's relationship with any of its then current
customers for the purpose of diverting or taking away from the
Company or Buyer.
5.8.3 Confidentiality. Seller agrees that during
the period from the Closing Date to and including the second
Closing Date Anniversary Seller will not disclose or use,
directly or indirectly, any Confidential Information, except
pursuant to a subpoena, order or request issued by a court of
competent jurisdiction or by another Government Entity, or as
otherwise required by Applicable Laws. Seller may, however,
use Confidential Information in the preparation of tax returns
with respect to periods prior to and including the Closing
Date.
5.8.4 Injunctive Relief For Breach. Seller's
obligations under this Section 5.8.4 are of a unique character
that gives them particular value, and a breach of any of such
obligations will result in irreparable and continuing damage to
the Company and Buyer for which there will be no adequate
remedy at law. Accordingly, without limiting Seller's
obligations under Section 5.2, in the event of such breach,
Seller agrees that the Company and Buyer will be entitled to
injunctive relief and a decree for specific performance, and
such other and further relief as may be proper (including
monetary damages if appropriate).
5.9 Seller's Right of Audit. Seller and its advisors shall
have access upon prior notice and during normal business hours to
the books, papers and records of the Company and its accountants
(if any are used) relating to the calculation of any Earnout due
Seller pursuant to Section 2.2.2 (b). Also, upon reasonable
notice to the Company, Seller, with the assistance of Seller's
advisors and auditors, may conduct at Seller's own expense an
examination of Company's books and records in respect to the
calculation of any amount due to Seller pursuant to Section
2.2.2(b). Such rights of access and examination set forth above
in this Section 5.9 shall terminate in respect of any payment
paid or payable pursuant to Section 2.2.2 (b) on the 180th day
after the earlier of the date such payment was due or paid
pursuant to Section 2.2.2 (b). If Seller shall conduct any audit
and such audit shall disclose that Buyer shall have underpaid the
Earnout by 5% or more, then Buyer or the Company shall pay the
cost of Seller's audit as well as any amounts underpaid.
5.10 Termination of LKB Employment Agreement. LKB and the
Company agree that concurrently with the execution and delivery
of the employment agreement contemplated by Section 6.1.6 between
Buyer and LKB, the employment agreement made effective as of
January 3, 2003, between the Company and LKB shall be, without
any further action, terminated and null and void for all
purposes, so that the Company has no Liability thereunder.
5.11 Termination of Shareholder Agreement. Seller and the
Company agree that concurrently with the consummation of the
Transactions, the Shareholder Agreement, dated January 2,
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2007, between the Company and Seller shall be, without any
further action, terminated and null and void for all purposes, so
that the Company has no Liability thereunder.
5.12 Retention Agreements.
5.12.1 Retention Agreement. The Retention Escrow
Amount is being placed into escrow in relation to the Retention
Agreements with the Company employees listed in Schedule 5.12
(the "Retention Agreements."). To the extent any employee
listed on Schedule 5.12 earns the last retention bonus
installment under a Retention Agreement, such amounts will be
released from the Retention Escrow Amount to Buyer. To the
extent any employee listed on Schedule 5.12 does not earn the
last retention bonus installment under a Retention Agreement,
such amounts will be released from the Retention Escrow Amount
to the LKB Trust. Upon release of any of the Retention Escrow
Amount to Buyer in accordance with the Escrow Agreement, Buyer
will, in accordance with its standard processes unless it
determines otherwise, pay the amount of such Retention Escrow
Amount owed to each employee under his or her applicable
Retention Agreement, net of applicable withholding taxes.
5.12.2 Assignment. The Company may, and upon
written request of Seller, the Company shall assign to Seller
its rights and obligations under Sections 1(c) or 1(d) of each
Retention Agreement (the "Assigned Provisions"), in which case
Seller shall assume such rights and obligations. If the
Company assigns the Assigned Provisions to Seller, the Company
shall have no Liability thereunder. Seller hereby remises,
releases and forever discharges the Company and its successors
and assigns of and from any and all manner of action and
actions, cause and causes of actions, suits, debts, dues, sums
of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, executions, claims and
demands of any kind and nature whatsoever in law or in equity
known or unknown against the Company which Seller ever had or
may hereafter have with respect to the Assigned Provisions.
The Company's assignment of the Assigned Provisions shall have
no effect on Buyer's rights against Seller under this Agreement
or otherwise with respect to the Transactions. In the event
that Company receives or obtains payment of any amounts from
employees or former employees of Company pursuant to Section
1(c) or (d) of a Retention Agreement, Company shall promptly
remit any such payments to Seller.
ARTICLE 6. CLOSING DOCUMENTS BEING DELIVERED
6.1 Documents Being Delivered by the Parties. The
following documents are being delivered by the Parties as part of
the Closing:
6.1.1 Government Filings. All notifications to and
filings with Governmental Entities required for the
consummation of the Transactions.
6.1.2 Escrow Agreement. The Escrow Agreement,
signed by the Parties and the Escrow Agent.
6.1.3 Flow of Fund Statement. The Parties shall
have agreed to and executed a Flow of Fund Statement describing
the sources of funds and payments at Closing.
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6.1.4 Closing Certificates.
(a) The Company Closing certificate signed by the
Company's secretary and certifying as to (i) the signing
authority and incumbency of the signatories of this Agreement and
other documents signed on the Company's behalf in connection
herewith; (ii) the resolutions adopted by the Company's Board
authorizing and approving the execution, delivery and performance
of this Agreement and the other documents executed in connection
herewith and the consummation of the Transactions and state that
such resolutions have not been modified, amended, revoked or
rescinded and remain in full force and effect; and (iii) the
Company's Organizational Documents.
(b) A Closing Certificate duly executed by the
secretary of Buyer and certifying (i) the signing authority and
incumbency of the signatories of this Agreement and other
documents signed on behalf of Buyer in connection herewith; (ii)
the resolutions adopted by Buyer's board of directors
authorizing and approving the execution, delivery and performance
of this Agreement and the other documents executed in connection
herewith and the consummation of the Transactions and state that
such resolutions have not been modified, amended, revoked or
rescinded and remain in full force and effect; and (iii) Buyer's
certificate of incorporation and by-laws.
6.1.5 Employment Agreement. The employment
agreement with LKB in the form of Exhibit B (the "Employment
Agreement").
6.1.6 Non-Foreign Affidavit. A non-foreign
affidavit as of the Closing Date, sworn under penalty of
perjury and in form and substance required under Treasury
Regulations issued pursuant to Code Section 1445 from each of
the LKB Trust and the Company stating that the LKB Trust or the
Company, as the case may be, is not a "foreign person" as
defined in Code Section 1445.
6.1.7 IRS Form 8023. IRS Form 8023 in respect of
the Section 338(h)(10) Election executed by the LKB Trust.
6.1.8 Termination of Phantom Stock Plan.
Resolutions of the Company's Board of Directors terminating the
Phantom Stock Agreement between the Company and LKB dated as of
December 26, 2006 (the "Phantom Stock Plan"), such resolutions,
without revocation or modification and in full force and effect
on the Closing Date, on such terms and conditions so that the
Company as of and after the Closing shall have no liabilities
or obligations in respect of the Phantom Stock Plan.
6.1.9 Memorandum of Agreement. The Company and
Seller shall take all action to terminate the Memorandum of
Agreement between LKB and Xxxxxxx Xxxxxx dated January 2, 2007,
effective as of the Closing, so that the Company as of and
after the Closing will have no Liabilities in respect of such
Memorandum of Agreement.
6.1.10 Closing Letter. The closing letter dated as
of the date hereof among Seller, Buyer and the Company.
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6.1.11 Delivery of Shares. Stock certificates
presenting all of its Shares, endorsed in blank or accompanied
by duly executed assignment documents, all sufficient to
convey, transfer and assign to Buyer sole and exclusive record
and beneficial right, title and interest in and to Seller's
Shares, free and clear of all Encumbrances.
6.1.12 Payment of Purchase Price. Buyer shall have
tendered the Initial Purchase Price pursuant to Section
2.2.2(a).
ARTICLE 7. SURVIVAL OF REPRESENTATIONS AND COVENANTS
7.1 The Company's and Seller's Representations and
Covenants. All representations and warranties made by the
Company and Seller in this Agreement, or any certificate or other
writing delivered by the Company, Seller or any of their
Affiliates pursuant hereto or in connection herewith, shall
survive the Closing and any investigation at any time made by or
on behalf of Buyer and shall terminate on the 540th day after the
Closing Date, except that (a) Buyer Indemnified Party claims
pending on such date shall continue until resolved and (b) the
representations and warranties in Sections 3.2, 3.12, 3.13, and
3.15 shall survive until the expiration of the applicable statute
of limitation for the respective Indemnification Claims, except
that Buyer Indemnified Party claims pending on such date in
respect of any of such Sections shall continue until resolved.
The covenants and other agreements made by the Company or Seller
in this Agreement or any certificate or other writing delivered
by the Company or any of its Affiliates pursuant hereto or in
connection herewith shall survive the Closing and any
investigation at any time made by or on behalf of Buyer until the
expiration of the applicable statute of limitations.
7.2 Buyer's Representations and Covenants. All
representations and warranties made by Buyer in this Agreement or
any certificate or other writing delivered by Buyer or any of its
Affiliates pursuant hereto or in connection herewith shall
survive the Closing until the 540th day after the Closing Date,
except that Company or Seller claims pending on such date shall
continue until resolved. The covenants and other agreements made
by Buyer in this Agreement or any certificate or other writing
delivered by the Buyer pursuant hereto or in connection herewith
shall survive the Closing and any investigation at any time made
by or on behalf of the Company or Seller until the expiration of
the applicable statute of limitations.
ARTICLE 8. OTHER PROVISIONS
8.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered by hand sent via a reputable nationwide courier service
or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such
other address for a Party as shall be specified by like notice)
and shall be deemed given on the date on which so hand-delivered
or on the third business day following the date on which so
mailed or sent:
To Buyer:
VSE Corporation
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: CEO
Fax: 000-000-0000
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with copy to (which shall not constitute notice):
Carter Strong, Esq.
Arent Fox LLP
0000 Xxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Fax: 000-000-0000
To Seller:
c/o G&B Solutions, Inc.
0000 Xxx Xxxxxx Xxxx, Xxxxx 000
XxXxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Fax: 000-000-0000
with copy to (which shall not constitute notice):
Xxxxxxx X. Xxxxxx, Esq.
Holland & Knight LLP
0000 Xxxxxx Xxxx., Xxxxx 000
XxXxxx, XX 00000
Fax: (000) 000-0000
8.2 Entire Agreement. Unless otherwise herein specifically
provided, this Agreement, including the Schedules and Exhibits,
and the documents and instruments and other agreements among the
Parties as contemplated by or referred to herein constitute the
entire agreement among the Parties with respect to the subject
matter hereof, and supersede all other prior agreements and
understandings, both written and oral, between the Parties with
respect to the subject matter hereof, including the letter of
intent dated February 28, 2008 among Buyer, the Company and
Seller. Each Party acknowledges that, in entering this Agreement
and consummating the Closing, such Party is not relying on any
representation, warranty, covenant, obligation or agreement not
expressly stated in this Agreement or in the certificates of or
agreements among the Parties contemplated by or referred to
herein.
8.3 Assignability. This Agreement is not intended to
confer upon any Person other than the Parties any rights or
remedies hereunder, except as otherwise expressly provided
herein. Neither this Agreement nor any of the rights and
obligations of the Parties hereunder shall be assigned or
delegated without the consent of all Parties, except that Buyer
may assign its rights to indemnification hereunder to its one or
more lenders.
8.4 Validity. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, each of
which shall remain in full force and effect.
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8.5 Specific Performance. The Parties acknowledge that
damages alone may not adequately compensate a Party for violation
by another Party of this Agreement. Accordingly, in addition to
all other remedies that may be available hereunder or under
Applicable Laws, any Party shall have the right to any equitable
relief that may be appropriate to remedy a breach or threatened
breach by any other Party hereunder, including the right to
enforce specifically the terms and conditions of this Agreement
by obtaining injunctive relief in respect of any violation or
non-performance hereof.
8.6 U.S. Currency. All amounts payable hereunder shall be
paid in United States dollars.
8.7 Governing Law. This Agreement shall take effect and
shall be construed as a contract under the laws (excluding
conflict of law rules and principles) of the Commonwealth of
Virginia.
8.8 Counterparts. This Agreement may be executed in one or
more counterparts, all of which together shall constitute one and
the same agreement.
8.9 Waiver. The rights and remedies of the Parties are
cumulative and not alternative. Neither the failure nor any
delay by any Party in exercising any right, power or privilege
under this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such
right, power or privilege will preclude any other or further
exercise of such right, power or privilege or the exercise of any
other right, power or privilege. To the maximum extent permitted
by Applicable Laws, (a) no claim or right arising out of this
Agreement can be discharged by one Party, in whole or in part, by
a waiver or renunciation of the claim or right unless in writing
signed by the other Party, (b) no waiver that may be given by a
Party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one Party
will be deemed to be a waiver of any obligation of such Party or
of the right of the Party giving such notice or demand to take
further action without notice of demand as provided in this
Agreement or the documents referred to in this Agreement.
8.10 Joint and Several Liability. For purposes of clarity,
any liability or obligation of LKB and LKB Trust, including as
"Seller," under this Agreement and any agreement, certificate or
instrument related to the Transactions executed by Seller, shall
be joint and several.
[The Signature Page follows this page.]
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IN WITNESS WHEREOF, the Parties have duly executed this
Stock Purchase Agreement under seal as of the date first above
written.
"BUYER"
VSE CORPORATION,
a Delaware corporation
By _________________________________
Xxxxxx X. Xxxxxx
Chairman, Chief Executive Officer
and President
"COMPANY"
G&B SOLUTIONS, INC.,
a Virginia Corporation
By _________________________________
Xxxxx X. Xxxxxxx
Chief Executive Officer
"SELLER"
XXXXX XXX XXXXXXX REVOCABLE TRUST
By:__________________________________
Xxxxx Xxx Xxxxxxx, as Sole Trustee
XXXXX XXX XXXXXXX
__________________________________
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