1
ASSET PURCHASE AGREEMENT
DATED AS OF
FEBRUARY 12, 1998
AMONG
GOVERNMENT TECHNOLOGY SERVICES, INC.,
BTG, INC.,
BTG TECHNOLOGY SYSTEMS, INC.,
AND
CONCEPT AUTOMATION, INC. OF AMERICA
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 Purchase And Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.01. Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.02. Retained Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.03. Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.04. Retained Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.05. Nonassignable Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.06. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.07. Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.08. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.09. Stock Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 3 Representations and Warranties of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.01. Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.02. Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.03. Acquisition of Series C Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.04. BTG SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.05. Division Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.06. No Violations; Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.07. No Undisclosed Material Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.08. Absence of Certain Events and Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.09. Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.10. Title to and Sufficiency of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.11. Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.12. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.14. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.15. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.16. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.17. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.18. Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.19. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.20. Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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Section 3.21. Government Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.22. Export Control and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.23. Cooperative Business Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.24. Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.25. Restrictive Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.26. Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.27. Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.28. Ownership of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.29. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.30. Cumulative Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 4 Representations and Warranties of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.01. Corporate Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.02. Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.03. No Violations; Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.04. Capitalization of GTSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.05. GTSI SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.06. No General Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.07. Title to Series C Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.08. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.09. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.10. Cumulative Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 5 Covenants of Buyer and Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.01. Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.02. Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.03. Assignments; Novation of Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.04. Noncompete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.05. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.06. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.07. Administration of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.08. Use of Stationery, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.09. Nasdaq Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 6 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.01. Tax Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.02. Transfer and Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.03. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.04. Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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ARTICLE 7 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.01. Employees; Allocation of Liabilities; WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.02. Employee Plans and Foreign Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.03. Defined Contribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 8 Survival; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.01. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.02. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.03. Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 9 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.01. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 9.03. Amendments; No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.04. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.05. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.06. Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.07. Expenses of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.08. Terms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 9.09. Confidentiality and Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.10. No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.11. Bulk Transfer Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.12. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.13. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.14. Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 9.15. Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
EXHIBITS
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1 Escrow Agreement
2 Trademark License Agreement
3 Database and Software Agreement
4 Standstill Agreement
5 Transition Services Agreement
6 Warehouse Sublease Agreement
7 Lockbox Agreements
8 Sales Commission and Bonus Agreement
9 Royalty Subcontracts
10 Novation Subcontracts
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11 Novation Agreements
12 Chattanooga Sublease Agreement
13 Assignment and Assumption of the Germany Lease
14 Series C Certificate of Designation
15 Opinion of Xxxxx & Xxxxxxx, L.L.P.
16 Opinion of Arent Fox Xxxxxxx Xxxxxxx & Xxxx, PLLC
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SELLERS' DISCLOSURE SCHEDULES
SECTION DISCLOSURE
- ------- ----------
1.01 Retained Assets
1.01(a) Certain Individuals
3.05 Division Balance Sheet
3.06(a) Violations
3.06(b) Consents and Approvals
3.07(b) Material Liabilities
3.08 Material Changes
3.10(b) Inventory
3.10(c) Tangible Personal Property
3.10(e) Government Property and Equipment
3.12 Litigation
3.13(f) Resale Exemption Certificates
3.14 Employee Benefit Plans
3.17(a) Purchase Intellectual Property
3.18(a) Employment Matters
3.19(a) Contracts
3.19(b) Defaults
3.19(c) Bids and Proposals
3.19(d) Unexercised Options for Sale of
Goods or Services
3.19(e) Late Performance
3.19(f) Late Delivery Penalties
3.19(g) Contracts Requiring Letters of Credit
or Bank Guarantees
3.19(h) Performance Pending Funding
3.21(c) Government Contract Deficiencies
3.21(f) Debarments and Suspensions
3.21(g) Stop Work Orders
3.21(i) Ceiling, Cap and Share Ratios
3.22(b) Export Control and Related Matters
3.23 Cooperative Business Agreements
3.24(a) Backlog
3.24(b) Exceptions to Backlog
3.26 Suppliers
3.27 Customers
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SELLERS' ATTACHMENTS
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1.1 Inventory
1.2 Current Inventory
1.3 Tangible Personal Property
1.4 Deposits
5.03(e) Deferred Revenue Contracts
BUYER'S ATTACHMENTS
- -------------------
4.03 Consents and Approvals
4.04(b) Stock Options, Etc.
4.08 Brokers and Finders
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated as of February 12,
1998 among Government Technology Services, Inc., a Delaware corporation
("Buyer" or "GTSI"), and BTG, Inc., a Virginia corporation ("BTG"), BTG
Technology Systems, Inc., a Virginia corporation ("BTG Systems"), and Concept
Automation, Inc. of America, a Virginia corporation ("Concept Automation" and,
together with BTG and BTG Systems, "Sellers").
W I T N E S S E T H:
WHEREAS, as part of a business constituting the Division (as
hereinafter defined) Sellers sell and distribute certain products and provide
certain services;
WHEREAS, Buyer desires to purchase from Sellers, and Sellers desire to
sell to Buyer substantially all of the assets of the Division, upon the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS.
(a) The following terms used herein shall have the
following meanings:
"Acquired Assets" means, subject to the exclusions set forth below,
the following assets, properties and rights, whether tangible or intangible,
whether fixed, contingent or otherwise, and wherever located, that are used or
held for use in the Division (or, in the case of Inventory, which are also
subject to open purchase orders) as of the Closing Date:
(i) all inventory, including merchandise,
materials, finished goods, work-in-process, packaging, shipping materials,
parts and other tangible personal property held for sale or which contribute to
the finished products or the sale, promotion, storage and shipment thereof,
whether located at facilities owned or leased by Sellers, inventory received at
the Virginia Warehouse or the Chattanooga Warehouse after the Closing Date if
it is subject to an open purchase order whether or not such inventory is in
transit as of the Closing Date, subject to Section 5.07, any rights of Sellers
to the warranties, price protections, volume discounts, special discounts,
prompt payment
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discounts, prepay discounts, cooperative advertising discounts and marketing
development fund allowances and price reductions received from suppliers, and
any related claims, credits, rights of recovery and setoff with respect to such
inventory, all of which (other than the related rights and inventory not
received at the Virginia Warehouse or the Chattanooga Warehouse as of February
6, 1998) is listed on Attachment 1.1 (collectively, the "Inventory");
(ii) all furniture, fixtures, office supplies,
machinery, equipment, computer hardware, computer software, supplies, repair
parts, tools, plant, laboratory and office equipment and other tangible
personal property, in each case as listed on Attachment 1.3, together with any
rights or claims arising out of the breach of any express or implied warranty
by the manufacturers or sellers of any of such assets or any component part
thereof;
(iii) all deposits identified on Attachment 1.4;
(iv) all right, title and interest in, to and
under all Acquired Contracts;
(v) all intangible personal property, including
all Proprietary Information and Intellectual Property, used or held for use in
the Division;
(vi) (A) originals of operating data and records
including books, records, electronic data, notes, sales and sales promotional
data, advertising materials, customer and supplier lists, databases, reference
catalogs, catalog inventory, and other similar property, rights and
information; and (B) copies of financial and accounting data and records
including books, records, electronic data, notes, credit information, cost and
pricing information, payroll and personnel records (to the extent permitted
under applicable law), and other similar property, rights and information, used
or held for use in the Division;
(vii) claims, causes of action, choses in action,
rights under express or implied warranties, rights of recovery, rights of
set-off, and rights of subrogation with respect to the Acquired Assets;
(viii) Permits, used or held for use in the
Division; and
(ix) all rights under non-disclosure and
proprietary agreements with employees and agents of Sellers or with other third
parties to the extent related to the Acquired Assets.
"Acquired Business" means the Acquired Assets and the Assumed
Liabilities.
"Acquired Contracts" means all Contracts other than the Contracts
identified on Disclosure Schedule Section 3.19(a) as "Nonacquired Contracts."
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"Affiliate" means, with respect to any specified Person, a Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"Ancillary Agreements" means the Escrow Agreement, the Trademark
License Agreement, the Database and Software Agreement, the Standstill
Agreement, the Transition Services Agreement, the Warehouse Sublease Agreement,
the Lockbox Agreements, the Sales Commission and Bonus Agreement, the Royalty
Subcontracts, the Novation Subcontracts, the Novation Agreements, the
Chattanooga Sublease Agreement, the Assignment and Assumption of the Germany
Lease, substantially in the form of Exhibits 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11,
12, and 13, respectively.
"Applicable Interest Rate" means interest at the rate per annum
determined, from time to time, under the provisions of Section 6621(a)(2) of
the Code.
"Assumed Liabilities" means (i) the Liabilities of Sellers to be
performed or otherwise satisfied under the Acquired Contracts specifically by
the terms thereof on any date that is after the Closing Date and (ii) all
Liabilities arising from Buyer's ownership of the Acquired Assets or its
operation of the Acquired Business after the Closing Date; provided that
Assumed Liabilities shall specifically exclude Liabilities arising out of or
related to (a) any misrepresentation or breach of warranty made by Sellers
contained in this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith, (b) breaches of covenants or
obligations of Sellers contained herein or (c) any Retained Liability.
"Chattanooga Warehouse" means the premises known as Suite A of
Warehouse at Highways 153/58, 0000 Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means common stock, par value $.005 per share, of
Buyer.
"Contracts" means (i) all oral or written bids, quotations, proposals
(including pending bid proposals), contracts (including Government Contracts
and Backlog Contracts), agreements (including the Vendor Agreements),
commitments, understandings, licenses, teaming arrangements, subcontracts,
memoranda of understanding ("MOUs"), memoranda of agreement ("MOAs"), contract,
subcontract or bid awards, sales and purchase orders (including partially
filled purchase orders), and backlog of unexecuted delivery orders and open
market orders on which any Seller has not executed, of any Seller relating to
the Division and the subject matter of which is within the definition of
"commercial items" as defined in Section 2.101 of the Federal Acquisition
Regulations, including those listed on Disclosure Schedule Section 3.19(a); and
(ii) the Germany Lease.
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"Controlled Group Liability" means all Liabilities relating to
Employee Plans and Foreign Plans under (i) Title IV of ERISA, (ii) Section 302
of ERISA, and (iii) Sections 412 and 4971 of the Code.
"Conversion Proposal" means the proposal to be presented to the
holders of Common Stock at the First Meeting and, if necessary, the Second
Meeting, with respect to the approval of (a) the conversion of the Series C
Preferred Stock into Common Stock in accordance with the terms of the Series C
Certificate of Designation and (b) the GTSI Charter Amendment.
"Current Inventory" means all manufacturer current, non-obsolete
Inventory based on a 90-day average run rate, which is either listed on
Attachment 1.2 or will be listed on Attachment 1.2 by supplement pursuant to
Section 2.10(b).
"Damages" means any damage, loss, claim, assessment, judgment,
liability and expense (including reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any pending or
threatened claim, action, suit, investigation, proceeding or government
directive).
"Disclosure Schedule" means the Disclosure Schedule delivered by
Sellers to Buyer simultaneously with the execution and delivery of this
Agreement and initialed by Sellers and Buyer.
"Division" means Sellers' business as a product reseller of computer
hardware, software, hardware maintenance agreements, software maintenance
agreements, software licenses, peripherals and integrated systems, providing
clients and prospective clients with advanced technology products in the areas
of enterprise networking and internet networking, the UNIX operating system
environment, data storage, image processing and high-performance
client/servers, and all activities incidental to the foregoing.
"Division Employees" means those individuals who are employed by any
Seller in the Division as of the Closing Date, a preliminary list of whom as of
December 18, 1997 has been delivered by Sellers to Buyer prior to the date
hereof and a definitive list of whom as of the close of business on the date
prior to the Closing Date has been delivered by Sellers to Buyer at Closing.
Division Employees shall include all individuals who are described in the first
sentence hereof and who are, as of the Closing Date, on an approved leave of
absence with a right to return to active employment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same "controlled group" as the first entity, trade or business pursuant
to Section 4001(a)(14) of ERISA.
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"Employee Plans" means each "employee benefit plan," within the
meaning of Section 3(3) of ERISA, and each employment, severance or other
similar contract, arrangement or policy and each plan or arrangement providing
for insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits or for deferred compensation, profit-sharing,
bonuses, stock options, stock appreciation or other forms of incentive
compensation or post-retirement insurance, compensation or benefits which is
maintained, administered or contributed to by any Seller or any of its ERISA
Affiliates and which covers any Division Employee, other than any such plan,
contract, arrangement or policy which is a Foreign Plan.
"Environmental Laws" means any applicable federal, state, local or
foreign law, treaty, judicial decision, regulation, rule, judgment, order,
decree, injunction, permit, agreement or governmental restriction, each as in
effect on or prior to the Closing Date, relating to the environment or to any
Hazardous Substance.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Export Control Laws" means all federal, state, local and foreign laws
(including common law), statutes, codes, ordinances, rules, regulations,
executive orders or other requirements, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretations thereof, relating to the export or reexport of
commodities and technologies. Export Control Laws includes the Export
Administration Act of 1979 (24 U.S.C. Sections 2401 - 2420); the International
Emergency Economic Powers Act (50 U.S.C. Sections 1701 - 1706); the Trading
with the Enemy Act (50 U.S.C. Sections 1 et seq.); the Arms Export Control Act
(22 U.S.C. Sections 2778, 2779); and the International Boycott Provisions of
Section 999 of the Code.
"Final Determination" shall mean (i) with respect to federal income
Taxes, a "determination" as defined in Section 1313(a) of the Code or execution
of an Internal Revenue Service Form 870AD and, with respect to Taxes other than
federal income Taxes, any final determination of liability in respect of a Tax
that, under applicable law, is not subject to further appeal, review or
modification through proceedings or otherwise (including the expiration of a
statute of limitations or a period for the filing of claims for refunds,
amended returns or appeals from adverse determinations) or (ii) the payment of
Tax by any Seller, Buyer or any of their Affiliates, whichever is responsible
for payment of such Tax liability under applicable law, with respect to any
item disallowed or adjusted by a Taxing Authority, provided that such
responsible party determines that no action should be taken to recoup such
payment and the indemnifying party, if any, agrees.
"Foreign Plans" means each "employee benefit plan," within the meaning
of Section 3(3) of ERISA, and each employment, severance or other similar
contract, arrangement or policy and each plan or arrangement providing for
insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits,
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retirement benefits or for deferred compensation, profit-sharing, bonuses,
stock options, stock appreciation or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which is maintained,
administered or contributed to by any Seller or any of its ERISA Affiliates
primarily for non-U.S. citizens or non-U.S. residents and which covers any
Division Employee.
"GAAP" means United States generally accepted accounting principles.
"Germany Lease" means the Commercial Sublease Agreement between
Digital Equipment GmbH and BTG, Inc., dated September 29, 1997, with respect to
a portion of the premises known as Xxxxxxxxxxxxxxx. 0-0, 00000 Xxxxxxxxx,
Xxxxxxx Xxxxxxxx of Germany.
"Government Contract" means (i) any Contract (including purchase
orders, blanket purchase orders and agreements and delivery orders) relating to
the Acquired Business between any Seller and any Governmental Entity and (ii)
any Contract (including GSA Contracts, purchase orders, blanket purchase
orders, blanket purchase agreements ("BPAs") and delivery orders) relating to
the Acquired Business entered into by any Seller as subcontractor (at any tier)
in connection with a Contract between another Person and any Governmental
Entity, including the Contracts listed on Section 3.19(a) of the Disclosure
Schedule.
"Governmental Entity" means any government or any court, arbitral
tribunal, administrative agency, or commission or other governmental or other
regulatory authority or agency, federal, state, local, transnational or
foreign.
"GTSI Board" means the board of directors of GTSI.
"GTSI Bylaws" means the bylaws of GTSI, as amended through the date of
this Agreement.
"GTSI Charter" means the certificate of incorporation of GTSI, as
amended through the date of this Agreement.
"GTSI Charter Amendment" means an amendment to the GTSI Charter
increasing the number of authorized shares of Common Stock from 10,000,000 to
20,000,000.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Hazardous Substance" means any substance, pollutant, contaminant,
chemical, waste or material, including petroleum, its derivatives, by-products
and other hydrocarbons, that is listed, identified in, or regulated under any
applicable federal, state, local or foreign law, treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit, agreement or
governmental restriction.
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"Income Tax" means any Tax imposed on or measured by net income, net
worth or capital, or any alternative minimum Tax or similar Tax, together with
any interest or any penalty, addition to tax or additional amount imposed by
any Taxing Authority.
"Intellectual Property" means all inventions, improvements, domestic
and foreign patents and applications therefor, trade secrets, know how,
customer lists, trade names, common law trademarks and service marks, trademark
and service xxxx registrations and applications therefor, copyrights, copyright
registrations and applications therefor, mask works, mask work registrations
and applications therefor, rights in Software and databases (including customer
databases), all rights (including rights to use data) with respect to any of
the foregoing that are granted or retained under Contract, license, law or
regulation.
"IRS" means the Internal Revenue Service.
"Liabilities" means any and all debts, liabilities, commitments,
claims, allegations, demands and obligations, whether fixed, contingent or
absolute, matured or unmatured, liquidated or unliquidated, accrued or not
accrued, known or unknown, whenever or however arising (including whether
arising out of any contract or tort based on negligence or strict liability)
and whether or not the same would be required by GAAP to be reflected in
financial statements or disclosed in the notes thereto.
"Lien" means any adverse claim, restriction on voting or transfer or
pledge, lien, mortgage, hypothecation, collateral assignment, charge,
encumbrance, easement, covenant, restriction, title defect, encroachment or
security interest of any kind.
"Liquidation Preference" has the meaning set forth in the Series C
Certificate of Designation.
"Material Adverse Effect" means, with respect to the Acquired Business
or any entity (or group of entities taken as a whole), such state of facts,
events, change or effect as has had, or would reasonably be expected to have, a
material adverse effect on the business, results of operations or financial
condition of the Acquired Business or, such entity (or group of entities, taken
as a whole), and with respect to the Acquired Business, also on the ability of
Buyer to own and operate the Acquired Business following the Closing Date
substantially as currently conducted; provided that, in any event, an adverse
effect in the amount of at least $25,000 shall be deemed to be material.
"New Material" means satisfying the provisions of Federal Acquisition
Regulation 48 CFR 52.211-5.
"Noncurrent Inventory" means all Inventory which is not Current
Inventory.
"PBGC" means the Pension Benefit Guaranty Corporation.
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"Permit" means any license, franchise, permit, concession, order,
clearance, authorization, approval or registration from, of or with a
Governmental Entity or other Person.
"Permitted Liens" means any Liens (i) for Taxes attributable to a
Pre-Closing Tax Period not yet due or payable or (ii) that are not material and
constitute mechanics', carriers', workers' or like liens incurred in the
ordinary course of business.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including any Governmental Entity.
"Pre-Closing Tax Period" means any Tax period, or portion thereof,
ending on or before the close of business on the Closing Date.
"Proprietary Information" means all information with respect to the
Acquired Business that in accordance with Sellers' usual practices would be
treated by Sellers as "PROPRIETARY INFORMATION - STRICTLY PRIVATE,"
"PROPRIETARY INFORMATION - INTERNAL DATA" or equivalent.
"Purchased Intellectual Property" means the Intellectual Property
included in the Acquired Assets.
"Retained Assets" means all assets, properties and rights, whether
tangible or intangible, whether fixed, contingent or otherwise, and wherever
located, of Sellers (including all demonstration, evaluation or other loaned
equipment from manufacturers) other than the Acquired Assets, including:
(i) All cash or cash equivalents held by any Seller, all
interest payable in connection with any such cash, cash equivalents or short
term investments, bank balances and rights in and to bank accounts, marketable
and other securities of any Seller.
(ii) All accounts receivable arising out of the business
and operations of the Division.
(iii) All contracts of insurance and all insurance plans
and the assets thereof.
(iv) All Employee Plans and Foreign Plans, benefit
arrangements, qualified plans and welfare plans and the assets thereof.
(v) Any and all claims of any Seller with respect to any
Tax refunds with respect to the period on or prior to the Closing Date.
(vi) All of each (a) Seller's organizational documents,
corporate books and records (including minute books and stock ledgers and
records), and originals of account books of original
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entry, (b) duplicated copies of any books, records, accounts, checks, payments
records, Tax records (including payroll, unemployment, real estate and other
Tax records) and other similar books, records and information of any Seller
relating to such Seller's operation of the Division prior to the Closing, (c)
all records prepared by or on behalf of Sellers in connection with the sale of
the Acquired Assets, (d) originals of Sellers' financial and accounting data
and records including books, records, electronic data, notes, credit
information, cost and pricing information, payroll and personnel records (to
the extent permitted under applicable law) and (e) all records and documents
relating to any Retained Assets.
(vii) All rights and claims of any Seller whether mature,
contingent or otherwise, against third parties relating to the business of the
Division (including all rights under the Contracts) for the period on or prior
to the Closing Date, whether in tort, contract, or otherwise.
(viii) All of each Seller's rights under or pursuant to this
Agreement or any other rights in favor of Sellers pursuant to the other
agreements contemplated hereby.
(ix) All rights to the names "BTG," "BTG Technology
Systems" and "Concept Automation" and any logo or variation thereof and the
goodwill associated therewith (except as contemplated hereby or by the
Trademark License Agreement, the Transition Services Agreement, the Royalty
Subcontracts or the Novation Subcontracts).
(x) All interests in real property other than with
respect to the Chattanooga Sublease, the Germany Lease and the Warehouse
Sublease.
(xi) The BTO CPU manufacturing of BTG computers, including
all unique components necessary to build same.
(xii) All right, title and interest in, to and under the
Retained Contracts.
(xiii) The additional assets designated as Retained Assets
on Disclosure Schedule Section 1.01.
"Retained Contracts" means all Contracts other than Acquired
Contracts.
"Retained Liabilities" means Liabilities with respect to: (i) any
inventory in transit to or from the facilities of any Seller and not the
subject of an open purchase order as of the Closing Date; (ii) returned
products initially delivered by any Seller on or before the Closing Date and
returned to any Seller or Buyer after the Closing Date ("Returned Products");
(iii) warranty and "year 2000" compliance claims and obligations relating to
products and services delivered under the Contracts on or before the Closing
Date; (iv) audits, inquiries, investigations or proceedings with respect to
performance under the Contracts on or before the Closing Date; (v) accounts
payable and vendor invoices with respect to the period on or before the Closing
Date; (vi) expenses accrued as of the
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Closing Date or any unpaid sales, use or other Tax whether or not assessed as
of the Closing Date; (vii) any duty, obligation or liability of any Seller to
be performed or otherwise satisfied under the Contracts specifically by the
terms thereof on or before the Closing Date; (viii) obligations under the
Contracts to upgrade Software after the Closing Date; (ix) any Liability
relating to the Retained Assets; (x) items otherwise identified as Retained
Liabilities in this Agreement; (xi) Permitted Liens; (xii) any Liability
related to the employment or termination of or resignation from employment by
Sellers of any of the individuals listed on Disclosure Schedule 1.01(a); (xiii)
any Liability related to the unsuccessful attempt by the persons listed in
clause (xii) above to acquire all or part of the Division; and (xiv) any other
Liability not within the definition of Assumed Liabilities.
"Returned Products" shall have the meaning set forth in the definition
of Retained Liabilities.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Series C Certificate of Designation" means the Certificate of
Designation, Preferences and Rights of the Series C Preferred Stock, in the
form attached hereto as Exhibit 14.
"Series C Preferred Stock" means the 8% Cumulative Redeemable
Convertible Preferred Stock, Series C, par value $.25 per share, of GTSI, with
the rights, preferences and privileges set forth in the Series C Certificate of
Designation.
"Sole-Source Supplier" means any supplier of goods or services to any
Seller with respect to the Division for which no practical alternative source
of such goods or services is available on terms and conditions substantially as
favorable to Sellers as those available from such supplier.
"State Department and PC-2 Contracts" means Contract No.
S-OPRAQ-97-D-0608 for the Department of State and Contract No.
DAAB07-97-D-V002 for the Department of Defense.
"Subsidiary" means, with respect to any Person, (i) any corporation of
which such Person owns, either directly or through its Subsidiaries, more than
fifty percent of the total combined voting power of all classes of voting
securities of such corporation or (ii) any partnership, association, joint
venture or other form of business organization, whether or not it constitutes a
legal entity, in which such Person, directly or indirectly, owns more than
fifty percent of the total equity interests.
"Tax" (including with correlative meaning, the terms "Taxes" and
"Taxable") means (i) all forms of taxation, whenever created or imposed,
whether imposed by a local, municipal, state, foreign, federal or other
governmental body or authority, including income, gross receipts, ad valorem,
excise, value-added, sales, use, transfer, franchise, license, stamp,
occupation, withholding, employment, payroll, property or environmental tax or
premium, together with any interest, penalty, addition to tax or additional
amount imposed by any Governmental Entity responsible for the
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imposition of any such tax (a "Taxing Authority"), and (ii) any liability for
the payment of any amounts as a result of being party or subject to any
agreement or with respect to the payment of any amounts of the type described
in (i) as a result of any express or implied obligations to indemnify any other
Person.
"Tax Return" means any return, report, statement, information
statement and the like required to be filed with any Taxing Authority.
"Transactions" means the transactions contemplated by the Transaction
Agreements.
"Transaction Agreements" means this Agreement and the Ancillary
Agreements.
"Vendor Agreements" means the (i) Remarketer/Integrator Agreement
dated July 30, 1992 between Dell Marketing L.P. and Concept Automation, Inc.,
as amended August 13, 1997 to, among other things, change name from Concept
Automation, Inc. to BTG, Inc. and as supplemented; (ii) Addendum to
Remarketer/Integrator Agreement dated April 14, 1993 between Dell Marketing
Corporation and Concept Automation, Inc.; (iii) Cisco Systems, Inc. GSA
Reseller Agreement dated January 22, 1996 between Cisco Systems, Inc. and BTG,
Inc.; (iv) U.S. Federal (All) Systems Integrator Agreement dated May 23, 1997
between Cisco Systems, Inc. and BTG, Inc.; (v) License Agreement dated March
10, 1995 between Netscape Communications Corporation and BTG, Inc., as amended;
and (vi) Systems Integrator Agreement No. 001754 dated December 20, 1996
between Netscape Communications Corporation and BTG, Inc.
"Virginia Warehouse" means Sellers' warehouse facility located at 0000
Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx.
(b) The following terms shall have the meanings assigned
to such terms in the following sections:
Term Section
---- -------
Agreement Recitals
Allocation 2.07
Apportioned Obligations 6.02(b)
Assumption Agreement 2.08(c)
Backlog Contracts 3.19(a)(xiv)
Basket Amount 8.07(a)
BTG SEC Documents 3.04
Buyer Recitals
Buyer DC Plans 7.03
Buyer Indemnified Parties 8.02(a)
Cap Amount 8.02(a)
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Cash Consideration 2.06
Cash Escrow Amount 2.06
Closing 2.08
Confidentiality Agreement 9.09
Consideration 2.07(a)
Contact Person 5.04(d)
Current Inventory 1.01
Disposition 2.10(c)
Division Balance Sheet 3.05
Division Financial Statements 3.05
Environmental Permits 3.13(a)(2)
Escrow Agent 2.06
Escrow Agreement 2.06
Escrow Shares 2.06
First Meeting 5.01(a)
First Proxy Statement 5.02(a)
General Assignment 2.08(b)
GTSI Balance Sheet 4.06
GTSI SEC Documents 4.05
indemnified party 8.03(a)
indemnifying party 8.03(a)
Independent Accountant 2.07(a)
Initial Shares 2.06
JIT 2.10(b)
Market Value 2.06
Noncurrent Inventory 1.01
Post-Closing Tax Period 6.02(b)
Product Requirement 5.04(d)
Purchase Price 2.06
Sale Credits 2.10(d)
Second Meeting 5.01(b)
Second Proxy Statement 5.02(b)
Seller Indemnified Parties 8.02(b)
Sellers Recitals
Sellers' Cost 2.10(c)
Shortfall Amount 2.10(a)
Software 3.17(a)(3)
Tax Benefit 8.02(d)
Taxing Authority 1.01(a)
Third Party Claim 8.03(b)
Total Shares 2.06
Transfer Taxes 6.02(a)
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VA3 Warehouse 2.10(b)
WARN Act 7.01(d)
ARTICLE 2
PURCHASE AND SALE
SECTION 2.01. PURCHASE AND SALE. Except as otherwise expressly
provided in this Agreement, upon the terms and conditions of this Agreement,
Buyer agrees to purchase from Sellers for the Purchase Price, and Sellers
agrees to sell, convey, transfer, assign and deliver, or cause to be sold,
conveyed, transferred, assigned and delivered, to Buyer at the Closing, free
and clear of all Liens (except the Permitted Liens), the Acquired Assets.
SECTION 2.02. RETAINED ASSETS. Retained Assets shall be excluded
from the Acquired Assets.
SECTION 2.03. ASSUMED LIABILITIES. Upon the terms and conditions
of this Agreement and effective at the time of the Closing, and notwithstanding
any role any Seller may have as a prime contractor or responsible party under
any Contract or whether any of the Contracts have been novated, Buyer shall
assume and agree to pay, satisfy and discharge when due in accordance with
their terms, and Buyer shall fully and forever hold Sellers and their
Affiliates harmless against, any and all Assumed Liabilities.
SECTION 2.04. RETAINED LIABILITIES. Notwithstanding any provision
in this Agreement or any other writing to the contrary, Buyer is not assuming
any Retained Liabilities, and all Retained Liabilities shall be retained by and
remain Liabilities of Sellers. Buyer will have no liability with respect to,
and Sellers shall fully and forever hold Buyer and its Affiliates harmless from
and against, the Retained Liabilities.
SECTION 2.05. NONASSIGNABLE CONTRACTS. Anything contained herein
to the contrary notwithstanding, this Agreement shall not constitute an
agreement to transfer or assign any Acquired Contract or Acquired Assets, if an
assignment or transfer or attempted assignment or transfer thereof without the
consent of another Person would constitute a breach thereof or in any way
impair the rights of Buyer or any Seller thereunder. If any such consent is
not obtained or if an attempted assignment or transfer would be ineffective or
would impair either Sellers' or Buyer's rights or benefits under any such
Acquired Contract or Acquired Assets so that Buyer would not receive all such
rights or benefits (other than Government Contracts with respect to which
Section 5.03 shall govern), then, with respect to the period after the Closing
Date only, (a) Sellers shall use their commercially reasonable efforts to
provide or cause to be provided to Buyer, to the extent permitted by law, the
rights and benefits of any such Acquired Contract or Acquired Assets and
Sellers shall promptly pay or cause to be paid to Buyer when received all
moneys received by Sellers with respect
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to any such Acquired Contract or Acquired Assets and (b) in consideration
thereof Buyer shall, to the extent they would constitute Assumed Liabilities,
pay, perform and discharge on behalf of Sellers all of Sellers' debts,
liabilities, obligations and commitments thereunder in a timely manner and in
accordance with the terms thereof. In addition, Sellers shall take such other
actions as may reasonably be requested by Buyer to place Buyer, insofar as
reasonably possible, in the same position as if such Acquired Contract or
Acquired Assets had been transferred as contemplated hereby and so all the
benefits and burdens relating thereto, including possession, use, risk of loss,
potential for gain and dominion, control and command, shall inure to Buyer. If
and when such consents and approvals are obtained, the transfer of the
applicable Acquired Contract or Acquired Assets shall be effected in accordance
with the terms and conditions hereof. Notwithstanding the foregoing, the
provisions of this Section 2.05 shall not relieve Sellers or Buyer of any of
their obligations under this Agreement with respect to any breach of any
Retained Liabilities or Assumed Liabilities or any representations, warranties,
covenants or agreements contained herein or in any of the Ancillary Agreements,
or with respect to any of their indemnification obligations contained herein or
therein. While it is acknowledged by Buyer that Sellers have not obtained any
required consents to the assignment of the Vendor Agreements, and that such
failure, by itself, is not a breach of this Agreement, Sellers hereby agree to
use commercially reasonable efforts to obtain such consents.
SECTION 2.06. PURCHASE PRICE. The Purchase Price payable by Buyer
to Sellers (the "Purchase Price") for the Acquired Assets shall be $7,825,265
in cash (representing $8 million less an adjustment for accrued vacation
liability and satisfaction of an outstanding invoice) (the "Cash
Consideration") and 15,375 shares of Series C Preferred Stock, payable at
Closing as follows: (a) $7,025,265 of the Cash Consideration shall be paid by
wire transfer to a bank account designated by BTG, as Sellers' agent, and
$800,000 of the Cash Consideration (the "Cash Escrow Amount") shall be paid by
wire transfer to an escrow agent (the "Escrow Agent") to be held in accordance
with the escrow agreement to be executed by the parties at the Closing in the
form of Exhibit 1 (the "Escrow Agreement"); and (b) by issuing to BTG, as
Sellers' agent, 15,375 shares of Series C Preferred Stock (the "Total Shares"),
and delivering 13,837 of the Total Shares (the "Initial Shares") to BTG, as
Sellers' agent, and 1,538 of the Total Shares (the "Escrow Shares") to the
Escrow Agent to be held in accordance with the Escrow Agreement. The "Market
Value" of the Total Shares or the Escrow Shares, as applicable, shall equal (a)
if Series C Preferred Stock, the aggregate Liquidation Preference of such
Series C Preferred Stock, and (b) if Common Stock, the product of (1) the
number of such Shares and (2) $5.125. The Purchase Price shall be paid as
provided in Section 2.08.
SECTION 2.07. ALLOCATION OF PURCHASE PRICE.
(a) The Purchase Price and the Assumed Liabilities
(collectively, the "Consideration"), to the extent properly taken into account
under Section 1060 of the Code, shall be allocated among the Acquired Assets as
set forth in this Section 2.07. No later than 30 days after the Closing Date,
Buyer shall deliver to Sellers a statement allocating the Consideration among
the Acquired Assets in accordance with Code Section 1060 and the regulations
promulgated thereunder (the "Allocation"). Sellers shall have a period of 10
days after the delivery of the Allocation to
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present in writing to Buyer notice of any objections Sellers may have to the
Allocation. Unless Sellers timely object, the Allocation shall be binding on
the parties without further adjustment. If Sellers shall raise any objections
within the 10-day period, Sellers and Buyer shall negotiate in good faith and
use their best efforts to resolve such dispute. If the parties fail to agree
within 20 days after delivery of the notice, the disputed items shall be
resolved by Xxxxxx Xxxxxxxx LLP, 0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxx (the "Independent Accountant"). The Independent Accountant shall
resolve the dispute within 30 days after having the dispute referred to it.
The costs, fees and expenses of the Independent Accountant shall be borne
equally by Buyer and Sellers. Notwithstanding the foregoing, the parties agree
that $500,000 of the Purchase Price shall be allocated to the tangible assets
set forth in Attachment 1.3.
(b) Except as required by a Final Determination, Sellers
and Buyer agree to (1) be bound by the Allocation, (2) act in accordance with
the Allocation in the preparation of financial statements and filing of all Tax
returns (including filing Form 8594 with its federal income Tax return for the
taxable year that includes the date of the Closing) and in the course of any
Tax audit, Tax review or Tax litigation relating thereto and (3) take no
position and cause their Affiliates to take no position inconsistent with the
Allocation for federal and state income Tax purposes.
(c) Not later than 30 days prior to the filing of their
respective Forms 8594 relating to the Transactions, each party shall deliver to
the other party a copy of its Form 8594.
SECTION 2.08. CLOSING. The closing (the "Closing") of the purchase
and sale of the Acquired Assets and the assumption of the Assumed Liabilities
hereunder shall take place at the offices of Arent Fox Xxxxxxx Xxxxxxx & Xxxx,
0000 Xxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X., at 10:30 a.m. local time,
simultaneously with the execution and delivery of this Agreement; provided,
however, that the parties intend that such Closing shall be deemed to be
effective, and the Transactions shall be deemed to occur simultaneously at 5:00
p.m. on the Closing Date. At the Closing:
(a) Buyer shall (1) pay by wire transfer to BTG the Cash
Consideration less the Cash Escrow Amount and deliver by wire transfer to the
Escrow Agent the Cash Escrow Amount, and (2) deliver to BTG a certificate
evidencing the Initial Shares, registered in BTG's name and deliver to the
Escrow Agent a certificate evidencing the Escrow Shares, registered in BTG's
name, along with five undated stock powers executed by BTG with respect to the
Escrow Shares.
(b) Sellers shall assign and transfer to Buyer the
Acquired Assets by delivery of (1) a general assignment and xxxx of sale in
form and substance reasonably satisfactory to Buyer and Sellers (the "General
Assignment"), duly executed by Sellers, (2) an assignment of the Intellectual
Property, (3) the Ancillary Agreements, and (4) all such other good and
sufficient instruments of conveyance, assignment and transfer, and such
affidavits and other instruments in form and substance reasonably acceptable to
Buyer's counsel, as shall be effective to transfer to Buyer the Acquired
Assets. Sellers shall also deliver to Buyer (1) the executed stock powers
described in clause (a) above, (2) copies of all consents required to
consummate this Agreement, (3) the opinion of its
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counsel, Xxxxx & Xxxxxxx L.L.P., in form and substance substantially as set
forth in Exhibit 15, (3) UCC termination statements or releases with respect to
all Liens (other than Permitted Liens) affecting the Acquired Assets or other
evidence in form and substance reasonably satisfactory to Buyer for each Lien
holder of Sellers that the Liability represented by any such Lien has been paid
or satisfied as of the Closing Date and that appropriate termination or release
documentation will be delivered by Sellers to Buyer promptly following the
Closing Date, and (4) such other customary closing documents Buyer may
reasonably request relating to the existence of Sellers and the authority of
Sellers for this Agreement and the Transactions, all in form and substance
reasonably satisfactory to Buyer.
(c) Buyer shall assume from Sellers the due payment,
performance and discharge of the Assumed Liabilities by delivery of (1) an
Assumption Agreement in form and substance reasonably satisfactory to Buyer and
Sellers (the "Assumption Agreement"), duly executed by Buyer, and (2) such
other good and sufficient instruments of assumption, in form and substance
reasonably acceptable to Sellers' counsel, as shall be effective to cause Buyer
to assume Assumed Liabilities as and to the extent provided in Section 2.03.
Buyer shall also deliver to Sellers (1) the Ancillary Agreements duly executed
by Buyer, (2) an employment agreement between Buyer and X. Xxxxx Xxxxx, (3) the
opinion of its counsel, Arent Fox Xxxxxxx Xxxxxxx & Xxxx, PLLC, in form and
substance substantially in the form of Exhibit 16, (4) the Series C Certificate
of Designation, which shall have been filed with the Secretary of State of
Delaware and have become effective and (5) such other customary closing
documents Sellers may reasonably request relating to the existence of Buyer and
the authority of Buyer for this Agreement and the Transactions, all in form and
substance reasonably satisfactory to Sellers.
SECTION 2.09. STOCK LEGENDS.
(a) The certificates evidencing the Series C Preferred
Stock issued to BTG pursuant to this Agreement, and, if applicable, the Common
Stock issued upon conversion of such Series C Preferred Stock, shall be
subject to the Standstill Agreement and shall bear the following legends:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE
STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT UPON DELIVERY
TO THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY IN FORM AND
SUBSTANCE TO IT THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
OF A STANDSTILL AGREEMENT DATED FEBRUARY 11, 1998
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BY AND BETWEEN THE CORPORATION AND BTG, INC. AND MAY NOT BE
TRANSFERRED EXCEPT IN COMPLIANCE THEREWITH.
THE CORPORATION WILL FURNISH TO ANY STOCKHOLDER UPON REQUEST AND
WITHOUT CHARGE A FULL OR SUMMARY STATEMENT OF THE POWERS DESIGNATIONS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL
RIGHTS OF THE SHARES OF THE SERIES C PREFERRED STOCK."
(b) Upon receipt of an opinion of legal counsel
satisfactory to GTSI that the above-described Series C Preferred Stock or
Common Stock, as applicable, no longer constitutes "restricted securities"
under Rule 144 of the Securities Act, the foregoing legend is no longer
required under applicable securities laws, or the Series C Preferred Stock or
Common Stock, as applicable, is otherwise freely tradable without registration
under the Securities Act, GTSI shall, upon the request of the holder of such
stock and the submission of the certificate evidencing such stock, issue a
substitute certificate without the first paragraph of the foregoing restrictive
legend thereon.
(c) Upon receipt of an opinion of legal counsel
satisfactory to GTSI that the above-described Series C Preferred Stock or
Common Stock, as applicable, is no longer subject to the Standstill Agreement,
GTSI shall, upon the request of the holder of such stock and the submission of
the certificate evidencing such stock, issue a substitute certificate without
the second paragraph of the foregoing restrictive legend thereon.
SECTION 2.10. DISPOSITION OF NONCURRENT INVENTORY.
(a) The parties agree that (i) subject to Section 2.10(e), the
value of the Current Inventory transferred to Buyer at Closing is less than the
amount bargained for by $4.5 million (the "Shortfall Amount"), (ii) Sellers are
obligated to pay the Shortfall Amount to Buyer, and (iii) Buyer has agreed to
dispose of the Noncurrent Inventory in an effort to satisfy Sellers' obligation
to pay the Shortfall Amount, in accordance with the procedure set forth in this
Section 2.10.
(b) After the Closing Date, the Noncurrent Inventory will be
segregated by Buyer in a "logical" warehouse in each of Chattanooga, Tennessee
(the "CHI Warehouse") and Chantilly, Virginia (the "VA3 Warehouse"). All
transfers in and out of the VA3 Warehouse will automatically be recorded by
Buyer in its "just in time" distribution and logistics operating system ("JIT")
and all transfers in and out of the CHI Warehouse will automatically be
recorded by Buyer separately on its JIT system. Such record will include all
sales, warehouse transfers, returns to vendors, receipts and related
information with respect to the Noncurrent Inventory. Within five (5) Business
Days after the Closing Date, Buyer will deliver to Sellers a supplement to
Attachment 1.2 which identifies from the Inventory listed on Attachment 1.1
additional Current Inventory with an aggregate Sellers' Cost equal to $1
million. Such additional Current Inventory will not be subject to the
procedure in this Section 2.10 with respect to repayment of the Shortfall
Amount. Buyer agrees to provide to Sellers
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on the fifteenth day after the end of each calendar month through September
1998, a report detailing the previous month's activity with respect to the
Shortfall Amount.
(c) Buyer will use commercially reasonable efforts to dispose of
the Noncurrent Inventory by sale to end users, return to vendors or liquidation
(each, a "Disposition"). Any proposed Disposition at a price less than ninety
percent (90%) of Sellers' Cost must be approved by Sellers in advance, which
approval shall not be unreasonably withheld. "Seller's Cost" means (i) with
respect to a particular item of Current Inventory, the Cost, listed on
Attachment 1.2, as which Sellers acquired such Current Inventory, (ii) with
respect to a particular item of Noncurrent Inventory received in the
Chattanooga Warehouse or the Virginia Warehouse as of the Closing Date, the
cost, listed on Attachment 1.1, at which Sellers acquired such Noncurrent
Inventory, and (ii) with respect to a particular item of Noncurrent Inventory
not received in the Chattanooga Warehouse or the Virginia Warehouse as of the
Closing Date, the cost at which Sellers acquire such Noncurrent Inventory as
reflected on the applicable purchase order, copies of which have been
delivered by Sellers to Buyer on the date hereof.
(d) The Shortfall Amount shall be reduced by the Sale Credits
until such time, if any, as the Shortfall Amount is reduced to zero. "Sale
Credits" means (i) Sellers' Cost, where the amount received by Buyer as a
result of a Disposition is equal to or greater than Sellers' Cost, or (ii) the
amount received by Buyer as a result of a Disposition, where such amount is
less than Sellers' Cost. Buyer shall promptly pay to Sellers any amounts
received as a result of a Disposition of Noncurrent Inventory in excess of the
Shortfall Amount, less a ten percent (10%) processing charge (which shall only
apply to Noncurrent Inventory sold after the Shortfall Amount has been reduced
to zero). Buyer shall notify Sellers in writing as soon as all of the
Noncurrent Inventory has been disposed of pursuant to this Section 2.10. Such
notice shall state the portion, if any, of the Shortfall Amount which remains
after the Disposition of the Noncurrent Inventory. Sellers shall pay such
amount in cash to Buyer within five days of Sellers' receipt of such notice.
Any insurance proceeds received by Buyer as a result of any casualty or loss of
Noncurrent Inventory shall be deemed to be amounts received by Buyer as a
result of a Disposition for purposes of this Section 2.10.
(e) The parties acknowledge that the Current Inventory has been
credited toward the Purchase Price in the full amount of Sellers' Cost as
reflected on Attachment 1.2, based on the assumption that such Current
Inventory is located in either the Chattanooga Warehouse or the Virginia
Warehouse as of the Closing Date. A physical count of the Current Inventory at
the Chattanooga Warehouse or the Virginia Warehouse will be performed by
representatives of Sellers and Buyer after the Closing. If it is determined as
a result of such count that any item of Current Inventory is missing, the
Shortfall Amount shall be increased by an amount equal to the Sellers' Cost
attributable to such Current Inventory.
(f) Notwithstanding the foregoing, if the Shortfall Amount has not
been paid in full to Buyer by October 30, 1998, Sellers shall pay to Buyer in
cash the unpaid portion of the Shortfall Amount on November 6, 1998. In such
event, the remaining Noncurrent Inventory may be disposed
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of by Buyer with no further obligation to Sellers. Sellers' obligation to pay
the Shortfall Amount is not subject to the Cap Amount set forth in Section
8.02(a) and Buyer's obligation to pay to Sellers amounts in excess of the
Shortfall Amount is not subject to the Cap Amount set forth in Section 8.02(b).
(g) The parties shall attempt to resolve any disputes with respect
to this Section 2.10 among themselves. If the parties are unable to do so, such
dispute shall be resolved by the submission by the parties to the Independent
Accountant of such documentary or other evidence as such parties may desire
(subject only to such rules of procedure or determinations of materiality and
relevance as the Independent Accountant may make). The parties shall provide
to the Independent Accountant (and each other) access to all information and
personnel reasonably relevant to the calculation in dispute and shall be bound
by and restricted to the claims theretofore made or the positions theretofore
asserted. The determination of the Independent Accountant will be set forth in
writing and delivered to the parties within 15 days after the submission of the
dispute and will be conclusive and binding upon the parties. Buyer will modify
the JIT as appropriate to reflect the resolution of any objections pursuant to
this Section 2.10(g). All fees and expenses relating to the services performed
by the Independent Accountant shall be borne pro rata by Sellers and Buyer in
proportion to the allocation by the Independent Accountant of the dollar
amounts in dispute between Sellers and Buyer such that the prevailing party
shall pay a lesser proportion of the fees and expenses.
SECTION 2.11. TANGIBLE PERSONAL PROPERTY. The tangible personal
property listed on Attachment 1.3 includes certain computer systems which, if
they are used or useful by Division Employees who are not employed by Buyer and
continue to be employed by Sellers as of the Closing Date, Sellers may elect to
retain. Any such retained personal property shall constitute Retained Assets
for all purposes of this Agreement. Sellers shall make such election no later
than February 12, 1998, and shall provide replacement systems (each, a
"Replacement System") therefor no later than February 26, 1998. Each
Replacement System shall consist of a Pentium 133 MHz computer and a 17-inch
monitor. In addition, a physical count of the office automation fixed assets,
including the computer systems, will be performed at Sellers' High Ridge,
Virginia facility, the Chattanooga Warehouse and the Virginia Warehouse will be
performed by representatives of Sellers and Buyer within five Business Days
after the Closing. If it is determined as a result of such count that there
are fewer than 304 computer systems (each consisting of a computer and a
monitor), Buyer shall so notify Sellers and Sellers shall promptly, but no
later than 30 days after receipt of such notice, cause to be delivered to
Buyer, at Sellers' cost and free and clear of Liens, the number of Replacement
Systems equal to the shortfall. Any such Replacement Systems shall be deemed to
be Acquired Assets for all purposes of this Agreement.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
To induce Buyer to enter into the Transaction Agreements and to
consummate the Transactions, Sellers represent and warrant to Buyer that the
statements contained in this Article 3 are correct and complete as of the date
of this Agreement, except as set forth in the Disclosure Schedule section
corresponding to the Section of this Agreement to which such representation or
warranty pertains:
SECTION 3.01. CORPORATE ORGANIZATION. Each Seller is a corporation
duly incorporated, validly existing and in good standing under the laws of the
Commonwealth of Virginia.
SECTION 3.02. CORPORATE AUTHORITY. Each Seller has, or, in the
case of any Ancillary Agreement executed after the date hereof, will have, the
requisite corporate power and authority to execute, deliver and perform each
Transaction Agreement to which it is or will be a party and to consummate the
Transactions. The execution, delivery and performance of each Transaction
Agreement by each Seller and the Transactions have been duly authorized by such
Seller's board of directors, and no other corporate proceedings on the part of
any Seller are necessary to authorize any Transaction Agreement or for Sellers
to consummate the Transactions. Each Transaction Agreement to which each
Seller is, or will be, a party is, or when executed and delivered will be
(assuming such agreement constitutes a valid and binding obligation of Buyer),
a valid and binding agreement of such Seller, enforceable against such Seller
in accordance with the terms thereof, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
relating to or affecting creditors' rights generally, and by general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
SECTION 3.03. ACQUISITION OF SERIES C PREFERRED STOCK.
(a) Sellers are purchasing the Series C Preferred Stock
solely for investment purposes, with no present intention of distributing or
reselling any of the Series C Preferred Stock or the Common Stock, if any,
issuable upon conversion thereof, or any interest therein. Sellers acknowledge
that the Series C Preferred Stock has not been, and the Common Stock, if any,
issuable upon conversion thereof will not be, registered under the Securities
Act.
(b) Sellers are aware of the applicable limitations under
the Securities Act relating to a subsequent sale, transfer, pledge, mortgage,
hypothecation, gift, assignment or other encumbrance of the Series C Preferred
Stock and the Common Stock, if any, issuable upon conversion thereof. Sellers
further acknowledge that such Series C Preferred Stock and Common Stock must be
held indefinitely unless subsequently registered under the Securities Act and
applicable state securities laws or an exemption from such registration is
available.
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(c) Sellers have received from GTSI adequate access to
financial and other information concerning GTSI, the Series C Preferred Stock
and the Common Stock, and Sellers have had the opportunity to ask questions of
and receive answers from GTSI concerning such Series C Preferred Stock and
Common Stock and to obtain therefrom any additional information necessary to
make an informed decision regarding the acquisition of such stock.
(d) Sellers have such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the acquisition of the Series C Preferred Stock. The investment in
the Series C Preferred Stock is suitable for Sellers upon the basis of the
facts regarding Sellers' financial situation and needs.
(e) Sellers realize that Buyer is relying on the validity
of their representations and agreements contained herein in issuing the Series
C Preferred Stock and the Common Stock, if any, issuable upon conversion
thereof, to them without registration under the Securities Act.
SECTION 3.04. BTG SEC DOCUMENTS.
(a) BTG has furnished the Buyer with a correct and
complete copy of each report, schedule, registration statement and definitive
proxy statement heretofore filed by BTG with the SEC since March 31, 1996 (the
"BTG SEC Documents"), which are all the documents (other than preliminary
material) that BTG was required to file with the SEC since March 31, 1996. As
of their respective dates, none of the BTG SEC Documents (including all
exhibits and schedules thereto and documents incorporated by reference therein)
contained any untrue statements of a material fact or omissions of a material
fact necessary so as not to render the statements therein misleading and in the
case of documents other than a registration statement, in light of the
circumstances under which they were made, and the BTG SEC Documents complied
when filed in all material respects with the then applicable requirements of
the Securities Act or the Exchange Act, as the case may be. BTG's financial
statements included in the BTG SEC Documents complied in all material respects
with the then applicable accounting requirements and the published SEC rules
and regulations with respect thereto, were prepared in accordance with GAAP
during the periods involved (except as may have been indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by Form 10-Q
promulgated by the SEC) and fairly present, in all material respects (subject,
in the case of the unaudited statements, to normal, year-end audit
adjustments), the consolidated financial position of BTG and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.
(b) Except as disclosed in the BTG SEC Documents, since
September 30, 1997, no event has occurred which has had or is reasonably likely
to have a Material Adverse Effect on BTG and its subsidiaries, taken as a
whole, or on the Division.
SECTION 3.05. DIVISION FINANCIAL STATEMENTS. Disclosure Schedule
Section 3.05 sets forth the unaudited combined balance sheet of the Division as
of December 31, 1997 (the "Division
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Balance Sheet"), March 31, 1997 and March 31, 1996, and the unaudited combined
statements of income and cash flows of the Division for the twelve months ended
March 31, 1997, March 31, 1996 and March 31, 1995 and the nine months ended
December 31, 1997, together with the notes to such financial statements (the
"Division Financial Statements"). The Division Financial Statements have been
prepared from the books and records of BTG and its Subsidiaries relating to the
Division and, except as described in the notes thereto, have been prepared in
accordance with GAAP and fairly present, in all material respects, the
financial condition and the results of operations of the Division as of the
date and for the period indicated.
SECTION 3.06. NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) Except as set forth on Disclosure Schedule Section
3.06(a), none of the execution, delivery or performance by any Seller of each
Transaction Agreement to which it is or will be a party or the consummation by
any Seller of the Transactions (i) will conflict with, or result in a violation
or breach of, its charter or bylaws or (ii) subject to the matters referred to
in clause 3.06(b) (i) and (ii) below, will conflict with, or result in a
violation or breach of, or constitute a default (with or without notice or
lapse of time or both) under, or give rise to any right of termination,
amendment, cancellation or acceleration of any obligation under, or result in
the creation of a Lien upon any of the properties or assets of, any Seller
under, (1) any of the terms, conditions or provisions of any Contract or of any
Permit to which such Seller is a party or by which any of their properties or
assets may be bound or (2) any judgment, order, decree, statute, law,
regulation or rule applicable to such Seller, except, in the case of this
clause (ii), for conflicts, violations, breaches, defaults, rights or Liens
that would not, individually or in the aggregate, (x) have a Material Adverse
Effect on the Acquired Business, (y) materially impair the ability of such
Seller to perform its material obligations under the Transaction Agreements or
(z) prevent or materially delay the consummation of the Transactions.
(b) No consent, approval, order, authorization of or
registration, declaration or filing with any Governmental Entity or any other
Person is required with respect to any Seller in connection with the execution,
delivery or performance by any Seller of each Transaction Agreement to which it
is or will be a party or the consummation by any Seller of the Transactions,
except for (i) assignment and novation of Government Contracts and (ii) the
other consents, approvals, orders, authorizations, registrations, declarations
and filings listed on Disclosure Schedule Section 3.06(b).
SECTION 3.07. NO UNDISCLOSED MATERIAL LIABILITIES. There are no
Liabilities of Sellers of any kind whatsoever relating to the Acquired
Business, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of
circumstances which could reasonably be expected to result in such a liability,
other than:
(a) Liabilities provided for in the Division Balance
Sheet or disclosed in the notes thereto; and
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(b) except as set forth on Disclosure Schedule Section
3.07(b), other undisclosed Liabilities which, individually or in the aggregate,
are not material to the Acquired Business.
SECTION 3.08. ABSENCE OF CERTAIN EVENTS AND CHANGES. Except as set
forth on Disclosure Schedule Section 3.08, since December 31, 1997, Sellers
have conducted the Acquired Business in the ordinary course, consistent with
past practices, and there have not been (a) any events, changes or developments
which, individually or in the aggregate, have had or would reasonably be
expected to have a Material Adverse Effect on the Acquired Business (as
currently conducted and as conducted since December 31, 1997), or would
materially impair the ability of any Seller to perform its obligations under
the Transaction Agreements, or that would prevent or materially delay the
consummation of the Transactions, other than events, changes or developments
relating to the economy in general or resulting from industry-wide developments
affecting companies in similar businesses; (b)(1) any granting by any Seller to
any officer or management Division Employee of any increase in compensation,
except in the ordinary course of business (including in connection with
promotions) consistent with past practice or as was required under employment
agreements in effect as of December 31, 1997, (2) any granting by any Seller to
any such officer or management Division Employee of any increase in severance
or termination pay, except as part of a standard employment package to any
person promoted or hired (but not, in any case, to any of the five most senior
officers), or as was required under employment, severance or termination
agreements in effect as of December 31, 1997, or (3) except in the ordinary
course of business consistent with past practice, any entry by any Seller into
any employment, consulting, severance, termination or indemnification agreement
with any executive officer or management Division Employee; (c) any acquisition
or any sale, lease or disposition of any material assets or properties of the
Division by any Seller, except in the ordinary course of business, consistent
with past practice; (d) any change in accounting methods, principles or
practices by any Seller, except insofar as such change may have been required
by a change in GAAP; or (e) any entry into any agreement, arrangement or
commitment to take any of the actions set forth in this Section 3.08.
SECTION 3.09. COMPLIANCE WITH APPLICABLE LAWS. Sellers and the
Acquired Assets are in compliance with all statutes, laws, regulations, rules,
judgments, orders and decrees of all Governmental Entities applicable to them
that relate to the Acquired Business (including any statutes, laws,
regulations, rules, judgments, orders and decrees incorporated expressly, by
reference or by operation of law into, or otherwise applicable to, any
Government Contract) except where the failure to be in compliance would not,
individually or in the aggregate, have a Material Adverse Effect on the
Acquired Business, materially impair the ability of any Seller to perform its
obligations under the Transaction Agreements or prevent or materially delay the
consummation of the Transactions. No Seller has received any written notice of
any administrative, civil or criminal investigation or audit (other than Tax
audits) by any Governmental Entity relating to the Acquired Business which has
not been resolved. Notwithstanding the foregoing, this Section 3.09 shall not
apply to Tax matters specifically governed by Section 3.13 or environmental
matters specifically governed by Section 3.15.
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SECTION 3.10. TITLE TO AND SUFFICIENCY OF ASSETS.
(a) Sellers have as of the date of this Agreement good,
valid and marketable title to the Acquired Assets in each case free and clear
of any Liens other than Permitted Liens.
(b) The Inventory has been, or will be upon receipt at
the Virginia Warehouse or the Chattanooga Warehouse, paid for by Sellers,
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. Disclosure Schedule Section
3.10(b) lists by stock keeping unit and quantity all Inventory purchased by
Sellers without the manufacturer's standard warranty.
(c) Attachment 1.3 lists all tangible personal property
(other than Inventory) which are Acquired Assets and the location thereof. All
of such personal property is in good operating condition, subject to ordinary
wear and tear.
(d) Except for the Retained Assets, the Acquired Business
includes all right, title and interest in and to all Acquired Assets that are
used in or that are being held for use or are otherwise necessary in the
operation, as currently conducted by Sellers, of the Division.
(e) Disclosure Schedule Section 3.10(e) contains a
complete and correct list of all government-owned property or
government-furnished equipment, including tooling and test equipment, provided
under, necessary to perform the obligation under, or for which Buyer could be
held accountable under, the Government Contracts transferred to Buyer pursuant
to this Agreement and such government-owned property is maintained by Sellers
in accordance with government approved property management system.
SECTION 3.11. RESERVES. The Division Balance Sheet sets forth all
reserves with respect to the Division existing as of December 31, 1997 and as
of the date hereof for uncollectible accounts, discounts and any other
deductions related to accounts receivable.
SECTION 3.12. LITIGATION. There are no civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending, or to the knowledge of Sellers, threatened, against Sellers that,
individually or in the aggregate, would (a) have a Material Adverse Effect on
the Acquired Business, (b) materially impair the ability of any Seller to
perform its obligations under the Transaction Agreements or (c) prevent or
materially delay the consummation of the Transactions. There are no
outstanding judgments, orders, decrees, stipulations or awards against any
Seller or its properties or businesses that, individually or in the aggregate,
would have a Material Adverse Effect on the Acquired Business, materially
impair the ability of any Seller to perform its obligations under the
Transaction Agreements or prevent or materially delay the consummation of the
Transactions. Disclosure Schedule Section 3.12 sets forth, as of the date
hereof, (x) each suit, action or proceeding
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and (y) each criminal investigation, in each case pending (or, to the knowledge
of Sellers, threatened), with respect to the Acquired Business.
SECTION 3.13. TAXES.
(a) All Tax Returns required to be filed by the Sellers
before the date hereof have been filed except where the failure to file would
not have an adverse effect on any of the Acquired Assets.
(b) Except as set forth on Disclosure Schedule Section
3.13(b), there are no material claims or investigations pending or, to Sellers'
knowledge, threatened in writing with respect to any Tax of the Acquired
Business or any Taxes (other than Income Taxes) relating to the Acquired
Assets.
(c) There is no Tax sharing or allocation agreement under
which the Acquired Business will have any obligations after the Closing Date.
(d) Sellers have timely paid, and will timely pay, all
Tax liabilities which relate to the Acquired Assets and which are incurred in
or attributable to the Pre-Closing Tax Period, the non-payment of which would
result in a Lien on any Acquired Asset, would otherwise adversely affect the
Acquired Business or would result in the Buyer becoming liable therefor.
(e) The Acquired Business does not report any income in
accordance with Section 460 of the Code.
(f) All resale exemption certifications required with
respect to customers of the Division have been obtained, are listed in
Disclosure Schedule Section 3.13(f) and are in full force and effect.
SECTION 3.14. EMPLOYEE BENEFIT PLANS.
(a) Disclosure Schedule Section 3.14 (i) lists and
describes the material terms of each Employee Plan and Foreign Plan and (ii)
identifies each Employee Plan and Foreign Plan that is intended to be a
"qualified plan" within the meaning of Section 401(a) of the Code. No Employee
Plan or Foreign Plan is subject to Title IV of ERISA. There does not now
exist, nor do any circumstances exist that could result in, any Controlled
Group Liability that would be a liability of Buyer or any of its ERISA
Affiliates as a result of the Transactions. No Employee Plan or Foreign Plan
is a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA or
a plan that has two or more contributing sponsors at least two of whom are not
under common control, within the meaning of Section 4063 of ERISA. Neither
Sellers nor any of their ERISA Affiliates have any liability for
post-retirement life, health, medical or other welfare benefits to Division
Employees,
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except as set forth in the Disclosure Schedule, and except for health
continuation coverage as required by Section 4980B of the Code or Part 6 of
Subtitle B of Title I of ERISA.
(b) Disclosure Schedule Section 3.14 lists, for each
Division Employee identified by Buyer to be hired as of the Closing Date,
Sellers' accrued vacation liability as of January 31, 1998.
SECTION 3.15. ENVIRONMENTAL MATTERS.
(a) (1) The Acquired Business is in compliance with
all applicable Environmental Laws except where the failure to be in compliance
would not, individually or in the aggregate, have a Material Adverse Effect on
the Acquired Business, materially impair the ability of any Seller to perform
its obligations under the Transaction Agreements or prevent or materially delay
the consummation of the Transactions.
(2) The Acquired Business has all Permits
required under Environmental Laws for the operation of the Acquired Business as
presently conducted (the "Environmental Permits") and there are no violations,
investigations or proceedings pending or, to the knowledge of Sellers,
threatened with respect to such Environmental Permits, except where the failure
to have such Environmental Permits or where the violation, investigation or
proceeding relating thereto would not, individually or in the aggregate, have a
Material Adverse Effect on the Acquired Business, materially impair the ability
of any Seller to perform its obligations under the Transaction Agreements or
prevent or materially delay the consummation of the Transactions.
(3) Since December 31, 1994, no notice,
notification, demand, request for information, citation, summons, complaint or
order has been received by or, to the knowledge of Sellers, is pending or
threatened by any Person against, any part of the Acquired Business or in
respect of any facilities it has used nor has any material penalty been
assessed against any of the Acquired Business with respect to any alleged
violation of any Environmental Law or liability thereunder, other than where
such notice, notification, demand, request for information, citation, summons,
complaint or order has been fully resolved, or where resolution would not,
individually or in the aggregate, have a Material Adverse Effect on the
Acquired Business, materially impair the ability of any Seller to perform its
obligations under the Transaction Agreements or prevent or materially delay the
consummation of the Transactions.
(4) No Hazardous Substance has been discharged,
generated, treated, manufactured, handled, stored, transported, emitted,
released or is present at any property now or previously owned, leased, used or
operated by any part of the Acquired Business in violation of any Environmental
Law, which violation, individually or in the aggregate, would have in a
Material Adverse Effect on the Acquired Business, materially impair the ability
of any Seller to perform its obligations under the Transaction Agreements or
prevent or materially delay the consummation of the Transactions.
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(b) Since January 1, 1994, there has been no
environmental investigation conducted of which Sellers have knowledge in
relation to the Acquired Business or any property or facility now or previously
owned or leased with respect to the Acquired Business with respect to any
matter which has had or would, individually or in the aggregate, have a
Material Adverse Effect on the Acquired Business, materially impair the ability
of any Seller to perform its obligations under the Transaction Agreements or
prevent or materially delay the consummation of the Transactions.
(c) The representations set forth in this Section 3.15
apply only to the facilities which are the subject of the sublease with respect
to the Chattanooga Warehouse, the Germany Lease and the sublease with respect
to the Virginia Warehouse, but apply to the Virginia Warehouse only with
respect to the period on and after January 1, 1997.
SECTION 3.16. BROKERS AND FINDERS. No Seller or any of its
directors, officers or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders fees in connection
with the Transactions.
SECTION 3.17. INTELLECTUAL PROPERTY.
(a) Unless otherwise indicated in Disclosure Schedule
Section 3.17(a), the Purchased Intellectual Property and the rights licensed or
assigned pursuant to the Ancillary Agreements constitute all of the
Intellectual Property (i) owned, developed or acquired by or on behalf of the
Sellers with respect to the Division or (ii) used by Sellers in the business
and operations of the Division. Unless otherwise indicated in Disclosure
Schedule Section 3.17(a), Sellers own, lease, license or have the right to use
the Purchased Intellectual Property (including with respect to owned
Intellectual Property, the exclusive right to use and license the same and have
the right to transfer the Purchased Intellectual Property to Buyer by Sellers'
sole act and deed). Disclosure Schedule Section 3.17(a) sets forth complete
and correct lists of:
(1) all patents, trademark registrations,
copyright registrations, mask work registrations and applications for any of
them which are part of the Purchased Intellectual Property;
(2) all license agreements granting to any Seller
license in Intellectual Property which licenses are included in the Acquired
Assets;
(3) all computer software programs, including
applications programs, operating system programs, network programs, database
programs, UNIX programs, internet programs, test programs and electronic data
interface programs, owned or used or held for use by any Seller in the business
or operations of the Division (the "Software"); and
(4) all licenses granted by any Seller to any
third party, including any other Seller, under any of the Purchased
Intellectual Property or Software.
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(b) Sellers own, lease, license or have the right to use
all the Software. Upon consummation of this Agreement, Buyer will be entitled
to continue to use all of the Purchased Intellectual Property, the rights
licensed pursuant to the Trademark License Agreement and the Software to the
same extent and under the same conditions that it has heretofore been used in
the Division, without financial obligations to any other Person. The Purchased
Intellectual Property, the rights licensed pursuant to the Trademark License
Agreement, the rights assigned pursuant to the Database and Software Agreement,
any Intellectual Property that constitutes a Retained Asset and Software
comprise all Intellectual Property and computer software programs necessary to
permit the operation of the Division by Sellers as now being conducted.
(c) To the knowledge of Sellers, no Purchased
Intellectual Property used in connection with the Division has been used,
divulged or appropriated for the benefit of any Person other than Sellers. No
Purchased Intellectual Property is owned or controlled by any officer, director
or employee of any Seller or any of its Affiliates.
(d) As of the date hereof, no Seller has made any claim
in writing of a violation, infringement, misuse or misappropriation by others
of rights of Sellers to or in connection with any Purchased Intellectual
Property used in connection with the Division.
(e) To the knowledge of Sellers, as of the date hereof,
there is no pending or threatened claim by any third Person of a violation,
infringement, misuse or misappropriation by any Seller in connection with the
Division of any Intellectual Property owned by any third Person, or of the
invalidity of any patent used in connection with the Division. To the knowledge
of Sellers, the conduct of the Acquired Business by Buyer following the Closing
in the manner currently conducted by Sellers will not result in the
infringement of any Intellectual Property owned by any Person. There are no
interferences or other contested inter partes proceedings, either pending or,
to the knowledge of Sellers, threatened, in any domestic or foreign copyright
office, patent and trademark office or any other Governmental Entity relating
to any pending application with respect to any Intellectual Property used in
connection with the Division.
SECTION 3.18. EMPLOYMENT MATTERS.
(a) Disclosure Schedule Section 3.18(a) sets forth (i) an
organizational chart for the Division as of the date of this Agreement
indicating the role of each Seller and its respective management in the
Division's operations; and (ii) a complete and accurate list of all Division
Employees as of December 18, 1997 showing for each: employer, name, current job
title or description, current salary level and any bonus, commission, deferred
compensation or other remuneration payable or expected to be paid with respect
to the twelve months ended March 31, 1998 in excess of $25,000, and describing
any existing written or oral compensation arrangement with such Employee.
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(b) There is no labor strike or work stoppage pending or,
to the knowledge of Sellers, threatened against the Acquired Business. Neither
Sellers nor any Affiliates of Sellers is a party to any collective bargaining
agreement relating to the Division Employees. To the knowledge of Sellers,
there is no material union representation or organizing effort pending or
threatened against any part of the Acquired Business.
(c) There are no unfair labor practice charges or
complaints pending or, to Sellers' knowledge, threatened by or on behalf of
any Division Employee or group of Division Employees.
(d) There are no complaints or charges pending or, to
Sellers' knowledge, threatened to be filed with any Governmental Entity or
arbitrator based on, arising out of, in connection with, or otherwise relating
to employment at the Division.
(e) Sellers are in compliance with all laws, and all
orders of any court, governmental agency or arbitrator relating to access to
facilities and employment, including such laws relating to wages, hours,
collective bargaining, discrimination, civil rights, affirmative action,
workers compensation, occupational safety and the payment of withholding and/or
social security and similar Taxes, except for any noncompliance which would not
have a Material Adverse Effect on the Acquired Business.
SECTION 3.19. CONTRACTS.
(a) Disclosure Schedule Section 3.19(a) lists all
Contracts described in clauses (i) through (xv) below to which any Seller is a
party and which relate to or involve the Division as currently operated by
Sellers or which are material to the continued operation of the Acquired
Business by Buyer. True, correct and complete copies of the Contracts referred
to in clauses (i)-(xv) below have been delivered to or made available to Buyer.
(i) Each Government Contract with respect to the
Division to which any Seller is a party;
(ii) Each note, debenture, letter of credit, bond
or surety, other evidence of indebtedness, guarantee, loan, credit or financing
agreement or instrument or other contract for money borrowed, including any
agreement or commitment for future loans, credit or financing in excess of
$75,000;
(iii) Each Contract not in the ordinary course of
business and involving expenditures or receipts of Sellers in excess of
$25,000;
(iv) Each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other Contract
affecting the ownership of, leasing of, title to, use of,
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or any leasehold or other interest in, any real or personal property and
involving aggregate payments in excess of $25,000;
(v) Each license agreement or other Contract with
respect to any Intellectual Property of Sellers or any other Person, including
any agreements with current or former employees, consultants, or contractors of
Seller regarding the ownership, appropriation or the nondisclosure of
Intellectual Property;
(vi) Each collective bargaining agreement or other
Contract to or with any labor union or other employee representative of a group
of employees relating to wages, hours, and other conditions of employment;
(vii) Each joint venture Contract, co-production or
partnership agreement, or limited liability company agreement;
(viii) Each Contract requiring capital expenditures
after the date hereof in an amount in excess of $25,000 or otherwise material
to Sellers;
(ix) Each distributorship, agency or
manufacturer's representative agreement;
(x) Each management, consulting or employment
Contract or severance agreement, including, without limitation, any Contract
(A) to employ or terminate executive officers or other personnel and other
Contracts with present or former officers, directors or shareholders of any
Seller or (B) that will result in the payment by, or the creation of any
commitment or obligation (absolute or contingent) to pay on behalf of any
Seller any severance, termination, "golden parachute," or other similar
payments to any present or former personnel following termination of employment
or otherwise as a result of the consummation of the Transactions;
(xi) Each distribution, franchise, license, sales
representative, commission, consulting, agency or advertising Contract which is
not cancelable on thirty (30) days notice without liability to any Seller;
(xii) Each material option to buy any property,
real or personal, or material option to sell any real property or personal
property;
(xiii) Each Contract containing covenants materially
limiting the freedom of any Seller to engage in any line of business or compete
with any Person anywhere in the world;
(xiv) Each open sales order, contract or firm
written quotation ("Backlog Contracts") for more than $10,000; and
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(xv) Each Contract pursuant to which any Seller is
required to indemnify a third party (other than with respect to product
warranties in the ordinary course of business).
(b) Except as set forth on Disclosure Schedule Section
3.19(a), all the Contracts listed pursuant to paragraph (a) hereof are (i) in
full force and effect and (ii) represent the legal, valid and binding
obligations of the Seller which is a party thereto and, to the knowledge of
Sellers, represent the legal, valid and binding obligations of the other
parties thereto. Except as set forth on Disclosure Schedule Section 3.19(b),
no condition exists or event has occurred which, with notice or lapse of time
or both, would constitute a default under such Contracts by any Seller or any
other party thereto, except where the occurrence of such event or existence of
any such condition would not have a Material Adverse Effect on the Division.
(c) Other than the TDA-3 proposal, Disclosure Schedule
Section 3.19(c) sets forth all bids, proposals or quotations for the sale of
goods or services by any Seller with respect to the Division and which were
outstanding (i) as of December 31, 1997 and (ii) as of the Closing Date. Other
than the TDA-3 proposal, Disclosure Schedule Section 3.19(c) identifies each
such bid, proposal or quotation by number and the party to which such bid,
proposal or quotation was made, the proposed price and Sellers' current
assessment of profit or loss at completion for each such bid, proposal or
quotation (it being understood that Sellers are not warranting the accuracy of
such current assessment). Except as set forth in Disclosure Schedule Section
3.19(c), there is no outstanding bid, proposal or quotation for the sale of
goods or services by any Seller with respect to the Division for which the
gross margin, as estimated in good faith by Sellers, would be less than 7% of
the proposed price set forth in such bid on the applicable Contract.
(d) Except as set forth on Disclosure Schedule Section
3.19(d), there are no Contracts for the sale of goods or services by any Seller
with respect to the Division as to which at the time of the most recent
scheduled contract milestone for any such Contract the work scheduled was more
than sixty (60) days late or, in the absence of scheduled contract milestones,
is currently estimated to be more than sixty (60) days late.
(e) Except as set forth on Disclosure Schedule Section
3.19(e), there are no Contracts, options or bids, proposals or quotations for
the sale of goods or services by any Seller with respect to the Division which
include provisions for a reduction in price or a liquidated damages clause for
late delivery.
(f) Except as set forth on Disclosure Schedule Section
3.19(f), there are no Contracts for the sale of goods or services by any Seller
with respect to the Division which require any Seller to be an account party to
a letter of credit or bank guarantee which allows the beneficiary to draw funds
without the specific consent of the account party, in the absence of an
arbitration or judicial ruling in favor of the beneficiary.
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(g) Except as set forth on Disclosure Schedule Section
3.19(g), (i) there is no outstanding bid, proposal or quotation for the sale of
goods or services by any Seller with respect to the Division where performance
of contractual effort will begin prior to contract award, and (ii) there are no
existing Contracts to which any Seller is a party with respect to the Division
where performance will continue while awaiting additional contractual funding.
(h) Except as set forth on Disclosure Schedule Section
3.19(h), there are no claims or requests for equitable adjustment outstanding
or, to the knowledge of Sellers, threatened under any Contracts in process.
SECTION 3.20. PERMITS. Sellers have all Permits relating to the
Acquired Business that are required to permit Sellers to carry on the
Division's business as it is presently conducted, except where the failure to
have such Permits would not, individually or in the aggregate, have a Material
Adverse Effect on the Acquired Business, materially impair the ability of any
Seller to perform its obligations under the Transaction Agreements or prevent
or materially delay the consummation of the Transactions; all such Permits are
in full force and effect; and Sellers are in compliance with the terms of such
Permits, except where the failure of such Permits to be in full force and
effect, or of any Seller to be in compliance with such Permits would not,
individually or in the aggregate, have a Material Adverse Effect on the
Acquired Business, materially impair the ability of any Seller to perform its
obligations under the Transaction Agreements or prevent or materially delay the
consummation of the Transactions.
SECTION 3.21. GOVERNMENT CONTRACTS.
(a) Sellers have complied in all material respects with
all applicable laws, regulations and contract provisions applicable to the
obtaining, formation, pricing, performance, billing, administration, and other
aspects of the Government Contracts listed on Disclosure Schedule Section
3.19(a), including compliance in all material respects with the Truth in
Negotiations Act, the Cost Principles and Cost Accounting Standards, the
Federal Acquisition Regulations (including FAR Part 39 with respect to "year
2000" compliance), the Buy American Act, the Trade Agreements Act, and with all
defective pricing, price, price reduction, or similar clauses contained or
incorporated in such Government Contracts, and Sellers are in compliance in all
material respects with the False Claims Act, or any similar applicable statutes
or regulations concerning false claims, false statements, defective pricing,
misrepresentation, or procurement integrity concerning any such Government
Contract, General Services Administration Multiple Award Schedule or Supply
Schedule, open market, commercial or other sale order involving or pursuant to
such Government Contracts, and Sellers are not aware of any allegation by any
Person that any Seller has not so complied.
(b) All of the Government Contracts relating to or
involving the Division have been legally awarded and each Seller which is a
party thereto is in compliance in all material respects with all terms and
conditions in such Government Contracts, including all terms and conditions
incorporated expressly by reference or by operation of law therein, and neither
the Sellers nor any
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other party has terminated, canceled or waived any material term or condition
of any such Government Contract.
(c) Except as set forth on Disclosure Schedule Section
3.21(c), no Seller has received any notice, written or oral, of performance or
administrative deficiencies relating to or involving any of such Government
Contracts which would have a Material Adverse Effect on the Acquired Business.
(d) The pricing, cost accounting, estimating, material
management and accounting, property and resource planning and procurement
systems relating to the Division have been properly disclosed to and, to the
extent required by applicable regulations, approved by the United States
government.
(e) To the Sellers' knowledge, no officer, director,
employee, agent, or representative of any Seller has made with respect to the
Division (1) any illegal political contributions (2) material payments from
corporate funds not recorded on the books and records of any Seller, (3)
payments from corporate funds that were falsely recorded on the books and
records of any Seller, (4) any payments from corporate funds, promises to pay,
or authorization of payment, or offer, gift or promise to give, to any
government officials or any foreign political party, official thereof or
candidate for foreign political office, or to any person while knowing that all
or a portion of such funds will be offered directly or indirectly to any
foreign official or any foreign political party, party official, or candidate
for foreign political office for the purpose of influencing the action of such
official, party official, or candidate for foreign political office or the
action of the government, or foreign political party, in order to obtain,
retain or direct business to or obtain, retain or direct licenses or other
special treatment for the Division.
(f) Except as set forth on Disclosure Schedule Section
3.21(f), neither Sellers, any of Sellers' Affiliates nor, to Sellers'
knowledge, any of their respective directors, officers or employees has been
debarred or suspended from participation in the award of Government Contracts
or subcontracts or from otherwise conducting business with the United States
government or any agency thereof, nor are there any facts or circumstances
which may form the basis of a debarment or suspension proceeding with respect
to the Sellers or any of Sellers' Affiliates or, to Sellers' knowledge, any of
their respective directors, officers or employees, in any such case, relating
to or involving the Division.
(g) Except as set forth on Disclosure Schedule Section
3.21(g), no Seller has received any notice of any "stop work orders", "cure
notice", "show cause notice" or any "terminations for convenience or default"
of any of the Government Contracts relating to or involving the Division.
(h) Sellers hold such security clearances as are required
to perform their respective Government Contracts or subcontracts. To Sellers'
knowledge, there are no facts or circumstances
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that could result in the suspension or termination of such clearances, or that
could render any Seller ineligible for such security clearances in the future.
All security measures required by the Department of Defense Industrial Security
Manual have been implemented.
(i) Except as set forth on Disclosure Schedule Section
3.21(i), there is no cost type Government Contract relating to or involving the
Division with a ceiling, cap or share ratio, which is or is likely to be
exceeded the result of which would have a Material Adverse Effect on the
Acquired Business.
SECTION 3.22. EXPORT CONTROL AND RELATED MATTERS.
(a) In connection with the Division, each Seller is in
compliance in all material respects with all United States and foreign Export
Control Laws.
(b) Except as set forth on Disclosure Schedule Section
3.22(b), each Seller has all necessary authority under the Export Control Laws
to conduct operations relating to the Division, including (i) all necessary
Permits for any pending export transactions, (ii) all necessary Permits for the
disclosure of information to foreign Persons and (iii) all necessary
registrations with Governmental Entities with authority to implement the Export
Control Laws.
(c) No Seller has participated directly or indirectly in
any boycotts or other similar practices in violation of the regulations of the
United States Department of Commerce or Section 999 of the Code.
SECTION 3.23. COOPERATIVE BUSINESS AGREEMENTS. Disclosure Schedule
Section 3.23 contains a complete and correct list of all of the written, oral
or "handshake" teaming arrangements, advance agreements, associate contractor
agreements, MOUs and MOAs, and modifications or amendments thereto, other than
TDA-3, to which any Seller is a party and which relate to or involve the
Division.
SECTION 3.24. BACKLOG.
(a) Disclosure Schedule Section 3.24(a) sets forth, with
respect to each Backlog Contract, the backlog of each Seller as it relates to
the Division as of (i) December 31, 1997 and (ii) as of the Closing Date, for
products and services to be provided by Sellers. Disclosure Schedule Section
3.24(a) includes the names of each customer, the dollar amount of backlog, any
dollar amount included which are unfunded by any Governmental Entity or other
customer in respect of undelivered orders, a brief description of the products
and services to be provided (or, in lieu thereof, the order therefor), the
proposed delivery dates therefor and any unexercised valid and subsisting
options in the backlog giving a brief description of the options and the
Contracts to which they relate.
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(b) Except as set forth in Disclosure Schedule Section
3.24(b), all of the Backlog Contracts (i) have been entered into in the
ordinary course of Sellers' business, and (ii) would, based on the facts as of
the Closing Date, be capable of performance by Sellers if Sellers retained the
Acquired Assets and the Assumed Liabilities, and made the planned capital
expenditures therefor, in accordance with the terms and conditions of each such
Contract.
SECTION 3.25. RESTRICTIVE AGREEMENTS. No Seller is a party to or
bound by any agreement, contract, policy, license, Permit, document,
instrument, arrangement or commitment relating to the Acquired Business that,
by its terms, would materially limit or restrict the freedom or ability of
Buyer or any of its Subsidiaries to compete in any line of business or with any
Person or in any geographic area after the Closing Date.
SECTION 3.26. SUPPLIERS. Except for the GSA letters of supply
(true and correct copies of which have been made available to Buyer),
Disclosure Schedule Section 3.26 sets forth a complete and accurate list of and
copies of Contracts with suppliers of products and services to which any Seller
is a party relating to the Division with a value in excess of $25,000 (a "Major
Supplier") during the year ended December 31, 1997. Sellers have delivered to
or otherwise made available for inspection by Buyer or its representatives
copies of such Contracts. Disclosure Schedule Section 3.26 also lists all
Sole-Source Suppliers with respect to the Division. No Major Supplier or
Sole-Source Supplier has declined to continue to act as such or has indicated
to any Seller any present or future intention to cease to do so or materially
adversely change the terms of such arrangements. Sellers have timely paid, and
will timely pay, all Liabilities which relate to the Contracts listed on
Disclosure Schedule Section 3.26 and which are incurred in or attributable to
the Pre-Closing Tax Period, the non-payment of which would result in a Lien on
any Acquired Asset, would otherwise adversely affect the Acquired Business or
would result in the Buyer becoming liable therefor.
SECTION 3.27. CUSTOMERS. Sellers have provided Buyer in respect of
the year ended December 31, 1997 a true and complete list of (i) the Division's
50 largest customers and (ii) the Division's sales from the 30 largest
customers. To the knowledge of Sellers, except as set forth on Disclosure
Schedule Section 3.27, (i) there are no outstanding disputes with any customer
referred to in clause (i) or (ii) of the previous sentence involving amounts in
excess of $10,000 individually or $75,000 in the aggregate with respect to any
single customer, and no customer referred to in clause (i) or (ii) of the
previous sentence has refused to continue to do business with the Division or
has stated to any Seller its intention not to continue to do business with the
Division.
SECTION 3.28. OWNERSHIP OF COMMON STOCK. No Seller or any
Affiliate of a Seller beneficially owns (as such term is defined in Rule 13d-3
under the Exchange Act) any Common Stock or has the right to acquire under any
circumstances, other than pursuant to this Agreement, any Common Stock.
SECTION 3.29. FULL DISCLOSURE. Neither this Agreement, any
Ancillary Agreement or the Disclosure Schedule contain any untrue statement of
a material fact or omit to state a material fact
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necessary to make the statements contained herein or therein not misleading, in
light of the circumstances under which they were made. There is no fact which
Sellers have not disclosed to Buyer in writing which any Seller presently
believes has or will have a Material Adverse Effect on the Division or on the
ability of any Seller to perform this Agreement, the Ancillary Agreements or
any Contracts to which any Seller is a party.
SECTION 3.30. CUMULATIVE EXCEPTIONS. The exceptions and
qualifications to the representations and warranties of Sellers in this Article
3 which are based upon such exceptions and qualifications not being "material"
or being "in all material respects," or not having a Material Adverse Effect
will not, individually or in the aggregate, have a Material Adverse Effect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
To induce Sellers to enter into the Transaction Agreements and to
consummate the Transactions, Buyer represents and warrants to Sellers that the
statements contained in this Article 4 are correct and complete as of the date
of this Agreement.
SECTION 4.01. CORPORATE ORGANIZATION AND QUALIFICATION. Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware.
SECTION 4.02. CORPORATE AUTHORITY. Buyer has, or in the case of
any Ancillary Agreement executed after the date hereof, will have, the
requisite corporate power and authority to execute, deliver and perform each
Transaction Agreement and to consummate the Transactions. The execution,
delivery and performance by Buyer of each Transaction Agreement and the
consummation by it of the Transactions have been duly authorized by its Board
of Directors, and, except for approval by its stockholders of the Conversion
Proposal, no other corporate proceedings on its part (including stockholder
approval) are or will be necessary to authorize any Transaction Agreement or
for it to consummate the Transactions. Subject to stockholder approval of the
Conversion Proposal, each Transaction Agreement is, or when executed and
delivered will be (assuming such agreement constitutes a valid and binding
obligation of each applicable Seller), a valid and binding agreement of Buyer,
enforceable against Buyer in accordance with the terms thereof except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally, and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
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SECTION 4.03. NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) None of the execution, delivery or performance by
Buyer of each Transaction Agreement to which it is or will be a party or the
consummation by Buyer of the Transactions (i) subject to stockholder approval
of the Conversion Proposal and the effectiveness of the GTSI Charter Amendment,
will conflict with, or result in a violation or breach of, the Amended and
Restated GTSI Charter or the Amended and Restated GTSI Bylaws or (ii) subject
to the matters referred to in Section 4.03(b), will conflict with, or result in
a violation or breach of, or constitute a default (with or without due notice
or lapse of time or both) under, or give rise to any right of termination,
amendment, cancellation or acceleration of any obligation under, or result in
the creation of any Lien upon any of the properties or assets of Buyer (other
than inventory, including the Current Inventory acquired at the Closing) either
under (1) any of the terms, conditions or provisions of any Contract or of any
Permit to which Buyer is a party or by which any of its properties or assets
may be bound, or (2) any judgment, order, decree, statute, law, regulation or
rule applicable to Buyer, except, in the case of clause (ii), for conflicts,
violations, breaches, defaults, rights, losses or Liens that would not,
individually or in the aggregate, (x) materially impair the ability of Buyer to
perform its obligations under the Transaction Agreements or (y) prevent or
materially delay the consummation of the Transactions.
(b) No consent, approval, order or authorization of or
registration with any Governmental Entity or any other Person is required with
respect to Buyer in connection with the execution, delivery or performance by
Buyer of each Transaction Agreement to which it is or will be a party or the
consummation by it of the Transactions, except for (i) compliance with any
applicable requirements of the HSR Act, (ii) assignment and novation of
Government Contracts, and (iii) the consents, approvals, orders,
authorizations, registrations, declarations, filings and agreements listed on
Attachment 4.03.
SECTION 4.04. CAPITALIZATION OF GTSI.
(a) On the date hereof, upon the effectiveness of the
Closing, GTSI will have an authorized capitalization consisting of 10,000,000
shares of Common Stock, par value $.005 per share, and 580,850 shares of
undesignated preferred stock, par value $.25 per share, of which 6,756,180
shares of Common Stock and 15,375 shares of Series C Preferred Stock will be
issued and outstanding and 49,904 shares of Common Stock will be in the
treasury of GTSI. All of such issued and outstanding Common Stock has been
duly authorized and validly issued and is fully paid and nonassessable, and is
not subject to any preemptive rights of other stockholders. The Series C
Preferred Stock to be issued to BTG pursuant to this Agreement, when issued and
delivered and paid for at the Closing in accordance with the terms hereof, will
be validly issued, fully paid and nonassessable and not subject to any Liens or
preemptive rights, and BTG will not be subject to personal liability by reason
of being a holder of such shares. All other capital stock of GTSI to be
outstanding on the Closing Date shall have been duly authorized and validly
issued and shall be fully paid and nonassessable, and shall not have been
subject to any preemptive rights of other
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stockholders. The Common Stock is currently traded on the National Market
Segment of The Nasdaq Stock Market.
(b) There are no outstanding options, warrants, rights,
calls, commitments, conversion rights, rights of exchange, plans or other
agreements of any character providing for the purchase, issuance or sale of
GTSI capital stock, except as contemplated by this Agreement, or as disclosed
on Attachment 4.04(b).
SECTION 4.05. GTSI SEC DOCUMENTS.
(a) Buyer has furnished Sellers with a correct and
complete copy of each report, schedule, registration statement and definitive
proxy statement heretofore filed by GTSI with the SEC since December 31, 1996
(the "GTSI SEC Documents"), which are all the documents (other than preliminary
material) that GTSI was required to file with the SEC since December 31, 1996.
As of their respective dates, none of the GTSI SEC Documents (including all
exhibits and schedules thereto and documents incorporated by reference therein)
contained any untrue statements of a material fact or omissions of a material
fact necessary so as not to render the statements therein misleading and in the
case of documents other than a registration statement, in light of the
circumstances under which they were made, and the GTSI SEC Documents complied
when filed in all material respects with the then applicable requirements of
the Securities Act or the Exchange Act, as the case may be. GTSI's financial
statements included in the GTSI SEC Documents complied in all material respects
with the then applicable accounting requirements and the published SEC rules
and regulations with respect thereto, were prepared in accordance with
generally accepted accounting principles during the periods involved (except as
may have been indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Form 10-Q promulgated by the SEC) and fairly
present, in all material respects (subject, in the case of the unaudited
statements, to normal, recurring audit adjustments), the consolidated financial
position of GTSI and its consolidated subsidiaries as at the dates thereof and
the consolidated results of their operations and cash flows for the periods
then ended. The consolidated balance sheet of GTSI and its consolidated
subsidiaries as September 30, 1997, is referred to herein as the "GTSI Balance
Sheet."
(b) Except as disclosed in the GTSI SEC Documents, since
September 30, 1997, no event has occurred which has had or is reasonably likely
to have a Material Adverse Effect on GTSI and its subsidiaries, taken as a
whole.
SECTION 4.06. NO GENERAL SOLICITATION. Neither GTSI nor any of its
Affiliates has engaged in any form of general solicitation or general
advertising in connection with the purchase and sale of GTSI securities
hereunder, nor made any other sales or solicited any other Persons to buy GTSI
securities that would require registration under the Securities Act of the
Common Stock contemplated to be sold and purchased hereunder.
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SECTION 4.07. TITLE TO SERIES C PREFERRED STOCK AND COMMON STOCK.
Upon consummation of the Closing, BTG shall have received from GTSI good and
marketable title to all of the Series C Preferred Stock issued to it, free and
clear of all Liens other than as set forth in the Standstill Agreement or
imposed by law. Upon stockholder approval of the Conversion Proposal and the
effectiveness of the GTSI Charter Amendment, BTG shall receive from GTSI good
and marketable title to all of the Common Stock issued to it upon conversion of
the Series C Preferred Stock, free and clear of all Liens other than as set
forth in the Standstill Agreement or imposed by law.
SECTION 4.08. BROKERS AND FINDERS. Except as set forth in
Attachment 4.08, none of Buyer or any of its directors, officers or employees
has employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finders' fees in connection with the Transactions.
SECTION 4.09. FULL DISCLOSURE. Neither this Agreement or any
Ancillary Agreement contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained herein or
therein not misleading, in light of the circumstances under which they were
made. There is no fact which Buyer has not disclosed to Sellers in writing
which Buyer presently believes has or will have a Material Adverse Effect on
Buyer or on the ability of Buyer to perform this Agreement or the Ancillary
Agreements.
SECTION 4.10. CUMULATIVE EXCEPTIONS. The exceptions and
qualifications to the representations and warranties of Buyer in this Article 4
which are based upon such exceptions and qualifications not being "material" or
being "in all material respects," or not having a Material Adverse Effect will
not, individually or in the aggregate, have a Material Adverse Effect.
ARTICLE 5
COVENANTS OF BUYER AND SELLERS
Buyer and Sellers agree that:
SECTION 5.01. STOCKHOLDERS MEETINGS.
(a) Buyer shall take all action necessary, in accordance with
applicable law, the GTSI Charter and the GTSI Bylaws, to convene a special or
annual meeting of its stockholders (the "First Meeting") no later than January
1, 1999 for the purpose of, among other things, considering and taking action
upon a resolution to approve the Conversion Proposal. Buyer shall not hold or
convene a special or annual meeting of its stockholders for any purpose prior
to the First Meeting. The GTSI Board will recommend that holders of Common
Stock vote in favor of the adoption of Conversion Proposal at the First Meeting
and each current member of the GTSI Board will vote any Common Stock over which
he or she has voting power in favor of the Conversion Proposal.
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(b) If the Conversion Proposal is not approved at the First
Meeting, GTSI shall take all action necessary, in accordance with applicable
law, the GTSI Charter and the GTSI Bylaws, to convene a special or annual
meeting of its stockholders (the "Second Meeting") no later than January 1,
2000 for the purpose of, among other things, considering and taking action upon
a resolution to approve the Conversion Proposal. The GTSI Board will recommend
that holders of Common Stock vote in favor of the adoption of Conversion
Proposal at the Second Meeting and each current member of the GTSI Board will
vote any Common Stock over which he or she has voting power in favor of the
Conversion Proposal .
SECTION 5.02. PROXY STATEMENT.
(a) GTSI will, consistent with the timing contemplated in Section
6.01(a), prepare and file a proxy statement (the "First Proxy Statement") with
the SEC relating to the First Meeting. GTSI will use its reasonable good faith
efforts to respond to any comments of the SEC or its staff and to cause the
First Proxy Statement to be mailed to GTSI's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
SEC or its staff. GTSI will provide Sellers with a copy of the preliminary
First Proxy Statement and all modifications thereto prior to filing or delivery
to the SEC and will consult with Sellers in connection therewith. GTSI will
notify Sellers promptly of the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff for amendments or supplements
to the First Proxy Statement or for additional information and will supply
Sellers with copies of all correspondence between GTSI or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the First Proxy Statement or the First Meeting. Sellers will
cooperate and furnish promptly all information required (including audited or
unaudited financial statements for the Division) for inclusion in the First
Proxy Statement or any amendment or supplement thereto. If at any time prior
to the First Meeting there shall occur any event that should be set forth in an
amendment or supplement to the First Proxy Statement, GTSI will promptly
prepare and mail to its stockholders such an amendment or supplement. The
information provided by either party for use in the First Proxy Statement shall
be true and correct in all material respects without omission of any material
fact which is required to make such information no false or misleading. No
representation, covenant or agreement is made by either party with respect to
information supplied by the other party for inclusion in the First Proxy
Statement.
(b) If GTSI is obligated to hold the Second Meeting pursuant to
Section 5.01(b), GTSI shall, consistent with the timing contemplated in Section
5.01(b), prepare and file a proxy statement (the "Second Proxy Statement") with
the SEC relating to the Second Meeting. The rights and obligations of GTSI and
Sellers set forth in Section 5.02(a) with respect to the First Proxy Statement
shall apply equally to the Second Proxy Statement.
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SECTION 5.03. ASSIGNMENTS; NOVATION OF GOVERNMENT CONTRACTS.
(a) GOVERNMENT CONTRACTS. The parties acknowledge that,
in accordance with FAR Section 42.1204 and other applicable U.S. Government
policy and guidance, Sellers and Buyer are required to enter into a novation
agreement or agreements with the U.S. Government. The parties acknowledge and
agree that they are consummating the transactions hereunder prior to obtaining
consents to the assignment or novation of the Government Contracts. Buyer
hereby acknowledges that Sellers' failure to obtain such consents or novations
prior to Closing shall not, by itself, constitute a breach of this Agreement.
Sellers and Buyer will cooperate fully with each other and will use all
reasonable efforts to obtain consents to the assignment, or the novation, of
all Government Contracts, and Sellers hereby agree expeditiously to take all
action necessary to request in accordance with FAR Section 42.12 that the U.S.
Government execute novation agreements recognizing Buyer as the successor in
interest thereto. Sellers and Buyer shall use all reasonable efforts to obtain
approvals of all required novations or assignments, including the execution and
delivery of agency agreements appointing Buyer as an agent of Sellers with
respect to each Government Contract relating to or involving the Division until
such Government Contract is novated, and the provision of the guarantee of
performance required for novation of contracts pursuant to FAR Sections
42.1201, 42.1204(e). Nothing in this Agreement, however, shall require (i)
Sellers or Buyer to pay any consideration for any such consent or novation, or
(ii) Buyer to accept any conditions, requirements, amendments or limitations
(other than those contained in the underlying contract) which Buyer determines,
in its sole discretion, to be unacceptable.
(b) PERFORMANCE UNDER NON-ASSIGNED CONTRACTS. With
respect to any Government Contracts that cannot be assigned to Buyer or novated
on the Closing Date, Sellers and Buyer shall cooperate so that the performance
obligations of Seller thereunder shall, unless not permitted by such Government
Contract, be deemed to be subcontracted or delegated to Buyer until such
Government Contract has been assigned or novated. Buyer or any of its
Subsidiaries, as a subcontractor or delegate, shall perform such Government
Contracts and Sellers shall, as soon as practicable, pay over to Buyer in full
any amounts received by Sellers as a result of performance by Buyer of such
Government Contracts. Prior to the assignment or novation of such Government
Contracts to Buyer, Sellers, as the contracting party, shall take such timely
action as is reasonably necessary to allow Buyer or any of its Subsidiaries to
perform such Government Contracts and to protect any rights that may exist or
accrue under such Government Contracts until they are assigned or novated.
(c) ASSIGNMENT AFTER CLOSING. If, after the Closing
Date, Sellers and Buyer obtain the necessary consent for the assignment or
novation of a Government Contract for which an assignment or novation is
required, then such Government Contract shall be deemed to be assigned and
transferred to Buyer promptly after Sellers and Buyer obtain such consent or
novation. Sellers shall reimburse Buyer for any monetary benefit received by
Sellers (net of actual costs paid or incurred by Sellers in connection with
such Government Contract prior to consent or novation) that would have accrued
to Buyer had the Government Contract been assigned or novated as of the
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Closing Date. Any subcontract or other Government Contract which Sellers and
Buyer have theretofore entered into or agreed upon in respect of such contract
shall be terminated effective as of the date of such assignment.
(d) BIDS. Sellers and Buyer shall cooperate with each
other and use their best efforts to preserve all bids, quotations and proposals
made in the ordinary course of business of the Division and to facilitate the
award thereof consistent with applicable legal requirements. Any contracts
awarded to Sellers pursuant to such bids, quotations and proposals shall,
subject to the consent of Buyer, be deemed to be Assumed Liabilities and, in
the case of Contracts with the U.S. Government, shall be deemed to be
"Government Contracts" for purposes of this Agreement and shall be governed by
this Section 5.03. In any instance where, prior to Closing, Sellers and Buyer
have submitted a bid or proposal in response to the same solicitation, such
bids or proposals shall be kept confidential from the other party. Sellers and
Buyer shall disclose to the soliciting organization or Governmental Entity in
connection with such bids or proposals the existence of this Agreement and the
letter of intent related to this Agreement. Sellers agree to continue, subject
to reasonable business judgment, to pursue any such bids or proposals until
such time as an award decision has been made. This Section 5.03(d) shall not
apply to any proposal by Sellers or Buyer with respect to TDA-3.
(e) DEFERRED REVENUE. If after the Closing Date Buyer
performs services and/or delivers products under a Contract identified in
Attachment 5.03(e) with respect to which Sellers have deferred revenue recorded
as of the Closing Date, not to exceed the amount set forth in Attachment
5.03(e), Sellers shall pay promptly to Buyer the amount of such deferred
revenue recorded with respect to such services and/or products.
(f) RETURNED PRODUCTS. Buyer shall retain any Returned
Products and shall promptly pay to Sellers upon receiving a Returned Product an
amount equal to the then current fair market value of such Returned Product,
less a handling fee of ten percent (10%) of such amount. Sellers shall issue
to the customer who returned such Returned Product a credit equal to the amount
paid by such customer for such Returned Product. If Buyer ships to a customer
a replacement product for a Returned Product, and invoices the customer
therefor, and such customer does not pay the amount due under such invoice
within 30 days after the invoice is mailed, Buyer shall invoice Sellers for
such amount and Sellers shall pay such amount within 30 days after receipt of
such invoice.
SECTION 5.04. NONCOMPETE.
(a) For the period beginning on the Closing Date and
continuing until the sixth anniversary of the Closing Date, Sellers shall not,
and shall use their commercially reasonable efforts to cause their directors,
officers, employees and Affiliates not to: (i) cause, induce or encourage any
Division Employees who are or become employees of Buyer or its Affiliates to
leave such employment, provided that nothing in this Section 5.04(a)(i) shall
preclude Sellers from hiring any such employee responding to a generally
circulated employment advertisement; (ii) cause, induce or encourage any actual
or prospective customer, supplier, manufacturer or licensor of the Division or
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the Acquired Business, or any other Person who has a business relationship with
any Seller, to terminate or change any such actual or prospective relationship
in a manner which would be adverse to the Division or the Acquired Business; or
(iii) subject to Section 5.04(d), conduct, participate or engage, directly or
indirectly (whether as a principal, sole proprietor, partner, stockholder,
agent, consultant, subcontractor, joint venturer, team member or in any other
capacity), acquire, own or have any interest (other than a three percent (3%)
or less ownership in an entity whose securities are traded on a recognized
securities exchange or quotation system), in any business, or support any
product or any business, that is competitive with the Acquired Business or the
Division (as conducted on the Closing Date or at any time during the two years
immediately prior to the Closing Date). The covenant in the foregoing sentence
shall encompass the activities of each Seller and its directors, officers,
employees and Affiliates in all areas of the United States and in Europe.
Sellers acknowledge that the Division is a nationwide business and that its
scope also includes Europe and agree that this covenant is reasonable with
respect to its duration, geographical area and scope. Sellers' obligation
under this Section 5.04 shall include taking all steps reasonably necessary to
enforce Sections 7 and 8 of the Employment and Noncompetition Agreement dated
as of October 20, 1995 by and between Concept Automation, Inc. of America and
Xxxxxx Xxxxxxx.
(b) The covenants and undertakings contained in this
Section 5.04 relate to matters which are of a special, unique and extraordinary
character and a violation of any of the terms of this Section 5.04 will cause
irreparable injury to Buyer, the amount of which will be impossible to estimate
or determine and which cannot be adequately compensated. Therefore, Buyer will
be entitled to an injunction, restraining order or other equitable relief from
any court of competent jurisdiction in the event of a breach of this Section
5.04. The rights and remedies provided by this Section 5.04 are cumulative and
in addition to any other rights and remedies which Buyer may have hereunder or
at law or in equity. If Buyer were to seek damages for any breach of this
Section 5.04, the portion of the Purchase Price delivered to Sellers hereunder
which is attributed by the parties to the foregoing covenant shall not be
considered a measure of or limit on such damages.
(c) The parties agree that, if any court of competent
jurisdiction in a final nonappealable judgment determines that a specified time
period, a specified geographical area, specified business limitation or any
other relevant feature of this Section 5.04 is unreasonable, arbitrary or
against public policy, then a lesser time period, geographical area, business
limitation or other relevant feature which is determined to be reasonable, not
arbitrary and not against public policy may be enforced against the applicable
party.
(d) Notwithstanding any other provision of this Section
5.04, if any Retained Contract requires any Seller to deliver products in a
manner that would be competitive with Buyer under Section 5.04(a) (a "Product
Requirement"), such Seller may nonetheless fulfill such Product Requirement
through a third party provided it first satisfies the following requirements.
Seller shall notify Buyer's Contact Person in writing of the Product
Requirement, including therein sufficient detail for Buyer to respond
professionally and setting forth a date by which Buyer must respond. Unless
another time period is specified in the notification and is reasonably required
to satisfy the
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Product Requirement, Buyer shall have three calendar days unless otherwise
specified to submit to Seller's Contact Person a written proposal for
fulfilling the Product Requirement. If such proposal is not received within
such three-day period or the other time period so specified, Seller may fulfill
the Product Requirement through another source. If Buyer's proposal is
received within the requisite period, Buyer and Seller shall negotiate in good
faith the terms under which Buyer would fulfill such Product Requirement. If
the parties are unable to reach agreement within a reasonable time and have
exhausted the dispute procedure in Section 5.04(e), Seller may fulfill the
Product Requirement through another source. Buyer's "Contact Person" shall
initially be Xxxxxxx Xxxxxxx. Sellers' "Contact Person" shall initially be
Xxxx Xxxxxxx.
(e) If the Contact Persons are unable to reach agreement
with respect to a Product Requirement, the matter, upon written request of
either party, shall be referred to the chief executive officer of the other
party for resolution. The chief executive officers shall promptly meet in a
good faith effort to resolve the dispute. If the chief executive officers do
not resolve the dispute within 14 calendar days after reference of the matter
to them, Seller shall be free to fulfill the Product Requirement through
another source.
(f) For a period of one year after the Closing Date,
Buyer shall not cause, induce or encourage any non-Division employee of Sellers
or its Affiliates to leave such employment; provided that nothing in this
Section 5.04(f) shall preclude Buyer from hiring any such employee responding
to a generally circulated employment advertisement.
SECTION 5.05. PUBLIC ANNOUNCEMENTS.
(a) The initial press release relating to the Transaction
Agreements will be a joint release. Buyer and Sellers will consult with each
other before issuing any further press release or making any other public
statement with respect to the Transaction Agreements and the Transactions that
differs substantially from previously approved statements and, except as may be
required by applicable law or any listing agreement with any securities
exchange or the Nasdaq Stock Market, will not issue any such press release or
make any such public statement unless the text of such statement shall first
have been agreed by the parties.
(b) Sellers and Buyer shall cooperate in making
communications with Division Employees with respect to Employee Plans
maintained by Sellers or Buyer and with respect to other matters arising in
connection with the purchase and sale of the Acquired Assets hereunder.
SECTION 5.06. FURTHER ASSURANCES. At and after the Closing Date,
Sellers will execute and deliver any bills of sale, assignments or assurances
and take and do, any other actions and things reasonably necessary to vest,
perfect or confirm of record or otherwise in Buyer any and all right, title and
interest in, to and under any of the rights, properties or assets of the
Acquired Business acquired or to be acquired by Buyer as a result of, or in
connection with, the purchase and sale of the Acquired Assets hereunder.
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SECTION 5.07. ADMINISTRATION OF ACCOUNTS.
(a) All payments and reimbursements made in the ordinary
course by any third party in the name of or to any Seller in connection with or
arising out of the Acquired Business after the Closing Date (including all
vendor rebates with respect to Current Inventory and Noncurrent Inventory sold
to Buyer pursuant to this Agreement and products sold after the Closing Date)
shall be held by such Seller in trust to the benefit of Buyer, and, immediately
upon receipt by such Seller of any such payment or reimbursement, such Seller
shall pay over to Buyer the amount of such payment or reimbursement without
right of set off.
(b) All payments and reimbursements made in the ordinary
course by any third party in the name of or to Buyer in connection with or
arising out of the Retained Assets and the Retained Liabilities after the
Closing Date (including vendor rebates with respect to Current Inventory and
Noncurrent Inventory sold to Buyer pursuant to this Agreement and products sold
on or prior to the Closing Date) shall be held by Buyer in trust to the benefit
of Sellers, and, immediately upon receipt by Buyer of any such payment or
reimbursement, Buyer shall pay over to BTG, as agent for Sellers, the amount of
such payment or reimbursement without right of set off.
SECTION 5.08. USE OF STATIONERY, ETC. To the extent that any
invoice, stationery or other printed materials acquired by Buyer pursuant to
this Agreement shall contain the name "BTG" or the name of any other Seller or
its Affiliates, Buyer may continue to use such materials in respect of the
Acquired Business until the earlier to occur of (i) the 180th day after the
Closing Date and (ii) the date on which the existing supply thereof shall be
exhausted, and neither Sellers nor any Affiliate of Sellers shall prohibit or
bring any action to enjoin the use of such materials by Buyer; provided that
Buyer shall in any event be entitled to use such materials in accordance with
the terms of the Trademark License Agreement, Novation Subcontracts, Royalty
Subcontracts and Distribution Agreement.
SECTION 5.09. NASDAQ FILINGS. Buyer shall make in a timely fashion
all notice and other filings required by The Nasdaq Stock Market with regard to
the issuance of the Series C Preferred Stock and the issuance of the Common
Stock upon conversion of the Series C Preferred Stock.
SECTION 5.10 PENTAGON STORE. Sellers agree to use commercially
reasonable efforts to make available for Buyer's use at Sellers' store at the
Pentagon, at no cost to Buyer, one desk and three passes, and to permit Buyer
to showcase "GTSI" on the premises.
SECTION 5.11 WARRANTY SERVICE. Sellers agree to cooperate with Buyer
after the Closing to identify all products shipped under warranty by Sellers on
or before the Closing Date and to identify and perform at its own cost such
warranty requirements at Buyer's request.
SECTION 5.12. REASONABLE EFFORTS. Each party will use reasonable
efforts to take, or cause to be taken, all actions necessary, proper or
advisable under applicable laws and regulations to comply with the foregoing
covenants.
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ARTICLE 6
TAX MATTERS
SECTION 6.01. TAX COVENANTS.
(a) All Returns required to be filed with any Taxing
Authority on or before the Closing Date with respect to any Pre-Closing Tax
Period by, or with respect to, the Acquired Business will be filed when due in
accordance with all applicable laws (taking into account any extension of a
required filing date) and Sellers shall pay or cause to be paid all Taxes as
shown on such Returns and all other Returns required to be filed with respect
to the Acquired Business (excluding any separate Returns required to be filed
by the Acquired Business) with respect to any Pre-Closing Tax Period will be
filed by Sellers when due (taking into account any extension of a required
filing date) and Sellers shall pay or cause to be paid all Taxes as shown on
such Returns.
(b) If any claim or demand for Taxes with respect to any
Pre-Closing Tax Period of the Acquired Business is asserted in writing against
Buyer or any of its Affiliates, Buyer shall notify Sellers as promptly as
practicable (taking into account the time in which a response is required), but
in no event later than 10 days of such claim or demand, and shall give Sellers
such information with respect thereto as Sellers may reasonably request.
Sellers may discharge, at any time, its indemnification obligation with respect
to such Taxes under this Agreement by paying to Buyer the amount of the
indemnifiable loss (inclusive to any amount payable under Section 10.02(d)),
calculated on the date of such payment. Sellers may, at their own expense,
participate in and assume the defense of any such claim, suit, action or
proceeding (including any Tax audit). If Sellers assume such defense, Buyer
shall have the right (but not the duty) to participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel employed
by Sellers. Whether or not Sellers choose to defend or prosecute any claim,
all of the parties hereto shall cooperate in the defense or prosecution
thereof. Sellers shall not be liable under Section 8.03 with respect to any
Tax referred to in this Section 6.01(b) resulting from a claim or demand the
defense of which Sellers were not offered the opportunity to assume as provided
under this Section 6.01(b) to the extent Sellers' Liability under this
Agreement is adversely affected as a result thereof.
(c) For all purposes of the Agreement, except as provided
in Section 6.02, all Taxes for a taxable period which includes (but does not
end on) the Closing Date shall be allocated based upon a closing-of-the-books
method.
SECTION 6.02. TRANSFER AND PROPERTY TAXES.
(a) All excise, sales, use, value added, registration
stamp, recording, documentary, conveyancing, franchise, property, transfer,
gains and similar Taxes, levies, charges and fees including any deficiencies,
interest, penalties, additions to tax or additional amounts excluding any
Income Taxes (collectively, "Transfer Taxes") incurred in connection with the
Transactions shall be borne by
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Sellers. Buyer and Sellers shall use reasonable efforts to minimize the amount
of all Transfer Taxes and shall cooperate in providing each other with any
appropriate resale exemption certifications and other similar documentation.
Sellers shall make the filings, reports, or returns and to handle any audits or
controversies with respect to any applicable Transfer Taxes, and Buyer shall
cooperate with respect thereto as necessary.
(b) All property Taxes and similar ad valorem obligations
levied with respect to the Acquired Assets or the assets of the Acquired
Business for a taxable period which includes (but does not end on) the Closing
Date (collectively, the "Apportioned Obligations") shall be apportioned between
Sellers and Buyer based on the number of days of such Taxable period included
in the Pre-Closing Tax Period and the number of days of such Taxable period
after the Closing Date (with respect to any such Taxable period, the
"Post-Closing Tax Period"). Sellers shall be liable for the proportionate
amount of such taxes that is attributable to the Pre-Closing Tax Period, and
Buyer shall be liable for the proportionate amount of such Taxes that is
attributable to the Post-Closing Tax Period. Upon receipt of any xxxx for
property Taxes relating to the Acquired Assets or the assets of the Acquired
Business, each of Sellers and Buyer shall present a statement to the other
setting forth the amount of reimbursement to which each is entitled under this
Section 6.02(b) together with such supporting evidence as is reasonably
necessary to calculate the proration amount. The proration amount shall be
paid by the party owing it to the other within 30 days after delivery of such
statement. If either Sellers or Buyer shall make any payment for which it is
entitled to reimbursement under this Section 6.02(b), the other party shall
make such reimbursement promptly but in no event later than 10 days after the
presentation of a statement setting forth the amount of reimbursement to which
the presenting party is entitled along with such supporting evidence as is
reasonably necessary to calculate the amount of reimbursement.
SECTION 6.03. COOPERATION. Buyer and Sellers agree to furnish or
cause to be furnished to each other, upon request, as promptly as practicable,
such information and assistance relating to the Acquired Business and the
Acquired Assets (including access to books and records) as is reasonably
necessary for the filing of all Tax Returns, the making of any election
relating to Taxes, the preparation for any audit by any taxing authority, and
the prosecution or defense of any claim, suit or proceeding relating to any
Tax. Buyer and Sellers shall retain all books and records with respect to
Taxes pertaining to the Acquired Assets for a period of at least six years
following the Closing Date. At the end of such period, each party shall
provide the other with at least 30 days prior written notice before destroying
any such books and records, during which period the party receiving such notice
can elect to take possession, at its own expense, of such books and records.
Sellers and Buyer shall cooperate with each other in the conduct of any audit
or other proceeding relating to Taxes involving the Acquired Assets or the
Acquired Business. Sellers agree to provide Buyer with such information
relating to the Division as is necessary to permit Buyer to file appropriate
payroll Tax Returns, including determining the extent to which wages paid by
Sellers are to be taken into account in determining Buyer's annual wage
limitations for social security Tax purposes.
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SECTION 6.04. REFUNDS. Sellers shall be entitled to any credits or
refunds of Taxes of the Acquired Business with respect to any Pre-Closing Tax
Period, including interest thereon, and Buyer shall pay or cause prompt payment
to be made to Sellers of any credits or refunds of such Taxes and interest
thereon received by Buyer or any of its Affiliates, reduced by any Income Taxes
payable on account of interest on such credits or refunds.
ARTICLE 7
EMPLOYEE BENEFITS
SECTION 7.01. EMPLOYEES; ALLOCATION OF LIABILITIES; WARN ACT.
(a) Prior to and on February 14, 1998, all obligations
for salaries, wages, vacation, sick leave, severance, bonuses, other employment
benefits and related payroll items with respect to the Division Employees shall
be Retained Liabilities and shall be the responsibility of and paid by Sellers.
(b) As of and after February 15, 1998, Buyer shall have
the right, in its sole discretion, to hire some or all of the Division
Employees and, upon such hiring, all obligations for salaries, wages, vacation
(except as set forth in the following sentence), sick leave, severance,
bonuses, commissions and other employment benefits and related payroll items
with respect to the Division Employees accrued with respect to the period prior
to such hiring shall remain the responsibility of and paid by Sellers and such
obligations with respect to Division Employees not hired by Buyer shall be the
responsibility of and paid by Sellers. Buyer shall assume all accrued vacation
with respect to Division Employees that Buyer hires on or after the Closing and
Sellers shall remit to Buyer a cash payment or payments in an amount equal to
(i) the value of such accrued vacation, to the extent that such amount exceeds
$100,000 in the aggregate, promptly after such Division Employees are hired by
Buyer, less (ii) $161,959 which has been deducted from the cash portion of the
Purchase Price.
(c) The terms and conditions of the Division Employees
hired by Buyer shall be upon such terms and conditions as Buyer, in its sole
discretion, shall determine. Upon such hiring, all obligations for salaries,
wages, vacation (except as set forth in Section 7.01(b)), sick leave,
severance, bonuses, commissions and other employment benefits and related
payroll items with respect to such persons with respect to the period after
such hiring shall be the responsibility of and paid by Buyer. Upon request of
Buyer, Sellers shall provide Buyer reasonable access to data before and after
the Closing (including computer data and personnel records) regarding the ages,
dates of hire, benefits, compensation and job description of the Division
Employees. Sellers will provide Buyer with reasonable opportunities to enter
into discussions with and to advise any of the Division Employees concerning
the terms of any future employment of such individuals by Buyer and will permit
Buyer reasonable access to Division Employees for such purpose. Sellers shall
not discourage
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any Division Employees from accepting an offer of employment, if any, made by
Buyer to such Employee. Buyer and Sellers shall cooperate in preparing and
disbursing materials concerning the Transactions or the effect of the
Transactions upon the Division Employees' employment or the terms or conditions
of the Division Employees' employment. Buyer and Sellers shall provide each
other with reasonable opportunity to review any written materials and to attend
any scheduled meetings concerning the foregoing.
(d) Sellers agree to provide any required notice under
the Worker Adjustment and Retraining Notification Act, as amended (the "WARN
Act"), and any similar statute, and otherwise to comply with any such statute
with respect to any "plant closing" or "mass layoff" as defined in the WARN Act
or similar event affecting Division Employees not hired by Buyer as of February
15, 1998. Sellers shall indemnify and hold harmless Buyer with respect to any
liability under the WARN Act or similar statute arising with respect to
Division Employees not hired by Buyer as of February 15, 1998. Buyer agrees to
provide any required notice under the WARN Act and any similar statute, and
otherwise to comply with any such statute with respect to any "plant closing"
or "mass layoff" as defined in the WARN Act or similar event affecting any
Division Employees hired by Buyer as of February 15, 1998 and thereafter
terminated by Buyer. Buyer shall indemnify and hold harmless Sellers with
respect to any liability under the WARN Act or similar statute arising with
respect to any Division Employees hired by Buyer as of February 15, 1998 and
thereafter terminated by Buyer.
SECTION 7.02. EMPLOYEE PLANS AND FOREIGN PLANS. Except as provided
in Section 7.01(b), all Liabilities under Employee Plans and Foreign Plans
shall be Retained Liabilities.
SECTION 7.03. DEFINED CONTRIBUTION PLANS. Effective as of
February 14, 1998, each Seller shall amend any defined contribution retirement
plan qualified under Section 401(a) of the Code and maintained by such Seller
or one of its ERISA Affiliates (1) to cause the active participation of the
Division Employees therein to cease as of February 14, 1998 and (2) to permit
Division Employees to elect to take distributions (subject to applicable law)
of their accounts thereunder (including to the extent practicable, in Buyer's
reasonable judgment, any plan loans) and, if such Employees so elect, to roll
them over, directly or otherwise, in accordance with applicable law and
regulations, to an individual retirement account or to one or more defined
contribution retirement plans qualified under Section 401(a) of the Code and
maintained by Buyer or one of its ERISA Affiliates (the "Buyer DC Plans"), and
the Buyer DC Plans shall accept such rollovers.
ARTICLE 8
SURVIVAL; INDEMNIFICATION
SECTION 8.01. SURVIVAL. The representations and warranties of Buyer
and Sellers contained in this Agreement or in any certificate or other writing
delivered pursuant hereto or in connection herewith shall survive the Closing
until the first anniversary of the Closing Date; provided, however,
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that (i) the representations and warranties set forth in Section 3.15 shall
survive the Closing until the second anniversary of the Closing Date, (ii) the
representations and warranties in Sections 3.13 shall survive until the
expiration of the statute of limitations applicable to the matters covered
thereby, giving effect to any mitigation, waiver or extension thereof and (iii)
the representations and warranties set forth in Section 4.07 shall survive
indefinitely. Notwithstanding the preceding sentence, any representation or
warranty in respect of which indemnity may be sought under this Agreement shall
survive the time at which it would otherwise terminate pursuant to the
preceding sentence, if notice of the inaccuracy or breach thereof giving rise
to such right of indemnity shall have been given to the party against whom such
indemnity may be sought prior to such time. All covenants and agreements of
the parties contemplating performance after the Closing Date shall survive the
Closing Date for a period ending at the earlier of the date such covenant or
agreement is performed or the expiration of the statute of limitations for any
claim relating thereto.
SECTION 8.02. INDEMNIFICATION.
(a) Sellers hereby indemnify Buyer and each of its
Subsidiaries, and each of Buyer's and such Subsidiaries' respective officers,
directors, employees and agents, and each of the heirs, executors, successors
and assigns of the foregoing (the "Buyer Indemnified Parties"), against and
agree to defend and hold them harmless from any and all Damages incurred or
suffered by any of them arising out of or relating to (i) any misrepresentation
or breach of warranty made by Sellers contained in this Agreement or in any
certificate delivered pursuant hereto or in connection herewith (provided,
however, that Sellers shall not be required to indemnify the Buyer Indemnified
Parties with respect to such misrepresentations or breaches (A) unless the
aggregate amount of Damages for which indemnity would otherwise be payable or
has previously been paid exceeds $100,000 (the "Basket Amount"), at which time
and at all times thereafter the Buyer Indemnified Parties shall be entitled to
the full amount of all claims without deduction of $100,000, or (B) to the
extent that the aggregate amount of Damages for which indemnity would otherwise
be payable exceeds the sum of the Cash Escrow Amount and the Market Value of
the Escrow Shares (the "Cap Amount"); (ii) breaches of covenants or obligations
of Sellers contained herein; or (iii) any Retained Liability. For purposes of
this Section 8.02(a), the Basket Amount and the Cap Amount shall not apply to
clauses (ii) and (iii) in the foregoing sentence, including in respect of any
Retained Liabilities which also constitute misrepresentations or breaches of
warranties under clause (i) thereof.
(b) Buyer hereby indemnifies Sellers, each of Sellers'
respective officers, directors, employees and agents, and each of the heirs,
executors, successors and assigns of the foregoing (the "Seller Indemnified
Parties"), against and agrees to defend and hold it harmless from any and all
Damages incurred or suffered by any of them arising out of or relating to (i)
any misrepresentation or breach of warranty made by Buyer contained in this
Agreement or in any certificate delivered pursuant hereto or in connection
herewith (provided, however, that Buyer shall not be required to indemnify the
Seller Indemnified Parties with respect to such misrepresentations or breaches
(A) unless the aggregate amount of Damages for which indemnity would otherwise
be payable or has previously been paid exceeds the Basket Amount, at which time
and at all times thereafter the Seller
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Indemnified Parties shall be entitled to the full amount of all claims without
deduction of $100,000, or (B) to the extent that the aggregate amount of
Damages for which indemnity would otherwise be payable exceeds the Cap Amount;
(ii) breaches of covenants or obligations of Buyer contained herein; (iii) any
Assumed Liability (including Liabilities with respect to Buyer's performance
under the Acquired Contracts after the Closing Date). For purposes of this
Section 8.02(b), the Basket Amount and the Cap Amount shall not apply to
clauses (ii) or (iii) in the foregoing sentence, including in respect of any
Assumed Liabilities which also constitute misrepresentations or breaches of
warranties under clause (i) thereof.
(c) The amount of any indemnifiable losses or other
liability for which indemnification is provided under this Agreement shall be
net of any amounts actually recovered by the indemnified party from third
parties (including amounts actually recovered under insurance policies) with
respect to such indemnifiable losses or other liability. Any indemnifying
party hereunder shall be subrogated to the rights of the indemnified party upon
payment in full of the amount of the relevant indemnifiable loss. An insurer
who would otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto or, solely by virtue of the indemnification
provision hereof, have any subrogation rights with respect thereto. If any
indemnified party recovers an amount from a third party in respect of an
indemnifiable loss for which indemnification is provided in this Agreement
after the full amount of such indemnifiable loss has been paid by an
indemnifying party or after an indemnifying party has made a partial payment of
such indemnifiable loss and the amount received from the third party exceeds
the remaining unpaid balance of such indemnifiable loss, then the indemnified
party shall promptly remit to the indemnifying party the excess (if any) of (i)
the sum of the amount theretofore paid by the indemnifying party in respect of
such indemnifiable loss plus the amount received from the third party in
respect thereof, less (ii) the full amount of such indemnifiable loss or other
liability.
(d) The amount of any indemnifiable losses or other
liability for which indemnification is provided under this Article 8 shall be
increased by any Tax imposed on the receipt of any indemnity payment with
respect thereto and decreased to take account of the tax benefit arising from
any credit, deduction, amortization, exclusion from income or other allowance
associated with the Damages giving rise to the payment received by the
Indemnitee ("Tax Benefit"). The amount of such decrease shall be the present
value as of the date of any indemnification payment under this Article 8 of
each Tax Benefit multiplied by (i) the combined effective federal and state
corporate tax rates in effect at the time of the indemnity payment or (ii) in
the case of a credit, 100 percent. The present value of any Tax Benefit shall
be determined using the Applicable Interest Rate and assuming the party being
indemnified has sufficient Taxable income or other Tax attributes to permit the
utilization of such Tax Benefit at the earliest possible time. Any payment
pursuant to this Article 8 will be treated as non-Taxable to the indemnified
party except to the extent that a Final Determination causes such payment to be
Taxable. If any Final Determination renders any payment made pursuant to this
Article Taxable to the recipient, the indemnifying party shall pay an amount
that reflects the Tax consequences to the indemnified party of receiving such
payment.
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SECTION 8.03. INDEMNIFICATION PROCEDURES.
(a) Subject to Section 6.01(c), upon receipt by any
Person who may seek indemnity pursuant to Section 8.02 (the "indemnified
party") of actual notice of a loss, claim, Damage, liability or action in
respect of which indemnity may be sought, such indemnified party shall promptly
notify the Person against whom such indemnity may be sought (the "indemnifying
party") in writing (provided, however, that the failure to so notify the
indemnifying party shall only relieve the indemnifying party of its obligations
hereunder to the extent such failure actually prejudices such indemnifying
party in its defense of the loss, claim, Damage, liability or action) and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the indemnifying party and
the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate, in such indemnified party's reasonable judgment, due to actual
or potential differing interests between them, in which case such fees and
expenses shall be paid by the indemnifying party. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all indemnified parties
and that all such fees and expenses shall be reimbursed as they are incurred.
Subject to the terms of Section 8.03(c), the indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(b) Upon receipt of the notice described in the first
sentence of Section 8.03(a), an indemnifying party shall promptly notify the
indemnified party of its election to defend or to seek to settle or compromise,
at such indemnifying party's own expense and by such indemnifying party's own
counsel, any claim, action, inquiry or investigation commenced by any person (a
"Third Party Claim") and of its acknowledgment of its indemnification
obligation hereunder. If the indemnifying party elects to assume
responsibility for defending such Third Party Claim, the indemnifying party
shall so notify the claimant or plaintiff of such election and request that all
communications relating to such Third Party Claim be made, delivered or
addressed to the indemnifying party and the indemnified party. After notice by
the indemnifying party to the indemnified party of its election to
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assume the defense of a Third Party Claim, subject to the indemnified party's
rights to separate counsel paid for by the indemnifying party pursuant to
Section 8.03(a), so long as such indemnifying party continues such defense in
good faith, the indemnifying party shall have no further obligation to the
indemnified party in respect of legal or other expenses not yet incurred by the
indemnified party in connection with such Third Party Claim and shall promptly
reimburse any such expenses already incurred.
(c) If an indemnifying party does not elect to assume
responsibility for a Third Party Claim (which decision not to assume may only
be made in the case of a good faith dispute that a claim is not properly the
subject of an indemnification obligation pursuant to this Article 8), an
indemnified party may not settle or compromise any claim without prior written
notice to the indemnifying party, which shall have the option within 10 days
following such notice (i) to disapprove the settlement and assume all past and
future responsibility for the claim, including reimbursing the indemnified
party for prior expenditures relating thereto, (ii) to disapprove the
settlement and continue to refrain from participation in the defense of the
claim, in which event the indemnifying party shall have no further right to
contest the amount or reasonableness of the settlement if the indemnified party
elects to proceed therewith, (iii) to approve the amount of the settlement,
reserving the indemnifying party's right to contest the indemnified party's
indemnity right, or (iv) to approve and agree to pay the settlement (and all
expenditures of the indemnified party relating thereto). If no response is
received by the indemnified party, the indemnifying party shall be deemed to
have elected option (ii).
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. ENTIRE AGREEMENT. This Agreement, together with the
Ancillary Agreements and the Confidentiality Agreement, constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior written and oral and all contemporaneous oral agreements
and understandings with respect to the subject matter hereof, including the
letter of intent with respect to the Transactions dated December 18, 1997, as
amended on January 9, 1998 and January 23, 1998.
SECTION 9.02. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy
or similar writing) and shall be given,
if to any Seller, to:
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
BTG, Inc.
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0000 Xxxxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
telecopier: (000) 000-0000
with a copy to:
Xxxxx X. X. Xxxxxx
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
telecopier: (000) 000-0000
if to Buyer, to:
X. Xxxxx Young
President and Chief Executive Officer
Government Technology Services, Inc.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
telecopier: (000) 000-0000
with a copy to:
Xxxxxx X. XxXxxxxx
Arent Fox Xxxxxxx Xxxxxxx & Xxxx
0000 Xxxxxxxxxxx Xxx., X.X.
Xxxxxxxxxx, XX 00000-0000
telecopier: (000) 000-0000
or such other address as such party may hereafter specify for the purpose by
notice to the other parties hereto. Each such notice, request or other
communication shall be effective (a) if given by telecopy, when such telecopy
is transmitted to the telecopy number specified in this section and the
appropriate telecopy confirmation is received, or (b) if given by any other
means, when delivered at the address specified in this Section.
SECTION 9.03. AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or
waived prior to the Closing Date if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by Sellers and Buyer or in
the case of a waiver, by the party against whom the waiver is to be effective.
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(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 9.04. SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of parties hereto and
their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that Buyer may
assign its rights and obligations to any one or more wholly owned Subsidiary or
Subsidiaries of Buyer (but no such assignment shall relieve Buyer of its
obligations hereunder); provided, however, that, without the prior consent of
Buyer, Sellers may collaterally assign their rights hereunder, subject to the
terms and conditions hereunder and without relieving Sellers of any obligation
or liability hereunder, to a lender or lenders as security for Sellers'
obligations to such lender or lenders.
SECTION 9.05. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the law of the Commonwealth of Virginia
regardless of the law that might otherwise govern under principles of conflicts
of laws applicable thereto, except with respect to matters of corporate law as
they apply to Buyer, which shall be governed by the Delaware General
Corporation Law.
SECTION 9.06. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
SECTION 9.07. EXPENSES OF SALE. Except as otherwise provided in this
Agreement, each party will be solely responsible for such party's legal,
accounting, and other costs and expenses associated with the Transactions.
SECTION 9.08. TERMS GENERALLY. The definitions in Article 1 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include," "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
All references herein to Articles, Sections, Attachments, Exhibits and
Schedules shall be deemed references to Articles and Sections of, and
Attachments, Exhibits and Schedules to, this Agreement unless the context shall
otherwise require. Except as otherwise expressly provided herein, all terms of
an accounting or financial nature shall be construed in accordance with GAAP.
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SECTION 9.09. CONFIDENTIALITY AND PUBLICITY. The provisions of the
Confidentiality Agreement between Buyer and Seller dated November 25, 1997, as
amended by Amendment No. One (the "Confidentiality Agreement"), will continue
in full force and effect. Without limitation of the foregoing, neither party
shall, nor shall permit its representatives to, make any public disclosure or
generate any publicity concerning the subject matter of this Agreement
including, without limitation, the terms or the identity of the parties hereto,
without the prior written approval of the other party except (in the reasonable
opinion of its counsel) as required by law (including any disclosures required
in connection with filings under applicable securities laws and regulations)
after prior notice to the other party and except that Buyer and Sellers may
issue a joint press release in a mutually agreeable form, upon the execution of
this Agreement by all of the parties hereto.
SECTION 9.10. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns.
SECTION 9.11. BULK TRANSFER LAWS. Buyer and Sellers hereby agree to
waive the compliance by either party with the provisions of Article 6 of the
Uniform Commercial Code as it is in effect in the states where the Acquired
Assets may be located and any other "bulk sales" or "bulk transfer" laws of any
jurisdiction in connection with the Transactions. Sellers unconditionally
agree to indemnify and hold harmless Buyer against any and all Damages relating
to the failure to so comply with such provisions or laws.
SECTION 9.12. SPECIFIC PERFORMANCE. Each of the parties acknowledges
and agrees that the other party would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the parties
agrees that the other party shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter (subject to the provisions set
forth in Section 9.14), in addition to any other remedy to which it may be
entitled, at law or in equity.
SECTION 9.13. REMEDIES CUMULATIVE. The remedies provided herein are
in addition to, and not in derogation of, any statutory, equitable, or common
law remedy any party may have with respect to a breach of this Agreement or
with respect to the Division or the Transactions, provided that the sole remedy
with respect to a breach of a representation or warranty under this Agreement
(other than such a breach which is also a Retained Liability or an Assumed
Liability) shall be pursuant to Article 8.
SECTION 9.14. JURISDICTION. Each of the parties consents to the
exclusive jurisdiction of the federal courts of the Eastern District of
Virginia for any legal action, suit or proceeding arising out of or in
connection with this Agreement or the Transactions, and agrees that any such
action, suit, or proceeding may be brought only in such courts. If such forum
is not available, each of the parties
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consents to the exclusive jurisdiction of the Circuit Court of Fairfax County,
Virginia, for any such action, suit or proceeding. Each of the parties further
waives any objection to the laying of venue for any suit, action or proceeding
in such courts. Each of the parties agrees to accept and acknowledge service
of any and all process that may be served in any suit, action or proceeding.
Each of the parties agrees that any service of process upon it mailed by
registered or certified mail, return receipt requested to such party at the
address provided in Section 9.02 shall be deemed in every respect effective
service of process upon such party in any such suit, action or proceeding.
Each of the parties agrees to waive any right it might have to a trial by jury
in any such suit, action or proceeding.
SECTION 9.15. JOINT AND SEVERAL LIABILITY. Notwithstanding anything
herein to the contrary, for all purposes of this Agreement (a) each Seller
hereby agrees that (i) it shall be deemed to have made herein all of the
representations and warranties made by all other Sellers herein and under the
other Transaction Agreements and (ii) it is jointly and severally obligated and
liable for the obligations and liabilities of all other Sellers herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
GOVERNMENT TECHNOLOGY SERVICES, INC.,
a Delaware corporation
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxxx
Chief Financial Officer
BTG, INC.,
a Virginia corporation
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxx, President and
Chief Executive Officer
BTG TECHNOLOGY SYSTEMS, INC.,
a Virginia corporation
By: /s/ XXXXXX X. XXXXXXX
---------------------------------------
Xxxxxx X. Xxxxxxx, President and
Chief Executive Officer
CONCEPT AUTOMATION, INC. OF AMERICA,
a Virginia corporation
By: /s/ XXXXXX X. XXXXXXX
---------------------------------------
Xxxxxx X. Xxxxxxx, President and
Chief Executive Officer
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