ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT dated as of September 16, 1996, by and among
MANTECH SOLUTIONS CORPORATION, a Virginia corporation having offices at 0000
Xxxxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxx 00000 ("Seller"), MANTECH INTERNATIONAL
CORPORATION, a New Jersey corporation having offices at 00000 Xxx Xxxxxxx
Xxxxxxx, Xxxxxxx, Xxxxxxxx 00000 ("Stockholder"), GLOBAL-INSYNC, INC., a
Virginia corporation with offices at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("Buyer") and GLOBAL INTELLICOM, INC., a Nevada corporation having offices at
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Parent").
W I T N E S S E T H :
WHEREAS, Seller is engaged in the business of build-to-order
manufacture of servers and workstations (collectively, the "Business");
WHEREAS, Stockholder beneficially owns all of the issued and
outstanding capital stock of Seller;
WHEREAS, Buyer desires to purchase from Seller and Seller desires to
sell to Buyer all of Seller's assets and properties used in the Business, upon
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, as a condition to the consummation of the transactions
contemplated by this Agreement, Buyer has required that Stockholder join with
Seller in making representations and warranties to Buyer concerning Seller, and
as the transactions contemplated hereunder provide benefit to Stockholder,
Stockholder is willing to make such representations, warranties and agreements;
and
WHEREAS, as a condition to the consummation of the transactions
contemplated by this Agreement, Seller has required that Parent join with Buyer
in making representations and warranties to Seller concerning Buyer and Parent,
and as the transactions contemplated hereunder provide benefit to Parent, Parent
is willing to make such representations, warranties and agreements.
NOW, THEREFORE, in consideration of the promises and of the mutual
agreements, covenants, representations and warranties hereinafter contained, and
for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
I. PURCHASE AND SALE OF ASSETS
1.1 Assets to be Transferred. Upon the terms and subject to the
conditions of this Agreement, Seller hereby sells, assigns, transfers, conveys
and delivers to Buyer, and Buyer hereby purchases and accepts from Seller, all
of the properties, assets, rights and business of
Seller reflected on Seller's balance sheet dated as at August 31, 1996 or as
otherwise set forth in this Section 1.1, excepting the Excluded Assets (as
hereinafter defined) (collectively, the "Assets"). The Assets include, but are
not limited to, the following:
(a) prepaid expenses and investments, a true and complete list of
which is set forth on Schedule 1.1 (a) hereto;
(b) all trade and other accounts and notes receivable (the
"Acquired Receivables");
(c) inventory, including, without limitation, raw materials,
work-in-process, finished goods, supplies, labels and sales and promotional
materials and brochures;
(d) all right, title and interest held by Seller to all tangible
personal property of Seller used in connection with the Business, whether owned
or leased, including, without limitation, furniture, fixtures, machinery,
equipment, motor vehicles, supplies, tools, spare parts, signs and leasehold
improvements, including, all accessions, accessories, additions, parts and
replacements and, in each case, whether or not affixed to any of the foregoing;
(e) Seller's interest in and claims and rights under the
agreements, leases and contracts described in Schedule 1.1(e) hereto (the
"Assumed Agreements"), and any and all prepayments, deposits and similar assets
associated with the Assumed Agreements;
(f) the Seller's interest in the intellectual property owned by,
or used in the operation of the Business, including any related goodwill, as set
forth on the annexed Schedule 1.1(f) (the "Intellectual Property"), other than
the trademarks and service marks Accel and Accel, the Computer Company;
(g) intangibles;
(h) originals or copies of all books, records and documents of
Seller related to, derived from or used in the operation of the Business,
including, without limitation, all customer lists, supplier lists, price lists,
telephone numbers and listings, advertising materials and marketing plans,
business files, regulatory files and approvals, business plans, financial data,
operations manuals, repair or service manuals, fire, safety or environmental
reports and all data related to inventory, sales and accounts receivable and
similar books and records related to the Business;
(i) permits, licenses, orders, consents and approvals of any
governmental or regulatory authority related to the operation of the Business
(the "Permits"), to the extent transferable, and all other material Permits;
(j) all other assets, properties, claims and rights of Seller,
not part of the Excluded Assets that are related to, derived from or used in the
operation of the Business; and
(k) all proceeds and products of any and all of the foregoing
items.
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1.2 Excluded Assets. There shall be excluded from Assets to be
transferred to Buyer hereunder the following assets of Seller (the "Excluded
Assets"):
(a) all of Sellers' cash, cash equivalents, prepaid income taxes
and deferred tax assets;
(b) the consideration delivered to Seller pursuant to this
Agreement for the Assets delivered to Buyer hereunder;
(c) Seller's corporate charter, taxpayer and other identification
numbers, tax returns, corporate seals, corporate minute books, stock ledgers and
other documents of Seller relating to the organization and existence of Seller
as a corporation; and
(d) all not-to-compete agreements, goodwill and other assets-long
term, reflected on Seller's balance sheet dated as of August 31, 1996.
1.3 Liabilities to be Assumed. Upon the terms and subject to the
conditions of this Agreement, Buyer hereby assumes the following (and only the
following) liabilities and obligations of Seller (the "Assumed Liabilities"):
(a) all unpaid liabilities of Seller reflected on Seller's
balance sheet dated as at August 31, 1996, or which thereafter arise in the
ordinary course of business through the date of Closing, provided, however, that
Buyer shall not assume any unpaid obligations or liabilities of Seller (i) to
its commercial lenders, (ii) for long-term debt or (iii) to any Affiliate (as
defined in Section 11.1 hereof) of Seller (other than working capital loans made
by Stockholder to Seller after August 31, 1996 in the ordinary course of
business, such amounts to be determined within ten days of the date hereof),
except that Buyer shall obtain release for Seller from (x) that certain letter
of credit in the amount of $75,000 issued by Mellon Bank in favor of Microsoft
Corporation (the "Letter of Credit") and (y) that certain performance bond in
the amount of $782,470, issued by United Pacific Insurance Co., in favor of the
Government of the District of Columbia) (the "D.C. Performance Bond") and (z)
that certain performance bond in amount of $100,000, issued by United Pacific
Insurance Co., in favor of the Commonwealth of Pennsylvania (together with the
D.C. Performance Bond, the "Performance Bond"); and
(b) Seller's obligations under the Assets arising after the
Closing Date.
1.4 Excluded Liabilities. Except for such liabilities of Seller as
are specifically assumed by Buyer under Section 1.3 hereof, Buyer shall not
assume, or take title to the Assets subject to, or in any way undertake to
discharge or perform, any liability or obligation of Seller which is not an
Assumed Liability (whether or not referred to in any Schedule hereto) (each, an
"Excluded Liability" and, collectively, the "Excluded Liabilities"). Seller
hereby undertakes to fully discharge, pay and/or satisfy such Excluded
Liabilities as are related to the Assets as and when the same may become due,
including, without limitation, the following:
(a) any liability or obligation of Seller to its commercial
lenders, except obligations in connection with the (i) Letter of Credit and (ii)
the Performance Bond;
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(b) any liability or obligation of Seller for long-term debt;
(c) any liability or obligation of Seller to any Affiliate of
Seller, other than amounts owing to the Stockholder or any of its Affiliates for
working capital loans made to Seller after August 31, 1996 in the ordinary
course of business;
(d) any liability or obligation of Seller for any product
liability incurred or related to work performed prior to the Closing Date, in
excess of the reserve provided on the August 31, 1996 balance sheet;
(e) any liability or other obligation of Seller arising out of
(i) any Environmental Claim (as defined in Section 11.1 hereof), (ii) any
incomplete, incorrect, expired or missing license, registration or other permit
required under any Environmental Law (as defined in Section 11.1 hereof) or
other applicable Law (as defined in Section 4.14 hereof), or (iii) any violation
of any applicable Law, in any such case respecting any act, omission, condition,
circumstance or other event occurring or existing on or before the date hereof
and relating in any way to (A) any of the Assets, (B) any other aspect of the
Business, (C) the import, procurement, storage, manufacture, use, shipment, sale
or disposal of any product or Environmental Substance (as defined in Section
11.1 hereof), or (D) any conduct of Seller or any of its Affiliates, employees,
officers, directors, shareholders, agents and other representatives;
(f) any liability or other obligation for any action, suit,
investigation or proceeding at law, in equity, in arbitration or by or before
any authority, threatened, pending, decided or settled, prior to the Closing
Date, or arising from any act, omission, condition, circumstance or other event
occurring on or before the Closing Date involving or affecting Seller, the
Business or any Asset, whether or not disclosed;
(g) any liability or other obligation of Seller or any of its
Affiliates in respect of any Plan (as defined in Section 4.20 hereof);
(h) any liability or other obligation of Seller for any foreign,
federal, state, county or local taxes of any kind or nature, or any interest or
penalties thereon, accrued for, applicable to or arising prior to the Closing
Date, or relating to the sale of the Assets hereunder;
(i) any liability or other obligation to make any payment to any
employee of Seller or any of its Affiliates, relating to employment prior to the
Closing Date, whether relating to salary, wages, commissions, benefits,
severance or any other amounts and whether required under any agreement,
applicable Law or otherwise;
(j) any liability or other obligation of Seller to present or
past officers, directors (acting in such capacity) or shareholders of Seller or
any of its Affiliates;
(k) any liability or obligation of Seller under any agreement
other than the Assumed Agreements;
(l) any liability or obligation relating to any tax audit
resulting from action taken prior to the Closing Date;
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(m) any liability or obligation of Seller arising out of or in
connection with the negotiation and preparation of this Agreement and the
consummation and the performance of the transactions contemplated hereby
including, without limitation, any tax liability so arising, except for tax
obligations set forth in Section 6.1 hereof; and
(n) any Contract other than Assumed Agreements or any other
claims, debts or liabilities not reflected or reserved against on the August
Balance Sheet.
II. PURCHASE PRICE
2.1 Purchase Price. In consideration of the sale, assignment,
transfer, conveyance and delivery of the Assets by Seller to Buyer, and in
reliance upon the representations, warranties, covenants and agreements made
herein by Seller to Buyer, Buyer agrees to pay Seller and Seller agrees to
accept from Buyer in full payment thereof, subject to adjustment, the sum of
five million seven hundred thirty six thousand eighty four ($5,736,084) Dollars
(the "Purchase Price").
2.2 Payment of Purchase Price. Contemporaneously herewith, unless
otherwise provided below, Buyer is paying to Seller the Purchase Price as
follows:
(a) Three hundred fifty thousand (350,000) shares of Series 3
Cumulative Preferred Stock (the "Preferred Shares") of Parent, having such
terms, preferences, rights and limitations as are set forth in the Certificate
of Designation attached as Exhibit A hereto;
(b) One million four hundred eighty six thousand eighty four
($1,486,084) Dollars, by delivery to Seller of Buyer's interest bearing
promissory note in the form annexed hereto as Exhibit B (the "Promissory Note");
(c) Four hundred seventy thousand ($470,000) Dollars, by delivery
to Seller of Buyer's interest bearing promissory note in the form annexed hereto
as Exhibit C (the "Additional Promissory Note" and, together with the Promissory
Note, the "Promissory Notes"); and
(d) Forty nine thousand seven hundred seventy eight (49,778)
shares of common stock, par value $.01 (the "Common Shares") of Parent, to be
delivered within twenty (20) days of the date hereof.
2.3 Allocation of Purchase Price. Seller and Buyer agree that the
Purchase Price shall be allocated among the Assets in conformance with the
provisions of Section 1060 of the Internal Revenue Code, as amended (the
"Code"), and in accordance with the allocation schedule annexed hereto as
Schedule 2.3, which will be determined by agreement among the parties within ten
days of the date hereof. Seller and Buyer agree to report the allocation of the
Purchase Price in Code Form 8594 and, where required, in their respective
Federal and State income tax returns in accordance with Schedule 2.3.
2.4 It is acknowledged between the parties that the operational
profit and loss of the Seller from September 1, 1996 through the Closing Date
shall be for the account of the Buyer.
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III. CLOSING
3.1 Closing. The closing of the purchase and sale of Assets and the
assumption of the Assumed Liabilities (the "Closing") shall take place at the
offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 0000 Xxxxxxxxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X., at 10:00 A.M. on the date hereof (the "Closing Date").
IV. REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDER
To induce Buyer to enter into this Agreement and the other documents
and instruments contemplated hereby, to purchase the Assets and to assume the
Assumed Liabilities, Seller and Stockholder hereby, jointly and severally,
represent, warrant and agree with Buyer as follows:
4.1 Organization; Standing; Authority. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia. Seller has all requisite corporate power and
authority, licenses, permits and franchises to own, lease and operate its
properties and assets, including, without limitation, the Assets, and to carry
on the Business as currently conducted. Seller is duly qualified and in good
standing to do business as a foreign corporation in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, a list of which
jurisdictions is set forth on Schedule 4.1 hereto.
4.2 Authority and Enforceability. Each of Seller and Stockholder has
full corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly authorized by all necessary
corporate and other action, executed and delivered by Seller and Stockholder and
(assuming the valid execution and delivery of the Agreement by Buyer and Parent)
constitutes the legal, valid and binding obligation of Seller and Stockholder,
enforceable against them in accordance with its terms.
4.3 Authorization; Conflicts. Neither the execution, delivery and
performance of this Agreement by Seller and Stockholder, nor the consummation by
each of the transactions contemplated hereby will (a) conflict with or result in
a breach of any provision of Seller's Certificate of Incorporation or Bylaws;
(b) constitute or result in the breach of, conflict with or give rise to a right
of forfeiture, termination, cancellation or acceleration with respect to, any
term, condition or provision of, any note, bond, mortgage or indenture, license
or other contract or obligation to which Seller or Stockholder is a party or by
which their respective properties and assets, including the Assets, may be bound
(subject to performance of the obligation to obtain consent to assignment of the
Assumed Agreements as set forth in Section 6.7 hereof), (c) violate in any
material respect any law, statute, regulation, judgment, order, writ,
injunction, or decree applicable to Seller or Stockholder or their respective
properties and assets including, without limitation, the Business or any of the
Assets, or (d) create or result in any Lien (as defined in Section 11.1 hereof)
on any of their respective properties or assets, including, without limitation,
the Business or any of the Assets.
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4.4 Capitalization and Ownership of Capital Stock. All of the
presently authorized, issued and outstanding shares of capital stock of Seller
are owned by Mantech Systems Engineering Corporation ("MSEC"). All of the
presently authorized, issued and outstanding shares of MSEC are owned by
Stockholder. There are not now and on the Closing Date there will not be any
outstanding subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible securities or other agreements or arrangements of any
character or nature whatsoever under which Seller is or may become obligated to
issue, assign or transfer any shares of its capital stock.
4.5 Consents. Except as set forth on Schedule 4.5 hereto, no consent,
order, authorization, qualification, license, or approval of, or exemption by,
or filing with, any governmental, public or regulatory body must be obtained in
connection with the execution, delivery and performance by Seller or Stockholder
of this Agreement, the transactions contemplated hereby or the legality,
validity, binding effect or enforceability hereof except as may be limited by
bankruptcy or other laws and equitable principles affecting contracts generally.
4.6 Books and Records. All financial, business and accounting books
and ledgers relating to the Business have been made available to Buyer and its
representatives. Such books and records have been substantially, properly and
accurately kept and completed in all material respects, and there are no
material inaccuracies or discrepancies of any kind contained or reflected
therein.
4.7 No Subsidiaries or Investments. Seller does not own any capital
shares or other equity or ownership or proprietary interest in any corporation,
partnership, association, trust, joint venture or other entity.
4.8 Financial Statements.
(a) Financials. Seller has previously furnished to Buyer copies
of its (i) unaudited balance sheet as at August 31, 1996 (the "August Balance
Sheet") and the related statements of income, for the eight months then ended,
prepared by Seller and certified by Seller's chief executive officer or chief
financial officer (collectively, the "August Financial Statements") and (ii)
unaudited balance sheet as of December 31, 1995 and the related statements of
income for the twelve months then ended, prepared by Seller and certified by
Seller's chief executive officer or chief financial officer (the "1995 Financial
Statements"). The August Financial Statements and the 1995 Financial Statements
have been prepared in accordance with generally accepted accounting principles,
applied on a consistent basis throughout the periods covered thereby and with
that of prior periods, and fairly present the financial condition and results of
operations of Seller as at the respective dates thereof and for the periods
covered thereby.
(b) No Adverse Change. Since the date of the August Balance
Sheet, (i) except as set forth on Schedule 4.8, there has not been any material
adverse change in Seller's financial condition or results of operations or in
Seller's properties or assets, including, without limitation, the Assets, and to
the knowledge of Seller and Stockholder no fact or condition exists or is
contemplated or threatened which might cause any such change at any time in the
future, and (ii) neither Seller nor its properties and assets, including without
limitation, the Assets, has
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sustained any material damage, destruction or loss, whether or not covered by
insurance. Since the date of the August Balance Sheet, Seller has conducted the
Business only in the ordinary course in all material respects.
4.9 Contracts. Schedule 4.9 sets forth a complete and correct list of
all material written contracts, agreements, understandings, arrangements,
purchase orders, sales orders, supply contracts, bids, leases, rental
arrangements and licenses by which the Assets may be bound, complete and correct
copies of which (including all amendments thereto) have been delivered to Buyer
(collectively, the "Contracts"), including, without limitation, the following:
(a) contracts with any current or former officer, director, employee, consultant
or shareholder, (b) contracts with any labor union or organization or other
organization representing any employee, (c) contracts for the sale of materials,
supplies, equipment, merchandise or services, (d) contracts for the purchase or
acquisition of materials, supplies, equipment, merchandise or services, (e)
licenses, royalty agreements or similar agreements (indicating on such schedule
whether Seller is the licensor or licensee thereunder), (f) warehousing,
distributorship, representative, management, marketing, sales agency, printing
or advertising contracts, (g) contracts for the sale of any of the Assets or for
the grant to any person of any preferential rights to purchase any of the
Assets, (h) joint venture contracts, (i) contracts under which Seller agrees to
indemnify any party, to guarantee or otherwise be responsible for the
obligations of any other party, to share the tax liability of any party or to
refrain from competing with any party, (j) loan and credit agreements,
mortgages, indentures, security agreements and other agreements relating to the
borrowing of money or representing deferred purchase price, (k) all agreements,
arrangements, commitments and understandings of any kind or nature with any
government, its agencies or departments, (l) contracts under which any current
or previous employee of Seller has agreed to refrain from competing with Seller
or disclosing any confidential or proprietary information concerning the
Business, or (m) any other contracts relating to the Business whether or not
made in the ordinary course of business.
4.10 Assumed Agreements. All Assumed Agreements are valid, binding,
enforceable and in full force and effect, except as may be limited by bankruptcy
or other laws and equitable principles affecting contracts generally. Seller is
not in default, no notice of a default has been received by Seller, and there
exists no condition or event which, with notice or lapse of time or both, would
constitute a default by Seller, under or with respect to any of such Assumed
Agreements. No other party to any of the Assumed Agreements is in default under
any of the Assumed Agreements, and there exists, to the knowledge of Seller and
subject to performance of the obligation to obtain consent to assignment of the
Assumed Agreements as set forth in Section 6.7 hereof, no condition or event
which, with notice or lapse of time or both, would constitute a default by any
other party to any such Assumed Agreement.
4.11 Acquired Receivables. Schedule 4.11 sets forth a complete and
correct list and aging by month of each Acquired Receivable. Each Acquired
Receivable is free and clear of all Liens other than Permitted Liens, arose in
the ordinary course of business in a bona fide arm's-length transaction, has
been reflected on Seller's books and records in accordance with generally
accepted accounting principles consistently applied, and is represented by a
written invoice or other written document that: (a) is legal, valid, binding and
enforceable against the obligor in accordance with its terms and provisions,
except as may be limited by bankruptcy or
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other laws and equitable principles affecting contracts generally, (b) does not
violate or conflict with any provision of applicable law, (c) has not been
amended or modified in any respect except as set forth on Schedule 4.11, (d)
reflects all agreements and understandings with the obligor thereof, and (e) is
assignable to Buyer without the consent of the obligor.
4.12 Title to Property and Assets. Schedule 4.12 sets forth a
complete and correct list of the real property owned or leased by Seller. Seller
has good and marketable title to such property in fee simple absolute (except
for leasehold interests, in which event Seller has a valid leasehold interest),
free and clear of all Liens except Permitted Liens (as defined in Section 11.1
hereto). Seller has good and marketable title to all of its other Assets, free
and clear of all Liens. The Assets being transferred to Buyer pursuant to this
Agreement constitute all of the assets and properties necessary to the operation
of the Business, as conducted as of the date hereof. To the knowledge of Seller
and Stockholder, no person or entity has any rights in any of the Assets that
could have a material adverse effect upon, or otherwise interfere with the
continued use of, any of the Assets by Buyer following the Closing.
4.13 Intellectual Properties.
(a) Schedule 4.13 contains a complete and accurate list of each
item of Intellectual Property licensed to, owned or currently used by Seller in
connection with the Business. Except as set forth on Schedule 4.13, each item of
Intellectual Property (i) has been maintained and used in accordance with all
applicable Laws, (ii) is assignable to Buyer in accordance with the terms and
provisions hereof and thereof, and (iii) to the knowledge of Seller and
Stockholder, is not and has not been infringed in any way by any other person.
(b) To the knowledge of Seller and Stockholder, no item of
Intellectual Property infringes any trademark, service xxxx, trade name,
copyright or patent (or similar right) of others in any jurisdiction and Seller
has all right and authority to use each item of Intellectual Property, whether
in the Business or otherwise. Neither Seller nor Stockholder has received any
notification from any person that the use of any item of Intellectual Property
by Seller or anyone claiming any right from Seller to use any item of
Intellectual Property infringes the rights of any third party.
(c) Except as set forth on Schedule 4.13, all technical
information, procedures, processes, trade secrets, formulae, methods, practices,
techniques, information, bills of parts, diagrams, drawings, specifications,
blueprints, lists of materials, labor and general costs, production manuals and
data relating to the design, manufacture, production, inspection and testing of
products (collectively, the "Know-How") developed, sold or used by Seller is
owned by Seller, may be utilized by Seller without the consent or license of any
third party, is free and clear of all liens and Seller does not pay royalties to
any third party in respect of the use by it of the Know-How. Seller has not
received any notification of infringement by it or other adverse claim with
regard to any Know-How used by it. To the knowledge of Seller and Stockholder,
no Know-How used by Seller infringes upon or otherwise violates any rights of
others.
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(d) Each current and former employee of Seller has assigned to
Seller all of such employee's rights to, and benefits to be derived from, each
material item of Intellectual Property and Know-How developed by such employee
while employed by Seller.
4.14 Compliance with Applicable Laws. Except as set forth on Schedule
4.14, Seller and its operation of the Business is in material compliance with
and conforms in all material respects to (a) all applicable judgments, orders,
injunctions, awards and decrees, and (b) to the knowledge of Seller and
Stockholder, all foreign, federal, state and local laws, statutes, ordinances,
codes, rules and regulations and all other requirements of governmental bodies,
courts and arbitrators (collectively, "Laws") that are applicable to Seller, the
Business or the Assets (including, without limitation, the Federal Occupational
Safety and Health Act of 1970, as amended, and the rules and regulations issued
thereunder). Except as set forth on Schedule 4.14, Seller has remedied or caused
to be remedied in all respects all violations of any such Laws of which Seller
or Stockholder has knowledge. Schedule 4.14 sets forth a correct and complete
list of all material permits, licenses, orders and approvals of federal, state,
local or foreign governmental or regulatory bodies that are required in order to
permit Seller to carry on the Business as currently conducted, all of which are
in full force and effect, and except as set forth on Schedule 4.5 are assignable
to Buyer without the consent of any person and no suspension or cancellation of
any of them is threatened, and to the knowledge of Seller and Stockholder, no
cause exists for such suspension or cancellation. Except as set forth on
Schedule 4.14, no notice has been served upon Seller (other than a notice
subsequently withdrawn or with regard to a violation subsequently cured) from
any governmental authority or other person claiming, nor to the knowledge of
Seller and Stockholder, does there currently exist, any violation of any
applicable Law in connection with any of such activities.
4.15 Business Practices. Seller has not made, offered or agreed to
offer anything of value to any government official, political party or candidate
for government office nor have any of them taken any action which would be in
violation of the Foreign Corrupt Practice Act of 1977 or any anti-boycott or
export laws.
4.16 Absence of Certain Events. Except as set forth on Schedule 4.16,
since August 31, 1996, Seller has conducted its business and operations only in
the ordinary and usual course of business, consistent with past practices.
Except as set forth on Schedule 4.16, since August 31, 1996, Seller has not:
(a) amended its Certificate of Incorporation or Bylaws or merged
with or into or consolidated with any other person, subdivided or in any way
reclassified any of its shares of capital stock or changed or agreed to change
in way manner the rights of any shares of its capital stock or the character of
the Business;
(b) issued or sold or purchased, or issued options or rights to
subscribe to, or entered into any contracts or commitments to issue or sell or
purchase, any shares of its capital stock or any other securities;
(c) incurred any obligations or liabilities, whether direct or
contingent, or made any guarantees, endorsements or other assumptions of
liabilities other than in the ordinary course
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of business (which, in no event, has included liabilities for borrowed money or
extensions of credit);
(d) mortgaged, pledged or subjected to any Lien (other than
Permitted Liens, as hereinafter defined) any of the Assets;
(e) acquired or disposed of any assets or properties, or, except
in connection with the transactions contemplated by this Agreement, entered into
any agreement or other arrangement for any such acquisition or disposition,
other than in the ordinary course of business;
(f) forgiven or canceled debts or claims or waived any rights of
material value;
(g) conducted its business or entered into any transaction, other
than in the ordinary course of business;
(h) granted any rights or licenses under any of its Intellectual
Properties or entered into any licensing or distributorship arrangements with
respect thereto;
(i) entered into or amended any employment agreement, entered
into any agreement with any labor union or association representing any
employees or entered into or amended any Plan;
(j) made any wage or salary increase, or paid any bonuses or any
dividends, or made any increase in any other direct or indirect compensation,
for or to any director, officer or employee of Seller;
(k) except for reasonable and necessary accounting fees and
expenses not exceeding $25,000 in the aggregate, incurred (whether by actual
payment or accrual) any costs or expenses for legal, accounting or other
professional fees and disbursements of such professionals in connection with the
transactions contemplated by this Agreement;
(1) made any change in any accounting principle or method of
election for federal income tax purposes used by it;
(m) suffered any material adverse change in its business,
operations, working capital, financial condition, revenues, assets, liabilities
(whether absolute, accrued, contingent or otherwise) or reserves;
(n) prepaid any of its obligations, except in the ordinary course
of business;
(o) made any material change in any assumption underlying any
method of calculation of bad debts, contingencies or other reserves from those
reflected in the Financial Statements;
(p) made any change in any material respect in the business
policies or practices of Seller or suffered any other event which had or may
have the effect of materially
11
impairing the business relationship of Seller with, and the goodwill of, any of
its customers, suppliers or licensees; or
(q) entered into any agreement or committed to take any action
set forth in subsections (a) through (p) of this Section 4.16.
4.17 Employees. Schedule 4.17 sets forth a complete and correct list
of the names of all employees of Seller and, for each such employee, the total
compensation rate (annual or hourly), years or other period of service and each
wage or salary increase or bonus paid to such employee since January 1, 1996.
Schedule 4.17 also sets forth, for each such employee, the (a) number of sick
days and personal days to which the employee was entitled, on an annual basis,
immediately prior to the Closing Date and the number of sick days and personal
days used by such employee during the annual period and (b) salaries, wages,
commissions, benefits, severance payments ("Severance Payments"), accrued
vacation pay and/or any other amounts payable to such employee as of the Closing
Date, (collectively, "Termination Amounts"). To the best knowledge of Seller and
Stockholder, no employee listed on Schedule 4.17 has made any threat, or
otherwise revealed an intent, to cancel or otherwise terminate his relationship
with Seller or the Business.
4.18 Employee Relations. To the knowledge of Seller and Stockholder,
Seller is in material compliance with all Federal, state or other applicable
laws, domestic or foreign, respecting employment and employment practices, terms
and conditions of employment and wages and hours, and has not and is not engaged
in any unfair labor practice. No unfair labor practice complaint against Seller
is pending before the National Labor Relations Board. No labor strike, picket,
material dispute, slowdown, stoppage or other material labor trouble has ever
occurred or is pending or, to the knowledge of Seller and Stockholder,
threatened against or involving Seller. To the knowledge of Seller and
Stockholder, no union representation question exists respecting the employees of
Seller. No grievance or any arbitration proceeding is pending except as
disclosed in Schedule 4.18 and, to the knowledge of Seller and Stockholder, no
such claim has been asserted or is threatened. No collective bargaining
agreement exists or is currently being negotiated by Seller. Except as disclosed
on Schedule 4.18, no claim of discrimination or harassment is pending or, to the
knowledge of Seller and Stockholder, threatened before the Equal Employment
Opportunity Commission, or any other judicial or administrative body or agency.
4.19 Suppliers and Customers, Etc. Schedule 4.19 sets forth a
complete and correct list of (a) the largest suppliers and/or vendors of Seller
(identified, in each case by the dollar amount of purchases from such party) for
the eight-month period ended August 31, 1996 and the twelve-month period ended
December 31, 1995 and (b) all of the customers of Seller (identified, in each
case, by the dollar amount of all purchase orders submitted by such party to
Seller for the eight-month period ended August 31, 1996). Except as set forth on
Schedule 4.19, no such supplier, vendor or customer has canceled or otherwise
terminated, or, to the knowledge of Seller and Stockholder, made any threat to
cancel or, otherwise terminate, its relationship with Seller. Except as set
forth
12
on Schedule 4.19, no such supplier, vendor or customer has during such period
decreased materially, or, to the best knowledge of Seller and Stockholder, made
any threat to decrease materially, its services or supplies to, or purchases
from, Seller. Except as set forth on Schedule 4.19, during such period or
thereafter, no breach or default or event of default occurred or was alleged to
have occurred, and no event occurred which with notice or lapse of time or both
would have constituted a breach or default or event of default, in connection
with any contractual or other arrangements between Seller and any of its
suppliers, vendors or customers. Schedule 4.19 also sets forth a list of all
license, royalty and other similar agreements to which Seller was a party that
was terminated by Seller or the other party or parties thereunder during the
past three (3) years.
4.20 Benefit Plans.
(a) Neither Seller nor any Affiliate of Seller has maintained or
maintains, contributes or is required to contribute to, any employee pension
benefit plans (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")). Schedule 4.20 sets forth each
employee welfare benefit plan (as defined in Section 3(1) of ERISA), bonus,
stock purchase, stock ownership, stock option, deferred compensation, incentive,
severance, termination or other compensation plan or arrangement, fringe benefit
plan or other benefit plan, agreement or arrangement presently maintained by, or
contributed to by Seller or any Affiliate of Seller (each, a "Plan" and,
collectively, the "Plans").
(b) To the knowledge of Seller and Stockholder, Seller and each
of the Plans are in compliance with the applicable provisions of ERISA and those
provisions of the Code applicable to the Plans.
(c) Except as set forth on Schedule 4.20, all premium payments or
other contributions to, and payments from, the Plans which may halve been
required to be made in accordance with the Plans have been timely made. All such
premiums or other contributions to the Plans, and all payments under the Plans,
except those to be made by an insurer, for any period ending before the Closing
Date that are not yet, but will be, required to be made are properly accrued and
reflected on the Financial Statements or are set forth on Schedule 4.20.
(d) Except as set forth on Schedule 4.20, all reports, returns
and similar documents with respect to the Plans required to be filed with any
government agency or distributed to any Plan participant have been duly and
timely filed or distributed.
(e) Seller has complied with the notice and continuation coverage
requirements of Section 4980B of the Code and the regulations thereunder with
respect to each Plan that is, or was during any taxable year of Seller for which
the statute of limitations on the assessment of federal income taxes remains
open, by consent or otherwise, a group health plan within the meaning of Section
4980B(g) of the Code.
(f) At no time has (i) Seller or (ii) any other employer that is,
or, at any relevant time, was together with Seller, treated as a "single
employer" under Section 414(b), 414(c) or 414(m) of the Code, incurred any
liability which could subject Buyer or Seller to any liability under Section
4062, 4063 or 4064 of ERISA.
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(g) At no time has Seller or any Affiliate of Seller contributed,
or been required to contribute, to any "multiemployer pension plan" within the
meaning of Section 3(37) of ERISA, and no liability is owing on account of any
withdrawal therefrom.
(h) Seller has not incurred or is reasonably likely to incur any
liability with respect to any Plan, including, without limitation, any plan or
arrangement that would be included within the definition of "Plan" hereunder,
but for the fact that such plan or arrangement was terminated before the date of
this Agreement.
(i) Neither Seller nor any Affiliate of Seller maintains or ever
has maintained or contributes, ever has contributed, or ever has been required
to contribute, to any Plan providing post-employment medical, health or life
insurance or other welfare benefits for current or future retired or terminated
employees, their spouses or their dependents, except as may be required by
applicable Law.
4.21 Inventory. All inventory of Seller is in a quantity usable and
salable in the ordinary course of its business. All inventories not written off
have been priced and are reflected on the balance sheet at the lower of cost or
market on a specific identification basis, in accordance with generally accepted
accounting principles consistently applied. The quantities of each type of
inventory (whether raw materials, work-in-process, or finished goods) are not
excessive, but are reasonable and warranted in the present circumstances of
Seller and the Business. Seller is not under any liability or obligation to make
refunds, bear the loss or otherwise become liable with respect to the return of
inventory or merchandise in the possession of wholesalers, distributors,
retailers, franchisees, licensees or other customers in excess of $500
individually or $1,000 in the aggregate. Schedule 4.21, which shall be delivered
within ten days, of the date hereof, shall set forth a list of all inventory
currently used by employees. Except as set forth on such Schedule 4.21 all
inventory, including equipment used for demonstration purposes, is located at
Seller's warehouse.
4.22 Product Warranty. Each product manufactured, sold, leased or
delivered by Seller prior to the Closing Date has been in conformity with all
applicable contractual commitments and all express and implied warranties, and
Seller does not have any liability (and to the knowledge of Stockholder there is
no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against Seller giving rise to
any liability of Seller) for replacement or repair thereof or other damages in
connection therewith, subject only to the reserve for product warranty claims
set forth on the August Balance Sheet. No product manufactured, sold, leased, or
delivered by Seller is subject to any guaranty, warranty, or other indemnity
beyond the applicable standard terms and conditions of sale or lease. Schedule
4.22 sets forth copies of the standard terms and conditions of sale or lease for
Seller (containing applicable guaranty, warranty and indemnity provisions).
4.23 Insurance. Schedule 4.23 sets forth a complete and correct list
and description (showing the policy number, name of carrier, coverage,
deductible amounts, term, expiration date and annual premium) of all insurance
policies with respect to Seller's business, properties assets and employees, and
all self-insurance programs maintained for the foregoing. All such policies are
in full force and effect and insure adequately against all risks to which Seller
and its business,
14
properties, assets and employees are normally exposed in the operation of the
Business. All premiums due on such policies of insurance have been paid in full
and no notice of cancellation, expiration or non-renewal of any such policy has
been received by Seller and no cause for such cancellation, expiration or
non-renewal exists.
4.24 Environmental Matters. Except as set forth on Schedule 4.24,
Seller has not received any notice from any governmental agency or private or
public entity advising that it is potentially responsible for response costs or
other costs with respect to a release or threatened release of any Environmental
Substance and neither it nor, to the knowledge of Seller or Stockholder, its
predecessors in interest with respect to the Business have conducted activities
which could reasonably be expected to result in such a notice. No
administrative, civil or criminal actions, including without limitation
third-party actions for personal injury or property damage, are pending or
threatened with respect to any Environmental Law or related to the Business or
the Assets. No judgments, consent orders, consent decrees, stipulations, or
other restrictions have been entered or applied with respect to any
Environmental Law or related to the Business or the Assets. Seller neither
received nor is aware of any governmental orders, notifications, notices of
violation or requests for information relating to environmental or health and
safety conditions at or related to the Business or the Assets, or is aware of
any past or current violations of any Environmental Law related to the Business
or the Assets or of environmental conditions related to the Business or the
Assets. Neither the operation of the Business, either as currently conducted or
conducted in the past at any office space or other facility or real property
owned, leased, used or occupied by Seller, whether currently or at any time in
the past, violate nor have violated any Environmental Law.
4.25 Brokers. Except for Ramko Capital, no broker, finder, agent or
other intermediary has acted on behalf of Seller or otherwise assisted in
bringing about the transactions contemplated by this Agreement and except for
Ramko Capital no broker, finder, agent or other intermediary is entitled to any
commission or finder's fee in respect thereof based in any way on agreements,
understandings or arrangements with or the conduct of Seller.
4.26 Litigation. Except as set forth on Schedule 4.26, there is no
claim, action, suit, proceeding, arbitration, investigation or inquiry pending
before any federal, state, local, or other court or governmental,
administrative, or self-regulatory body or agency, or any private arbitration
tribunal, or to the knowledge of Seller and Stockholder, threatened against
Seller relating to the Business, any of the Assets or the Assumed Liabilities,
or the transactions contemplated by this Agreement; nor to the knowledge of
Seller and Stockholder is there any basis for any such claim, action, suit,
proceeding, arbitration, investigation or inquiry. Without limiting the
generality of the preceding sentence, Schedule 4.26 sets forth a list and
description (including the status) of each claim, action, suit, investigation
and proceeding involving Seller and any employee of Seller. To the knowledge of
Seller and Stockholder, Seller is in compliance with each judgment, order, writ,
injunction, decree or consent of any court or other judicial authority relating
to, binding or affecting Seller, any part of the Business or the Assets, or any
of the Assumed Liabilities, each of which is set forth an Schedule 4.26.
4.27 Bank Accounts; Powers of Attorney. Schedule 4.27 sets forth the
name and address of each bank or other financial institution with which Seller
has an account, credit line or
15
a safe deposit box or vault, the name and account number under which such
account is maintained and the name and title or capacity of each person
authorized to draw thereon or have access thereto. Schedule 4.27 also sets forth
a complete and correct list of all powers of attorney, proxies and other like
instruments to act on behalf of Seller or any other party in connection with the
Business, any of the Assets or any of the Assumed Liabilities.
4.28 Taxes.
(a) Seller (i) has filed on a timely basis all Tax Returns (as
hereinafter defined) of, relating to or which include Seller which are required
to be filed on or before the date of this Agreement, which Tax Returns are true,
correct and complete in all material respects, (ii) has paid all Taxes required
to be paid on or before the date of this Agreement, and (iii) has collected or
withheld, paid over and reported all Taxes required to have been collected or
withheld by it on or before the date of this Agreement in all material respects.
(b) Except as set forth on Schedule 4.28, (i) no Taxing authority
has asserted any adjustment that could result in a material additional Tax for
which Seller is or may be liable, (ii) to the knowledge of Seller and
Stockholder there is not pending audit, examination, investigation, dispute,
proceeding or claim (collectively, "Proceeding") relating to any Tax for which
Seller is or may be liable and to the knowledge of Seller and Stockholder, no
Taxing authority is contemplating such a Proceeding, (iii) no statute of
limitations with respect to any Tax for which Seller is or may be liable has
been waived or extended, and (iv) Seller is not a party to any tax sharing or
tax allocation agreement, arrangement or understanding. Set forth on Schedule
4.28 is a list of each jurisdiction in which Seller has filed or is required to
file a Tax Return, the type of Tax and type of Tax Return filed or required.
(c) Seller is not a "consenting corporation" within the meaning
of Section 341(f) of the Code (or any comparable state, local or foreign Tax
provision). Seller is not a party to any contract, agreement, plan or
arrangement that, individually or collectively, could given rise to any material
payment that would not be deductible by reason of Section 280G or 404 of the
Code (or any comparable state, local or foreign Tax provision). Seller does not
have any "tax-exempt use property" within the meaning of Section 168(h) of the
Code (or any comparable state, local or foreign Tax provision).
4.29 Related Party Transactions. Except as disclosed in Schedule
4.29, neither Stockholder, nor any Affiliate of Seller or Stockholder has any
interest, financial or otherwise, in any business which is a party to, or in any
property which is the subject of, any material transaction with the Seller
relating to the Business, including, without limitation, any customer, supplier,
competitor, or potential competitor or lessor.
4.30 Complete Business Assets. Except for the Excluded Assets, the
Assets and Assumed Agreements represent all of the assets and contract rights
used by Seller to conduct its business in the manner in which it has been
conducted by it since January 1, 1996. Neither Seller, Stockholder nor any of
their respective Affiliates directly or indirectly presently conducts, or has
since January 1, 1996 conducted the Business other than by or through Seller.
The Business does
16
not materially utilize any assets or rights of any person or entity other than
those included in the Assets and the Assumed Agreements.
4.31 Investment. Seller (i) understands that the Preferred Shares and
the Common Shares have not been, and, except as otherwise agreed to by the
parties, will not be, registered under the Securities Act, or under any state
securities laws, and are being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public offering, (ii) is
acquiring the Preferred Shares and the Common Shares solely for its own account
for investment purposes, and not with a view to the distribution thereof, (iii)
is a sophisticated investor with knowledge and experience in business and
financial matters, (iv) has received certain information concerning the Buyer
and has had the opportunity to obtain additional information as desired in order
to evaluate the merits and the risks inherent in holding the Preferred Shares
and the Common Shares, (v) is able to bear the economic risk and lack of
liquidity inherent in holding the Preferred Shares and the Common Shares, and
(vi) is an Accredited Investor within the meaning of Regulation D under the
Securities Act of 1933, as amended.
4.32 No Misrepresentation by Seller or Stockholder; Disclosure. No
representation or warranty of Seller or Stockholder made or contained in this
Agreement contains a misstatement of a material fact or omits to state a
material fact required to be stated therein in order to make the statement
contained therein, in the light of the circumstances under which it is made, not
misleading.
V. REPRESENTATlONS AND WARRANTIES OF BUYER
To induce Seller to enter into this Agreement and the other documents
and instruments contemplated hereby, Buyer and Parent hereby jointly and
severally represent, and agree with Seller as follows:
5.1 Organization and Good Standing of Purchaser. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Virginia. Buyer has all requisite corporate power and
authority to make the representations, warranties and agreements made hereunder,
to own, lease and operate its properties and assets and to carry on its business
as currently conducted, to execute and deliver this Agreement and to perform its
obligations under this Agreement.
5.2 Authority and Enforceability. Each of Buyer and Parent has full
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly authorized by all necessary corporate
and other action, executed and delivered by Buyer and Parent and (assuming the
valid execution and delivery of the Agreement by Seller and Stockholder)
constitutes the legal, valid and binding obligation of Buyer and Parent,
enforceable against them in accordance with its terms.
5.3 Authorization Conflicts. Neither the execution, delivery and
performance of this Agreement by Buyer and Parent, nor the consummation by it of
the transactions contemplated hereby will (a) conflict with or result in a
breach of any provision of Buyer's and Parent's
17
Certificate of Incorporation or Bylaws; (b) constitute or result in the breach
of, conflict with or give raise to a right of forfeiture, termination,
cancellation or acceleration with respect to, any term, condition or provision
of, any note, bond, mortgage, indenture, license or other contract or obligation
to which Buyer or Parent is a party or by which their respective properties and
assets may be bound, (c) violate in any material respect any law, statute,
regulation, judgment, order, writ, injunction, or decree applicable to Buyer or
Parent or their respective properties and assets or (d) create or result in any
Lien on any of their respective properties or assets.
5.4 Consents. Except as set forth on Schedule 5.4, no consent, order,
authorization, qualification, license, or approval of, or exemption by, or
filing with, any governmental, public or regulatory body is required in
connection with the execution, delivery and performance by Buyer of this
Agreement, the transactions contemplated hereby or the legality, validity,
binding effect or enforceability hereof except as may be limited by bankruptcy
or other laws and equitable principles affecting contracts generally.
5.5 Broker. Except as set forth on Schedule 5.5, no broker, finder,
agent or other intermediary has acted on behalf of Buyer or otherwise assisted
in bringing about the transactions contemplated by this Agreement and no broker,
finder, agent or other intermediary is entitled to any commission or finder's
fee in respect thereof based in any way on agreements, understandings or
arrangements with or the conduct of Buyer.
5.6 No Misrepresentation by Buyer or Parent; Disclosure. No
representation or warranty of Buyer or Parent made or contained in this
Agreement or in any document filed by the Parent with the U.S. Securities and
Exchange Commission, in each case as may have been corrected, restated or
amended, since September 1, 1995 contains a misstatement of a material fact or
omits to state a material fact required to be stated therein in order to make
the statement contained therein, in light of the circumstances under which it is
made, not misleading.
5.7 Additional Representations. Buyer and Parent, jointly and
severally, represent and warrant that the representations made on Schedule 5.7
hereof regarding the financial condition of the Buyer are true and complete in
all respects, are not misleading and do not permit it to state any fact required
to be stated in order to make any statement therein not misleading, in each case
as of the Closing Date.
VI. CERTAIN AGREEMENTS OF SELLER, STOCKHOLDER AND BUYER
6.1 Expenses of Sale. Except as expressly set forth below in this
Section 6.1, Seller and Buyer shall each bear their own direct and indirect
expenses incurred in connection with the negotiation and preparation of this
Agreement and the consummation and performance of the transactions contemplated
hereby and any income taxes of any kind. Any excise, sales, use, gross receipts
or similar taxes, whether imposed on Buyer or Seller, arising solely out of the
transfer of the Assets shall be shared equally between Buyer and Seller (and any
refund of such taxes shall likewise be paid to, and shall be shared equally
between Buyer and Seller). Buyer and Seller will cooperate with one another in
filing any required tax returns and in seeking any applicable exemption from the
payment of any excise, sales, use, gross receipts or similar tax with respect to
the transfer of the Assets hereunder.
18
6.2 Publicity. Seller, Stockholder, Buyer and Parent, and each of
their Affiliates shall have the right to issue any publicity, releases or
announcements that are required by law or that any such party, in its reasonable
discretion, deems appropriate. Such party shall provide to each other party a
copy of each such publicity, release and/or announcement promptly after its
issuance.
6.3 Post-Closing Access.
(a) After the Closing, Seller shall give, or cause to be given,
to the officers, employees, attorneys, accountants and other authorized
representatives of Buyer (collectively, "Buyer's Representatives"), reasonable
access during normal business hours to all of the tax and other records
(including, without limitation, the right to make copies and take extracts
therefrom), plants, properties and personnel of Seller as Buyer may from time to
time reasonably request, in connection with Buyer's conduct of its business,
including, without limitation, the preparation of financial statements and
filing of required tax returns and reports by Buyer and filings by Parent, or
any of their respective Affiliates, with the Securities and Exchange Commission
or any securities exchange or in connection with any of the transactions
contemplated by this Agreement. Seller and Seller's Representatives shall
furnish or cause to be furnished, at Buyer's expense, such information and
cooperation as may be reasonably requested by Buyer in connection with the
foregoing.
(b) After the Closing, Buyer shall give, or cause to be given, to
Seller's Representatives, access comparable to that given by Seller pursuant to
Section 6.3(a), including, without limitation, access to Buyer's accounting
system and records relating to pre-Closing Data accounting information, in
connection with Seller's preparation of accounting and tax records. Buyer and
Buyer's Representatives shall furnish, at Seller's expenses such information and
cooperation as may be reasonably requested by Seller in connection with the
foregoing.
6.4 Financial Statements. Seller shall, at Buyer's expense, except as
provided below assist the Buyer in preparation of the Seller's financial
statements for the three year period ended December 31, 1995, including the
notes thereto, accompanied by an audit report thereon by independent certified
public accountants (the "Accountants") satisfactory to Buyer and certified by
Seller's chief executive officer or chief financial officer (collectively, the
"1995 Financial Statements"). In addition, Seller shall provide any other
financial statements concerning Seller and the Business as Buyer, Parent or any
of their respective Affiliates may from time to time request, provided such
request does not require any expenditure by Seller. Notwithstanding the
foregoing, Seller shall reimburse Buyer for 50% of the cost of producing the
financial statement for the three year period ended December 31, 1995, provided,
however, that such reimbursement shall in no event exceed $25,000.
6.5 License. Seller hereby grants to Buyer a non-exclusive,
world-wide license to use the name "ManTech Solutions (formerly a subsidiary of
ManTech International Corporation)" in the same form and for the same purposes
and to the same extent used in connection with the Business on or prior to the
date hereof, which license shall terminate six months from the date hereof.
During the term of such license, Buyer covenants to meet the standards of
quality, efficacy, design, workmanship and service with respect to products and
services of the Business
19
bearing the ManTech name employed by Seller immediately prior to the Closing
Date. If Seller determines, in Seller's reasonable judgment, that any products
or services do not meet the quality standards in effect immediately prior to the
Closing Date, Seller may terminate this license effective 10 days after giving
written notice to Buyer of such termination.
6.6 Delivery of Consents. Seller and Stockholder covenant to deliver
consents to transfer of all Assumed Agreements and Intellectual Property no
later than October 31, 1996. In the event of a failure to deliver any such
consent, the parties hereto shall negotiate an acceptable adjustment of the
Purchase Price as the remedy for such failure to obtain consent.
6.7 Performance of Assumed Agreements. Buyer and Parent covenant to
faithfully perform all obligations under all Assumed Agreements, so long as
Seller or Stockholder shall have any obligation thereunder related thereto.
6.8 Replacement of Letter of Credit and Performance Bond by Buyer. No
later than October 31, 1996, Buyer agrees to replace the Letter of Credit and
the Performance Bond and to terminate such instruments. Buyer agrees to
reimburse Seller for all costs, fees and expenses incurred by Seller in
connection with the Letter of Credit and the Performance Bond between the date
hereof and the date of termination.
6.9 Non-Competition, Non-Solicitation and Non-Disclosure.
(a) Each of Seller and Stockholder covenants and agrees that, for
a period of five (5) years following the Closing Date, they will not, and they
will not permit their Affiliates, directly or indirectly, alone or as a partner,
joint venturer, officer, director, employee, lender, consultant, agent,
independent contractor, stockholder or otherwise, to engage in the Business, as
defined herein and as currently operated. The passive ownership by Seller or
Stockholder of not more than five percent (5%) of the shares of stock of any
corporation having a class of equity securities actively traded on a national
securities exchange or in the over-the-counter market shall not be deemed, in
and of itself, to violate the prohibitions of this paragraph.
(b) Each of Seller and Stockholder covenants and agrees that, for
a period of five (5) years following the Closing Date, neither they nor their
Affiliates, directly or indirectly, shall attempt to or employ, hire or engage
any person who was employed by Seller during the six (6) months prior to the
Closing Date or is employed by Buyer at any time after the Closing Date;
provided, however, that the prohibitions of this Section 6.9 shall not apply to
any such employee terminated by Buyer, and further provided that the
prohibitions of this Section 6.9 shall not apply in the event that a former
employee responds to a general solicitation for employment made by Seller,
Stockholder or their Affiliates.
(c) Each of Seller and Stockholder covenants and agrees that they
will not, at any time following the Closing Date, disclose, directly or
indirectly, or make available to any person, or in any manner use for their own
benefit, any confidential information or trade secrets relating to the Business,
or any information concerning the financial condition, prospects, customers,
licensees, suppliers, sources of leads and methods of developing products,
obtaining new business, manufacturing and distribution methods or any other
methods of doing and
20
operating the Business, except to the extent that such information is a matter
of public knowledge, was acquired by Seller or Stockholder subsequent to the
date hereof or is required to be disclosed by law (in which case prior to such
disclosure the disclosing party shall promptly provide prior written notice of
such required disclosure to Buyer in order to afford Buyer the opportunity to
seek an appropriate protective order preventing such disclosure).
(d) Each of Seller and Stockholder acknowledges and agrees that a
breach by them of any of the provisions of this Section 6.9 will cause
irreparable harm and damage to Buyer and that, in the event of such breach,
Buyer shall have, in addition to any and all remedies at law, the right to an
injunction, specific performance or other equitable relief to prevent the
violation of the obligations of Seller and Stockholder hereunder.
(e) Each of Seller and Stockholder acknowledges and agrees that
each provision of this Section 6.9 shall be treated as a separate and
independent clause, and the unenforceability by any one clause shall in no way
impair the enforceability of any of the other clauses herein. Furthermore, if
one or more of the provisions contained in this Section 6.9 shall for any reason
be held to be excessively broad as to geographical scope, duration, activity or
otherwise so as to be unenforceable at law, such provision or provisions shall
be construed by the appropriate judicial body by limiting and reducing it or
them, as the case may be, so as to be enforceable to the maximum extent
compatible with the applicable Law as it shall then appear.
VII. CERTAIN EMPLOYEE MATTERS
7.1 Employment of Seller's Employees. Contemporaneous with the
Closing, Buyer shall hire each employee listed on Schedule 4.17 on an "at will"
basis and shall employ such employees following the Closing Date at the same
salaries such employees received from Seller immediately prior to Closing. Buyer
shall initially provide to all such employees substantially such benefits, other
than salary, as set forth on Schedule 4.17. Any liability which Seller may have
owed to any such employee prior to the Closing Date not otherwise set forth on
Seller's balance sheet dated as of August 31, 1996 shall remain the liability of
the Seller.
7.2 Severance Obligations. Seller shall pay, within ten days of the
date hereof, Xxxxxx Xxxxxxxx fifteen thousand ($15,000) Dollars and Xxxxx Xxxxx
twenty-five thousand ($25,000) Dollars on the Closing Date.
VIII. REIMBURSEMENT OF PAST DUE ACQUIRED RECEIVABLES
8.1 Seller agrees to reimburse Buyer for all amounts on each Acquired
Receivable designated by Buyer in accordance with Section 8.3 that shall be
unpaid seventy-five (75) days after its Due Date (as defined below). The "Due
Date" of each Acquired Receivable shall be a date that is thirty (30) days after
the date such Acquired Receivable was recorded on Seller's books and records. An
Acquired Receivable that shall become unpaid seventy-five (75) days after its
Due Date is sometimes referred to in this Agreement as a "Past Due Receivable"
and, collectively, as "Past Due Receivables."
8.2 Post Closing Collection of Acquired Receivables.
21
(a) For a period of 135 days from and after the Closing Date,
Buyer shall use its best efforts to collect the Acquired Receivables. For
purposes of this Section 8.2, the term "best efforts" means the use of those
procedures generally followed by Buyer in the collection of its accounts
receivable other than Acquired Receivables.
(b) Solely for purposes of this Article 8, amounts collected by
Buyer after the Closing Date from any obligor of an Acquired Receivable who is
also an obligor of a receivable owned by Buyer and arising after the Closing
Date shall, unless otherwise designated by such obligor, be applied first
against the outstanding balance of the Acquired Receivable before application
against the outstanding balance of other receivables of Buyer arising after the
Closing Date; provided, that where any such obligor of an Acquired Receivable
shall have a bona fide dispute regarding all or a portion of such Acquired
Receivable, the disputed portion of such Acquired Receivable shall not be
applied as provided above and shall be deemed unpaid.
8.3 Procedure for Reimbursement. No earlier than the 135th day nor
later than the 155th day after the Closing Date, Buyer shall notify Seller by
providing a schedule setting forth a list and the amount, net of the bad debt
reserve on the August 31, 1996 Balance Sheet (the "Reimbursement Amount"), of
those Past Due Receivables (whether or not such Acquired Receivables were Past
Due Receivables on the Closing Date or became Past Due Receivables thereafter)
that remain outstanding. Seller shall have thirty (30) days after receipt of
such notice to take such action as it shall deem appropriate to cause repayment
of any Past Due Receivables. Within forty (40) days after such notice of the
Reimbursement Amount is given to Seller (the "Reimbursement Date"), Seller shall
pay the Reimbursement Amount, less any repayments, to Buyer by reducing the
principal amount of the Promissory Note. Upon payment of the Reimbursement
Amount related to any Acquired Receivable, all right, title and interest to such
Acquired Receivable shall be transferred to the Seller and amounts paid in
respect of such Acquired Receivables shall be paid to Seller.
IX. CLOSING DELIVERIES
9.1 Deliveries of Seller. Contemporaneously herewith or prior hereto,
Seller is delivering or has previously delivered to Buyer each of the following
documents:
(a) Certificate of Secretary. A certificate of the Secretary of
Seller setting forth (i) a copy of the resolutions adopted by its Board of
Directors and shareholders approving the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, (ii)
Seller's certificate of incorporation, as amended to date, (iii) Seller's
Bylaws, as amended to date, and (iv) the incumbency of Seller's officers and
including such officers' signatures.
(b) Corporate Records and Financial Statements. The financial
statements described in Section 4.8(a).
(c) Instruments of Transfer. General assignments, bills of sale,
consents and other instruments of transfer, in form and substance satisfactory
to Buyer, to vest in Buyer good and marketable right, title and interest in the
Assets.
22
9.2 Deliveries of Buyer. Contemporaneously herewith or prior hereto,
Buyer is delivering or has previously delivered to Seller each of the following
documents:
(a) Promissory Notes. The Promissory Notes, duly executed by
Buyer, together with a guaranty of payments thereon by Parent.
(b) Preferred Shares. A certificate or certificates representing
the Preferred Shares.
(c) Common Shares. A certificate or certificates representing the
Common Shares.
(d) Registration Rights Agreement. A Registration Rights
Agreement in the form attached hereto as Exhibit D, duly executed by Parent.
(e) Certificate of Secretary. A Certificate of the Secretary of
Buyer setting forth (i) a copy of the resolutions adopted by its Board of
Directors and shareholders approving the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
thereby, (ii) Buyer's certificate of incorporation, as amended to date, (iii)
Buyer's Bylaws, as amended to date, and (iv) the incumbency of Buyer's officers
and including such officers' signatures.
(f) Instruments of Assumption. Assumptions and other similar
instruments of assignment, in form and substance satisfactory to Seller, to
evidence Buyer's assumption of the Assumed Liabilities.
X. SURVIVAL AND INDEMNIFICATION
10.1 Survival of Representations and Warranties. All such
representations, warranties, covenants and agreements of Seller, Stockholder,
Buyer and Parent made in this Agreement or in any certificate delivered pursuant
hereto shall survive the execution and delivery hereof.
10.2 Indemnification by Seller and Stockholder. Seller and
Stockholder, jointly and severally, agree to indemnify, defend and hold Buyer
and its Affiliates harmless from and against any and all losses, diminution of
value, claims, demands, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and disbursements) of every kind, nature
and description (collectively, "Claims") based upon, arising out of or otherwise
in respect of (a) any inaccuracy in or any breach of any representation,
warranty, covenant or agreement of Seller or Stockholder contained in this
Agreement, and (b) the Excluded Liabilities (including, without limitation,
Claims based upon, arising out of or otherwise relating to (i) workmen's
compensation, disability, discrimination, wage and hour and other matters in
respect of past or present employees of Seller and (ii) the operation of the
Business in respect of all periods on or prior to the Closing Date).
10.3 Indemnification by Buyer. Buyer and Parent, jointly and
severally, agree to indemnify, defend and hold Seller and its Affiliates
harmless from and against any and all Claims based upon, arising out of or
otherwise in respect of any material inaccuracy in or any breach of
23
any representation, warranty, covenant or agreement of Buyer or Parent contained
in this Agreement. Buyer agrees to indemnify, defend and hold Seller and its
Affiliates harmless from and against any and all claims based upon, arising out
of or otherwise in respect of (a) any failure to pay or fulfill any and all
Assumed Liabilities or the terms of any Assumed Agreement in accordance with its
terms or (b) the operation of the Business in respect of all periods after the
Closing Date.
10.4 Notice and Defense of Third Party Claims. If any claim, action,
suit, investigation or proceeding shall be brought or asserted under Section
10.2 or 10.3 against Buyer or any of its Affiliates or Seller or any of its
Affiliates, respectively (each an "Indemnified Person"), in respect of which
indemnity may be sought under either such Section from the relevant indemnifying
person (the "Indemnifying Person"), the Indemnified Person shall give prompt
written notice of such action, suit, investigation or proceeding to the
Indemnifying Person, who shall assume the defense thereof (including the
employment of counsel reasonably satisfactory to the Indemnified Person) and the
payment of all expenses related thereto; provided, however that any delay or
failure to so notify the Indemnifying Person shall relieve the Indemnifying
Person of its obligations hereunder only to the extent, if at all, that the
Indemnifying Person is materially prejudiced by reason of such delay or failure.
The Indemnified Person shall have the right to employ separate counsel in any
such action, suit, investigation or proceeding and to participate in the defense
thereof, but the fees and disbursements of such separate counsel shall be borne
by the Indemnified Person unless both the Indemnified Person and the
Indemnifying Person are named as parties and the Indemnified Person shall in
good faith determine that representation by the same counsel is inappropriate
(in which later case the fees and disbursements of such separate counsel shall
be at the expense of the Indemnifying Person). In the event that the
Indemnifying Person, within ten (10) days after notice of any such action, suit,
investigation or proceeding, fails to assume the defense thereof, the
Indemnified Person shall have the right to undertake the defense, compromise or
settlement of such action, suit, investigation or proceeding for the account of
the Indemnifying Person, and all costs, fees and expenses thereof shall be
deemed Claims for which the Indemnifying Person shall be responsible. Anything
in this Section to the contrary notwithstanding, the Indemnifying Person shall
not, without the Indemnified Person's prior written consent, settle or
compromise any action, suit, investigation or proceeding or consent to the entry
of any judgment or order thereunder. Notwithstanding any other provision herein
to the contrary, no Indemnifying Person shall be required to Indemnify an
Indemnified Person for any judgment issued by any judicial, administrative,
arbitral or other body until such judgment represents a final, unappealable
judgment of such body of competent jurisdiction over the Indemnified Party.
10.5 Limitation of Indemnification; Right of Offset; Claims.
(a) Buyer shall have the right to give notice of any and all
Claims under this Agreement and to be reimbursed for the amount of any and all
such Claims by offsetting such amounts as expended against any amounts payable
by Buyer to Seller or Stockholder pursuant to this Agreement, including, without
limitation, any payments due Seller under the Promissory Notes delivered
pursuant to Section 2.2(b) and (c) hereof. In the event that Claims received by
Buyer exceed the value of the Preferred Shares and the principal amount of the
Promissory Note, Stockholder shall provide Buyer with reasonable assurance of,
and security for, payment of expenditures related to any such Claims. Neither
the giving of nor failure to give any such notice
24
of a Claim under this Agreement nor the offsetting of any amounts nor failure to
offset any amounts in respect of any Claim by Buyer, shall constitute an
election of remedies nor limit Buyer in any manner in the enforcement of any
other remedies that may be available to it.
(b) Seller and Stockholder shall have the right at Seller's or
Stockholder's option, to offset the amount of any Claim payable to Buyer or
Parent under this Agreement against any amounts payable by Buyer to Seller or
Stockholder pursuant to this Agreement, including, without limitation, any
payments due under the Promissory Notes or Preferred Shares, or by delivering to
Buyer the Promissory Notes or certificate or certificates representing the
Preferred Shares or the Common Shares or any common stock issued in conversion
of the Preferred Shares, in payment thereof. Buyer and Parent agree to accept
the Promissory Notes, Preferred Shares or Common Shares in satisfaction of any
Claim, and promptly to issue a replacement note or certificate to Seller for the
balance.
(c) Seller's and Stockholder's indemnification obligation to
Buyer hereunder shall be limited, in the aggregate, to the Purchase Price
received and realized, provided, however, that the foregoing limitation shall
not apply to obligations resulting from misstatements or omissions of Seller's
actual knowledge and Claims resulting therefrom.
XI. MISCELLANEOUS
11.1 Certain Definitions. As used in this Agreement, the following
terms have the following meanings:
(a) "Affiliate" with respect to any person or entity, means and
includes any person or entity directly, or through one or more intermediaries,
controlling, controlled by or under common control with such person or entity.
(b) "Control" means the possession, directly or indirectly, of
the power, by share ownership, contract or otherwise, to direct the management
and policies of a person or entity.
(c) "Environmental Claim" means any claim alleging (i) any
responsibility, liability or unlawful act or omission under any Environmental
Law (ii) any tortious act or omission or breach of contract pertaining to any
Environmental Substance, or (iii) any other violation or claim under any
Environmental Law or in respect of any Environmental Substance.
(d) "Environmental Law" means any applicable Law pertaining to
(i) any emission, discharge, release, runoff; disposal or presence in the
environment of any Environmental Substance, (ii) any cleanup, containment,
manufacturing, treatment, handling, transportation, storage or sale of or other
activity pertaining to any Environmental Substance, or (iii) any other peril to
public or occupational health or safety or to the Environment that may be posed
by an Environmental Substance.
(e) "Environmental Substance" means any toxic substance,
hazardous material, contaminant, waste, pollutant or other similar product or
substance that may be, or pose, a threat to public or occupational health or
safety or to the environment.
25
(f) "Lien" means and includes any lien, pledge, negative pledge,
mortgage, security interest, claim, lease, charge, option, restriction on use,
right of first refusal, or other encumbrance of any kind or nature whatsoever,
and shall include, without limitation, with respect to real property, any
easement, restrictive covenant, encroachment or other defect, other than a
Permitted Lien.
(g) "Permitted Lien" means (i) carriers', warehousemen's,
mechanics', or other like Liens arising in the ordinary course of business for
sums not due and payable, (ii) with respect to real property, easements,
rights-of-way, restrictive covenants, encroachments, zoning and other
governmental ordinances and other like encumbrances incurred in the ordinary
course of business, none of which are substantial in amount or materially
detract from the value of such property or impair the present or anticipated
future use of such property, and (iii) Liens on real property for taxes not yet
due and payable or which are being contested in good faith by appropriate
proceedings.
(h) "Tax" shall mean any federal state, county, local or foreign
income tax, including any intent, penalty, or additional thereto, whether
disputed or not.
(i) "Tax Returns" shall mean all returns, amended returns,
declarations, reports, estimates, information returns and statements regarding
Taxes which are or were filed or required to be filed under applicable law,
whether on a consolidated, combined, unitary or separate basis or otherwise.
11.2 Notices. Any notice, request, demand or other communication
permitted or required to be given hereunder shall be in writing, shall be sent
by one of the following means to the addressee and shall be deemed conclusively
to have been given: (a) on the first business day following the day timely
deposited with Federal Express (or other equivalent national overnight carrier)
or United States Express Mail, with the cost of delivery prepaid; (b) on the
fifth business day following the day duly sent by certified or registered United
States mail, postage prepaid and return receipt requested; or (c) when otherwise
actually delivered to the addressee, at the following addresses:
(i) if to Seller or Stockholder:
c/o Mantech International Corporation
00000 Xxx Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Xx.
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxx Xxx., X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxx, Esq.
26
(ii) if to Buyer: Global-InSync, Inc.
c/o Global Intellicom, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Johan de Muinck Keizer, Esq.,
General Counsel
with a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Any party may, by notice given in accordance with this Section 11.2
to the other party, designate another address or person for receipt of notices
hereunder. Copies may be sent by regular first-class mail, postage prepaid, to
such person(s) as a party may direct from time to time by notice to the others,
but failure or delay in sending copies shall not affect the validity of any such
notice, request, demand or other communication so given to a party.
11.3 Brokers. Seller and Stockholder, jointly and severally, agree
that they shall (a) solely be responsible for and shall pay the fees,
commissions and expenses of each broker, finder, investment banker and other
intermediary hired by Seller or Stockholder in connection with this Agreement
and the transactions contemplated hereby, including, without limitation, the
fees, commissions and expenses of Ramko Capital and their respective Affiliates,
and (b) indemnify Buyer and its Affiliates in accordance with Article IX hereof
with respect to all such fees, commissions and expenses.
11.4 Entire Agreement. This Agreement (including the Schedules and
Exhibits annexed hereto or referred to herein) hereby contains the entire
agreement between the parties with respect to the transfer of the Assets to
Buyer and the assumption by Buyer of the Assumed Liabilities and supersedes all
prior agreements, written or oral, with respect thereto.
11.5 Waivers and Amendments Preservation of Remedies. This Agreement
may be amended, superseded, canceled, renewed or extended, and the terms hereof
may be waived, only by a written instrument signed by all parties to this
Agreement or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any such right, power or privilege, or any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. The rights and remedies
herein provided are cumulative and shall not preclude any party from seeking any
other remedy available, whether pursuant to applicable law or otherwise.
27
11.6 No Third-Party Beneficiaries. Except as expressly contemplated
hereby, this Agreement is intended for the exclusive benefit of the parties
hereto and shall not be enforceable by any other person or entity.
11.7 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance, with the laws of the State of New York,
without regard to principles of conflicts or choice of law (or any other law
that would make the laws of any state other than the State of New York
applicable hereto).
11.8 Bulk Transfer Laws. Buyer and Seller hereby waive compliance
with all applicable bulk sales and similar laws. Buyer and Parent, jointly and
severally, agree to bear all costs and expenses associated with any and all
claims, losses, liabilities, costs and expenses relating to the Assets or
Assumed Liabilities that Seller or Buyer may incur as a consequence of any bulk
transfer laws, including the waiver of compliance therewith. Seller and
Stockholder, jointly and severally, agree to bear all costs and expenses
associated with any claims, losses, liabilities, costs and expenses relating to
the Excluded Assets or the Excluded Liabilities that Buyer or Parent may incur
as a consequence of any bulk transfer laws, including the waiver of compliance
therewith.
11.9 Binding Effect; Assignment; Parties in Interest.
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assignable by any of the parties hereto without
the prior written consent of the other party, except that the rights of Buyer
hereunder may be assigned, without the consent of the other parties hereto, to
any corporation all of the outstanding capital stock of which is owned or
controlled, directly or indirectly, by Parent; provided that (i) the assignee
shall assume in writing all of Buyer's obligations hereunder, and (ii) Buyer
shall not be released from any of its obligations hereunder by reason of such
assignment. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective permitted successors and assigns. Nothing in
this Agreement is intended to confer, expressly or by implication, upon any
other person any rights or remedies under or by reason of this Agreement.
11.10 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument.
11.11 Further Assurances. Seller and Stockholder shall use their best
efforts to promptly obtain any and all consents, approvals and waivers necessary
to permit the assignment to, and assumption by, Buyer of all of the Assumed
Contracts with respect to which a third-party consent, approval or waiver is
required and has not been obtained prior to the Closing.
11.12 Schedules. All Schedules referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein.
11.13 Captions. All section titles or captions contained in this
Agreement or in any Schedule annexed hereto or referred to herein, and the table
of contents to this Agreement, are for
28
convenience only, shall not be deemed a part of this Agreement and shall not
affect the meaning or interpretation of this Agreement.
29
IN WITNESS WHEREOF, the parties have executed this Agreement or
caused this Agreement to be executed by their respective duly authorized
officers on the date first written above.
MANTECH SOLUTIONS CORPORATION
By: /s/ Xxxx X. Xxxxx
-----------------------------------
Name: Xxxx X. Xxxxx
Title: Treasurer
MANTECH INTERNATIONAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman of the Board
GLOBAL-INSYNC, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
GLOBAL INTELLICOM, INC.
By: /s/ N. Xxxxxx Xxxxxx
-----------------------------------
Name: N. Xxxxxx Xxxxxx
Title:Chairman of the Board and
Chief Executive Officer
Exhibit A
CERTIFICATE OF DESIGNATION
Xxxxxxx X. Xxxxxx and Johan de Muinck Keizer, certify that they are
the President, and Secretary, respectfully, of Global Intellicom, Inc., a Nevada
corporation (hereinafter referred to as the "Corporation"); that, pursuant to
the Corporation's Restated Articles of Incorporation and Section 78.1955 of the
Nevada General Corporation Law, the Board of Directors of the Corporation
adopted the following resolutions on September 16, 1996; and that none of the
Series 3 Convertible Preferred Stock has been issued.
1. Creation of Series 3 Convertible Preferred Stock. There is hereby
created a series of preferred stock consisting of 350,000 shares and designated
as the Series 3 Cumulative Preferred Stock, par value $.01 ("Series 3 Preferred
Stock"), having the voting powers, preferences, relative, participating,
optional and other special rights and the qualifications, limitations and
restrictions thereof as are set forth below.
2. Dividends.
(a) The holders of the shares of Series 3 Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors, out of funds legally available for the payment of dividends,
cumulative dividends in cash at the annual rate of 6% of the Liquidation
Preference (as hereinafter defined). Such dividends shall be payable commencing
on June 30, 1997 and, thereafter, in equal semi-annual payments on each December
31 and June 30 (each of such dates being a "Dividend Payment Date"), in
preference to dividends on any Common Stock or stock of any other class,
ranking, as to dividend rights, junior to the Series 3 Preferred Stock. Such
dividends shall be paid to the holders of record at the close of business on the
date specified by the Board of Directors of the Corporation at the time such
dividend is declared; provided, however, that such date shall not be more than
60 days nor less than 10 days prior to the respective Dividend Payment Date.
Each of such semi-annual dividends shall be fully cumulative and shall accrue
(whether or not declared and whether or not there shall be funds legally
available for the payment of dividends) from the first day of the semi-annual
period in which such dividend may be payable as herein provided to the last day
of such semi-annual period, except that the dividend for the period ending June
30, 1997 shall accrue from the date of the issuance of the Series 3 Preferred
Stock..
(b) For any semi-annual dividend period in which dividends are
not paid at the rate stated above, on the Dividend Payment Date first succeeding
the end of such semi-annual dividend period, such accrued dividends shall be
added to the Liquidation Preference of the Series 3 Preferred Stock (solely for
the purposes of calculating dividends payable on the Series 3 Preferred Stock
pursuant to the first sentence of paragraph 2(a)) effective at the beginning of
the semi-annual dividend period succeeding the semi-annual dividend period as to
which such dividends were not paid and shall thereafter accrue additional
dividends in respect thereof at the rate stated above, until such unpaid
dividends have been paid in full, at which time such dividend
shall be subtracted (solely for the purpose of calculating dividends payable on
the Series 3 Preferred Stock) from the Liquidation Preference.
3. Voting. (a) Except as otherwise expressly provided herein
or provided or required by law, the Series 3 Preferred Stock shall have no
voting rights.
(b) The holders of Series 3 Preferred Stock shall have the
following special voting rights:
(i) On each second Dividend Payment Date
that quarterly dividends on Series 3 Preferred Stock shall not have been paid in
full as required herein (a "Dividend Default"), then and in each such event, the
holders of shares of Series 3 Preferred Stock shall be entitled to elect such
number of directors ("Special Directors") as set forth in Section 3(b)(v),
hereof, at the next annual meeting of stockholders of the Corporation. The
holders of all shares otherwise entitled to vote for directors, voting
separately as a class, shall be entitled to elect the remaining members of the
Board of Directors. Such special voting right of the holders of shares of Series
3 Preferred Stock may be exercised until all dividends in default on the Series
3 Preferred Stock shall have been paid in full or declared and funds sufficient
therefor set aside, and when so paid or provided for together with one
additional Dividend Payment Date shall have passed without a Dividend Default,
such special voting right of the holders of shares of Series 3 Preferred Stock
shall cease and any directors appointed or elected under this Section 3(b) shall
resign, but subject always to the same provisions for the vesting of such
special voting rights in the event of any such future Dividend Default.
(ii) At any time after such special voting
rights shall have so vested in the holders of shares of Series 3 Preferred
Stock, the Secretary of the Corporation may, and upon the written request of the
holders of record of 10% or more in number of the shares of Series 3 Preferred
Stock then outstanding addressed to the Secretary at the principal executive
office of the Corporation shall, call a special meeting of the holders of shares
of Series 3 Preferred Stock, for the election of the Special Directors to be
elected by them as herein provided, to be held within 60 days after such call
and at the place and upon the notice provided by law and in the Bylaws for the
holding of meetings of stockholders; provided, however, that the Secretary shall
not be required to call such special meeting in the case of any such request
received less than 90 days before the date fixed for any annual meeting of
stockholders, and if in such case such special meeting is not called or held,
the holders of shares of Series 3 Preferred Stock shall be entitled to exercise
the special voting rights provided in this paragraph at such annual meeting. If
any such special meeting required to be called as above provided shall not be
called by the Secretary within 30 days after receipt of any such request, then
the holders of record of 10% or more in number of the shares of Series 3
Preferred Stock then outstanding may designate in writing one of their number to
call such meeting, and the person so designated may, at the expense of the
Corporation, call such meeting to be held at the place and upon the notice given
by such person, and for that sole purpose shall have access to the stock books
of the Corporation. No such special meeting and no adjournment thereof shall be
held on a date later than 60 days before the
-2-
annual meeting of stockholders. If, at any meeting so called or at any annual
meeting held while the holders of shares of Series 3 Preferred Stock have the
special voting rights provided for in this paragraph, the holders of not less
than 40% of the aggregate voting power of Series 3 Preferred Stock then
outstanding are present in person or by proxy, which percentage shall be
sufficient to constitute a quorum for the election of additional directors as
herein provided, the then authorized number of directors of the Corporation
shall be increased by the number of Special Directors to be elected, as of the
time of such special meeting or the time of the first such annual meeting held
while such holders have special voting rights and such quorum is present, and
the holders of shares of Series 3 Preferred Stock, voting as a class, shall be
entitled to elect the Special Director or Directors so provided for. If the
directors of the Corporation are then divided into classes under provisions of
the Certificate of Incorporation of the Corporation or the Bylaws, the Special
Director or Directors shall belong to each class of directors in which a vacancy
is created as a result of such increase in the authorized number of directors.
If the foregoing expansion of the size of the Board of Directors shall not be
valid under applicable law, then the holders of shares of Series 3 Preferred
Stock, voting as a class, shall be entitled, at the meeting of stockholders at
which they would otherwise have voted, to elect a Special Director or Directors
to fill any then existing vacancies on the Board of Directors, and shall
additionally be entitled, at such meeting and each subsequent meeting of
stockholders at which directors are elected, to elect all of the directors then
being elected until by such class vote the appropriate number of Special
Directors has been so elected.
(iii) Upon the election at such meeting by
the holders of shares of Series 3 Preferred Stock, voting as a class, of the
Special Director or Directors they are entitled so to elect, the persons so
elected, together with such persons as may be directors or as may have been
elected as directors by the holders of all shares otherwise entitled to vote for
directors, shall constitute the duly elected directors of the Corporation. Each
Special Director so elected by holders of shares of Series 3 Preferred Stock,
voting as a class, shall serve until the next annual meeting or until their
respective successors shall be elected and qualified, or if any such Special
Director is a member of a class of directors under provisions dividing the
directors into classes, each such Special Director shall serve until the annual
meeting at which the term of office of such Special Director's class shall
expire or until such Special Director's successor shall be elected and shall
qualify, and at each subsequent meeting of stockholders at which the
directorship of any Special Director is up for election, said special class
voting rights shall apply in the reelection of such Special Director or in the
election of such Special Director's successor; provided, however, that whenever
the holders of shares of Series 3 Preferred Stock shall be divested of the
special rights to elect one or more Special Directors as above provided, the
terms of office of all persons elected as Special Directors, or elected to fill
any vacancies resulting from the death, resignation, or removal of Special
Directors shall forthwith terminate (and the number of directors shall be
reduced accordingly).
(iv) If, at any time after a special meeting
of stockholders or an annual meeting of stockholders at which the holders of
shares of Series 3 Preferred Stock, voting as a class, have elected one or more
Special Directors as provided above, and while the holders of
-3-
shares of Series 3 Preferred Stock shall be entitled so to elect one or more
Special Directors, the number of Special Directors who have been so elected (or
who by reason of one or more resignations, deaths or removals have succeeded any
Special Directors so elected) shall by reason of resignation, death or removal
be reduced, the vacancy in the Special Directors may be filled by any one or
more remaining Special Director or Special Directors. In the event that such
election shall not occur within 30 days after such vacancy arises, or in the
event that there shall not be incumbent at least one Special Director, the
Secretary of the Corporation may, and upon the written request of the holders of
record of 10% or more in number of the shares of Series 3 Preferred Stock and
each Other Series of Preferred Stock then outstanding addressed to the Secretary
at the principal office of the Corporation shall, call a special meeting of the
holders of shares of Series 3 Preferred Stock, for an election to fill such
vacancy or vacancies, to be held within 60 days after such call and at the place
and upon the notice provided by law and in the Bylaws for the holding of
meetings of stockholders; provided, however, that the Secretary shall not be
required to call such special meeting in the case of any such request received
less than 90 days before the date fixed for any annual meeting of stockholders,
and if in such case such special meeting is not called, the holders of shares of
Series 3 Preferred Stock so entitled to vote shall be entitled to fill such
vacancy or vacancies at such annual meeting. If any such special meeting
required to be called as above provided shall not be called by the Secretary
within 30 days after receipt of any such request, then the holders of record of
10% or more in number of the shares of Series 3 Preferred Stock then outstanding
may designate in writing one of their number to call such meeting, and the
person so designated may, at the expense of the Corporation, call such meeting
to be held at the place and upon the notice above provided, and for that purpose
shall have access to the stock books of the Corporation; no such special meeting
and no adjournment thereof shall be held on a date later than 60 days before the
annual meeting of stockholders.
(v) On September 30, 1997, in the event that
by such date there has been a Dividend Default relating to the dividend due on
June 30, 1997, the holders of Series 3 Preferred Stock shall be entitled to
elect a number of directors sufficient to constitute 15% of the total number of
directors of the Company. On the second subsequent Dividend Payment Date on
which there has been a Dividend Default, the holders of the Series 3 Preferred
Stock shall be entitled to elect a number of directors sufficient to constitute
an additional 15% of the total number of directors of the Company, and,
thereafter, after each second subsequent Dividend Payment Date on which there
has been a Dividend Default, the holders of the Series 3 Preferred Stock shall
be entitled to elect a number of directors constituting an additional 15% of the
Board of Directors.
In the event that the size of the Board of Directors is
increased at any time during which any Special Director is serving thereon, such
vacancies shall be filled first by Special Directors elected by the holders of
the Series 3 Preferred Stock until the appropriate number of Special Directors
shall have been so elected.
4. Liquidation Preference. In the event of any liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series 3
Preferred Stock then outstanding shall be
-4-
entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders, whether from capital, surplus or earnings,
before any payment shall be made to the holders of any stock ranking on
liquidation, dissolution or winding up junior to the Series 3 Preferred Stock
(with respect to rights on liquidation, dissolution or winding up, the Series 3
Preferred Stock shall rank prior to the Common Stock), an amount equal to $10.00
per share of Series 3 Preferred Stock plus an amount equal to all accumulated
and unpaid dividends thereon, whether or not declared, to the date of such
distribution (the "Liquidation Preference"). If upon any liquidation,
dissolution or winding up the Corporation, the assets of the Corporation
available for distribution to its stockholders shall be insufficient to pay the
holders or shares of Series 3 Preferred Stock the full amounts to which they
respectively shall be entitled, the holders of shares of Series 3 Preferred
Stock shall share ratably in any distribution of assets according to the
respective amounts which would be payable in respect of the shares held by them
upon such distribution if all amounts payable on or with respect to said shares
were paid in full. In the event of any liquidation, dissolution or winding up of
the Corporation, after payment shall have been made to the holders of shares of
Series 3 Preferred Stock of the full amounts to which they respectively shall be
entitled as aforesaid, holders of any class or classes of stock ranking on
liquidation, dissolution or winding up junior to the Series 3 Preferred Stock
shall be entitled, to the exclusion of the holders of shares of Series 3
Preferred Stock, to share, according to their respective rights and preferences,
in all remaining assets of the Corporation available for distribution to its
stockholders. Neither the merger or consolidation of the Corporation into or
with another corporation or the merger or consolidation of any other corporation
into or with the Corporation, or the sale, transfer or other disposition of all
or substantially all the assets of the Corporation shall be deemed to be a
liquidation, dissolution or winding up of the Corporation.
5. Conversion. The holders of Series 3 Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(a) Each share of Series 3 Preferred Stock
shall be convertible, at the option of the holder thereof, at any time after the
date of issuance of such share, into Common Stock as more fully described below.
The number of shares of fully paid and nonassessable Common Stock into which
each share of Series 3 Preferred Stock may be converted shall be determined by
dividing $10.00 plus all accrued but unpaid dividends on the Series 3 Preferred
Stock by the Conversion Price (as hereinafter defined) in effect at the time of
conversion. The Conversion Price shall initially be $10.00 subject to adjustment
as provided in Section 6 below.
(b) No fractional shares of Common Stock
shall be issued upon conversion of the Series 3 Preferred Stock and in lieu of
any fractional shares to which the holder would otherwise be entitled, the
number of shares of Common Stock issuable upon conversion shall be rounded to
the nearest whole number.
(c) The holder of any shares of Series 3
Preferred Stock may exercise the conversion right pursuant to Section 4(a) as to
any part thereof by delivering to the Corporation during regular business hours,
or at such other place as may be designated by the Corporation, the
-5-
certificate or certificates for the shares to be converted, duly endorsed or
assigned in blank or to the Corporation (if required by it), accompanied by
written notice stating that the holder elects to convert such shares and stating
the name or names (with address) in which the certificate or certificates for
the shares of Common Stock are to be issued. Conversion shall be deemed to have
been effected on the date when the aforesaid delivery is made and such date is
referred to herein as the "Conversion Date". As promptly as practicable
thereafter, the Corporation shall issue and deliver to or upon the written order
of such holder, to the place designated by such holder, a certificate or
certificates for the number of shares of Common Stock to which such holder is
entitled. The person in whose name the certificate or certificates for Common
Stock are to be issued shall be deemed to have become a stockholder of record on
the applicable Conversion Date unless the transfer books of the Corporation are
closed on that date, in which event such person shall be deemed to have become a
stockholder of record on the next succeeding date on which the transfer books
are open. Upon conversion of only a portion of the number of shares covered by a
certificate representing shares of Series 3 Preferred Stock surrendered for
conversion, the Corporation shall issue and deliver to or upon the written order
of the holder of the certificate so surrendered for conversion, at the expense
of the Corporation, a new certificate covering the number of shares of Series 3
Preferred Stock representing the unconverted portion of the certificate so
surrendered.
(d) The Corporation shall, at all times when
Series 3 Preferred Stock shall be outstanding, reserve and keep available out of
its authorized but unissued stock, for the purpose of effecting the conversion
of Series 3 Preferred Stock, such number of its duly authorized shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series 3 Preferred Stock.
(e) All shares of Common Stock which may be
issued in connection with the conversion provisions set forth herein will, upon
issuance by the Corporation, be validly issued, fully paid and non-assessable.
6. Call Option. The Corporation shall have the option to call
all or part of the shares of Series 3 Preferred Stock by providing the holder
thereof a notice of not less than five (5) "trading days." A trading day shall
mean a day during which the exchange or organization where the Common Stock of
the Corporation is traded is open for business. Receipt of a notice exercising
this call option by the holders of the Series 3 Preferred Stock shall not
prejudice the rights of the holder thereof under Section 5 hereof. The exercise
price of the call option shall be equal to the Liquidation Preference and shall
be payable within three (3) business days after the expiration of the five
trading day call period.
7. Adjustments. The Conversion Price initially shall be
$10.00. The Conversion Price from time to time in effect shall be subject to
adjustment (to the nearest tenth of a cent) from time to time as follows:
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(a) In the event the Corporation at any time
or from time to time effects a subdivision or combination of its outstanding
Common into a greater or lesser number of shares without a proportionate and
corresponding subdivision or combination of its outstanding Series 3 Preferred
Stock, then and in each such event the Conversion Price shall be decreased or
increased proportionately.
(b) In case of any merger (other than a
merger in which the Corporation is not the continuing or surviving entity) or
any reclassification of the Common Stock of the Corporation, each share of the
Series 3 Preferred Stock shall thereafter be convertible into that number of
shares of stock or other securities or property to which a holder of the number
of shares of Common Stock issuable upon conversion of a share of Series 3
Preferred Stock immediately prior to such merger or reclassification would have
been entitled upon such merger or reclassification. In any such case,
appropriate adjustment (as determined by the Board of Directors in good faith)
shall be made in the application of the provisions herein set forth with respect
to the rights and interests thereafter of the holders of Series 3 Preferred
Stock, such that the provisions set forth herein shall thereafter be applicable,
as nearly as reasonably may be, in relation to any share of stock or other
property thereafter issuable upon conversion.
(c) Whenever the Conversion Price shall be
adjusted as provided in this Paragraph 6, the Corporation shall forthwith file,
at the office of the Corporation or of any transfer agent designated as transfer
agent for the Series 3 Preferred Stock, a statement, certified by the President
of the Corporation, showing in detail the facts requiring such adjustment and
the Conversion Price that shall be in effect after such adjustment. The
Corporation shall also cause a copy of such statement to be sent by first class
mail, postage prepaid, to each holder of record of Series 3 Preferred Stock at
such holder's address as shown in the records of the Corporation.
(d) In the event the Corporation shall
propose to take any action of the types described in this Paragraph 6, the
Corporation shall give notice to each holder of Series 3 Preferred Stock, which
notice shall specify the record date, if any, with respect to any such action
and the date on which such action is to take place. Such notice shall also set
forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action (to the extent such effect may be known at
the date of such notice) on the Conversion Price and the number, kind or class
of shares or other securities or property which shall be deliverable upon
conversion of the shares of Series 3 Preferred Stock. In the case of any action
which would require the fixing of a record date, such notice shall be given at
least 20 days prior to that date so fixed, and in case of all other action, such
notice shall be given at least 30 days prior to the taking of such proposed
action.
8. Ranking. Notwithstanding any other provisions hereof, the
Series 3 Preferred Stock shall be of equivalent preference to all other existing
series of Preferred Stock of the Corporation, in all respects, including
without, limitation, payment of dividends. The Corporation shall issues no
securities senior in preference to the Series 3 Preferred Stock so long as any
shares of Series 3 Preferred Stock are outstanding, in any respect, including
without limitation,
-7-
liquidation preferences or payment of dividends, but may issue securities of
equivalent preference thereto.
9. Transferability. The shares of Series 3 Preferred Stock may
not be sold, transferred, assigned, pledged or otherwise encumbered by the
holder thereof unless all outstanding shares of Series 3 Preferred Stock are
transferred, assigned, pledged or otherwise encumbered to one person or entity.
10. Notices. Any notices required to be given to the holder of
the Series 3 Preferred Stock shall be deemed given if deposited in the United
States mail, postage prepaid, and addressed to the holder of record at its
address appearing on the books of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation of Series 3 Convertible Preferred Stock to be duly
executed by its Chairman of the Board of Directors and Chief Executive Officer,
and Secretary, this 16th day September, 1996.
/s/ Xxxxxxx X. Xxxxxx
--------------------------
Xxxxxxx X. Xxxxxx
/s/ Johan de Muinck Keizer
--------------------------
Johan de Muinck Keizer
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STATE OF NEW YORK }
}
COUNTY OF NEW YORK }
On September 16, 1996, before me, _________________, a notary public
in and for the County of New York, the State of New York, personally appeared
Xxxxxxx X. Xxxxxx and Johan de Muinck Keizer, personally known to me to be the
persons whose names are subscribed to the within instrument and acknowledged to
me that they executed the same in their authorized capacities, and that by their
signatures on the instrument the entity upon behalf of which the persons acted,
executed the instrument.
WITNESS my hand and official seal.
Signature_________________________
(Seal)
-9-
Exhibit B
PROMISSORY NOTE
$1,486,084 New York, New York
September 16, 1996
FOR VALUE RECEIVED, the undersigned, GLOBAL-INSYNC, INC., a
Virginia corporation having an office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (the "Payor"), hereby promises to pay to MANTECH SOLUTIONS CORPORATION, a
Virginia corporation (the "Payee"), at 00000 Xxx Xxxxxxx Xxxxxxx, Xxxxxxx,
Xxxxxxxx 00000, or at such other place as may be designated from time to time in
writing by the Payee, the sum of One Million Four Hundred Eighty Six Thousand
Eighty-Four ($1,486,084) Dollars, plus interest, all as provided in this
promissory note (as the same may be supplemented, modified, amended or restated
from time to time in the manner provided herein, the "Note").
1. Interest hereunder shall accrue on the unpaid balance
hereof commencing on March 16, 1997 at the rate of nine (9%) percent per annum.
Interest shall be computed based upon a 360-day year of twelve 30-day months. If
payment is due and payable on a Saturday, Sunday or legal holiday, the due date
shall be extended to the next business day.
2. Payor shall pay to Payee on the 45th day following the last
day of each calendar quarter (each, an "Installment Date") commencing the
quarter ending June 30, 1997, and continuing through the quarter ending
September 30, 2001 (November 14, 2001 being referred to herein as the "Maturity
Date"), an amount equal to two (2%) percent of Payor's "net sales" (as
hereinafter defined) during the most recently ended calendar quarter (the
"Installment Payment")(2% of net sales from March 16, 1997 through June 30, 1997
for the quarter ended June 30, 1997), provided, however, that the Installment
Payment for each quarter ended June 30 shall be adjusted so that the aggregate
amount paid hereunder during the prior three calendar quarters and such quarter
ended June 30 commencing in 1998 shall be not less than the sum of (a) the
amount of all interest accrued on this Note during the four calendar quarters
ended that June 30 plus (b) 10% of the original principal amount of the Note.
Any unpaid principal outstanding on the Maturity Date shall be payable in full,
together with accrued interest thereon to the date of payment. "Net sales" shall
mean the gross sales of Payor without deduction for any taxes payable with
respect to such sales but with deduction for discounts, returns and allowances.
3. Each Installment Payment hereunder shall be applied first
to the payment of interest accrued on the then outstanding unpaid principal
amount hereunder and then to the reduction of any portion of the principal
amount then outstanding.
4. All payments under or pursuant to this Note shall be made
in United States Dollars, by check or wire transfer of immediate available
funds, to the Payee at its office set forth in the first paragraph of this Note
or to such other person and/or address as Payee shall designate in writing.
5. The Maker shall have the right to prepay this Note in whole
at any time or in part from time to time without penalty or premium, provided
that on each prepayment the Maker shall pay accrued interest on the principal
amount so prepaid to the date of such prepayment, and each partial prepayment
shall be applied to the next succeeding installment or installments of this
Note.
6. Each of the following events shall constitute a default
under this Note (each an "Event of Default"): (i) Payor fails for a period of
thirty (30) days following written notice thereof to Payor to make payment of
any amount due hereunder; (ii) Payor fails or neglects for a period of thirty
(30) days following written notice thereof to Payor to perform or observe any
material covenant or condition contained hereunder; (iii) the insolvency or
inability of the Payor to pay its debts as they mature; (iv) the execution by
Payor of any assignment for the benefit of Payor's creditors or the filing by
Payor of any proceedings for relief under the Bankruptcy Code, as amended, or
insolvency laws or any laws relating to the relief of debtors, readjustment of
any indebtedness, reorganization, composition, extension of debt, or if any
application is made by Payor for the appointment of a receiver or a trustee for
any of Payor's assets; or (v) the filing or commencement of any proceedings
against Payor for relief under the U.S. Bankruptcy Code, as amended, or
insolvency laws or any laws relating to the relief of debtors, readjustment or
any indebtedness, reorganization, composition, extension of debt which
proceedings are not dismissed within sixty (60) days.
7. (a) Upon the occurrence and at any time during the
continuance of any Event of Default, the Payee shall be entitled to (i) declare
this Note, and any and all principal, interest and other amounts due under this
Note, to be immediately due and payable, and (ii) exercise or otherwise enforce
any one or more of the Payee's rights, powers, privileges, remedies and
interests under this Note or applicable law.
(b) Without limiting the foregoing, upon the occurrence and at
any time during the continuance of an Event of Default, Payor shall take all
actions necessary to grant Payee a security interest in all of the assets of
Payor and all proceeds therefrom, including without limitation, filing financing
statements on Form UCC-1 in all appropriate jurisdictions.
8. This Note has been delivered pursuant to that certain Asset
Purchase Agreement (the "Purchase Agreement") dated of even date herewith, among
Payee, Payor, Global Intellicom, Inc. and Mantech International Corporation and
is subject to all of the terms and conditions thereof including, without
limitation, Payor's right of offset as provided in Section 10.5 of the Purchase
Agreement. Upon any such offset, Payee shall deliver this Note to Payor in
exchange for a new Note which sets forth the adjusted principal amount.
9. From time to time Payor shall deliver by certified mail or
Federal Express to X. Xxxxx, Chief Financial Officer of Payee, with a copy to
Xxxxxxx Xxxxxx, Esq. of Xxxxxxxx, Xxxxxxx & Xxxxx, a statement of the
outstanding principal and interest on this Note, which shall be conclusive and
binding on Payee unless objected to by Payee in writing within ten (10) days of
receipt thereof. Payee shall have the right to audit the financial records of
Payor to verify its net sales, at Payee's expense.
-2-
10. Any notice, request, demand or other communication
permitted or required to be given hereunder shall be in writing, shall be sent
by one of the following means to the addressee at the address set forth above
(or at such other address as shall be designated hereunder by notice to the
other parties and persons receiving copies, effective upon actual receipt) and
shall be deemed conclusively to have been given: (a) on the first business day
following the day timely deposited with Federal Express (or other equivalent
national overnight courier) or United States Express Mail, with the cost of
delivery prepaid; (b) on the fifth business day following the day duly sent by
certified or registered United States mail, postage prepaid and return receipt
requested; or (c) when otherwise actually delivered to the addressee. Copies may
be sent by regular first-class mail, postage prepaid, to such person(s) as a
party may direct from time to time by notice to the others, but failure or delay
in sending copies shall not affect the validity of any such notice, request,
demand or other communication so given to a party.
11. The Payor shall pay or reimburse, upon demand, any and all
reasonable costs and expenses incurred by the Payee, whether directly or
indirectly, in connection with the administration, enforcement and collection of
this Note, and of any of the Payee's rights, powers, privileges and other
interests under this Note and applicable law, including (without limitation) the
reasonable disbursements, expenses and fees of counsel to the Payee.
12. This Note shall be governed by, and construed and enforced
in accordance with, the laws of the State of New York without regard to
principles of conflicts or choice of law (or any other law that would make the
laws of any state other than the State of New York applicable hereto).
13. This Note shall not be negotiable, transferable or
assignable by the Payee whether by operation of law or otherwise except to a
wholly-owned subsidiary of Payee, an entity under common control with Payee or
to Payee's financial institution.
14. Presentment for payment, notice of dishonor, protest and
notice of protest are hereby each waived by Payor. Any other waiver or consent
respecting this Note shall be effective only if in writing and signed by the
Payee and then only in the specific instance and for the specific purpose for
which given. No such other waiver or consent shall be deemed, regardless of
frequency given, to be a further or continuing waiver or consent. The failure or
delay of the Payee at any time or times to require performance of, or to
exercise its rights with respect to, any term or provision of this Note in no
manner shall affect its right at a later time to enforce any such term or
provision. No notice to or demand on the Payor in any case shall entitle such
party to any other or further notice or demand. All rights, powers, privileges,
remedies and other interests of the Payee under this Note and applicable law are
cumulative and not alternatives.
15. This Note contains the entire agreement of the parties and
supersedes all other representations, warranties, agreements and understandings,
oral or written, with respect to the matters contained herein.
-3-
16. All capitalized terms used herein and not otherwise
defined shall have the meanings given to them in the Purchase Agreement.
IN WITNESS WHEREOF, the Payor has executed and delivered this
Note on the date first written above.
GLOBAL-INSYNC, INC.
By:
-----------------------------------
Name:
Title:
-4-
Exhibit C
PROMISSORY NOTE
$470,000 New York, New York
September 16, 1996
FOR VALUE RECEIVED, the undersigned, GLOBAL-INSYNC, INC., a
Virginia corporation having an office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (the "Payor"), hereby promises to pay to MANTECH SOLUTIONS CORPORATION, a
Virginia corporation (the "Payee"), at 00000 Xxx Xxxxxxx Xxxxxxx, Xxxxxxx,
Xxxxxxxx 00000, or at such other place as may be designated from time to time in
writing by the Payee, the sum of Four Hundred Seventy Thousand ($470,000)
Dollars, plus interest, all as provided in this promissory note (as the same may
be supplemented, modified, amended or restated from time to time in the manner
provided herein, the "Note").
1. Interest hereunder shall accrue on the unpaid balance
hereof commencing on March 16, 1997 at the rate of nine (9%) percent per annum.
Interest shall be computed based upon a 360-day year of twelve 30-day months. If
payment is due and payable on a Saturday, Sunday or legal holiday, the due date
shall be extended to the next business day.
2. Payor shall pay to Payee on the 45th day following the last
day of each calendar quarter (each, an "Installment Date") commencing following
the earlier of (i) the quarter ending December 31, 2001 or (ii) the quarter the
payment in full of the Promissory Note of even date herewith made by Payor in
favor of Payee in the original principal amount of $1,486,084, and continuing
for eight quarterly payments thereafter (the forty-fifth day following the
eighth quarter being referred to herein as the "Maturity Date"), an amount equal
to two (2%) percent of Payor's "net sales" (as hereinafter defined) during the
most recently ended calendar quarter (the "Installment Payment"), provided,
however, that the Installment Payment for each quarter ended December 31 shall
be adjusted so that the aggregate amount paid hereunder during the prior three
calendar quarters and such quarter ended December 31 shall be not less than the
sum of (a) the amount of all interest accrued on this Note during the four
calendar quarters ended that December 31 plus (b) 10% of the original principal
amount of the Note. Any unpaid principal outstanding on the Maturity Date shall
be payable in full, together with accrued interest thereon to the date of
payment. "Net sales" shall mean the gross sales of Payor without deduction for
any taxes payable with respect to such sales but with deduction for discounts,
returns and allowances.
3. Each Installment Payment hereunder shall be applied first
to the payment of interest accrued on the then outstanding unpaid principal
amount hereunder and then to the reduction of any portion of the principal
amount then outstanding.
4. All payments under or pursuant to this Note shall be made
in United States Dollars, by check or wire transfer of immediate available
funds, to the Payee at its office
set forth in the first paragraph of this Note or to such other person and/or
address as Payee shall designate in writing.
5. The Maker shall have the right to prepay this Note in whole
at any time or in part from time to time without penalty or premium, provided
that on each prepayment the Maker shall pay accrued interest on the principal
amount so prepaid to the date of such prepayment, and each partial prepayment
shall be applied to the next succeeding installment or installments of this
Note.
6. Each of the following events shall constitute a default
under this Note (each an "Event of Default"): (i) Payor fails for a period of
thirty (30) days following written notice thereof to Payor to make payment of
any amount due hereunder; (ii) Payor fails or neglects for a period of thirty
(30) days following written notice thereof to Payor to perform or observe any
material covenant or condition contained hereunder; (iii) the insolvency or
inability of the Payor to pay its debts as they mature; (iv) the execution by
Payor of any assignment for the benefit of Payor's creditors or the filing by
Payor of any proceedings for relief under the Bankruptcy Code, as amended, or
insolvency laws or any laws relating to the relief of debtors, readjustment of
any indebtedness, reorganization, composition, extension of debt, or if any
application is made by Payor for the appointment of a receiver or a trustee for
any of Payor's assets; or (v) the filing or commencement of any proceedings
against Payor for relief under the U.S. Bankruptcy Code, as amended, or
insolvency laws or any laws relating to the relief of debtors, readjustment or
any indebtedness, reorganization, composition, extension of debt which
proceedings are not dismissed within sixty (60) days.
7. (a) Upon the occurrence and at any time during the
continuance of any Event of Default, the Payee shall be entitled to (i) declare
this Note, and any and all principal, interest and other amounts due under this
Note, to be immediately due and payable, and (ii) exercise or otherwise enforce
any one or more of the Payee's rights, powers, privileges, remedies and
interests under this Note or applicable law.
(b) Without limiting the foregoing, upon the occurrence and at
any time during the continuance of an Event of Default, Payor shall take all
actions necessary to grant Payee a security interest in all of the assets of
Payor and all proceeds therefrom, including without limitation, filing financing
statements on Form UCC-1 in all appropriate jurisdictions.
8. This Note has been delivered pursuant to that certain Asset
Purchase Agreement (the "Purchase Agreement") dated of even date herewith, among
Payee, Payor, Global Intellicom, Inc. and Mantech International Corporation and
is subject to all of the terms and conditions thereof including, without
limitation, Payor's right of offset as provided in Section 10.5 of the Purchase
Agreement. Upon any such offset, Payee shall deliver this Note to Payor in
exchange for a new Note which sets forth the adjusted principal amount.
9. From time to time Payor shall deliver by certified mail or
Federal Express to X. Xxxxx, Chief Financial Officer of Payee, with a copy to
Xxxxxxx Xxxxxx, Esq. of Xxxxxxxx, Xxxxxxx & Xxxxx, a statement of the
outstanding principal and interest on this Note, which shall be conclusive and
binding on Payee unless objected to by Payee in writing within ten (10) days
-2-
of receipt thereof. Payee shall have the right to audit the financial records of
Payor to verify its net sales, at Payee's expense.
10. Any notice, request, demand or other communication
permitted or required to be given hereunder shall be in writing, shall be sent
by one of the following means to the addressee at the address set forth above
(or at such other address as shall be designated hereunder by notice to the
other parties and persons receiving copies, effective upon actual receipt) and
shall be deemed conclusively to have been given: (a) on the first business day
following the day timely deposited with Federal Express (or other equivalent
national overnight courier) or United States Express Mail, with the cost of
delivery prepaid; (b) on the fifth business day following the day duly sent by
certified or registered United States mail, postage prepaid and return receipt
requested; or (c) when otherwise actually delivered to the addressee. Copies may
be sent by regular first-class mail, postage prepaid, to such person(s) as a
party may direct from time to time by notice to the others, but failure or delay
in sending copies shall not affect the validity of any such notice, request,
demand or other communication so given to a party.
11. The Payor shall pay or reimburse, upon demand, any and all
reasonable costs and expenses incurred by the Payee, whether directly or
indirectly, in connection with the administration, enforcement and collection of
this Note, and of any of the Payee's rights, powers, privileges and other
interests under this Note and applicable law, including (without limitation) the
reasonable disbursements, expenses and fees of counsel to the Payee.
12. This Note shall be governed by, and construed and enforced
in accordance with, the laws of the State of New York without regard to
principles of conflicts or choice of law (or any other law that would make the
laws of any state other than the State of New York applicable hereto).
13. This Note shall not be negotiable, transferable or
assignable by the Payee whether by operation of law or otherwise except to a
wholly-owned subsidiary of Payee, an entity under common control with Payee or
to Payee's financial institution.
14. Presentment for payment, notice of dishonor, protest and
notice of protest are hereby each waived by Payor. Any other waiver or consent
respecting this Note shall be effective only if in writing and signed by the
Payee and then only in the specific instance and for the specific purpose for
which given. No such other waiver or consent shall be deemed, regardless of
frequency given, to be a further or continuing waiver or consent. The failure or
delay of the Payee at any time or times to require performance of, or to
exercise its rights with respect to, any term or provision of this Note in no
manner shall affect its right at a later time to enforce any such term or
provision. No notice to or demand on the Payor in any case shall entitle such
party to any other or further notice or demand. All rights, powers, privileges,
remedies and other interests of the Payee under this Note and applicable law are
cumulative and not alternatives.
-3-
15. This Note contains the entire agreement of the parties and
supersedes all other representations, warranties, agreements and understandings,
oral or written, with respect to the matters contained herein.
16. All capitalized terms used herein and not otherwise
defined shall have the meanings given to them in the Purchase Agreement.
IN WITNESS WHEREOF, the Payor has executed and delivered this
Note on the date first written above.
GLOBAL-INSYNC, INC.
By:
------------------------------
Name:
Title:
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EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated September 16, 1996 between
MANTECH SOLUTIONS CORPORATION, a Virginia corporation with offices at 0000
Xxxxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxx 00000 (the "Seller") and GLOBAL
INTELLICOM, INC., a Nevada corporation with offices at 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (the "Company").
W I T N E S S E T H:
WHEREAS, the Seller and Global-InSync, Inc., a Virginia corporation,
are parties to an Asset Purchase Agreement dated September 16, 1996 (the
"Purchase Agreement");
WHEREAS, the Seller is to receive an aggregate of 350,000 shares (the
"Preferred Shares") of Series 3 Convertible Preferred Stock, $.01 par value per
share ("Preferred Stock"), of the Company, as part of the consideration payable
to the Seller under the Purchase Agreement; and
WHEREAS, as a condition to the obligations of the Seller to
consummate the transactions contemplated by the Purchase Agreement, the Company
has agreed to provide certain registration rights with respect to the shares of
common stock issuable upon conversion of the Preferred Shares.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company and the Seller hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, $.01 par value, of the
Company, as constituted as of the date of this Agreement.
"Conversion Shares" shall mean shares of Common Stock issued or
issuable upon conversion of the Preferred Shares, and any shares of capital
stock received in respect thereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
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"Global Shares" shall mean the shares of Common Stock issued to the
Seller under the Purchase Agreement.
"Registration Expenses" shall mean the expenses so described in
Section 7.
"Restricted Stock" shall mean the Conversion Shares and the Global
Shares, excluding Conversion Shares and Global Shares which have been (i)
registered under the Securities Act pursuant to an effective registration
statement filed thereunder and disposed of in accordance with the registration
statement covering them or (ii) publicly sold pursuant to Rule 144 under the
Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described in Section 7.
2. RESTRICTIVE LEGEND. Each certificate representing Preferred
Shares, Conversion Shares, Global Shares or Restricted Stock shall, except as
otherwise provided in this Section 2 or in Section 3, be stamped or otherwise
imprinted with a legend substantially in the following form:
"The securities represented by this certificate have not
been registered under the Securities Act of 1933 or
applicable state securities laws. These securities have
been acquired for investment and not with a view to
distribution or resale, and may not be sold, mortgaged,
pledged, hypothecated or otherwise transferred without an
effective registration statement for such securities under
the Securities Act of 1933 and applicable state securities
laws, or the availability of an exemption from the
registration provisions of the Securities Act of 1933 and
applicable state securities laws.
A certificate shall not bear such legend if in the opinion of counsel
satisfactory to the Company (provided, however, that in the event counsel to the
Company disagrees with such opinion, the restrictive legend shall be retained
unless the parties obtain a no-action letter from the Commission with respect to
such matter) the securities being sold thereby may be publicly sold without
registration under the Securities Act.
3. NOTICE OF PROPOSED TRANSFER. Prior to any proposed transfer of any
Conversion Shares or Global Shares (other than under the circumstances described
in Sections 4
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or 5), the holder thereof shall give written notice to the Company of its
intention to effect such transfer. Each such notice shall describe the manner of
the proposed transfer and, if requested by the Company, shall be accompanied by
an opinion of counsel satisfactory to the Company (provided, however, that in
the event counsel to the Company disagrees with such opinion, no transfer shall
be made unless the parties have obtained a no-action letter from the Commission
with respect to such matter) to the effect that the proposed transfer may be
effected without registration under the Securities Act, whereupon the holder of
such stock shall be entitled to transfer such stock in accordance with the terms
of its notice. Each certificate for Conversion Shares and Global Shares
transferred as above provided shall bear the legend set forth in Section 2,
except that such certificate shall not bear such legend if the opinion of
counsel referred to above is to the further effect that the transferee and any
subsequent transferee (other than an affiliate of the Company) would be entitled
to transfer such securities in a public sale without registration under the
Securities Act. The restrictions provided for in this Section 3 shall not apply
to securities which are not required to bear the legend prescribed by Section 2
in accordance with the provisions of that Section.
4. REQUIRED REGISTRATION.
(a) At any time after the eighteen month anniversary of the date of
this Agreement, the Seller may request the Company to register under the
Securities Act all or any portion of the shares of Restricted Stock held by the
Seller for sale in the manner specified in such notice, PROVIDED, HOWEVER, that
the only securities which the Company shall be required to register pursuant
hereto shall be shares of Common Stock, and PROVIDED, FURTHER, HOWEVER, that in
any underwritten public offering contemplated by this Section 4 or Section 5,
the holders of Preferred Shares shall be entitled to sell such Preferred Shares
to the underwriters for conversion and sale of the shares of Common Stock issued
upon conversion thereof. Notwithstanding anything to the contrary contained
herein, no request may be made under this Section 4 within 180 days after the
effective date of a registration statement filed by the Company covering a firm
commitment underwritten public offering in which Seller shall have been entitled
to join pursuant to Section 5.
(b) The Company shall use its best efforts to register under the
Securities Act by taking all actions necessary, including without limitation
those actions set forth in Section 6 hereof, for public sale in accordance with
the method of disposition specified in the notice from requesting holders
described in paragraph (a) above, the number of shares of Restricted Stock
specified in such notice. If such method of disposition shall be an underwritten
public offering, the Seller may designate the managing underwriter of such
offering, subject to the approval of the Company, which approval shall not be
unreasonably withheld or delayed. The Company shall be obligated to register
Restricted Stock pursuant to this Section 4 on two occasions only , PROVIDED,
HOWEVER, that such obligation shall be deemed satisfied only when a registration
statement covering all shares of Restricted Stock specified in the notice
received as aforesaid, for sale in accordance with the method of disposition
specified by Seller shall have become effective.
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(c) The Company shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the method
of disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company for its own account, except as and to the extent that, in
the opinion of the managing underwriter (if such method of disposition shall be
an underwritten public offering), such inclusion would adversely affect the
marketing of the Restricted Stock to be sold.
5. INCIDENTAL REGISTRATION. If the Company at any time (other than
pursuant to Section 4) proposes to register any of its securities under the
Securities Act for sale to the public, whether for its own account or for the
account of other security holders or both (except with respect to registration
statements on Forms X-0, X-0 or another form not available for registering the
Restricted Stock for sale to the public), each such time it will give written
notice to the Seller. Upon the written request of Seller, received by the
Company within 20 days after the giving of any such notice by the Company, to
register any of its Restricted Stock, the Company will use its best efforts to
cause the Restricted Stock as to which registration shall have been so requested
to be included in the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent requisite to permit the
sale or other disposition by the holder (in accordance with its written request)
of such Restricted Stock so registered. In the event that any registration
pursuant to this Section 5 shall be, in whole or in part, an underwritten public
offering of Common Stock, the number of shares of Restricted Stock to be
included in such an underwriting may be reduced if and to the extent that the
managing underwriter shall be of the opinion that such inclusion would adversely
affect the marketing of the securities to be sold by the Company therein,
provided, however, that any such reduction in the number of shares to be
included shall be made pro rata among all selling stockholders in the offering
other than the Company. Notwithstanding the foregoing provisions, the Company
may withdraw any registration statement referred to in this Section 5 without
thereby incurring any liability to the holders of Restricted Stock.
6. REGISTRATION PROCEDURES. If and whenever the Company is required
by the provisions of Sections 4 or 5 to use its best efforts to effect the
registration of any shares of Restricted Stock under the Securities Act, the
Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
(which, in the case of an underwritten public offering pursuant to Section 4,
shall be on Form S-1 or S-2 or other form of general applicability satisfactory
to the managing underwriter selected as therein provided) with respect to such
securities and use its best efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in paragraph (a) above and comply with the provisions of
the Securities Act with respect to the
-4-
disposition of all Restricted Stock covered by such registration statement in
accordance with the sellers' intended method of disposition set forth in such
registration statement for such period;
(c) furnish to each seller of Restricted Stock and to each
underwriter such number of copies of the registration statement and each such
amendment and supplement thereto (in each case including all exhibits) and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or other
disposition of the Restricted Stock covered by such registration statement;
(d) use its best efforts to register or qualify the Restricted Stock
covered by such registration statement under the securities or "blue sky" laws
of such jurisdictions as the sellers of Restricted Stock or, in the case of an
underwritten public offering, the managing underwriter reasonably shall request,
PROVIDED, HOWEVER, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) use its best efforts to list the Restricted Stock covered by such
registration statement with any securities exchange on which the Common Stock of
the Company is then listed;
(f) immediately notify each seller of Restricted Stock and each
underwriter under such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and promptly prepare
and furnish to such seller a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to the purchasers of
such Restricted Stock, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing;
(g) if the offering is underwritten and at the request of any seller
of Restricted Stock, use its best efforts to furnish on the date that Restricted
Stock is delivered to the underwriters for sale pursuant to such registration:
(i) an opinion dated such date of counsel representing the Company for the
purposes of such registration, addressed to the underwriters and to such seller,
to such effects as reasonably may be requested by counsel for the underwriters
or by such seller or its counsel, and (ii) a letter dated such date from the
independent public accountants retained by the Company, addressed to the
underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements of the Company included in the
-5-
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to the
period ending no more than five business days prior to the date of such letter)
with respect to such registration as such underwriters reasonably may request;
(h) make available for inspection by each seller of Restricted Stock,
any underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, reasonable access to all financial and other records, pertinent
corporate documents and properties of the Company, as such parties may
reasonably request, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement;
(i) cooperate with the selling holders of Restricted Stock and the
managing underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Restricted Stock to be sold, such certificates to
be in such denominations and registered in such names as such holders or the
managing underwriters may request at least two business days prior to any sale
of Restricted Stock; and
(j) permit any holder of Restricted Stock which holder, in the sole
and exclusive judgment, exercised in good faith, of such holder, might be deemed
to be a controlling person of the Company, to participate in good faith in the
preparation of such registration or comparable statement and to require the
insertion therein of material, furnished to the Company in writing, which in the
reasonable judgment of such holder and its counsel should be included.
For purposes of Section 6(a) and 6(b) and of Section 4(c), the period
of distribution of Restricted Stock in a firm commitment underwritten public
offering shall be deemed to extend until each underwriter has completed the
distribution of all securities purchased by it, and the period of distribution
of Restricted Stock in any other registration shall be deemed to extend until
the earlier of the sale of all Restricted Stock covered thereby and 120 days
after the effective date thereof.
In connection with each registration hereunder, the sellers of
Restricted Stock will furnish to the Company in writing such information
requested by the Company with respect to themselves and the proposed
distribution by them as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.
In connection with each registration pursuant to Sections 4 or 5
covering an underwritten public offering, the Company and each seller agree to
enter into and perform its obligations under a written agreement with the
managing underwriter selected in the manner herein provided in such form and
containing such provisions as are customary in the securities
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business for such an arrangement between such underwriter and companies of the
Company's size and investment stature.
7. EXPENSES. All expenses incurred by the Company in complying with
Sections 4 and 5, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and independent
public accountants for the Company, fees and expenses (including counsel fees)
incurred in connection with complying with state securities or "blue sky" laws,
fees of the securities exchange upon which the Common Stock of the Company is
then listed, transfer taxes and fees of transfer agents and registrars, but
excluding any Selling Expenses, are called "Registration Expenses". All
underwriting discounts and selling commissions applicable to the sale of
Restricted Stock and fees and expenses of counsel to the sellers of Restricted
Stock are called "Selling Expenses".
The Company will pay all Registration Expenses in connection with
each registration statement under Sections 4 or 5. All Selling Expenses in
connection with each registration statement under Sections 4 or 5 shall be borne
by the participating sellers in proportion to the number of shares sold by each,
or by such participating sellers other than the Company (except to the extent
the Company shall be a seller) as they may agree.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of a registration of any of the Restricted Stock,
under the Securities Act pursuant to Sections 4 or 5, the Company will indemnify
and hold harmless each seller of such Restricted Stock thereunder, its officers
and directors, each underwriter of such Restricted Stock thereunder and each
other person, if any, who controls such seller or underwriter within the meaning
of the Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which such seller, officer, director, underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
Restricted Stock was registered under the Securities Act pursuant to Sections 4
or 5, any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, (ii) any blue sky application or other document
executed by the Company specifically for that purpose or based upon written
information furnished by the Company filed in any state or other jurisdiction in
order to qualify any or all of the Restricted Stock under the securities laws
thereof (any such application, document or information herein called a "Blue Sky
Application"), (iii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (iv) any violation by the Company or its agents of any
rule or regulation promulgated under the Securities Act applicable to the
Company or its agents and relating to action or inaction required of the Company
in connection with such registration, or (v) any failure to register or qualify
the Restricted Stock in any state where the Company or its agents has
affirmatively undertaken or agreed in writing that the Company (the undertaking
of any underwriter chosen by the Company being attributed to the
-7-
Company) will undertake such registration or qualification on the seller's
behalf (provided that in such instance the Company shall not be so liable if it
has undertaken its best efforts to so register or qualify the Restricted Stock)
and will reimburse each such seller, and such officer and director, each such
underwriter and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action, PROVIDED, HOWEVER, that the
Company will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by any such seller, any such underwriter
or any such controlling person in writing specifically for use in such
registration statement or prospectus.
(b) In the event of a registration of any of the Restricted Stock
under the Securities Act pursuant to Sections 4 or 5, each seller of such
Restricted Stock thereunder, will indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of the Securities
Act, each officer of the Company who signs the registration statement, each
director of the Company, each other Seller of Restricted Stock, each underwriter
and each person who controls any underwriter within the meaning of the
Securities Act, against all losses, claims, damages or liabilities, joint or
several, to which the Company or such officer, director, other seller,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Restricted Stock was registered under the Securities Act
pursuant to Sections 4 or 5, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or any Blue Sky
Application or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse the Company and
each such officer, director, other seller, underwriter and controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action,
PROVIDED, HOWEVER, that such seller will be liable hereunder in any such case if
and only to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with information
pertaining to such seller, as such, furnished in writing to the Company by such
seller specifically for use in such registration statement or prospectus.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 8 and shall only relieve
it from any liability which it may have to such indemnified party under this
Section 8 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the
-8-
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with counsel so selected,
PROVIDED, HOWEVER, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(d) The indemnities provided in this Section 8 shall survive the
transfer of any Restricted Stock by such holder.
9. CHANGES IN COMMON STOCK OR PREFERRED STOCK. If, and as often as,
there is any change in the Common Stock by way of a stock split, stock dividend,
combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the Common Stock as so
changed.
10. RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Stock to the public without registration, at all
times after 90 days after any registration statement covering a public offering
of securities of the Company under the Securities Act shall have become
effective, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Restricted Stock forthwith upon request
a written statement by the Company as to its compliance with the reporting
requirements of such Rule 144 and of the Securities Act and the Exchange Act, a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed by the Company
-9-
as such holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing such holder to sell any Restricted Stock
without registration.
11. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Seller as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Charter or By-laws of the Company or any provision of any
indenture, agreement or other instrument to which it or any of its properties or
assets is bound, conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement
or other instrument or result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the properties or assets of
the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except to the extent the
indemnification provisions herein may be deemed not enforceable.
12. MISCELLANEOUS.
(a) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including without
limitation transferees of any Preferred Shares or Restricted Stock), whether so
expressed or not.
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by certified or registered
mail, return receipt requested, postage prepaid, or telexed, in the case of
non-U.S. residents, addressed as follows:
if to the Company or the Seller, at the address of such
party set forth in the Purchase Agreement;
if to any subsequent holder of Preferred Shares or
Restricted Stock, to it at such address as may have been furnished to
the Company in writing by such holder;
or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of a holder of Preferred Shares or
Restricted Stock) or to the holders of Preferred Shares or Restricted Stock (in
the case of the Company) in accordance with the provisions of this paragraph.
-10-
(c) This Agreement shall be construed and enforced in accordance with
and governed by and construed in accordance with the internal laws of the State
of New York.
(d) This Agreement may not be amended or modified, and no provision
hereof may be waived, without the written consent of each of the original
parties hereto.
(e) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(f) The obligations of the Company to register shares of Restricted
Stock under Sections 4 or 5 which are owned by any party other than Seller shall
terminate on the fifth anniversary of the date of this Agreement.
(g) If requested in writing by the underwriters for an underwritten
public offering of securities of the Company, each holder of Restricted Stock
shall agree not to sell publicly any shares of Restricted Stock or any other
shares of Common Stock (other than shares of Restricted Stock or other shares of
Common Stock being registered in such offering), without the consent of such
underwriters, for a period of not more than 180 days following the effective
date of the registration statement relating to such offering; PROVIDED, HOWEVER,
that all persons entitled to registration rights with respect to shares of
Common Stock who are not parties to this Agreement, all other persons selling
shares of Common Stock in such offering and all executive officers and directors
of the Company who own at least 100,000 shares of Common Stock shall also have
agreed not to sell publicly their Common Stock under the circumstances and
pursuant to the terms set forth in this Section 12(g).
(h) Notwithstanding the provisions of Section 6(a), the Company's
obligation to file a registration statement, or cause such registration
statement to become and remain effective, shall be suspended for a period not to
exceed 90 days in any 24-month period if there exists at the time material
non-public information relating to the Company which, in the reasonable opinion
of the Company, should not be disclosed.
(i) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
-11-
IN WITNESS WHEREOF, the parties have executed this Agreement on
September 16, 1996.
MANTECH SOLUTIONS CORPORATION
By:
--------------------------------------
Name:
Title:
GLOBAL INTELLICOM, INC.
By:
--------------------------------------
Name:
Title:
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