May 12, 1999
STOCK PURCHASE AGREEMENT
AMONG
HADRON, INC.,
AVENUE TECHNOLOGIES, INC.
AND
SIX NATIONS, INC.
McLean, Virginia
TABLE OF CONTENTS
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II PURCHASE AND SALE OF SHARES . . . . . . . . . . . . . 3
2.1 Purchase and Sale of Shares. . . . . . . . . . . . . . . . . 3
2.2 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Payment Terms.. . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Form of Payment.. . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Option Price. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 The Closing.. . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III RELATED AGREEMENTS . . . . . . . . . . . . . . . . . 5
3.1 Related Agreements. . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SELLER 5
4.1 Organization of Seller. . . . . . . . . . . . . . . . . . . . 5
4.2 Authority Relative to this Agreement. . . . . . . . . . . . . 5
4.3 Qualification of the Company. . . . . . . . . . . . . . . . . 5
4.4 Capitalization of the Company; Validity of Shares.. . . . . . 6
4.5 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . 6
4.6 Consents and Approvals. . . . . . . . . . . . . . . . . . . . 7
4.7 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . 7
4.8 Licenses and Permits. . . . . . . . . . . . . . . . . . . . . 7
4.9 Environmental Matters.. . . . . . . . . . . . . . . . . . . . 7
4.10 Financial Statements. . . . . . . . . . . . . . . . . . . . . 8
4.11 Absence of Change.. . . . . . . . . . . . . . . . . . . . . . 8
4.12 Undisclosed Liabilities.. . . . . . . . . . . . . . . . . . . 9
4.13 Current Information.. . . . . . . . . . . . . . . . . . . . . 9
4.14 Tax Matters.. . . . . . . . . . . . . . . . . . . . . . . . . 9
4.15 Labor and Employment Matters. . . . . . . . . . . . . . . . .10
4.16 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . .10
4.17 Title to Properties.. . . . . . . . . . . . . . . . . . . . .10
4.18 Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
4.19 Material Contracts. . . . . . . . . . . . . . . . . . . . . .10
4.20 Intellectual Property.. . . . . . . . . . . . . . . . . . . .11
4.21 Accounts Receivable.. . . . . . . . . . . . . . . . . . . . .12
4.22 Year 2000.. . . . . . . . . . . . . . . . . . . . . . . . . .12
4.23 Maintenance of Tangible Personal Property.. . . . . . . . . .12
4.24 Insurance.. . . . . . . . . . . . . . . . . . . . . . . . . .12
4.25 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . .12
4.26 Insider Interests.. . . . . . . . . . . . . . . . . . . . . .13
4.27 Certain Practices.. . . . . . . . . . . . . . . . . . . . . .14
4.28 Work in Progress. . . . . . . . . . . . . . . . . . . . . . .14
4.29 Full Disclosure.. . . . . . . . . . . . . . . . . . . . . . .14
4.30 Finders.. . . . . . . . . . . . . . . . . . . . . . . . . . .14
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . 14
5.1 Organization; Authority Relative to this Agreement. . . . . .14
5.2 No Conflict.. . . . . . . . . . . . . . . . . . . . . . . . .15
5.3 Consents and Approvals. . . . . . . . . . . . . . . . . . . .15
5.4 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . .15
5.5 Finders.. . . . . . . . . . . . . . . . . . . . . . . . . . .15
5.6 Buyer's Intentions. . . . . . . . . . . . . . . . . . . . . .15
ARTICLE VI ADDITIONAL COVENANTS. . . . . . . . . . . . . . . . 15
6.1 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . .15
6.2 Public Announcements. . . . . . . . . . . . . . . . . . . . .16
6.3 Further Assurances. . . . . . . . . . . . . . . . . . . . . .16
6.4 Board of Directors. . . . . . . . . . . . . . . . . . . . . .16
6.5 F&M Bank. . . . . . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE VII EMPLOYEES AND EMPLOYEE MATTERS . . . . . . . . . . 16
7.1 Company Employees.. . . . . . . . . . . . . . . . . . . . . .16
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF BUYER. . . . . . . . 16
8.1 Representations and Warranties. . . . . . . . . . . . . . . .16
8.2 Performance of this Agreement.. . . . . . . . . . . . . . . .17
8.3 Corporate Authorization.. . . . . . . . . . . . . . . . . . .17
8.4 Consents and Approvals. . . . . . . . . . . . . . . . . . . .17
8.5 Injunction, Litigation, etc.. . . . . . . . . . . . . . . . .17
8.6 Legislation.. . . . . . . . . . . . . . . . . . . . . . . . .17
8.7 Estoppel Certificates, etc. . . . . . . . . . . . . . . . . .17
8.8 Resignation.. . . . . . . . . . . . . . . . . . . . . . . . .17
8.9 Opinion of Counsel for Seller.. . . . . . . . . . . . . . . .17
8.10 Related Agreements. . . . . . . . . . . . . . . . . . . . . .17
ARTICLE IX CONDITIONS TO OBLIGATIONS OF SELLER AND COMPANY . . 18
9.1 Representations and Warranties. . . . . . . . . . . . . . . .18
9.2 Performance of this Agreement.. . . . . . . . . . . . . . . .18
9.3 Corporate Authorization.. . . . . . . . . . . . . . . . . . .18
9.4 Injunction, Litigation, etc.. . . . . . . . . . . . . . . . .18
9.5 Legislation.. . . . . . . . . . . . . . . . . . . . . . . . .18
9.6 Opinion of Counsel for Buyer. . . . . . . . . . . . . . . . .18
ARTICLE X CLOSING. . . . . . . . . . . . . . . . . . . . . . . 19
10.1 Time and Place of Closing.. . . . . . . . . . . . . . . . . .19
10.2 Deliveries by Seller. . . . . . . . . . . . . . . . . . . . .19
10.3 Deliveries by Buyer.. . . . . . . . . . . . . . . . . . . . .19
10.4 Deliveries by Company.. . . . . . . . . . . . . . . . . . . .19
ARTICLE XI INDEMNIFICATION . . . . . . . . . . . . . . . . . . 20
11.1 Indemnification by Seller.. . . . . . . . . . . . . . . . . .20
11.2 Indemnification by Buyer. . . . . . . . . . . . . . . . . . .20
11.3 Seller's Obligations for Third Party Claims.. . . . . . . . .20
11.4 Buyer's Obligations for Third Party Claims. . . . . . . . . .21
11.5 Limitations on Indemnification. . . . . . . . . . . . . . . .22
11.6 Survival; Investigation.. . . . . . . . . . . . . . . . . . .23
ARTICLE XII GENERAL PROVISIONS . . . . . . . . . . . . . . . . 23
12.1 Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . .23
12.2 Governing Law.. . . . . . . . . . . . . . . . . . . . . . . .25
12.3 Schedules.. . . . . . . . . . . . . . . . . . . . . . . . . .25
12.4 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . .25
12.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . .25
12.6 Miscellaneous.. . . . . . . . . . . . . . . . . . . . . . . .25
EXHIBITS
EXHIBIT A - Short-term Notes . . . . . . . . . . . . . . . . . 27
EXHIBIT B - Convertible Notes. . . . . . . . . . . . . . . . . 28
EXHIBIT C - Summary Class A Shareholders With More Than 10,000 Share
of Class A Stock . . . . . . . . . . . . . . . . . . . . . . . 29
EXHIBIT D - Summary Class A Shareholders With 10,000 or Fewer Shares
of Class A Stock . . . . . . . . . . . . . . . . . . . . . . . 32
EXHIBIT E - Option Ownership Summary for Purchase of Class A Shares
of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . 34
EXHIBIT F - Certificate of Incorporation & Bylaws. . . . . . . 36
SCHEDULE 3.1 - Key Employees . . . . . . . . . . . . . . . . . 37
SCHEDULE 3.1A . . . . . . . . . . . . . . . . . . . . . . . . 38
SCHEDULE 4.8 - Licenses and Permits. . . . . . . . . . . . . . 39
SCHEDULES
SCHEDULE 4.18 - Leases . . . . . . . . . . . . . . . . . . . . 40
SCHEDULE 4.19 - Material Contracts . . . . . . . . . . . . . . 41
SCHEDULE 4.20 - Intellectual Property. . . . . . . . . . . . . 42
SCHEDULE 4.24 - Insurance. . . . . . . . . . . . . . . . . . . 43
SCHEDULE 4.25 - Employee Benefits. . . . . . . . . . . . . . . 44
SCHEDULE 4.26 - Insider Interests. . . . . . . . . . . . . . . 45
SCHEDULE 4.28 - Contracts in Progress. . . . . . . . . . . . . 46
SCHEDULE 8.9 - Opinion of Counsel for Seller . . . . . . . . 47
SCHEDULE 8.10 - Form of Other Purchase Agreements. . . . . . . 48
SCHEDULE 9.6 - Opinion of Counsel for Buyer. . . . . . . . . 49
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("Agreement"), dated as of the
30th day of April, 1999, is made among SIX NATIONS, INC.
("Seller") a stockholder of AVENUE TECHNOLOGIES, INC., HADRON,
INC., a corporation organized under the laws of the State of New
York ("Buyer") and AVENUE TECHNOLOGIES, INC. ("Company"), a
corporation organized under the laws of the Commonwealth of
Virginia.
INTRODUCTION
A. The equity of the Company consists of class A shares of
common stock ("Class A Shares"), class B shares of common stock
("Class B Shares") and options to purchase Class A Shares
("Options"). All of the Class A Shares and the Class B Shares
shall collectively be referred to as the "Shares").
B. Seller owns two hundred fifty four thousand six hundred
twenty nine (254,629) Class A Shares and five hundred thousand
(500,000) Class B Shares. The Class A Shares and Class B Shares
owned by Seller are collectively referred to herein as "Seller's
Shares".
The Buyer is entering into separate stock purchase
agreements (the "Other Purchase Agreements"), each dated as of
the date hereof, between or among the Buyer and the other holders
of Shares ("Other Sellers") pursuant to which the Buyer is
agreeing to purchase from the Other Sellers, and the Other
Sellers are agreeing to sell to the Buyer, the Shares owned by
the Other Sellers (the "Other Sellers' Shares");
Seller and Company desire to sell and Buyer desires to
purchase the Seller's Shares on the terms and for the
consideration hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements herein contained, the
parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS .
THE FOLLOWING TERMS, AS USED HEREIN, HAVE THE FOLLOWING MEANINGS:
"Class A Shares" has the meaning set forth in paragraph A of
the Introduction.
"Class B Shares" has the meaning set forth in paragraph A of
the Introduction.
"Closing" has the meaning set forth in Section 2.5.
"Closing Date" has the meaning set forth in Section 10.1.
"Company" means Avenue Technologies, Inc.
"Company Employees" has the meaning set forth in
Section 7.1.
"Company Financial Statements" has the meaning set forth in
Section 4.10.
"Convertible Notes" has the meaning set forth in Section
2.3.
"Disclosure Schedules" has the meaning set forth in Article
IV.
"Encumbrances" means liens, mortgages, charges, security
interests, pledges, adverse claims, and other defects in title
generally considered to be encumbrances. When referring to the
shares of stock of the Company, Encumbrances also means any
preemptive rights, rights of first refusal or restriction of any
kind.
"Environmental Permits" has the meaning set forth in
Section 4.9(a).
"ERISA" means the Employment Retirement Income Security Act
of 1974, as amended.
"Governmental Authority" means any United States federal,
state or local or any foreign or tribal government, governmental
regulatory or administrative authority, agency or commission or
any court, tribunal, or judicial or arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered
by or with any Governmental Authority.
"Intellectual Property" has the meaning set forth in
Section 4.20.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended.
"Leases" has the meaning set forth in Section 4.18.
"Legal Action" has the meaning set forth in
Subsection 11.3(ii).
"Licenses and Permits" has the meaning set forth in
Section 4.8.
"Loan" has the meaning set forth in Section 6.5.
"Material Contracts" has the meaning set forth in
Section 4.19.
"Options" has the meaning set forth in paragraph A of the
Introduction.
"Option Holders" means those individuals or entities owning
options to purchase Class A Shares.
"Option Termination Agreements" means the agreements with
all of the Option Holders in the form of Schedule 3.1A.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plans" has the meaning set forth in
Section 4.25(a).
"Person" means an individual, a corporation, a partnership,
an association, a labor union, a trust or any other entity or
organization, including a government, a governmental body, a
political subdivision or an agency of instrumentality thereof.
"Purchase Price" has the meaning set forth in Section 2.2.
"Related Agreements" means the agreements identified in
Section 3.1
"Shares" has the meaning set forth in the paragraph A of the
Introduction.
"Short-term Notes" has the meaning set forth in Section 2.3.
"Stock Option Plan" means the stock option plan of the
Company effective February 24, 1997 under which certain employees
were entitled to receive shares of stock in the Company.
"Subsidiary" with respect to any party to this Agreement,
means any corporation or other business entity, whether or not
incorporated, of which at least 50% of the securities or
interests having, by their terms, ordinary voting power to elect
members of the Board of Directors, or other persons performing
similar functions with respect to such entity, is held directly
or indirectly by such party.
"Survival Date" has the meaning set forth in Section 11.4.
"to the knowledge of Seller/Company" means to the knowledge
of either the Company or the Seller.
"Welfare Plans" has the meaning set forth in Section
4.25(a).
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 PURCHASE AND SALE OF SHARES.
Upon the terms and conditions of this Agreement and the Other
Purchase Agreements, at the Closing, Seller and Other Sellers
shall sell to Buyer and Buyer shall purchase from Seller and
Other Sellers the Shares for the Purchase Price specified in
Section 2.2.
2.2 PURCHASE PRICE.
The purchase price for all the Shares ("Purchase Price") is two
million five hundred two thousand five hundred seventy six
dollars ($2,502,576), payable as set forth in Section 2.4. The
purchase price for the Seller's Shares shall be two million five
hundred two thousand five hundred seventy six dollars
($2,502,576) less the amounts paid to the Other Sellers for the
Other Sellers' Shares pursuant to Section 2.4.
2.3 PAYMENT TERMS.
The Purchase Price for all of the Shares shall be paid by using a
combination of cash, Short-term Notes and Convertible Notes as
described herein. Short-term Notes shall be due and payable
ninety (90) days from the date of issuance and pay interest at
the prime rate as published on the date of issuance in the Wall
Street Journal. Short-term Notes shall be in the form of and
have the rights specified in attached Exhibit A. Convertible
Notes shall be due and payable three (3) years from the date of
issuance, shall be convertible into shares of common stock of
Hadron, Inc. at a price of two dollars and twenty five cents
($2.25) per share and shall pay interest on a quarterly basis at
the rate of six percent (6.0%) per annum. Convertible Notes
shall be in the form of and have the conversion and other rights
specified in Exhibit B attached hereto.
2.4 FORM OF PAYMENT.
The Seller and Other Sellers shall have the right to receive
payment for their Shares based on the following:
(i) Each owner of Class A Shares (including the
Seller) owning more than ten thousand (10,000) shares of Class A
Shares shall receive payment for his or her Class A Shares
calculated as follows: (a) for the first fifty percent (50%) of
the shareholder's Class A Shares, two dollars ($2.00) per share
payable in Short-term Notes; and (b) for the remaining fifty
percent (50%) of his or her Class A Shares, two dollars ($2.00)
per share payable in Convertible Notes, as specified in Exhibit
C;
(ii) Each owner of Class A Shares owning ten thousand
(10,000) or fewer shares of Class A Shares shall receive as
payment for his or her Class A Shares, two dollars ($2.00) per
share payable in cash in as specified on Exhibit D;
(iii) The Seller shall receive one million dollars
($1,000,000) as payment for its Class B Shares calculated as
follows: (a) for the first three hundred seventy thousand shares
(370,000), two dollars ($2.00) per share payable in Short-term
Notes; and (b) for the remaining one hundred thirty thousand
shares (130,000), two dollars ($2.00) per share payable in
Convertible Notes;
2.5 OPTION PRICE.
Each owner of Options shall receive as payment for his or her
Options, one dollar and sixty cents ($1.60) per share granted in
such Option payable in cash, by the Company at the time of
Closing as specified in Exhibit E. The Company agrees to waive
its right to receive the exercise price from each Option Holder
for exercising each Option.
2.6 THE CLOSING.
SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, THE SALE
AND PURCHASE OF THE SHARES SHALL TAKE PLACE AT A CLOSING (THE
"CLOSING"), PURSUANT TO SECTION 10.1.
ARTICLE III
RELATED AGREEMENTS
3.1 RELATED AGREEMENTS.
AS A CONDITION OF CLOSING UNDER THIS AGREEMENT, THE BUYER SHALL
ENTER INTO OTHER PURCHASE AGREEMENTS FOR THE PURCHASE OF ALL OF
THE OUTSTANDING CAPITAL STOCK OF THE COMPANY OTHER THAN THE
SELLER'S SHARES AND THE COMPANY SHALL HAVE ENTERED INTO OPTION
TERMINATION AGREEMENTS IN THE FORM OF SCHEDULE 3.1A WITH ALL OF
THE OPTION HOLDERS. ADDITIONALLY, THE COMPANY SHALL HAVE ENTERED
INTO EMPLOYMENT AGREEMENTS AND NON-COMPETE AGREEMENTS WITH THE
KEY EMPLOYEES IDENTIFIED ON SCHEDULE 3.1 THAT WILL BE EFFECTIVE
AS OF MAY 1, 1999, AND ARE CONTINGENT UPON CLOSING HEREUNDER.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SELLER
The Company and the Seller, jointly and severally, represent
and warrant to Buyer, except as set forth in the attached
Disclosure Schedules, the following:
4.1 ORGANIZATION OF SELLER.
THE COMPANY IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND
IN GOOD STANDING UNDER THE LAWS OF THE COMMONWEALTH OF VIRGINIA.
COPIES OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS,
AS CURRENTLY IN EFFECT, ARE ATTACHED AS EXHIBIT F. THE MINUTE
BOOKS OF THE COMPANY CONTAIN ACCURATE RECORDS OF ALL MEETINGS AND
ACCURATELY REFLECT ALL MATERIAL ACTIONS TAKEN BY THE STOCKHOLDERS
AND THE BOARD OF DIRECTORS OF THE COMPANY.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT.
THE COMPANY HAS THE CORPORATE POWER AND AUTHORITY TO EXECUTE AND
DELIVER THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED HEREBY. THE SELLER HAS AUTHORITY TO EXECUTE AND
DELIVER THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED HEREBY. THE EXECUTION AND DELIVERY BY THE COMPANY
AND THE SELLER OF THIS AGREEMENT, AND THE CONSUMMATION BY EACH OF
THE TRANSACTIONS CONTEMPLATED HEREBY, HAVE BEEN DULY AUTHORIZED
BY THE COMPANY'S AND SELLER'S RESPECTIVE BOARDS OF DIRECTORS, AND
NO OTHER CORPORATE PROCEEDINGS ON THE PART OF THE COMPANY OR THE
SELLER ARE NECESSARY WITH RESPECT THERETO. THIS AGREEMENT HAS
BEEN DULY EXECUTED AND DELIVERED BY SELLER AND COMPANY. THIS
AGREEMENT CONSTITUTES A VALID AND BINDING OBLIGATION OF SELLER
AND COMPANY, ENFORCEABLE AGAINST SELLER AND COMPANY IN ACCORDANCE
WITH ITS TERMS EXCEPT AS ITS TERMS MAY BE LIMITED BY: (I)
BANKRUPTCY, INSOLVENCY OR SIMILAR LAWS AFFECTING CREDITORS'
RIGHTS GENERALLY; OR (II) GENERAL PRINCIPLES OF EQUITY, WHETHER
CONSIDERED IN A PROCEEDING IN EQUITY OR AT LAW.
4.3 QUALIFICATION OF THE COMPANY.
THE COMPANY HAS THE CORPORATE POWER AND AUTHORITY TO OWN ALL OF
ITS PROPERTIES AND ASSETS AND TO CARRY ON ITS BUSINESS AS NOW
BEING CONDUCTED. THE COMPANY IS DULY QUALIFIED AND IN GOOD
STANDING TO DO BUSINESS IN EACH JURISDICTION IN WHICH THE
PROPERTY OWNED OR LEASED BY IT, OR THE NATURE OF THE BUSINESS
CONDUCTED BY IT, MAKES SUCH QUALIFICATION NECESSARY. THE COMPANY
HAS NO SUBSIDIARIES, AND THERE ARE NO CORPORATIONS, PARTNERSHIPS
OR OTHER ENTITIES IN WHICH THE COMPANY OWNS, OF RECORD OR
BENEFICIALLY, ANY DIRECT OR INDIRECT EQUITY OR OTHER INTEREST OR
ANY RIGHT TO ACQUIRE THE SAME. THE COMPANY IS NOT A MEMBER OF
(NOR IS ANY OF ITS BUSINESS CONDUCTED THROUGH) ANY JOINT VENTURE,
PARTNERSHIP OR LIMITED LIABILITY COMPANY.
4.4 CAPITALIZATION OF THE COMPANY; VALIDITY OF SHARES.
(i) The authorized capital of the Company consists of
eight hundred thousand (800,000) Class A Shares with a par value
of one dollar ($1.00) and five hundred thousand (500,000) Class B
Shares with a par value of one dollar ($1.00). All of the
holders of Class A Shares, and the number of shares owned by them
are listed on Exhibits C and D, and Six Nations Inc. is the sole
holder of Class B Shares. All of the issued and outstanding
shares of capital stock of the Company are validly issued and
outstanding, fully paid and nonassessable and either free of
preemptive rights or preemptive rights have been validly waived
by all parties who may have had such rights. Except as disclosed
in the Disclosure Schedules and except for the employee stock
options set out in Exhibit E, there are no options, warrants,
convertible securities or other rights, agreements, arrangements
or commitments of any character relating to the capital stock of
the Company or obligating Seller or the Company to issue or sell
any shares of capital stock of, or other interest in, the
Company. Upon delivery to Buyer of certificates duly endorsed by
Seller evidencing the Seller's Shares pursuant to this Agreement,
Buyer will have good title to the Seller's Shares, free of
Encumbrances.
(ii) There are no outstanding contractual obligations
of the Company to repurchase, redeem or otherwise acquire any
shares of Common Stock or Options, or to provide funds to, or
make any investment (in the form of a loan, capital contribution
or otherwise) in, any other Person.
(iii) The stock register of the Company accurately
records (i) the name and address of each Person owning Shares of
capital stock of the Company, and (ii) the certificate number of
each certificate evidencing Shares of capital stock issued by the
Company, the number of shares evidenced by each such certificate,
the date of issuance thereof and, in the case of cancellation,
the date of cancellation.
(iv) Upon closing under this Agreement and the Other
Purchase Agreements covering all four hundred ninety six thousand
six hundred fifty nine (496,659) of the Other Sellers' Shares,
and the termination of the Options under the Option Termination
Agreements, Buyer will own legally and beneficially, one hundred
percent of the Company, and no other Person shall have any
options, warrants, securities, capital stock or other rights to
any capital stock of the Company.
4.5 NO VIOLATION.
The execution and delivery by the Company and Seller of this
Agreement will not: (i) violate or result in a breach of any
provision of the Articles of Incorporation or Bylaws of the
Company; (ii) result in a breach, or default, require any
consent, or give rise to any right of termination, modification
or acceleration or give rise to any Encumbrance under the
provisions of any agreement or other instrument or obligation to
which Seller or the Company is a party or by which Seller, the
Company, the Shares, the Other Sellers' Shares, or any of the
Company's assets, properties or businesses may be bound; or (iii)
violate any law or Governmental Order applicable to Seller, the
Company or the Shares.
4.6 CONSENTS AND APPROVALS.
There is no requirement applicable to Seller or Company to make
any filing with, or obtain the consent or approval of, any Person
as a condition to the consummation of the transactions
contemplated by this Agreement. The execution, delivery, and
performance of this Agreement by Seller do not and will not
require any consent, approval, authorization or other order of,
action by, filing with or notification to any Governmental
Authority.
4.7 COMPLIANCE WITH LAWS.
To the knowledge of the Company and Seller, the business of the
Company has been operated in compliance in all material respects
with all laws and regulations, federal, state or local, domestic
or foreign, applicable to its business including, without
limitation, those related to (i) antitrust and trade matters,
(ii) civil rights, (iii) zoning and building codes, (iv) public
health and safety, (v) worker health and safety and (vi) labor
and employment and discrimination in employment.
4.8 LICENSES AND PERMITS.
The term "Licenses and Permits" as used herein means governmental
licenses, permits, approvals and authorizations, whether federal,
state and local, domestic or foreign, other than Environmental
Permits. The Company has all of the Licenses and Permits
required to conduct its business as it is presently being
conducted. Schedule 4.8 contains a complete list of all such
Licenses and Permits, all of which are in full force and effect.
The business of the Company has been operated in compliance with
all of the terms and conditions set forth in such Licenses and
Permits. No notice of a violation of any such License or Permit
has been received by Seller or the Company, or to the knowledge
of Seller or Company, recorded or published, and no proceeding is
pending or, to the knowledge of Seller or Company, threatened, to
revoke any of them. Seller and Company know of no facts which
exist with respect to the Company which would allow the
revocation of any of the Licenses and Permits of the Company.
4.9 ENVIRONMENTAL MATTERS.
(a) The Company has in all material respects
operated its business in compliance with all laws and
regulations relating to pollution control and
environmental contamination and the provisions of its
Environmental Permits, except for such violations
thereof as do not and cannot reasonably be expected to
have an adverse effect on the Company. "Environmental
Permits" means governmental permits, approvals and
authorizations, which relate to the environment or to
public health and safety or worker health and safety,
as they may be affected by the environment.
(b) The Company is not obligated, by itself or
jointly with others, to clean up, remedy or otherwise
restore to its former condition any building,
contaminated surface water, ground water, soil or any
natural resource associated therewith.
4.10 FINANCIAL STATEMENTS.
The Company has previously furnished Buyer with true and complete
copies of its reviewed financial statements, including the notes
thereto for the years ending December 31, 1996, 1997 and 1998
(the "Company Financial Statements") together with the reports on
such statements of the Company's independent public accountants.
Such Financial Statements present fairly the financial position
of the Company as of such dates and the results of their
operations and changes in financial position for such periods and
have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis. To
the best of the Company's knowledge, the Buyer or its
representatives, using the Company's Financial Statements and
supporting documentation shall be able to have the Company's
Financial Statements audited in accordance with GAAP within sixty
(60) days from the Closing Date.
4.11 ABSENCE OF CHANGE.
Since December 31, 1998 there has not been:
(i) any material change, or development involving a
prospective change to the Company, including, without limitation,
any damage, destruction or loss (whether or not covered by
insurance);
(ii) any obligation or liability (whether absolute,
accrued, contingent or otherwise) involving more than Fifty
Thousand Dollars and no/100 ($50,000) incurred by the Company;
(iii) any general uniform increase in the compensation
of the employees or consultants of the Company including, without
limitation, those required by law or collective bargaining
agreements or undertaking of an obligation to do so in the
future;
(iv) any increase in the compensation payable to any
officer or director of the Company;
(v) any amendment to any employment agreement to which
any employee or consultant of the Company is a party;
(vi) any license, sale, transfer, pledge, mortgage or
other disposition of assets of the Company other than in the
ordinary course of business consistent with past practice;
(vii) any deterioration of relations between the Company
and its material suppliers or customers;
(viii) any direct or indirect redemption, purchase or
other acquisition of any shares of the capital stock, stock
options or other equity interests in the Company or undertaking
of an obligation to do so in the future except pursuant to the
Stock Option Plan and as contemplated herein and in the Other
Purchase Agreements and Option Termination Agreements;
(ix) any declaration, setting aside or payment of any
dividend (whether in cash, capital stock or property) with
respect to the Shares, any other shares, or other equity
interests in the Company;
(x) any issuance by the Company of any shares of its
capital stock, or any securities or obligations convertible into
or exchangeable for, or giving any person the right to acquire
from it, any shares of its capital stock except pursuant to the
Stock Option Plan;
(xi) any account receivable owing to the Company since
March 31, 1999 (instead of December 31, 1998 as mentioned above)
which subsequent thereto (i) has had asserted against it any
claim, refusal to pay or right of set-off, (ii) an account debtor
has refused or threatened to refuse to pay for any reason or such
account debtor, to the knowledge of the Company, has become
insolvent or bankrupt or (iii) has been pledged to any third
party; or
(xii) any agreement relating to the borrowing of money
or to the mortgaging or pledging of, or otherwise placing an
encumbrance on, any asset of the Company.
Since December 31, 1998 the Company has operated its business
only in the ordinary and usual course and in a manner consistent
with past practices.
4.12 UNDISCLOSED LIABILITIES.
The Company has not incurred any liabilities or obligations which
are not reflected in the Company Financial Statements, other than
those incurred subsequent to such date in the ordinary course of
business and consistent with past practices of the Company and
which do not and would not be reasonably expected to have a
material adverse effect. Reserves are reflected on the Company's
balance sheet dated March 31, 1999 for all liabilities of the
Company in amounts that have been established on a basis
consistent with the past practices of the Company and in
accordance with GAAP.
4.13 CURRENT INFORMATION.
Seller has previously delivered to Buyer non-public information
relating to the business and affairs of the Company and will
continue to furnish similar information until the Closing. At
the time of delivery thereof none of such information contained,
or will contain, any untrue statement of a material fact or
omitted, or will omit, to state a fact necessary in order to make
such statements made therein, in light of the circumstances in
which they were made, not misleading.
4.14 TAX MATTERS.
The Company has filed, in a timely manner, all federal, state,
local and foreign tax returns, reports and declarations required
of it by applicable law and has collected, withheld or deposited,
or made provision for the payment of all taxes (including,
without limitation, income, sales, use, occupation, property,
excise and employment taxes, and interest and penalties thereon)
in a timely manner which have or may become due on account of
such filings. The federal tax returns for the Company have been
filed with the Internal Revenue Service through 1997. The Company
has not received any assessment for unpaid taxes, does not know
of any reason why any such assessment might be made and has not
agreed to any extension of time for the assessment of any taxes.
Adequate provisions have been made for the payment of all current
taxes.
4.15 LABOR AND EMPLOYMENT MATTERS.
The Company is not a party to any employment or consulting
agreements. There are no controversies, claims or grievances
pending or, to the knowledge of Seller, threatened between Seller
or the Company and Company Employees, or a labor union
representing any of its employees.
4.16 LITIGATION.
There are no actions, suits, claims, investigations or
proceedings pending or, to the knowledge of the Company or
Seller, threatened against Seller or the Company, before any
court, Governmental Authority or arbitrator, domestic or foreign,
that has or can reasonably be expected to have a material adverse
effect on the Company or which seek: (i) to prevent, restrict or
delay the consummation of the transactions contemplated by this
Agreement; or (ii) to limit, in any manner, the right of Buyer to
control the business of the Company after the consummation of the
transactions contemplated by this Agreement. Furthermore, there
are no judgments, orders or decrees of any such court,
Governmental Authority or arbitrator, domestic or foreign, that
has or can reasonably be expected to have any such effect.
4.17 TITLE TO PROPERTIES.
(a) The Company does not have any fee simple
interest in real property.
(b) The Company has good title to all of the
personal property, tangible or intangible, owned by it,
free and clear of Encumbrances except for the lien
securing the Loan described in Section 6.5.
4.18 LEASES.
Schedule 4.18 sets forth a complete list of each agreement into
which the Company has entered, whether as lessor or lessee, which
relates to either real or personal property, other than monthly
leases of personal property, which may be canceled upon not more
than thirty (30) days notice and require the payment of not more
than one thousand dollars ($1,000) per month. The leases listed
in Schedule 4.18 are referred to herein as "Leases." The Company
has complied in all material respects with its obligations under
all of the Leases and, to the knowledge of Seller and the
Company, no event has occurred or condition exists which
constitutes or can reasonably be expected to constitute a breach
of the provisions of any Lease by any party thereto. Complete
copies of all of the Leases have been delivered to Buyer.
4.19 MATERIAL CONTRACTS.
Schedule 4.19 sets forth a complete and correct list of each
contract, agreement or commitment of the Company, other than
Leases:
(i) upon which any substantial part of the business of
the Company is dependent or which, if breached, could reasonably
be expected to have a material adverse effect on the Company;
(ii) which provides for aggregate future payments by or
to the Company of more than fifty thousand dollars ($50,000),
except for purchase orders or sales orders arising in the
ordinary and usual course of business, in which case they are
listed only if any party thereto is obligated to make future
payments aggregating more than one hundred thousand dollars
($100,000) in any year;
(iii) which extends for more than one year from the
Closing Date and may not be cancelled by the Company with thirty
(30) or less days notice;
(iv) which provides for the sale, lease or other
transfer, after the date hereof and other than in the ordinary
course of business, of any of the assets of the Company except
those assets securing the Loan described in Section 6.5;
(v) which relates to the employment, retirement or
termination of the services of any officer or former officer of
the Company, except as disclosed on Schedule 4.15; or
(vi) which contains covenants pursuant to which any
Person has agreed not to compete with any business conducted by
the Company or not disclose to others information concerning the
Company.
Each of the foregoing is referred to in this Agreement as a
"Material Contract." Each Material Contract is valid and binding
on the parties thereto and is in full force and effect. The
Company has complied in all material respects with its
obligations under all of the Material Contracts and, to the
knowledge of Seller and Company, no event has occurred or
condition exists which constitutes or can reasonably be expected
to constitute a breach of any such contract by any party thereto.
Complete copies of all the Material Contracts have been delivered
to Buyer.
4.20 INTELLECTUAL PROPERTY.
The term "Intellectual Property" as used herein means trade
names, trademarks and service marks, patents, patent rights and
copyrights, whether domestic or foreign, (as well as
applications, registrations or certificates for any of the
foregoing), inventions, trade secrets, proprietary processes and
formulae, software and other property rights generally considered
to be intellectual property other than general know-how. The
Company owns, or has the right to use, all of its Intellectual
Property. Schedule 4.20 contains a complete and correct list of
all such Intellectual Property and any royalties, honoraria, fees
or other payments payable by the Company to any Person by reason
of the ownership, use, license, sale or disposition of the
Intellectual Property. There is no claim pending or, to the
knowledge of Seller or the Company, threatened against the
Company alleging that its use of any Intellectual Property
infringes upon the rights of any Person and no Person is
infringing upon the rights of the Company in its Intellectual
Property. All letters, patents, registrations and certificates
issued by any Governmental Authority relating to the Intellectual
Property are valid and subsisting and have been properly
maintained. Complete copies of all documents pursuant to which
the Company has acquired the right to use its Intellectual
Property, or has licensed or otherwise permitted any other Person
to use any of such Intellectual Property, have been delivered to
Buyer.
4.21 ACCOUNTS RECEIVABLE.
The Company's accounts receivable, including those acquired by
the Company subsequent to the 30th day of April, 1999 but prior
to the Closing (and not collected prior to Closing), constitute
valid and enforceable claims arising from bona fide transactions
in the ordinary course of business and will have been collected
or be collectible in amounts not less than the aggregate amount
thereof (net of reserves established in accordance with prior
practice) carried on the books of the Company. Each of such
accounts receivable, and those acquired after April 30, 1999 but
prior to the Closing, except for the lien securing the Loan, are
not the subject of a pledge or assignment, and are free of
Encumbrances and has not been placed for collection with any
attorney, collection agency or similar individual or firm.
Adequate reserves for doubtful accounts have been established on
the books of the Company and are reflected on the balance sheet
in accordance with GAAP. As of the date hereof, there are no
claims, refusals to pay or other rights of set-off against any
such accounts receivable, except as specified in the Disclosure
Schedules.
4.22 YEAR 2000.
The Company has taken all action necessary to ensure that it and
all property sold to the Buyer are "Year 2000 Ready." Year 2000
Ready shall mean that (i) all mission-critical date-affected
technology (hardware, software and firmware) used by the Company
in its business operations are able to correctly and effectively
receive, transmit and process date data from, into and between
the twentieth and twenty-first centuries (including but not
limited to Year 2000 leap year calculations) and otherwise
continue to function properly and unimpaired; and (ii) all
mechanical systems which rely upon embedded microchips utilized
in the operation of the Company's business will continue to
function properly and unimpaired from, into and between the
twentieth and twenty-first centuries (including but not limited
to Year 2000 leap year calculations). If requested by the Buyer,
Seller will provide evidence of such actions to ensure that the
Company is Year 2000 Ready.
4.23 MAINTENANCE OF TANGIBLE PERSONAL PROPERTY.
The tangible personal property which belongs to the Company: (i)
has been maintained in good repair in accordance with the usual
practices in the United States of businesses which are engaged in
activities similar to the business conducted by the Company; (ii)
is in good condition, ordinary wear and tear excepted; and (iii)
is usable in the ordinary course of the business of the Company
as it is presently being conducted.
4.24 INSURANCE.
Schedule 4.24 sets forth a list of insurance policies maintained
by the Company. The Company is not in default in any respect
under any provision of any such policy nor has it failed to give
notice or present any claim thereunder in a timely manner so as
to bar recovery of any valid claim.
4.25 EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.25 lists all of the employee
benefit plans and programs (except the unfunded
deferred compensation plans which are listed in
Schedule 4.19), including, without limitation, all
retirement, savings and other pension plans ("Pension
Plans"), all health, severance, insurance, disability
and other employee welfare plans ("Welfare Plans") and
all incentive, vacation and other similar plans that
are maintained by the Company on behalf of the Company
Employees.
(b) As to each of the Pension Plans, the Company
has complied, in all material respects, with all
applicable laws and regulations in administering such
plans, including specifically the provisions of ERISA
and the qualification provisions of Section 401 of the
Internal Revenue Code. No prohibited transaction, as
defined in Section 4975 of the Internal Revenue Code,
has occurred with respect to any of the Pension Plans
and none of the Pension Plans has incurred any
accumulated funding deficiency, as defined in Section
412 of the Internal Revenue Code, whether or not
waived. There has not been, with regard to any such
plan, any reportable event, as defined in Section
4043(b) of ERISA, that is required to be reported to
the PBGC by law or regulation. The fair market value
of the assets of each of the Pension Plans equals or
exceeds the present value of all benefits accrued under
such plan, whether or not vested, based on the
actuarial assumptions that would be used by the PBGC if
the plan were terminated as of the date of this
Agreement and as of the Closing.
(c) As to each of the Welfare Plans and other
employee benefit plans and programs (including without
limitation the plans listed on Schedule 4.19), the
Company has complied, in all respects, with all
applicable laws and regulations in the administration
thereof including, without limitation, the provisions
of ERISA when applicable.
(d) The Company has not terminated any Pension
Plan or incurred any liability to the PBGC under
Section 4001, et seq. of ERISA and, to the knowledge of
Seller or the Company, no condition exists that could
reasonably be expected to cause Buyer to incur any such
liability. All premiums payable to the PBGC have been
paid when due.
(e) No compensation or benefit that is or will be
payable as a result of the transactions contemplated by
this Agreement will be characterized as an "excess
parachute payment" within the meaning of Section 280G
of the Internal Revenue Code.
4.26 INSIDER INTERESTS.
Neither the Seller nor any officer or director: (i) competes
with, is involved with or has any direct or indirect interest in
any business entity which competes with the business conducted by
the Company; (ii) has any agreement of any type with the Company
other than being an at will employee of the Company; or (iii) has
any interest, direct or indirect, in any property, real or
personal, tangible or intangible, including, without limitation,
Intellectual Property, used in or pertaining to the business
conducted by the Company, except as a stockholder or employee of
the Company or as disclosed on Schedule 4.26.
4.27 CERTAIN PRACTICES.
To the knowledge of Seller and the Company, no stockholder,
director, officer, employee or agent of the Company has, directly
or indirectly, made or agreed to make, any unlawful or illegal
payment, gift or political contribution to, or taken any other
unlawful or illegal action, for the benefit of any customer,
supplier, governmental employee or other Person who is or may be
in a position to assist or hinder the business of the Company.
4.28 WORK IN PROGRESS.
Schedule 4.28 contains a complete list of all contracts on which
the Company is currently working or which have not been
completed, the customer for whom the work is being performed, and
the amount and basis for payment and the status of the contract
and the work being performed thereunder. Except as set forth in
the Disclosure Schedules, there is currently no work being
performed for which there is either (i) no written agreement
signed by the customer, or (ii) no funding available and
committed by the customer, in the case of contracts with a
Governmental Authority.
4.29 FULL DISCLOSURE.
None of the representations and warranties of the Company or the
Seller made in this Article contains any untrue statement of
material fact or omits to state a material fact necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading. To the knowledge of Seller, no
event has occurred or condition exists which can reasonably be
expected to have a material effect on the Company.
4.30 FINDERS.
Company shall be responsible for the fee of twenty five thousand
dollars ($25,000) for services of Xxxxxx Xxxxxxx for his
assistance rendered in connection with the transactions
contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller the following:
5.1 ORGANIZATION; AUTHORITY RELATIVE TO THIS AGREEMENT.
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York and has
corporate power and authority to execute and deliver this
Agreement, and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by Buyer of this
Agreement, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by the Board of
Directors of Buyer and no other corporate proceedings on the part
of Buyer are necessary with respect thereto. This Agreement has
been duly executed and delivered by Buyer. This Agreement
constitutes a valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms except as its terms
may be limited by: (i) bankruptcy, insolvency or similar laws
affecting to creditors' rights generally; or (ii) general
principles of equity, whether considered in a proceeding in
equity or at law.
5.2 NO CONFLICT.
The execution and delivery by Buyer of this Agreement, the Short-
term Notes, the Convertible Notes and the Related Agreements do
not, and the consummation of the transactions contemplated hereby
and thereby, will not violate or result in a breach of any
provision of the Articles of Incorporation or Bylaws of Buyer or
violate any law or governmental order applicable to Buyer.
5.3 CONSENTS AND APPROVALS.
There is no requirement applicable to Buyer to make any filing
with, or to obtain the consent or approval of any Person as a
condition to the consummation of the transactions contemplated by
this Agreement. The execution, delivery, and performance of this
Agreement by Buyer do not and will not require any consent,
approval, authorization or other order of, action by, filing with
or notification to any Governmental Authority.
5.4 LITIGATION.
No action, suit, claim, investigation or proceeding is pending
or, to the knowledge of Buyer, threatened against Buyer before
any court, Governmental Authority or arbitrator, domestic of
foreign, which have or can reasonably be expected to have a
material adverse effect on the Buyer or which seeks: (i) to
prevent, restrict or delay consummation of the transactions
contemplated by this Agreement; or (ii) to limit in any manner,
the right of Buyer to control the business of the Company after
the consummation of the transactions contemplated by this
Agreement. Furthermore, there are no judgments, orders or
decrees of any such court, Governmental Authority or arbitrator,
domestic or foreign, which have or can reasonably be expected to
have any such effect.
5.5 FINDERS.
Buyer shall be responsible for the fee of twenty five thousand
dollars ($25,000) for services of Xxxxxx Xxxxxxx for his
assistance rendered in connection with the transactions
contemplated by this Agreement based upon arrangements made by or
on behalf of the Buyer.
5.6 BUYER'S INTENTIONS.
The Buyer was not organized for the specific purpose of acquiring
the Shares. The Buyer has sufficient knowledge and experience in
investing in companies similar to the Company in terms of the
Company's stage of development to enable Buyer to be able to
evaluate the risks and merits of its purchase of the Seller's
Shares and the Other Sellers' Shares. The Buyer has had an
opportunity to discuss the Company's business, management and
financial affairs with the Company's management and is purchasing
the Shares for its own account for the purpose of investment and
not with a view to or for sale in connection with any
distribution thereof.
ARTICLE VI
ADDITIONAL COVENANTS
6.1 EXPENSES.
Except as otherwise provided in this Agreement, all costs and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby will be paid by the Party
incurring such costs and expenses.
6.2 PUBLIC ANNOUNCEMENTS.
The parties to this Agreement will consult with one another
before issuing any press releases or otherwise making any public
statements with respect to this Agreement and the transactions
contemplated hereby and will not issue any such press release or
make any such public statement without the consent of the other
unless such action is specifically required by law.
6.3 FURTHER ASSURANCES.
Seller, Company and Buyer, as the case may be, will use
reasonable efforts to implement the provisions of this Agreement
and for such purpose, at the request and expense of Buyer, Seller
and Company, as the case may be, will, at or after the Closing,
without further consideration, promptly execute and deliver, or
cause to be executed and delivered, such additional documents as
may be necessary to implement any provision of this Agreement and
the Related Agreements.
6.4 BOARD OF DIRECTORS.
Buyer shall vote in favor of the appointment of Xxxxxx X. Xxxxxxx
as a member of the Board of Directors of the Company.
6.5 F&M BANK.
Buyer shall ensure that the credit line of up to eight-hundred
thousand dollars ($800,000) from F&M Bank -- Northern Virginia,
Loan Number 1132667872 ("Loan") for the Company's operating
expenses is satisfied within thirty (30) days of Closing.
ARTICLE VII
EMPLOYEES AND EMPLOYEE MATTERS
7.1 COMPANY EMPLOYEES.
Seller has delivered to Buyer a list of all of the employees of
the Company ("Company Employees"), and a listing of the salaries,
bonuses, or other compensation currently paid to each.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to consummate the transactions
contemplated by this Agreement shall be subject, to the extent
not waived, to the following conditions.
8.1 REPRESENTATIONS AND WARRANTIES.
Except for changes expressly contemplated by this Agreement, each
of the representations and warranties of Company and of Seller
contained in this Agreement, which representations and warranties
include the information in the schedules corresponding thereto,
shall be true and correct in all material respects as of the date
of Closing and Seller and Company shall have delivered to Buyer a
certificate to that effect signed by Seller as a stockholder of
the Company and a certificate to that effect signed by an officer
of the Company.
8.2 PERFORMANCE OF THIS AGREEMENT.
Seller shall have, and the Company shall have, performed in all
material respects all of its obligations to be performed before
or at Closing under this Agreement and shall have delivered to
Buyer a certificate to that effect signed by Seller and the
Chairman or President of the Company.
8.3 CORPORATE AUTHORIZATION.
All corporate action required to be taken by the Company in
connection with the transactions contemplated hereby shall have
been taken, all documents incident thereto shall be reasonably
satisfactory in substance and form to Buyer and Buyer shall have
received such originals or copies of such documents as it may
reasonably request.
8.4 CONSENTS AND APPROVALS.
The consents and approvals of all Persons which Seller is
required to obtain in order to be able to transfer the Shares to
Buyer shall have been obtained.
8.5 INJUNCTION, LITIGATION, ETC.
No order of any court or governmental agency shall be in effect
which restrains or prohibits the consummation of the transactions
contemplated by this Agreement or which would limit or affect the
ability of Buyer to own and control a portion of the Company, and
there shall not have been threatened, nor shall there be pending,
any action or proceeding by or before any such court or
governmental agency seeking to prohibit or delay or challenging
the validity of the transactions contemplated by this Agreement.
8.6 LEGISLATION.
No statute, rule or regulation shall have been proposed or
enacted which prohibits or might prohibit, restrict or delay the
consummation of the transactions contemplated by this Agreement.
8.7 ESTOPPEL CERTIFICATES, ETC.
Seller shall have obtained and delivered to Buyer executed
estoppel certificates satisfactory in form and substance to
Buyer, and such other information with respect to the Leases as
Buyer may reasonably request.
8.8 RESIGNATION.
All directors, officers and board members of the Company shall
have submitted their resignations from such positions with the
Company as of the Closing Date.
8.9 OPINION OF COUNSEL FOR SELLER.
Buyer shall have received an opinion from Holland and Knight,
LLP, counsel for Seller, in substantially the form attached
hereto as Schedule 8.9.
8.10 RELATED AGREEMENTS.
All Other Sellers shall have entered into Other Purchase
Agreements in the form of attached Schedule 8.10 with the Buyer,
and the holders of all Options shall have entered into Option
Termination Agreements with the Company in the form of attached
Schedule 3.1A.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF
SELLER AND COMPANY
The obligation of Seller and Company to consummate the
transactions contemplated by this Agreement shall be subject, to
the extent not waived, to the satisfaction of each of the
following conditions.
9.1 REPRESENTATIONS AND WARRANTIES.
Except for changes expressly contemplated by this Agreement, each
of the representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects as
of the date of Closing, and Buyer shall have delivered to Seller
a certificate to that effect signed by its Chairman or President.
9.2 PERFORMANCE OF THIS AGREEMENT.
Buyer shall have performed in all material respects with all of
its obligations under this Agreement and shall have delivered to
Seller a certificate to that effect signed by its Chairman or
President.
9.3 CORPORATE AUTHORIZATION.
All corporate action required to be taken by Buyer in connection
with the transactions contemplated in this Agreement shall have
been taken, all documents incident thereto shall be reasonably
satisfactory in substance and form to Seller, and Seller shall
have received all such originals or copies of such documents as
it may reasonably request.
9.4 INJUNCTION, LITIGATION, ETC.
No order of any court or governmental agency shall be in effect
which restrains or prohibits the consummation of the transactions
contemplated by this Agreement and there shall not have been
threatened, nor shall there be pending, any action or proceeding
by or before any such court or governmental agency seeking to
prohibit or delay or challenging the validity of any of the
transactions contemplated by this Agreement.
9.5 LEGISLATION.
No statute, rule or regulation shall have been proposed or
enacted which prohibits or might prohibit, restrict or delay the
consummation of the transactions contemplated hereby.
9.6 OPINION OF COUNSEL FOR BUYER.
Seller shall have received an opinion from McGuire, Woods, Battle
& Xxxxxx, LLP, Counsel for Buyer, in substantially the form
attached hereto as Schedule 9.6.
ARTICLE X
CLOSING
10.1 TIME AND PLACE OF CLOSING.
The Closing shall take place at the offices of McGuire, Woods,
Battle & Xxxxxx LLP located at 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000,
XxXxxx, Xxxxxxxx, at 4:00 p.m. local time on Wednesday the 12th
day of May 1999 ("Closing Date").
10.2 DELIVERIES BY SELLER.
At Closing, Seller shall deliver to Buyer the following:
(i) the certificates representing the Seller's Shares
duly endorsed or with stock powers attached thereto duly
signed;
(ii) the certificates required by Sections 8.1 and 8.2.
(iii) copies of the consents required by Section 8.4;
(iv) the Opinion of Counsel required by Section 8.9; and
(v) such additional documents as Buyer may reasonably request.
10.3 DELIVERIES BY BUYER.
At the Closing Buyer shall deliver to Seller the following:
(i) the Purchase Price in cash, Short-term Notes and
Convertible Notes;
(ii) the certificates required by Sections 9.1 and 9.2;
(iii) evidence that the corporate action described in
Section 9.3 has been taken;
(iv) the Opinion of Counsel required by Section 9.6; and
(v) such additional documents as Seller may reasonably request.
10.4 DELIVERIES BY COMPANY.
At the Closing Company shall deliver to Buyer the following:
(i) the certificates required by Sections 8.1 and 8.2;
(ii) evidence that the corporate action described in
Section 8.3 has been taken;
(iii) the estoppel certificates required by Section 8.7;
(iv) a certificate from the Virginia State Corporation
Commission confirming the Company's good standing in
Virginia, and a certificate from the appropriate authority
in each other jurisdiction in which the Company is qualified
to do business, of the Company's good standing in that
jurisdiction, all as of a reasonably recent date.
ARTICLE XI
INDEMNIFICATION
11.1 INDEMNIFICATION BY SELLER.
Subject to the limitations contained in this Article, Seller will
indemnify and hold Buyer harmless from any damage, loss,
liability or expense including, without limitation, reasonable
expenses of investigation and reasonable attorneys' fees arising
out of:
(i) any breach of a representation and warranty made
by Seller in this Agreement;
(ii) the breach of any agreement of Seller contained in
this Agreement; or
(iii) any undisclosed liability or obligation of the
Company, whether civil or criminal in nature arising out of
actions that occurred prior to the Closing Date.
11.2 INDEMNIFICATION BY BUYER.
Subject to the limitations contained in this Article, Buyer will
indemnify and hold Seller harmless from any damage, loss,
liability or expense including without limitation, reasonable
expenses of investigation and reasonable attorneys' fees arising
out of:
(i) any breach of a representation and warranty made
by Buyer in this Agreement;
(ii) the breach of any agreement of Buyer contained in
this Agreement; or
(iii) any debt, liability or obligation of the Company
arising from any act or omission of the Company or Buyer after
the Closing.
11.3 SELLER'S OBLIGATIONS FOR THIRD PARTY CLAIMS.
The obligation of Seller to indemnify Buyer under the
provisions of this Article with respect to claims resulting from
the assertion of liability by Persons not parties to this
Agreement (including governmental claims for penalties, fines and
assessments) shall be subject to the following terms and
conditions:
(i) Buyer shall give prompt written notice to
Seller of any assertion of liability by a third party which
might give rise to a claim for indemnification based on the
foregoing provisions of this Article, which notice shall
state the nature and basis of the assertion and the amount
thereof, to the extent known, provided, however, that no
delay on the part of Buyer in giving notice shall relieve
Seller of any obligation to indemnify unless (and then
solely to the extent that) Seller is prejudiced by such
delay.
(ii) If any action, suit or proceeding (a "Legal
Action") is brought against Buyer with respect to which
Seller may have liability under the foregoing provisions of
this Article, the Legal Action shall be defended by Seller
and such defense shall include all proceedings for appeal or
review which counsel for Buyer shall deem appropriate.
(iii) Notwithstanding the provisions of the
previous subsection of this Agreement, until Seller shall
have assumed the defense of any such Legal Action, the
defense shall be handled by Buyer. Furthermore, (A) if
Seller fails to provide Buyer with evidence acceptable to
Buyer that Seller has sufficient financial resources to
defend and fulfill its indemnification obligation with
respect to the Legal Action; or (B) if the Legal Action
involves other than money damages and seeks injunctive or
other equitable relief; Seller shall not be entitled to
assume the defense of the Legal Action and the defense shall
be handled by Buyer. If the defense of the Legal Action is
handled by Buyer under the provisions of this subsection,
Seller shall pay all legal and other expenses reasonably
incurred by Buyer in conducting such defense.
(iv) In any Legal Action initiated by a third
party and defended by the indemnifying party (A) the
indemnified party shall have the right to be represented by
advisory counsel and accountants, at its own expense, (B)
the indemnifying party shall keep the indemnified party
fully informed as to the status of such Legal Action at all
stages thereof, whether or not the indemnified party is
represented by its own counsel, (C) the indemnifying party
shall make available to the indemnified party, and its
attorneys, accountants and other representatives, all books
and records of the indemnifying party relating to such Legal
Action and (D) the parties shall render to each other such
assistance as may be reasonably required in order to ensure
the proper and adequate defense of such Legal Action.
(v) In any Legal Action initiated by a third
party and defended by the indemnifying party, the
indemnifying party shall not make any settlement of any
claim without the written consent of the indemnified party,
which consent shall not be unreasonably withheld. Without
limiting the generality of the foregoing, it shall not be
deemed unreasonable to withhold consent to a settlement
involving injunctive or other equitable relief against the
indemnified party or its assets, employees or business, or
relief which the indemnified party reasonably believes could
establish a custom or precedent which will be materially
adverse to the best interests of its continuing business.
11.4 BUYER'S OBLIGATIONS FOR THIRD PARTY CLAIMS.
The obligation of Buyer to indemnify Seller under the
provisions of this Article with respect to claims resulting from
the assertion of liability by Persons not parties to this
Agreement (including governmental claims for penalties, fines and
assessments) shall be subject to the following terms and
conditions:
(i) Seller shall give prompt written notice to
Buyer of any assertion of liability by a third party which
might give rise to a claim for indemnification based on the
foregoing provisions of this Article, which notice shall
state the nature and basis of the assertion and the amount
thereof, to the extent known, provided, however, that no
delay on the part of Seller in giving notice shall relieve
Buyer of any obligation to indemnify unless (and then solely
to the extent that) Buyer is prejudiced by such delay.
(ii) If any Legal Action is brought against Seller
with respect to which Buyer may have liability under the
foregoing provisions of this Article, the Legal Action shall
be defended by Buyer and such defense shall include all
proceedings for appeal or review which counsel for Seller
shall deem appropriate.
(iii) Notwithstanding the provisions of the
previous subsection of this Agreement, until Buyer shall
have assumed the defense of any such Legal Action, the
defense shall be handled by Seller. Furthermore, (A) if
Buyer fails to provide Seller with evidence acceptable to
Seller that Buyer has sufficient financial resources to
defend and fulfill its indemnification obligation with
respect to the Legal Action; or (B) if the Legal Action
involves other than money damages and seeks injunctive or
other equitable relief; Buyer shall not be entitled to
assume the defense of the Legal Action and the defense shall
be handled by Seller. If the defense of the Legal Action is
handled by Seller under the provisions of this subsection,
Buyer shall pay all legal and other expenses reasonably
incurred by Seller in conducting such defense.
(iv) In any Legal Action initiated by a third
party and defended by the indemnifying party (A) the
indemnified party shall have the right to be represented by
advisory counsel and accountants, at its own expense, (B)
the indemnifying party shall keep the indemnified party
fully informed as to the status of such Legal Action at all
stages thereof, whether or not the indemnified party is
represented by its own counsel, (C) the indemnifying party
shall make available to the indemnified party, and its
attorneys, accountants and other representatives, all books
and records of the indemnifying party relating to such Legal
Action and (D) the parties shall render to each other such
assistance as may be reasonably required in order to ensure
the proper and adequate defense of such Legal Action.
(v) In any Legal Action initiated by a third
party and defended by the indemnifying party, the
indemnifying party shall not make any settlement of any
claim without the written consent of the indemnified party,
which consent shall not be unreasonably withheld. Without
limiting the generality of the foregoing, it shall not be
deemed unreasonable to withhold consent to a settlement
involving injunctive or other equitable relief against the
indemnified party or its assets, employees or business, or
relief which the indemnified party reasonably believes could
establish a custom or precedent which will be materially
adverse to the best interests of its continuing business.
11.5 LIMITATIONS ON INDEMNIFICATION.
(i) Neither the Seller nor the Buyer shall have any
obligation to indemnify the other under this Article unless and
until the aggregate amount of its liability exceeds fifty
thousand dollars ($50,000), and thereafter the indemnified party
shall be entitled to indemnification thereunder only for the
aggregate amount of such liability in excess of fifty thousand
dollars ($50,000).
(ii) All damages to which the indemnified party may be
entitled pursuant to the provisions of this Article shall be net
of any insurance coverage in which the indemnified party receives
the benefits with respect thereto.
(iii) The indemnification obligations of the Seller or
Buyer under Article XI shall terminate three (3) years from the
Closing Date, except with respect to any claims for
indemnification as to which the indemnified party shall have
given the indemnifying party written notice setting forth its
claim with reasonable specificity (in contradistinction to
generalized allegations) as to the nature thereof on or prior to
three (3) years from the Closing Date.
(iv) Notwithstanding any other provision of the
Agreement, Seller's liability under this Article XI shall not
exceed one million dollars ($1,000,000) in the aggregate.
(v) Notwithstanding any other provision of the
Agreement, Buyer's liability under this Article XI shall not
exceed one million dollars ($1,000,000) in the aggregate.
11.6 SURVIVAL; INVESTIGATION.
The representations and warranties of Seller contained in this
Agreement shall survive any investigation by Buyer and shall not
terminate until the third (3rd) anniversary of the Closing (the
"Survival Date") at which time they shall lapse. Notwithstanding
the provisions of the preceding sentence, any representation or
warranty in respect of which indemnification may be sought under
Sections 11.1 and 11.2 shall survive the Survival Date if written
notice, given in good faith, of the specific breach thereof is
given to Seller prior to the Survival Date, whether or not
liability has actually been incurred.
ARTICLE XII
GENERAL PROVISIONS
12.1 NOTICES.
All notices and other communications given hereunder shall be in
writing. Notices shall be effective when delivered, if delivered
personally. Otherwise, they shall be effective when sent to the
parties at the addresses or numbers listed below, as follows: (i)
on the business day delivered (or the next business day following
delivery if not delivered on a business day) if sent by a local
or long distance courier, prepaid telegram, telefax or other
facsimile means; or (ii) three days after mailing if mailed by
registered or certified U.S. mail, postage prepaid and return
receipt requested.
If to Seller to:
SIX NATIONS, INC.
X/X Xxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Telefax No.: (000) 000-0000
With a copy to:
HOLLAND & KNIGHT, LLP
0000 Xxxxxxxxxxxx X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx Xxxxxxx, Esquire
Telefax No.: (000) 000-0000
If to Company to:
AVENUE TECHNOLOGIES, INC.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Chairman of the Board and President
Telefax No.: (000) 000-0000
If to Buyer to:
HADRON, INC.
0000 Xxxxxx Xxxxx Xxxxxxxx
Xxxxx 000 Xxxx
Xxxxxxxxx, XX 00000
Attention: Executive Vice President and
Corporate Secretary, S. Xxxxx Xxxxxx
Telefax No.: (000) 000-0000
With a copy to:
MCGUIRE, WOODS, BATTLE, & XXXXXX, LLP
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxx Xxxxxxx, Esquire
Telefax No.: (000) 000-0000
Any Person may change the address or number to which notices are
to be delivered to him, her or it by giving the other Persons
named above notice of the change in the manner set forth above.
12.2 GOVERNING LAW.
This Agreement shall be governed and construed in accordance with
the laws of the Commonwealth of Virginia without regard to its
choice of law rules.
12.3 SCHEDULES.
The information contained in any schedule or exhibit which is
referred to in any section of this Agreement shall be deemed to
have been disclosed in connection with, and to be incorporated
into, that particular section only, and shall not be deemed a
part of any other section.
12.4 HEADINGS.
The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation
of the Agreement.
12.5 COUNTERPARTS.
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.
12.6 MISCELLANEOUS.
This Agreement: (i) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject
matter hereof; (ii) is not intended to and shall not confer upon
any Person, other than the parties hereto, any rights or
remedies; and (iii) shall not be assigned by operation of law or
otherwise, except that Buyer may assign its rights hereunder to
another of its Subsidiaries without the consent of the Seller or
Company.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed and their corporate seals to be hereto
affixed and attested by their duly authorized officers.
SELLER:
SIX NATIONS, INC.
/S/ XXXXXX X. XXXXXXX
----------------------
By: Xxxxxx X. Xxxxxxx
Title: President
BUYER:
HADRON, INC.
/S/ X.X. XXXXXXX
---------------------------
By: X.X. Xxxxxxx
Title: Chairman and Chief Executive Officer
COMPANY:
AVENUE TECHNOLOGIES, INC.
/S/ XXXXXX X. XXXXXXX
----------------------------
By: Xxxxxx X. Xxxxxxx
Title: Chairman of the Board and President
