Exhibit 99.6
STOCK PURCHASE
AND
SETTLEMENT AGREEMENT
THIS AGREEMENT entered into this ____ day of August, 2002, by and
between DynCorp ("DynCorp") and DynTek, Inc. ("DynTek");
WITNESSETH
WHEREAS effective December 27, 2001, DynCorp Management Resources, Inc.
("DMR"), a subsidiary of DynCorp, merged into a subsidiary of DynTek, such
merger being hereinafter referred to as the "Merger"; and
WHEREAS, subsequent to the consummation of the Merger, DynCorp has made
a strategic decision to reduce its ownership interest in DynTek and to withdraw
from participation on DynTek's board of directors; and
WHEREAS, DynCorp wishes to sell to DynTek, and DynTek has agreed to
purchase from DynCorp, certain Class B Common Shares of DynTek owned by DynCorp,
on such terms and conditions as are hereinafter set forth, including the
issuance to DynCorp of certain warrants for the future purchase of DynTek Common
Shares; and
WHEREAS as part of this transaction, the parties, without admitting any
fault, culpability or liability, wish to settle and resolve any and all claims,
liabilities and causes of action that may now exist or hereafter arise, that are
or would be in any way related to the DMR contract with the Commonwealth of
Virginia for non-emergency transportation brokerage services (the "VA NET
Contract") or the Merger, or any other matter related to or arising out of the
Merger transaction or the past dealings between the parties hereto, including
direct and derivative-type claims;
NOW THEREFORE, for good and valuable consideration as hereinafter
described, the parties do hereby agree as follows:
1. Purchase of Shares. DynCorp will sell to DynTek, and DynTek will purchase
from DynCorp, at the Closing hereafter specified, a total of 8,000,000
shares of DynTek Class B Common Shares (the "Purchased Shares") for a
per-share consideration of $0.625 and a total consideration of $5,000,000,
such consideration to be paid by delivery of a Note in the form of Exhibit
A hereto.
2. Settlement of VA NET Contract Expense and Other Disputes. For and in
consideration of the respective undertakings of the parties described
herein, including DynCorp's agreement to make the Settlement Payment
described below, DynCorp and DynTek hereby agree to forever settle, resolve
and release one another from any and all claims, liabilities, causes of
action or other rights, whether presently known or hereafter arising, that
relate to any matter prior to the execution of this Agreement, except those
liabilities that are described in Section 2.2 below and the specific
provisions of that certain Agreement and Plan of Reorganization between the
parties dated April 25, 2001, as amended (the "Merger Agreement") that are
described in Section 5 hereof, it being expressly understood that such
payment is in consideration of VA NET Contract expenses that were
unanticipated at the time of the Merger.
2.1. The Settlement Payment shall be $5,000,000 including the $1,000,000
payment previously made on DynTek's behalf to MTM on July 19, 2002.
2.2. This settlement and release excludes any and all liability that may be
incurred by DynCorp or DynTek under surety or other bonds preserved by
DynCorp pursuant to Section 4.16 of the Merger Agreement or the DynCorp
Guarantee hereafter defined, which liability DynTek has expressly
assumed under Section 4.16 and Section 4.19 of the Merger Agreement,
both of which Sections will survive this Agreement and remain in full
force and effect in accordance with their terms.
2.3. In furtherance of this settlement, the parties will at Closing execute
and deliver to one another a copy of the form of General Release
attached as Exhibit B to this Agreement.
2.4. All other provisions of this Agreement to the contrary notwithstanding,
the $4,000,000 of proceeds representing the balance of the Settlement
Payment will be made directly by DynCorp on DynTek's behalf to the
vendors and creditors of DynTek identified in Part 1 of Exhibit C
hereto. In this regard, DynTek will certify to DynCorp in writing at
the Closing the identity of such payee, the amount to be paid, and the
date the valid billing for such payment was first received and booked
by DynTek. DynCorp shall be entitled to access to such confirming
information from DynTek's books and records as may be reasonably
necessary to enable DynCorp to verify the accuracy of each payee's
entitlement.
3. Warrants. DynTek shall issue to DynCorp detachable warrants to purchase
7,500,000 DynTek Common Shares, at an exercise price of $4.00 per share, to
be exercised within three years following the closing date. The form of
such warrants shall be as set forth in Exhibit D hereto.
4. Conditions Precedent to Closing. The obligations of the parties to close
the transaction shall be subject to the following conditions precedent:
4.1. Prior to closing, DynTek shall have taken steps to implement a program
of permanent cost savings, the effect of which would reasonably be
expected to result in $3.0 million of permanent annual cost savings
(excluding cost savings identified or implemented since June 2002
through the date of this Agreement); provided that if such program is
not sufficient to make DynTek's earnings before interest, taxes,
depreciation and amortization ("EBITDA") positive (after payment of all
currently projected interest expense) within 90 days following the
closing, DynTek shall take steps to implement a further program of
permanent cost savings of at least an additional $1.0 million.
4.2. The DynTek Chief Executive Officer shall have consented in writing to
the amendment of his Employment Contract so that his incentive
compensation for DynTek fiscal years 2003 and 2004 shall be subject to
the achievement of targets of DynTek EBITDA determined by the
Compensation Committee of DynTek's Board of Directors, which targets
will be designed to assure that no bonuses are paid in excess of salary
unless and until positive EBITDA from the DynTek consolidated business
are sufficient to create shareholder value while at the same time
assuring that all cash obligations of DynTek are met in a timely
fashion.
4.3. A Special Committee of the Board of Directors of DynTek shall have been
formed and said Committee and the full Board of DynTek shall have approved
this Agreement and the various transactions described herein. In this
connection, DynTek shall have delivered to DynCorp certified resolutions of
the Special Committee of the DynTek Board appointed to consider and approve
the DynCorp/DynTek settlement, and the full DynTek Board, confirming in
language that is acceptable to DynTek, DynCorp and the counsel for the
Committee and DynTek Board, that the settlement described in this Agreement
is fair and reasonable to DynTek and its stockholders, and that all
interests of DynTek have been satisfied on reasonable and fair terms, on an
arm's length basis, and that the settlement represented by this Agreement
and the Release attached hereto will, upon execution, constitute a full and
complete accord and satisfaction of any and all rights of DynTek, it
subsidiaries and affiliates, the DynTek stockholders, and their successors,
heirs and/or legal representatives that are described herein or in Exhibit
B hereto.
4.4. DynCorp shall have received a copy of an amendment to the loan agreement
between a subsidiary of DynTek and Foothill Capital Corporation
("Foothill") in the form set forth in Exhibit E, duly executed
4.5. At the closing, DynTek shall either (a) present to DynCorp reasonable
evidence that the respective customers for the Virginia Contract and
North Carolina Contract, as such terms are defined in the Assignment
and Termination Agreement dated as of July 12, 2002 (the "TechServ
Agreement"), between DynTek and DynCorp TechServ LLC ("TechServ") have
agreed to the assignment of such contracts under such terms as have
released TechServ from any further obligations thereunder or (b) enter
into and execute appropriate agreements to reassign either or both of
the said contracts to TechServ.
4.6. Ernst & Young LLP shall have received from DynTek's President and Chief
Financial Officer a fully executed representation letter with respect
to the DMR December 27, 2001 financial statement audit that is
acceptable to Ernst & Young.
4.7. DynTek's President and Chief Financial Officer shall have delivered to
DynCorp a certification dated as of the closing confirming the accuracy
of all of the DynTek representations and warranties as of that date.
5. Covenants Concerning VA NET Contract. The parties recognize that DynCorp
continues to have liability under a Labor and Material Payment Bond issued
by National Union Fire Insurance Company of Pittsburgh, PA ("AIG") on July
2, 2001 to the Commonwealth of Virginia in connection with the 2000 award
to DMR of the VA NET Contract ("AIG Bond"), and under a separate November
28, 2000 DynCorp guarantee issued to the Commonwealth of Virginia
guaranteeing DMR's performance on such Contract ("DynCorp Guarantee"). The
parties further acknowledge that under Section 4.16 and Section 4.19 of the
Merger Agreement, DynTek has the obligation to indemnify DynCorp and
replace the AIG Bond and DynCorp Guarantee. Accordingly, the parties agree
as follows with respect to the VA NET Contract:
5.1. DynTek agrees that it shall not through June 2003 make any change to
the size or composition of the VA NET Contract project management team
without the consent of DynCorp.
5.2. DynTek will provide to DynCorp by the 20th of each calendar month
commencing in August 2002 the prior calendar month financial reports on
all aspects of the VA NET Contract reflecting total receipts, cost of
revenue, overhead costs, provider costs, satisfactory evidence of
payment of expenses under the contract, and any other relevant
information concerning contract operations, claims, or disputes with
the Commonwealth of Virginia. DynCorp shall be entitled to audit and/or
examine all such DynTek records upon reasonable notice and during
regular business hours.
5.3. DynCorp will have the right to review and approve all modifications to
the VA NET Contract or any settlement, which modification or settlement
would increase DynCorp's liability thereunder, with the Commonwealth or
any vendor thereunder so long as the DynCorp Guarantee or the AIG Bond
remain outstanding; provided that such review and approval will not be
unreasonably withheld or delayed. Moreover, DynTek will not submit a
proposal for a follow-on VA NET Contract beyond June 2003 unless the
DynCorp Guarantee and AIG Bond are no longer outstanding.
6. Other Covenants. DynTek further agrees to take the following actions
subsequent to Closing.
6.1. As soon as practicable following receipt by Ernst & Young of the letter
described in Section 4.5, DynCorp will use its best efforts to cause
Ernst & Young to deliver to DynTek (i) the audited balance sheets of
DMR as of December 27, 2001and the related statements of operations,
changes in stockholders' equity and cash flows for the years ended of
December 27, 2001 (collectively, the "Financial Statements") and (ii)
Ernst & Young's consent to the inclusion of the Financial Statements in
DynTek's SEC filings as appropriate.
6.2. On or before October 1, 2002, DynTek will pay all outstanding amounts
owed DynCorp under the Transition Services Agreement attachment to the
Merger Agreement, and shall remove its personnel from the DynCorp
facility at 00000 Xxxxx Xxxxxxx Xxxxx. As of this date, all of
DynCorp's obligations under the Transition Services Agreement shall
terminate; provided that the obligation of DynTek to compensate DynCorp
for services rendered thereunder shall continue in accordance with the
Transition Services Agreement terms until all amounts due are paid in
full.
6.3. In the event DynTek proposes at any time that DynCorp continues to own
common shares of DynTek to issue additional DynTek common shares such
that DynCorp's total fully diluted ownership of DynTek (including
securities issuable upon exercise of the warrants described in Section
3) would be less than 25%, DynTek shall immediately notify DynCorp and
give DynCorp a right of first refusal for 5 business days after its
receipt of written notice to purchase such additional common shares, or
a portion thereof, for the same consideration as would be obtained from
third party subscribers. If such right is not exercised by DynCorp
within such 5-day period, it shall be null and void.
6.4. Neither party shall make any public announcement or disclosure
regarding the provisions of this transaction or this Agreement without
the written consent of the other party; provided, however, that that
either party shall have the right to make such public announcement as
it may deem appropriate to comply with applicable law, including
applicable securities laws.
6.5. DynTek shall recommend EBITDA targets to its Compensation Committee
that are consistent with the terms of the consent described in Section
4.2 above and shall make no bonus or incentive payment to its Chief
Executive Officer for fiscal years 2003 and 2004 that are inconsistent
with such guidelines.
6.6. In the event either of both of the said contracts referred to in
Section 4.5 is re-assigned to TechServ, DynCorp shall cause TechServ to
subcontract 100% of the work thereunder to DynCorp Systems & Solutions
LLC ("DS&S"), a subsidiary of DynCorp, at a contract price equal to 98%
of TechServ's receipts thereunder and shall cause DS&S in turn to
subcontract 100% of the work thereunder to DynTek at a contract price
equal to the amount DS&S receives from TechServ.
6.7. Until the Note has been paid in full, DynTek shall continue to
maintain, and cause each of its subsidiaries to continue to maintain, a
system of accounting established and administered in accordance with
sound business practices to permit preparation of consolidated and
consolidating financial statements in conformity with generally
accepted accounting principles and each of the financial statements
described below shall be prepared from such system and records. DynTek
shall deliver or cause to be delivered to DynCorp:
(a) Monthly Reports. As soon as practicable, and in any event no later than
thirty (30) days following the end of each calendar month, (i) the
consolidated balance sheet as of the end of such month, and income
statement for the month and for the fiscal year-to-date, setting forth in
each case in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year and the corresponding
figures from the consolidated financial forecast, certified by its Chief
Executive Officer and Chief Financial Officer as fairly presenting the
consolidated financial position of DynTek and its subsidiaries as at the
date indicated, and the results of their operations for the periods
indicated; and (ii) a schedule detailing DynTek's selling, general, and
administrative expenses for the month and fiscal year to date, setting
forth in each case in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year and the corresponding
figures from the consolidated financial forecast, certified by its Chief
Executive Officer and Chief Financial Officer as being accurate and
complete.
(b) Quarterly Reports. As soon as practicable, and in any event no later than
two Business Days after the date required for filing quarterly reports on
Form 10-Q in accordance with the rules of the Securities and Exchange
Commission, the consolidated balance sheets of DynTek and its subsidiaries
as at the end of such period (i) for such fiscal quarter and (ii) for the
period beginning on the first day of such fiscal year and ending on the
last day of such fiscal quarter, together with the related consolidated
statements of income and cash flow for such periods, setting forth in each
case in comparative form the corresponding figures for the corresponding
periods of the previous fiscal year and the corresponding figures from the
consolidated financial forecast for the current fiscal year, certified by
its Chief Financial Officer as fairly presenting the consolidated financial
position of DynTek and its subsidiaries as at the dates indicated and the
results of their operations and cash flow for the fiscal quarters
indicated, subject to normal year end adjustments.
(c) Annual Reports. As soon as practicable, and in any event no later than two
Business Days after the date required for filing annual reports on Form
10-K in accordance with the rules of the Securities and Exchange
Commission, (i) the consolidated and consolidating balance sheets of DynTek
and its subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income, stockholders' equity
and cash flow for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the previous fiscal year and
the corresponding figures from the consolidated financial forecast for the
current fiscal year, and (ii) a report with respect to such consolidated
financial statements of an independent certified public accountant
reasonably acceptable to DynCorp, which report shall be unqualified and
shall state that such financial statements fairly present the consolidated
financial position of DynTek and its subsidiaries as at the dates indicated
and the results of their operations and cash flow for the periods indicated
in conformity with GAAP (except for changes with which such independent
certified public accountant, if applicable, shall concur and which shall
have been disclosed in the notes to the financial statements) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards.
(d) Officer's Certificate. Together with each delivery of any financial
statement pursuant to subsection (a) and (b) of this Section, (i) a
certificate signed by the Chief Executive Officer or the Chief Financial
Officer of DynTek (an "Officer's Certificate") stating that the signatory
thereto has reviewed the terms of this Agreement and has made, or caused to
be made under his/her supervision, a review in reasonable detail of the
transactions and consolidated and consolidating financial condition of
DynTek and its subsidiaries during the accounting period covered by such
financial statements, that such review has not disclosed the existence
during or at the end of such accounting period, and that such person does
not have knowledge of the existence as at the date of such Officer's
Certificate, of any condition or event which constitutes an Event of
Default or of Default (each as defined in the loan agreement entered into
between Foothill and a subsidiary of DynTek (the "Foothill loan
agreement"), or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
DynTek or any of its subsidiaries has taken, is taking and proposes to take
with respect thereto; and (ii) an Officer's Certificate setting forth
calculations (with such specificity as DynCorp may reasonably request) for
the period then ended which demonstrate compliance, when applicable, with
the provisions of the Foothill loan agreement.
(e) Budgets; Business Plans; Financial Projections. As soon as practicable and
in any event no later than January 31, 2003 and fifteen (15) days after the
end of each fiscal year of DynTek ending in 2003 and thereafter, a
consolidated plan and financial forecast, prepared in accordance with
DynTek's normal accounting procedures applied on a consistent basis, for
the five (5) fiscal year period commencing in the fiscal year in which
delivered, including, without limitation, (i) forecasted consolidated
balance sheets and statements of cash flow and income statement of DynTek
for such fiscal years, (ii) forecasted consolidated and consolidating
statement of cash flow and income statement of DynTek and its subsidiaries
for and as of the end of each fiscal month of such fiscal years, (iii) the
amount of forecasted capital expenditures for such fiscal years, and (iv)
forecasted compliance with the provisions of Section 6.9 each of the
foregoing prepared for each fiscal month in the first fiscal year of such
five fiscal year period.
(f) Events of Default. Promptly upon any of the Chief Executive Officer or
Chief Financial Officer of DynTek obtaining knowledge of any condition or
event which constitutes an Event of Default or Default under the Foothill
loan agreement, DynTek shall deliver to DynCorp an Officer's Certificate
specifying (i) the nature and period of existence of any such Event of
Default, Default, condition, or event; (ii) the notice given or action
taken by such person in connection therewith; and (iii) what action DynTek
has taken, is taking, and proposes to take with respect thereto.
(g) Foothill Agreement Documents. DynTek shall deliver a copy of the following,
promptly upon its receipt thereof (where applicable), and concurrently with
its delivery thereof (where applicable), to DynCorp: (i) each material
notice or other material communication delivered by or on behalf of DynTek
to any person in connection with the Foothill loan agreement, and (ii) each
material notice or other material communication received by DynTek from any
person in connection with the Foothill loan agreement.
(h) Other Information. Promptly upon receiving a request therefor from DynCorp,
DynTek shall prepare and deliver to DynCorp such financial statements and
other information with respect to DynTek or any of its Subsidiaries as from
time to time may be reasonably requested by DynCorp.
6.8. Until the Note has been paid in full, the maximum amount of accounts
payable that may be aged over 60 days from the date of invoice (other
than invoices that DynTek is disputing in good faith) shall be not more
than the amounts set forth below as of the end of each corresponding
month:
August 2002 $1,500,000
September 2002 $1,000,000
October 2002 $1,000,000
November 2002 $750,000
December 2002 $500,000
January 2003 and thereafter $100,000
6.9. Commencing with DynTek's fiscal quarter ending December 31, 2002 and
until the Note has been paid in full, the ratio of DynTek's EBITDA to
interest expense and scheduled principal payments on the Note shall be
no less than 1.1:1.0.
7. Provisions of Merger Agreement.
8.1. Except as otherwise provided in Section 7.2 below, all further
obligations of the parties pursuant to the Merger Agreement shall be
deemed to be discharged, fulfilled, released, extinguished, and of no
further effect as of the closing of this transaction, including without
limitation the provisions of Section 4.21.
8.2. The parties' obligations and rights under Sections 4.9, 4.10, 4.11, 4.12,
4.16 and 4.19 of the Merger Agreement shall not be released but shall
remain in full force and effect in accordance with their terms. Moreover,
the Transition Services Agreement, Exhibit C to the Merger Agreement, shall
remain in full force and effect until midnight September 15, 2002, after
which time all obligations of DynCorp thereunder shall cease and shall be
considered covered by DynTek's General Release; provided, however, that
DynTek shall continue to be obligated to perform all of its obligations
under the Transition Services Agreement. Finally, the Registration Rights
Agreement, Exhibit B to the Merger Agreement, shall not be released or
terminated but shall remain in full force and effect in accordance with its
terms, subject only to such changes thereto as are referenced in this
Agreement.
8. Representations and Warranties. Each party represents and warrants that the
following statements as to itself are true, correct, and complete:
8.1. Organization and Good Standing. It is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Delaware. It has full corporate power to carry on their business
activities as now conducted. It has, since its incorporation, complied
in all material respects with all laws, regulations, ordinances, and
orders applicable to its business activities and properties. It is
entitled to own, lease, or operate the properties they now own, lease,
or operate. It is further qualified and licensed to do business and are
in good standing in each other jurisdiction in which the nature of its
business makes such qualification or licensing necessary.
8.2. No Material Adverse Developments. DynTek knows of no developments
regarding its business or prospects that individually or taken together
would have a material adverse impact on the business, financial
standing or affairs of DynTek, except as described and disclosed in
DynTek's past filings with the Securities Exchange Commission or as
disclosed to DynCorp in writing prior to the execution of this
Agreement. As of the date of this Agreement, there are no uncured
Events of Default under the Foothill loan agreement.
8.3. Due Diligence and VA NET Contract EAC. The December 17, 2001 estimate of
the cost at completion of the VA NET Contract ("EAC"), which was jointly
prepared by DynCorp and DynTek (then known as XxxXxxxxxx.xxx, Inc.), was
accurate and complete as of such date to the best of DynTek's knowledge and
belief at such time. DynTek was afforded full and complete access prior to
December 27, 2001 to all DMR and VA NET Contract records, personnel and
information, and there is no basis for suggesting that DynCorp or DMR
failed in any way to fully disclose any and all relevant information
regarding its operations or the VA NET Contract or its future prospects.
DynTek executives participated fully in the December 17, 2001 EAC review
meeting and concurred with the formal acceptance of that EAC as appropriate
given the then existing circumstances impacting the performance of the VA
NET Contract.
8.4. No Conflict. The execution, delivery and performance of this Agreement
and Exhibits A, B and D hereto do not and will not (i) conflict with
the certificate of incorporation or by-laws of the parties; (ii)
constitute a tortious interference with any contractual obligation of
the parties or conflict with, result in a breach of or constitute (with
or without notice or lapse of time or both) a default under any
contractual obligation of the parties; (iii) result in or require the
creation or imposition of any lien whatsoever upon any of the property
or assets of the parties; or (iv) require any approval of the parties'
shareholders which has not been obtained.
8.5. Authority. The parties have the full right, power, and authority to execute
and deliver this document and Exhibits A, B and D, to perform their
obligations hereunder, and to consummate the transactions contemplated
hereby. The execution, delivery, and performance of this Agreement, the
Release, the Warrant, the Note, and all the other transactions and
obligations herein provided for have been duly authorized by all necessary
corporate action on their part. This Agreement, the Release, the Warrant,
and the Note constitute the legal, valid, and binding obligation of the
parties, enforceable against them in accordance with their terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies
and defenses.
8.6. Investment Intent. Each of DynCorp and any permitted transferee of the
Warrant, as of the date hereof and as of the date of (and as a condition
to) each transfer and/or exercise of the Warrant, (a) is acquiring the
Warrant and/or the shares issuable upon exercise thereof (collectively, the
"Securities"), as applicable, for its own account for investment purposes
only and not with a present view to any resale or distribution thereof
within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), in violation thereof, (b) possesses such knowledge and
experience in financial and business matters as to enable it to evaluate
the merits and risks of an investment in the Securities, (c) understands
and is able to bear the economic risk involved in acquiring the Securities,
including any loss relating to or arising out of such investment, (d)
understands and agrees that the Securities are not registered under the
Securities Act or any other securities law and may not be offered, sold,
pledged or conveyed unless such Securities are registered under the
Securities Act or an exemption from the registration requirements of the
Securities Act is available, (e) is an "accredited investor" (as such term
is defined in Rule 501 promulgated under the Securities Act), and (f) has
been given the opportunity to ask questions of, and receive answers from,
DynTek concerning the terms of the Securities and to obtain such additional
written information, to the extent DynTek possesses such information or can
acquire it without unreasonable effort or expense, necessary to verify the
accuracy of the same as it desires in order to evaluate the investment in
the Securities.
8.7. Aged Payables. DynTek's schedule of aged payables, attached hereto as
Exhibit F, is true and correct as of the date thereof.
9. Understandings Regarding DynCorp's Remaining Class B Common Shares. DynCorp
agrees that on the closing date, it shall convert its existing Class B
Common Shares of DynTek into Class A Common Shares of DynTek.
9.1. DynTek agrees to facilitate such conversion and by December 31, 2002 to
have used its best efforts to register and list for trading on the
NASDAQ exchange all DynTek common shares held by DynCorp immediately
after the closing.
9.2. On or before the closing, the DynCorp nominated directors shall resign
from the DynTek Board; provided, however, that DynTek agrees that its
directors and officers liability insurance will continue to be
available to the former DynCorp directors and that DynTek will continue
to renew its directors and officers coverage for at least five years
following the closing so long as the renewal premium does not exceed
200% of the current premium.
10. Closing and Termination of Agreement. Subject to the prior satisfaction of
all conditions precedent, set forth in Section 4 hereto, the closing will
take place at the offices of DynCorp, 00000 Xxxxx Xxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxx, promptly following satisfaction of the condition set forth in
Section 4.4; provided that if no closing occurs before September 15, 2002
this Agreement and all obligations hereunder shall terminate, and shall be
of no further force or effect.
11. Miscellaneous Provisions.
11.1.Standstill Agreement. Except as permitted herein or in Exhibit D
hereto, DynCorp agrees that it will not for a period of 2 years from
the date of this Agreement purchase any DynTek voting securities
without the approval of the DynTek Board of Directors.
11.2.Covenant Against Litigation. DynTek and DynCorp each agree on behalf of
themselves and all Settling Parties not to initiate, file, commence, or
otherwise sponsor directly or indirectly, any lawsuit, arbitration, claim
or other proceeding, whether legal or equitable in nature, that in any way
relate to the matters released in the General Releases, Exhibit B hereto,
provided, that nothing herein will preclude a party from enforcing a
provision of this Agreement or such General Releases. In the event of a
breach of this covenant, the non-breaching party shall be entitled to seek
and obtain an injunction in the United States District Court for the
Eastern District of Virginia and recover any and all damages and costs
related to such injunctive relief.
11.3.Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered
personally or sent by facsimile transmission or overnight express or by
registered or certified mail, postage prepaid, addressed as follows:
DynCorp: DynTek, Inc.
00000 Xxxxx Xxxxxxx Xxxxx 00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000 Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx Attn: Xxxxxx X. Xxxx
Senior Vice President & General President & Chief Executive Officer
Counsel fax: (000) 000-0000
fax: (000) 000-0000
With a copy to:
Xxxxx Peabody LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esquire
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or
sent by facsimile transmission or overnight express or by registered or
certified mail, postage prepaid, addressed as follows:
11.4.Entire Agreement. This Agreement, together with the Exhibits hereto and
all documents specifically incorporated herein by reference, contains
the entire agreement between DynCorp and DynTek with respect to the
transactions contemplated herein and supersede all previous written or
oral negotiations, commitments, and understandings.
11.5.Counterparts; Execution by Facsimile. This Agreement may be executed in
two or more counterparts, manually or by facsimile transmission, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11.6.Survival of Representations. All the representations, warranties,
covenants, and understandings contained on this Agreement shall survive
the execution of this Agreement, and, without limitation, the
representations and warranties shall survive so long as any applicable
statute of limitations or right of action pertaining thereto, whether
or not asserted, shall endure. No performance or execution of this
Agreement in whole or in part by a party hereto shall constitute a
waiver by such party or stop such party from asserting its rights
hereunder, nor shall a waiver of or failure to exercise one or more
rights hereunder constitute a waiver of any other rights.
11.7.Governing Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Virginia applicable to agreements made and to be performed entirely within
the Commonwealth of Virginia without regard to principles of conflicts of
law. Both parties irrevocably submit to the exclusive jurisdiction of the
state courts of the Commonwealth of Virginia located in Arlington, Virginia
or the United States Federal District Court located in the Eastern District
of Virginia for the purposes of any suit, action or other proceeding
arising out of or in connection with this Agreement. Each party further
agrees that service of any process, summons, notice or document by U.S.
registered mail to a party's address set forth in the Agreement shall be
effective service of process for any action, suit or proceeding in the
Commonwealth of Virginia with respect to any matters to which it has
submitted to jurisdiction as set forth above in the immediately preceding
sentence. Each party irrevocably and unconditionally waives the right to
trial by jury and any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement in any such court and hereby
further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in
such court has been brought in an inconvenient forum. The prevailing party
in any such action will be awarded its reasonable damages, costs, and
expenses (including attorneys' fees) incurred in prosecuting or defending
such litigation.
11.8.Interpretation. The section headings contained in this Agreement are for
reference purposes only and shall not affect the interpretation of this
Agreement. All references to section number refer to sections of this
Agreement, except as otherwise specified. All references in this Agreement
to gender shall be deemed to include all genders, and all references in the
singular or plural shall be deemed to include the plural and singular, as
appropriate. Whenever the words "include", "includes", or "including" are
used, they shall be deemed to be followed by the words "without
limitation". The language used in this Agreement will be deemed to be the
language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction will be applied against any person.
11.9.Severability. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the
validity of the remainder of this Agreement.
11.10. Assignment. No party hereto may assign or delegate or otherwise
transfer any of its rights or obligations hereunder without the prior
written consent of the other party hereto, and any agreement, act, or
deed purporting to effect any such assignment, delegation, or transfer
without such prior written consent shall be void; provided however that
such prohibition shall not exclude assignment by operation of law, such
as by merger of a party into another corporation.
11.11. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, the settling parties, and their
respective successors and assigns.
11.12. No Third-Party Beneficiaries. The provisions of this Agreement are
intended solely for the benefit of the parties hereto, and no other
party is entitled to any rights, benefits, or privileges created
hereunder.
11.13. Amendments and Waivers. This Agreement may not be modified or amended
except by a writing or writings signed by the party against whom any
modification or amendment is asserted or sought to be enforced. No
waiver by any party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant hereunder or affect in any way any
rights arising by virtue of any prior or subsequent such occurrence.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first mentioned above.
DynCorp DynTek, Inc.
By: By:
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Name: Name:
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Its: Its:
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