SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 OR 15(d) of
the Securities Exchange Act of 1934
Date of Report:
September 13, 1995
VSE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
State or Other Jurisdiction of Incorporation or Organization)
0-3676 54-0649263
(Commission File Number) (I.R.S.Identification Number)
2550 Huntington Avenue
Alexandria, Virginia 22303-1499
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code
(703) 960-4600
VSE CORPORATION
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 29, 1995, VSE Corporation (the "Registrant") acquired all
of the outstanding capital stock of Energetics Incorporated ("Energetics") of
Columbia, Maryland. The stock purchase (the "purchase") was effected pursuant
to a Stock Purchase Agreement dated August 29, 1995, by and among the
Registrant, Energetics and Energetics shareholders ("the selling
shareholders") as listed on the signature pages to the attached Purchase
Agreement.
Under the terms of the purchase, the Registrant acquired 850 shares
of Energetics' stock, which represented all of the issued and outstanding
shares of Energetics' capital stock, in exchange for approximately 3.7 million
dollars. The purchase price was determined by arm's - length negotiations
between VSE and the selling shareholders. Energetics and certain key Energetics
executives also entered into employment agreements dated August 29, 1995
pursuant to which the executives agreed to continue service with Energetics in
their current capacities for a period up to 3 years. The purchase was accounted
for using the pooling of interests method.
Energetics is a professional service organization with experience in
assisting government and industry in conducting effective technology programs,
primarily in the fields of energy use and the environment. Following the
purchase, VSE intends to continue and expand upon the historical Energetics
business and to integrate Energetics' assets with those of VSE.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
A. FINANCIAL STATEMENTS OF ENERGETICS AND PRO FORMA FINANCIAL STATEMENTS OF
VSE CORPORATION.
It is impracticable to provide the financial statements, proforma
financial statements and independent auditor's consent required to be filed
pursuant to this Item 7 with respect to the Exchange and accordingly such items
will be filed as soon as practicable, but in any event not later than 60 days
following the date hereof.
B. EXHIBITS
Exhibit No.
1. A copy of the Registrant's press release regarding the matter
discussed above under Item 2.
2. Stock Purchase Agreement dated August 29, 1995 between VSE,
Energetics, and selling shareholders. The schedules to the
Stock Purchase Agreement have been omitted. VSE agrees to
furnish supplementally a copy of any omitted schedule to the
Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VSE CORPORATION
(Registrant)
Date: September 13, 1995 C. S. Weber
C. S. Weber, Senior Vice President,
Secretary and Treasurer
(Principal Financial Officer)
VSE CORPORATION
2550 Huntington Avenue, Alexandria, Virginia 22303-1499
Telephone (703) 960-4600 Fax (703) 960-2688
PRESS RELEASE FOR IMMEDIATE RELEASE
NASDAQ Stock Symbol: VSEC Contact: C. S. Weber (CFO), 703/329-4770
VSE ACQUIRES ENERGETICS INCORPORATED
Alexandria, Virginia, August 29, 1995.-- VSE Corporation
reported today that it has acquired Energetics Incorporated
("Energetics") of Columbia, Maryland.
Energetics, which was established in 1979, has over 15 years'
experience in assisting government and industry in conducting
effective technology programs, primarily in the fields of energy use
and the environment. Principal clients include the U. S. Department
of Energy, other U. S. Government prime contractors, public
utilities, universities, and non-profit corporations and
associations. For the year ended November 30, 1994, Energetics
recorded revenues and net income of approximately $11 million and
$300 thousand, respectively (unaudited).
VSE has retained the management team at Energetics and will
operate the company as a wholly owned subsidiary. The acquisition
is expected to add about $12 million in annual revenues to VSE's
consolidated financial statements. The purchase price for the
acquisition was approximately $3.7 million.
VSE Chairman and CEO Don Ervine said, "We are extremely
pleased to complete the acquisition of Energetics, which is
recognized nationally for its knowledge of industrial energy use and
the analysis of advanced technologies for specific industries. The
addition of Energetics and its strong staff of professional and
technical employees provides VSE and Energetics with new
opportunities for growth and diversification. This acquisition is
consistent with our goal to establish VSE as a large, diversified
technical and management services company."
VSE is a professional services company established in 1959.
The company provides engineering, development, testing and
management services to maintain and modernize products, equipment,
and systems. For the year ended December 31, 1994, VSE reported
consolidated revenues of $65.6 million and net income of $1.5
million ($1.80 a share). For the six month period ended June 30,
1995, VSE reported consolidated revenues of $33.3 million and net
income of $711 thousand ($.82 a share).
STOCK PURCHASE AGREEMENT
dated as of August 29, 1995
between
VSE CORPORATION,
SELLERS NAMED HEREIN,
and
ENERGETICS INCORPORATED
<PAGE>
TABLE OF CONTENTS
Page
Section 1 Purchase and Sale of Shares. . . . . . . . . . . . . . . . . . 1
1.1 Agreement to Purchase and Sell . . . . . . . . . . . . . . . . 1
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Delivery and Payment . . . . . . . . . . . . . . . . . . . . . 1
1.4 Purchase Price Adjustment. . . . . . . . . . . . . . . . . . . 2
Section 2 Representations and Warranties of the Company and Sellers. . . 5
2.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Capital Structure. . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 No Violation.. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . 6
2.8 Compliance with Applicable Laws. . . . . . . . . . . . . . . . 7
2.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.10 Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.11 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.12 Absence of Certain Changes or Events . . . . . . . . . . . . . 8
2.13 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . 8
2.14 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 8
2.15 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.16 Title to Property; Leases. . . . . . . . . . . . . . . . . . . 9
2.17 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.18 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.19 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.20 Employee Benefit Plans; Employees. . . . . . . . . . . . . . . 12
2.21 Government Contracts . . . . . . . . . . . . . . . . . . . . . 13
2.22 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . 15
2.23 Compliance with Applicable Laws. . . . . . . . . . . . . . . . 15
2.24 Accounts Receivable 14 . . . . . . . . . . . . . . . . . . . . 15
2.25 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . 15
2.26 Notification of Breaches . . . . . . . . . . . . . . . . . . . 15
Section 3 Representations and Warranties of Sellers. . . . . . . . . . . 16
3.1 Share Ownership. . . . . . . . . . . . . . . . . . . . . . . . 16
3.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . 16
3.3 Title to Common Stock. . . . . . . . . . . . . . . . . . . . 16
3.4 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . 16
3.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.6 Notification of Breaches . . . . . . . . . . . . . . . . . . . 16
Section 4 Buyer's Representations and Warranties . . . . . . . . . . . . 17
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . 17
4.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.4 Governmental Authorities . . . . . . . . . . . . . . . . . . . 17
4.5 Investment Representation. . . . . . . . . . . . . . . . . . . 17
4.6 Notification of Breaches . . . . . . . . . . . . . . . . . . . 18
Section 5 Tax Elections. . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6 [ Intentionally Blank ]. . . . . . . . . . . . . . . . . . . . 19
Section 7 [ Intentionally Blank ]. . . . . . . . . . . . . . . . . . . . 19
Section 8 [ Intentionally Blank ]. . . . . . . . . . . . . . . . . . . . 19
Section 9 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . 19
9.1 Indemnification by Sellers.. . . . . . . . . . . . . . . . . . 19
9.2 Indemnification by Buyer.. . . . . . . . . . . . . . . . . . . 19
9.3 Claims by Third Parties. . . . . . . . . . . . . . . . . . . . 20
9.4 Monetary Limitation of Claim . . . . . . . . . . . . . . . . . 20
9.5 Limitation of Claim against Sellers. . . . . . . . . . . . . . 20
9.6 Escrow Deposit . . . . . . . . . . . . . . . . . . . . . . . . 20
9.7 Tax Election Indemnification . . . . . . . . . . . . . . . . . 21
9.8 Set-off. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.9 Indemnification as Sole Remedy . . . . . . . . . . . . . . . . 22
Section 10 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 22
10.1 Collateral Agreements, Amendments and Waivers. . . . . . . . . 22
10.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 22
10.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.4 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . 22
10.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.6 Survival of Representations, Warranties and Agreements . . . . 24
10.7 Specific Performance . . . . . . . . . . . . . . . . . . . . . 24
10.8 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . 24
10.9 Public Announcement. . . . . . . . . . . . . . . . . . . . . . 24
10.10 No Third-Party Beneficiaries. . . . . . . . . . . . . . . 24
10.11 Construction. . . . . . . . . . . . . . . . . . . . . . . 25
10.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . 25
10.13 Counterparts. . . . . . . . . . . . . . . . . . . . . . . 25
SCHEDULES
Schedule 1.1 List of Sellers
Schedule 1.3(a) Employment and Agreement with Thomas S. Bustard
Schedule 1.3(b) Employment and Agreement with James E. Reed
Schedule 1.3(c) Employment and Agreement with Howard E. Lowitt
Schedule 1.3(d) Escrow Agreement
Schedule 1.5(e) Company's Historical Accounting Method
Schedule 2.1 Certificate of Incorporation and Bylaws of the Company
Schedule 2.2 Stock Options
Schedule 2.5 Violations
Schedule 2.7 Financial Statements
Schedule 2.8 Compliance with Applicable Laws
Schedule 2.9 Litigation
Schedule 2.10(a) Liabilities
Schedule 2.10(b) Reserves
Schedule 2.12 Absence of Certain Changes or Events
Schedule 2.14 Environmental Matters
Schedule 2.15 Contracts
Schedule 2.16(b) Title to Property
Schedule 2.16(c) Leases
Schedule 2.16(d) Computer Software
Schedule 2.19 Tax Matters
Schedule 2.20 Employee Benefit Plans; Employees
Schedule 2.21(a) Government Contracts
Schedule 2.21(f) Government Contracts
Schedule 2.22 Labor Matters
Schedule 2.24 Accounts Receivable
Schedule 2.25 Powers of Attorney
Schedule 6.1(k-1) Opinion of Company's Counsel
Schedule 6.1(k-2) Opinion of Seller's Counsel
Schedule 6.2(c) Opinion of Buyer's Counsel
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is dated as of August
29, 1995 between VSE Corporation, a Delaware corporation ("Buyer"), Thomas
S. Bustard, James E. Reed, Howard E. Lowitt, Jay Leikin and Rene B. Abarcar
(each a "Seller" and collectively with the other Sellers ("Seller") and
Energetics Incorporated, a Maryland corporation (the "Company").
A. Sellers own beneficially and of record all of the Company's
outstanding capital stock, which consists of 850 shares of common stock, no par
value (the "Shares").
B. Buyer desires to purchase from Sellers, and Sellers desire to sell to
Buyer, the Shares on the terms and conditions set forth herein.
FOR GOOD AND VALUABLE CONSIDERATION, Buyer, Sellers and
the Company, intending to be legally bound, agree as follows:
Section 1
Purchase and Sale of Shares
1.1 Agreement to Purchase and Sell. Subject to the terms and
conditions set forth herein, Buyer agrees to purchase from each Seller, and each
Seller agrees to sell to Buyer, such Seller's Shares in such amount set opposite
such Seller's name on Schedule 1.1, free and clear of all claims, liens,
charges, restrictions and encumbrances of any nature whatsoever, at the Closing
(as defined in Section 1.2) and, in consideration of such Seller's sale of
Shares, Buyer agrees to pay to such Seller an amount that represents the same
percentage of the Purchase Price (as defined below) as Seller's percentage of
total Shares outstanding as set forth on Schedule 1.1 ("Seller's Percentage").
The aggregate purchase price to be paid by Buyer hereunder for the Shares (the
"Purchase Price") shall be $3,660,000, subject to adjustment as required by
Section 1.4, plus any Contingent Payments as defined in Section 1.5.
1.2 Closing. The closing of the purchase and sale of the Shares and on
the other transactions contemplated hereby (the "Closing") shall take place at
the offices of Arent Fox Kintner Plotkin & Kahn, 1050 Connecticut Avenue, N.W.,
Washington, D.C. 20036, at 10:00 a.m., local time, on August 29, 1995 or at such
other place, time or date as Buyer and the Company shall mutually agree. The
date on which the Closing occurs is hereinafter referred to as the "Closing
Date."
1.3 Delivery and Payment. In addition to the other documents and
instruments required to be delivered by any party pursuant hereto, at the
Closing, (i) each Seller shall deliver to Buyer one or more stock certificates
representing all of the Shares set opposite such Seller's name on Schedule 1.1,
properly endorsed in blank or accompanied by duly executed assignment
documents, (ii) Thomas S. Bustard, James E. Reed and Howard E. Lowitt
(collectively, the "Primary Sellers") shall each deliver to Buyer executed
employment agreements in the form of Schedules 1.3(a), 1.3(b) and 1.3(c),
respectively, (iii) each director and officer of the Company shall deliver to
Buyer a letter evidencing such person's resignation as of the Closing from each
such position with the Company, (iv) Buyer shall deliver to each Seller 90% of
his Closing Purchase Price (as defined Below) by wire transfer (each Seller
shall designate the account to which his Closing Purchase Price is to be
delivered at least two business days prior to the Closing Date by notice to
Buyer), and (v) Buyer shall deliver to the Escrow Agent pursuant to the Escrow
Agreement attached as Schedule 1.3(d) (the "Escrow Agreement") 10% of each
Seller's Closing Purchase Price, to be held as part of the Escrow Deposit (as
defined in the Escrow Agreement). In respect of any Seller, his "Closing
Purchase Price" shall be an amount equal to his Seller's Percentage of the
Purchase Price, without any adjustment pursuant to Section 1.4 nor any
inclusion of Contingent Payments.
1.4 Purchase Price Adjustment.
(a) Net Worth Statement. As promptly as practicable, but in
any event within 45 days following the Closing, the Company shall deliver to
Sellers' Representative (as defined in the Escrow Agreement) a statement of the
Company's Net Worth (the "Net Worth Statement") as of the Closing Date. The
Net Worth Statement shall be prepared by the Company (probably initially by Jay
Leikin) and accompanied by a certificate from the Company's chief financial
officer to the effect that the Net Worth Statement fairly presents the Company's
Net Worth as of the Closing Date. For purposes of computing the Net Worth
Statement, any Company tax liability attributable solely to the Election
described in Section 5.1, shall be excluded from the Closing Date liabilities.
(b) If Sellers' Representative disagrees with the Net Worth Statement,
Sellers' Representative shall give notice thereof to the Company within 30 days
after delivery of the Net Worth Statement to Sellers' Representative,
specifying in sufficient detail to permit Seller to reasonably evaluate the
nature and extent of such disagreement.
(c) The Company and Sellers' Representative shall attempt to
settle any such dispute regarding the Net Worth Statement; any such settlement
shall be final and binding upon the Company and Sellers. If, however, the
Company and Sellers' Representative are unable to settle such dispute within 30
days after the Company's receipt of such notice of dispute, the dispute shall be
submitted for resolution to the Independent Certified Public Accountant. The
decision of the Independent Certified Public Accountant shall be final and
binding upon the Company and Sellers. All costs incurred in connection with the
resolution of said dispute by the Independent Certified Public Accountant,
including expenses and fees for services rendered, shall be paid one half by the
Company and one-half by Sellers. The Company and Sellers' Representative shall
use reasonable efforts to have the dispute resolved within 60 days after such
dispute is submitted to the Independent Certified Public Accountant, but neither
the Company or Sellers' Representative shall have any liability to any party
hereto if such dispute is not resolved within such 60-day period, absent bad
faith.
(d) Within 10 business days following a final determination of
the Net Worth Statement (whether as a result of Sellers' Representative failing
to give notice of Sellers' disagreement with the Company's determination within
the time period prescribed above, a resolution by the Company and Sellers'
Representative of any such disagreement, or a determination by the Independent
Certified Public Accountant to resolve any disagreement among the parties), the
following shall occur:
(i) if the Company's Net Worth set forth in the Net Worth
Statement exceeds $2 million, the Purchase Price shall be increased by
the amount of such excess and Buyer shall promptly pay to each Seller,
by check, such Seller's Percentage of the increase in the Purchase Price;
and
(ii) if the Company's Net Worth set forth in the Net Worth
Statement is less than $2 million, the Purchase Price shall be decreased
by the amount of such deficiency and Sellers jointly and severally agree
to refund the amount of such deficiency to Buyer by check. Any
payment to which Buyer is entitled pursuant to this subparagraph (ii)
shall first be satisfied from the Escrow Deposit.
1.5 Contingent Payments.
(a) The Company is or anticipates being an official recipient,
as a subcontractor or prime contractor, of certain contracts with The United
States Department of Energy ("DOE") identified by Contract Numbers DE-AC21-
95MC31346 and DE-AC21-95MC32057 as such contracts may be amended,
altered, increased or decreased (the "DOE Contracts"). Notwithstanding the
foregoing, DOE Contracts shall not include any "follow-on" or additional
contracts between the Company and the DOE which arise from subsequent
negotiations between the Company and the DOE and which are assigned different
DOE contract numbers. On or before the 15th day of August, 1996 and on each
of the four anniversaries thereof ("Contingent Payment Date"), Buyer shall pay
to Sellers (the "Contingent Payment"), as part of the Purchase Price, an amount
equal to 1% of the Revenue recognized by the Company with respect to the DOE
Contracts during the 12-month period, or part thereof, ending on the 30th day
of June immediately preceding the particular Contingent Payment Date.
(b) Buyer shall deliver to Seller's Representative, concurrently
with the delivery of each Contingent Payment, a statement (the "Contingent
Payment Statement") setting forth in reasonable detail in order for Seller's
Representative to evaluate the calculation of the said Contingent Payment and
copies of working papers and data used by Buyer in the preparation of the
Contingent Payment Statement.
(c) Sellers' Representative shall have 30 business days from his
receipt of the Contingent Payment Statement to object in writing to the
calculation of the Contingent Payment, setting forth in reasonable detail the
nature and extent of such objection. If Sellers' Representative does not so
object, the Contingent Payment Statement shall be deemed final and conclusive
with respect to the determination of the Contingent Payment.
(d) If the parties are unable to agree on the determination of the
Contingent Payment pursuant to Sections 1.5 (a), (b) and (c), either Sellers'
Representative or Buyer may refer such disagreement to the Independent Certified
Public Accountant whose determination shall be final, conclusive and binding
upon all parties. The Independent Certified Public Accountant shall be provided
access to all information, including work papers and supporting data, and
personnel reasonably relevant to the calculation in dispute. The disagreement
between Sellers and Buyer shall be referred to the Independent Certified Public
Accountant only upon a written request therefor (by Sellers' Representative or
Buyer) given to the Independent Certified Public Accountant and the other
party. Such request shall set forth in reasonable detail the nature of the
disagreement between the parties. In the event of any such reference, the
parties shall not be bound by or restricted to the claims theretofore made or
positions theretofore asserted with respect to the dispute submitted to the
Independent Certified Public Accountant; and Sellers and Buyer shall each be
free to assert such claims, take such positions and submit to the Independent
Certified Public Accountant such additional documentary or other evidence as
such parties or party may desire (subject only to such rules or procedure and
determinations of materiality and relevance as the Independent Certified Public
Accountant may make). The fees and expenses charged by the Independent
Certified Public Accountant for such services shall be paid half by Sellers and
half by Buyer. Within 10 days following receipt of notice of the final
determination made by the Independent Certified Public Accountant in accordance
with this Section 1.5, Buyer shall pay to Sellers the amount, if any, of the
Contingent Payment calculated in accordance with said final determination.
(e) For purposes of this Agreement:
"Revenue" means, for the specified period, the costs and fees billed or
billable by the Company for the DOE Contracts to the extent that the amount of
such DOE Contract is received by the Company and/or appropriately booked as
a receivable in accordance with the Company's Historical Accounting Method.
With respect to the billable costs or fees referred to in the preceding
sentence, such amounts shall be net of any allowances for contract
disallowances. "Independent Certified Public Accountant" means an independent
certified public accounting firm nominated by the party making the referral of a
disagreement pursuant to Section 1.5(c) at the time of such referral, provided
that if the other party rejects such nomination and nominates a second
independent public accounting firm within three business days after such
referral, the Independent Certified Public Accountant shall be the independent
public accounting firm nominated by the other party; provided, further, that if
the referring party rejects such second independent public accounting firm, the
Independent Certified Public Accountant shall be such independent public
accounting firm as shall be selected jointly by the first and second independent
accounting firms nominated as provided above.
"Net Worth" shall mean an amount equal to the excess of the assets of
the Company over its liabilities, determined in accordance with the Company's
Historical Accounting Method, and shown on the Balance Sheet of the Company
as of the Closing Date delivered pursuant to Section 1.4 (a).
"Company's Historical Accounting Method" shall mean generally accepted
accounting principles, consistently applied, except as otherwise set forth on
Schedule 1.5(e).
Section 2
Representations and Warranties of the
Company and Sellers
To induce Buyer to enter into and perform under this Agreement, the
Company and each Seller, jointly and severally, hereby represent and warrant to
Buyer, as of the date hereof, as follows:
2.1 Due Organization. The Company (a) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Maryland, (b) has all requisite power and authority to own, lease and
operate its properties and to carry on its business as it is now being
conducted and (c) is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary other than in such
jurisdictions where the failure so to qualify would not have in the aggregate a
material adverse effect on the Company's business, operations, assets or
financial condition ("Material Adverse Effect"). Complete and correct copies
of the Company's articles of incorporation and by-laws, as in effect on the
date hereof, are included as Schedule 2.1 (collectively, the "Charter
Documents").
2.2 Capital Structure. The Company's authorized capital stock consists
of 10,000 shares of common stock, no par value, of which 850 Shares are
outstanding and no capital stock is held by the Company as treasury stock. The
Shares are duly authorized, validly issued, fully paid and nonassessable and not
subject to any preemptive rights. Except as set forth on Schedule 2.2, there
are no options, warrants, calls, rights, commitments or other agreements of any
character (the "Options") to which the Company is a party or by which it is
bound obligating the Company to issue, deliver or sell, or cause to be issued,
delivered or sold, any capital stock of the Company or obligating the Company
to grant, extend or enter into any Option.
2.3 Subsidiaries. The Company does not own, directly or indirectly,
any capital stock or other equity securities of any corporation, partnership,
trust, joint venture or other entity or have any direct or indirect equity or
other ownership interest in any business other than the business the Company
conducts.
2.4 Authority. The Company has all requisite corporate power and
authority to enter into this Agreement and each other agreement, instrument and
document required to be executed by the Company in connection herewith, and
to consummate the purchase and sale of the Shares and other transactions
contemplated hereby and thereby (collectively, the "Transactions"). The exec-
ution and delivery by the Company of this Agreement and such other agreements,
instruments and documents, and the consummation by the Company of the
Transactions, have been duly authorized by all necessary corporate action of the
Company. This Agreement has been duly and validly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought (collectively, the "Exceptions").
2.5 No Violation. To the knowledge of the Company and each Seller,
except for a Shareholders Agreement among Sellers dated April 24, 1992 (the
"Shareholders Agreement") which shall be terminated prior to Closing and except
as set forth on Schedule 2.5, the execution and delivery of this Agreement and
each other agreement, instrument and document required to be executed by the
Company or any Seller in connection herewith do not, and the consummation of
the Transactions will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any material
obligation or to loss of a material benefit under, any provision of the Charter
Documents or any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or its properties or assets, or result in the creation or
imposition of any lien, charge or encumbrance upon any of such properties or
assets, other than any such conflicts, violations, defaults, terminations,
cancellations, accelerations, liens, charges or encumbrances which in the
aggregate will not have a Material Adverse Effect.
2.6 Consents. To the knowledge of the Company and each Seller, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign ("Governmental
Entity") or of any other person, individual person, corporation, partnership,
trust, joint venture, limited liability company or other entity (collectively,
"Person") is required by or with respect to the Company or any Seller in
connection with the execution and delivery of this Agreement by the Company or
any Seller and each other agreement, instrument and document required to be
executed by the Company or any Seller in connection herewith, or the
consummation by the Company or any Seller of the Transactions.
2.7 Financial Statements. The Company has made available to Buyer
and has attached hereto as Schedule 2.7 true and complete copies of the
Company's financial statements for the years ended November 30, 1994, 1993 and
1992 (the "Financial Statements"). The Financial Statements have been prepared
in accordance with the Company's Historical Accounting Method applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto), and fairly present the Company's financial position at their
respective dates and the related results of operations for the periods then
ended.
For purposes of this Agreement, the Company's unaudited balance sheet at the
Closing Date is hereinafter referred to as the "Balance Sheet." The Company has
provided to Buyer the unaudited balance sheet and the related statements of
income and cash flows, for the Company, for the six months ended May 28, 1995
(collectively, the "May Financial Statements"). The May Financial Statements
have been prepared in accordance with the Company's Historical Accounting
Method during the periods involved (except as may be indicated in the notes
thereto), and fairly present the Company's financial position as of its date
and the related results of operations for the periods then ended, except for
any adjustment described therein and any normal year-end adjustments.
2.8 Compliance with Applicable Laws. Except as set forth on Schedule
2.8, the Company's business is not being conducted in violation of any law,
ordinance, rule, regulation, judgment, decree or order of any Governmental
Entity, except for possible violations which in the aggregate will not have a
Material Adverse Effect. The Company and each Seller have neither received
notice nor are aware that any investigation or review by any Governmental
Entity with respect to the Company is pending or threatened, other than those
the outcome of which will not have a Material Adverse Effect.
2.9 Litigation. Except as set forth on Schedule 2.9, there is no suit,
action or proceeding (including any condemnation proceeding) pending or, to the
knowledge of the Company or any Seller, threatened which, if adversely
determined in the aggregate will have a Material Adverse Effect, nor to the
knowledge of the Company or any Seller, is there any valid basis for any such
suit, action or proceeding, nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator outstanding against the
Company or any Seller having, or which, insofar as reasonably can be foreseen,
in the future will have, any Material Adverse Effect. There are no consent
decrees (including any affirmative action plan) of any Governmental Entity to
which the Company or any Seller is a party or by which the assets of the
Company are bound and relating to the Company's business or by which any of the
properties or assets of the Company or any Shares are bound.
2.10 Liabilities.
(a) All of the Company's liabilities, direct or indirect, fixed or
contingent, including any guarantees or other primary or secondary liabilities
in respect of any obligation or liability of any other Person or disallowances
with respect to any Government Contract are reflected on the Balance Sheet,
with the exception only of: (A) liabilities incurred in the ordinary course of
business since the date of such Balance Sheet (none of which are material
liabilities for breach of contract, breach of warranty, violation of law, tort,
or infringement of the rights of others, and none of which in the aggregate
constitute a material adverse change in the Company's condition from that shown
on such most recent balance sheet); (B) liabilities set forth on Schedule
2.10(a); and (C) liabilities, in an aggregate amount not exceeding $25,000,
not required by the Company's Historical Accounting Method to be included in
the Balance Sheet.
(b) Except as set forth on Schedule 2.10(b), the reserves, if any,
shown on the May Financial Statements are adequate for the payment or
satisfaction of the liabilities to which they relate and all reserves required
by the Company's Historical Accounting Method have been made.
2.11 Licenses. To the knowledge of the Company and each Seller, the
Company has all licenses, permits, approvals and other authorizations of any
Governmental Entity required for the conduct of its business as it is currently
conducted, except where the failure to have any such license, permit, approval
or authorization will not have a Material Adverse Effect.
2.12 Absence of Certain Changes or Events. Except as set forth on
Schedule 2.12, since the date of the Balance Sheet, the Company has conducted
its business only in the ordinary course, and there has not been (i) any
material adverse change in the financial condition, results of operations,
business, assets or liabilities of the Company, (ii) any damage, destruction or
loss whether covered by insurance or not, which has or reasonably may be
expected to have a Material Adverse Effect, (iii) any declaration, setting
aside or payment of any dividend (whether in cash, stock or property) with
respect to any capital stock of the Company ("Capital Stock") or any
redemption, purchase or other acquisition, direct or indirect, of any Capital
Stock, (iv) any entry into any commitment or transaction material to the
Company's business condition (including any borrowing, capital expenditure or
sale of assets), (v) any acquisition by the Company (by merger, consolidation
or acquisition of stock or assets) of any Person, or the entering into by the
Company of any contract, agreement, commitment or arrangement with respect
thereto, (vi) any change by the Company in accounting principles except to the
extent required by a change in the Company's Historical Accounting Method,
(vii) any labor dispute, litigation or governmental investigation material to
the Company's business and financial condition, (viii) any action referred to
in Section 5.2 or (ix) any understanding or agreement, whether in writing or
otherwise, to take any action described in this Section 2.12.
2.13 Brokers and Finders. The Company has not engaged, or caused to
be incurred any liability to, any finder, broker or sales agent in connection
with the execution, delivery or performance of this Agreement or the
Transactions.
2.14 Environmental Matters.
(a) Except as set forth on Schedule 2.14, to the knowledge of
the Company and each Seller, the Company has obtained all permits, licenses and
other authorizations, and has made all registrations and given all
notifications, which are required with respect to the operation of its business
under federal, state, local and foreign laws relating to pollution or
protection of the environment or liability for environmental contamination,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including surface water,
ground water, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes (the "Environmental Laws"), other than
those permits, licenses and other authorizations the failure of which to
obtain, in the aggregate, will not have a Material Adverse Effect.
(b) Except as set forth on Schedule 2.14, to the knowledge of
the Company and each Seller, the Company is in compliance in all material
respects with all terms and conditions of the required permits, licenses and
authorizations, and is also in full compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws or contained in
any regulation, code, plan, order, decree, judgment, injunction, settlement
agreement, notice or demand letter issued, entered, promulgated or approved
thereunder, where the failure to be in compliance in the aggregate will not
have a Material Adverse Effect.
(c) Except as set forth on Schedule 2.14, there is no civil,
criminal or administrative action, suit, demand, claims, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending (excluding
any of the foregoing with respect to which the Company has not received service
of process or notice, as the case may be, although neither the Company nor any
Seller has any knowledge of the existence thereof) or, to the best knowledge of
the Company and Sellers, threatened against the Company relating in any way to
the Environmental Laws or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder.
2.15 Contracts. Except as disclosed on Schedule 2.15, there are (a) no
employment agreements, other personal service agreements (excluding consulting
and/or subcontract agreements which are charged directly to a government
contract), noncompetition agreements, confidentiality agreements or agreements
with respect to inventions, trade secrets or proprietary rights to which the
Company is a party and (b) no contracts (including license agreements,
maintenance agreements, distribution agreements and leases, if any) to which the
Company is a party, which is material to the Company or which by its terms
involves the future payment by or to the Company of $50,000 or more in the
aggregate. Neither the Company, nor, to the knowledge of the Company and each
Seller, any other party to any such agreement or contract, has breached or
violated any provisions of, or is in default under the terms of, nor will
compliance with the terms of this Agreement result in a breach of or default
in, any contract, agreement, plan, lease or license, a breach or violation of
which or a default under which will have a Material Adverse Effect.
2.16 Title to Property; Leases.
(a) The Company does not own any real property, improvements
or fixtures and has no agreements or options to purchase or otherwise acquire an
interest in same.
(b) The Company has good and sufficient title to all material
property and assets which are not real property, reflected in the Balance Sheet
or acquired after the date thereof (except properties and assets sold or
otherwise disposed of since the date of the Balance Sheet in the ordinary
course of business, and except those that are leased, as to which it has valid
and enforceable leases), free and clear of all mortgages, liens, pledges,
charges or encumbrances of any kind or character, except (i) statutory liens
for real and personal property taxes (x) in an aggregate amount not exceeding
$5,000 and (y) not yet delinquent or payable subsequent to the date hereof;
(ii) existing statutory or common law liens securing the payment or performance
of any obligation of the Company in an aggregate amount not exceeding $5,000,
the payment or performance of which is not delinquent, or which are payable or
performable without interest or penalty subsequent to such date, or the
validity of which are being contested in good faith by the Company; (iii) the
rights of customers of the Company with respect to inventory or work in process
under orders or contracts entered into by the Company in the ordinary course of
business; (iv) such imperfections or irregularities of title, liens, easements,
charges or encumbrances as do not materially detract from or materially
interfere with the use of the properties or assets subject thereto, or affected
thereby, or otherwise materially impair business operations at such properties;
(v) such imperfections or irregularities of title, liens, easements, charges or
encumbrances as would not materially interfere with the sale of, or materially
detract from the aggregate value of, such properties and assets; and (vi) as
expressly disclosed on Schedule 2.16(b) or on the Balance Sheet. The Company's
material buildings, machinery and equipment reflected in the Balance Sheet are
in operating condition and repair (excepting normal wear and tear, defects the
cost of repairing which would not be material, any need for ordinary, routine
maintenance and repairs, and such as have been sold or otherwise disposed of
since the date of the Balance Sheet in the ordinary course of business).
(c) Set forth on Schedule 2.16(c) is a true and correct list of
each lease or occupancy agreement with respect to which the Company is the
tenant (collectively, the "Company Leases" and individually, a "Company Lease"),
which list sets forth the date of each such Company Lease and any amendment
thereto. The information set forth on Schedule 2.16(c) with respect to each
Company Lease is true and correct in all material respects. Each of the Company
Leases is in full force and effect and, except as expressly set forth on
Schedule 2.16(c), (i) no Company Lease has been modified, amended, cancelled or
terminated; (ii) neither the Company nor, to the knowledge of the Company and
each Seller, any other party to any Company Lease, is in material default of any
of its respective obligations thereunder; (iii) no notice has been given or
received by the lessee under any Company Lease, alleging a default by the
recipient of such notice or a claim or offset against the enforcement of such
recipient's rights under such Company Lease; and (iv) no consent or approval of
the lessor under any Company Lease or of any other party is required to permit
the transactions contemplated by this Agreement, and such transactions will not
conflict with, or result in any breach or violation of, or default under, any
Company Lease, entitle the lessor to cancel or terminate the same or otherwise
materially adversely affect the rights of the lessee thereunder. The copies of
the Company Leases that have heretofore been delivered or made available to
Buyer are true, complete and correct copies of the Company Leases and reflect
and constitute the entire agreement between the lessor and lessee thereunder
concerning the leasing of and/or occupancy of the premises or property covered
thereby.
(d) To the knowledge of the Company and each Seller,
Schedule 2.16 (d) lists of all existing computer software programs, products,
modules and components thereof that are used or held by the Company (the
"Software"). To the knowledge of the Company and each Seller, the Company
has the right to use the Software pursuant to valid license agreements entered
into with the owner of each Software package and the use of the Software by the
Company does not infringe on the rights of any other Person.
2.17 Insurance. All current primary, excess and umbrella policies of
insurance owned or held by or on behalf of, or providing insurance coverage to,
the Company are in full force and effect. With respect to all insurance
policies providing insurance coverage to the Company, no premiums are in
arrears, no notice of cancellation or termination has been received with respect
to any such policy, other than notices of cancellation or termination routinely
sent at the end of a policy term, and all such insurance policies are, to the
knowledge of the Company and each Seller, valid, outstanding, collectible and
enforceable policies.
2.18 Disclosure. No representation, warranty or statement of the
Company set forth herein (including the Schedules) or in any document, agreement
or instrument executed by the Company or any Seller in connection with the
Transactions contains or will contain any untrue statement of a material fact or
information.
2.19 Tax Matters.
(a) For purposes hereof, (i) "Taxes" shall mean all taxes,
assessments, charges, duties, fees, levies or other governmental charges
(including interest, penalties or additions associated therewith) (including
federal, state, city, county, local, foreign, or other income, franchise,
capital, withholding, real or tangible property, employment, unemployment
compensation, transfer, sales, use, excise and all other taxes of any kind)
imposed by the United States or any state, city, county, country or foreign
government or subdivision or agency thereof, whether disputed or not, and (ii)
"Actions" means any one or more acts, transactions, events, or omissions of
whatever nature.
(b) The Company has filed on a timely basis all returns and
reports, including all estimated returns and reports of every kind, and have
timely given all notices, in respect of Taxes required to be filed or given
under applicable law within the applicable statute of limitations period by any
of them. Such returns, reports and notices are complete and accurate in all
material respects. All Taxes shown on such returns or reports have been, and
all Taxes subsequently assessed with respect to the periods and or Actions to
which such returns or reports relate have been or will be, timely, and fully
paid except for amounts that the Company is contesting in good faith, as set
forth on Schedule 2.19. Except as set forth on Schedule 2.19, no extensions of
time to file such reports or returns or waivers of statutes of limitation have
been granted. The provisions in the May Financial Statements for Taxes
currently payable and for deferred Taxes are adequate in all material respects
to provide for such Taxes for which the Company may be liable in respect of
periods or Actions through the dates thereof. Such provisions do not assume the
availability of any loss carry forwards. Except for audits of the 1990 and 1991
income tax returns of the Company (with respect to which there were no material
changes in the amount of federal income tax owing or paid by the Company), the
federal income taxes of the Company have not been examined by the Internal
Revenue Service (the "IRS") in respect of the last five taxable years. No fact
or condition exists relating to any past or current Action except as set forth
on Schedule 2.19, which, if known to any tax authority having jurisdiction,
would likely result in a successful challenge by such authority of the treatment
or omission of such factor or condition on any tax return, report or notice of
the Company, and no issue has arisen in any examination of the Company by the
IRS that, in either case, if raised with respect to any other period not so
examined would result in a proposed material deficiency for any other period not
so examined, if upheld. The Company has made all payments of estimated Taxes
required to be made under Section 6655 of the Internal Revenue Code of 1986, as
amended (the "Code"), and any comparable provisions of state, local or foreign
law. All such amounts that are required to be remitted to any taxing authority
have been duly remitted, except for such amounts as the Company is contesting in
good faith as set forth on Schedule 2.19. Except as set forth on Schedule 2.19,
there is no pending nor, to the knowledge of the Company and each Seller,
threatened or contemplated action, audit, proceeding or investigation for the
assessment or collection of Taxes of the Company. Except as set forth on
Schedule 2.19, there are no requests for rulings, outstanding subpoenas or
requests for information with respect to Taxes of the Company, proposed
reassessments of any property owned or leased by the Company, or similar matters
pending with respect to any taxing authority. Except as set forth on Schedule
2.19, no power of attorney has been granted by the Company or any of its
Subsidiaries with respect to any matter relating to Taxes which is currently in
force. Any adjustment of Taxes of the Company made by the IRS in any
examination which is required to be reported to the appropriate state, local or
foreign taxing authorities has been reported and any additional amount due with
respect thereto has been paid except for amounts that the Company is contesting
in good faith, as set forth on Schedule 2.19.
(c) The Company has provided to Buyer copies of all material
revenue agent's reports, and other material written assertions of deficiencies
or other liabilities for Taxes, of the Company with respect to past periods for
which the limitations period has not run.
2.20 Employee Benefit Plans; Employees.
(a) All employee benefit plans or other material arrangements
under which or to which the Company contributes to or for the benefit of its
employees are accurately identified on Schedule 2.20. All such plans and
arrangements have been, and up to the Closing shall continue to be, maintained
in compliance in all material respects with, where applicable, the Employee
Retirement Income Security Act, as amended ("ERISA"), the Code, all federal and
state securities laws, all other applicable federal and state laws, and all
regulations and rulings issued by government agencies responsible for the
administration or enforcement of one or more such laws. To the knowledge of the
Company and each Seller, there is no current matter, including any matter
involving the administration and operation of such plans or arrangements, which
would either materially adversely affect the likelihood of any of such plans or
arrangements being deemed to be in compliance with the applicable provisions of
any such laws, regulations or rulings or impose any material liability upon the
Company with respect to such plans or arrangements. No such plan or
arrangement, nor any trust established thereunder, shall be amended or
terminated prior to the Closing, except as may be adopted as a condition to the
issuance of a favorable determination letter by the IRS, or as otherwise may be
required to comply with the requirements of applicable laws.
(b) Neither the Company, the employee benefit plans listed on
Schedule 2.20 nor any trustee or administrator of any such plan has engaged in a
transaction in connection with which the Company could be subject to either a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code.
(c) The employee retirement plans listed on Schedule 2.20 as
being tax-exempt (collectively the "Pension Plans"), at all times have qualified
as tax-exempt plans under Section 401 (a) of the Code, and the trusts which are
a part of such Pension Plans (collectively, the "Trusts") at all times have
qualified as tax-exempt trusts under Section 501(a) of the Code. All such
Pension Plans and Trusts shall continue to so qualify up to the Closing and
Sellers' Representative shall promptly notify Buyer if, at any time, any Seller
or the Company has knowledge or believes that any Pension Plan or Trust no
longer qualifies as such a tax-exempt plan or as such a tax-exempt trust.
(d) No liability to the Pension Benefits Guaranty Corporation
("PBGC") has been incurred, with respect to any Pension Plan, by the Company.
The Company has not received notice of the institution of proceedings by the
PBGC to terminate any Pension Plan. Included in the Schedule 2.20 is a true and
correct list of all notices of reportable events (within the meaning of Section
4043(b) of ERISA) which the Company has filed with the PBGC.
(e) The Company has not been a participating employer in any
"multi-employer" or "multiple employer" plans (within the meaning of Sections
4063 and 4064 of ERISA).
(f) The Company has delivered to Buyer a true and complete
list identifying each employee of the Company ("Employee"), each such
Employee's position with the Company and the salary and other compensation
currently payable to each such Employee.
2.21 Government Contracts.
(a) For purposes of this Agreement, "Government Contracts"
means with respect to any Person, any contract (including purchase orders,
blanket purchase orders and agreements and delivery orders) between such Person
and the United States Government or any department, agency, or instrumentality
thereof or any state or local governmental agency or authority (the
"Government"), and any subcontract at any tier held by such Person under a prime
government contract. The Company has delivered to Buyer all Government
Contracts to which the Company is a party. Except as otherwise specified on
Schedule 2.21(a), with respect to the Government Contracts to which the Company
is a party: (i) to the extent that the Government Contracts so provide, such
Government Contracts constitute valid and binding obligations of the Company,
and are enforceable in accordance with their terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization or similar laws or equitable
principles relating to creditors' rights generally; (ii) the Company is in
compliance in all material respects with the terms of all Government Contracts
to which it is a party and all laws, regulations, and contract provisions
applicable to the obtaining, formation, pricing, performance, billing,
administration, and other aspects of its Government Contracts, including
compliance in all material respects with the Truth in Negotiations Act (as
amended) and with all defective pricing, price reduction, or similar clauses
contained or incorporated in its Government Contracts, and the Company is in
compliance in all material respects with the False Claims Act (as amended), or
any similar applicable statutes or regulations concerning false claims,
false statements, defective pricing, misrepresentation, or procurement integrity
concerning any Government Contract, General Services Administration Multiple
Award Schedule or Supply Schedule, open market, commercial or other sale order
involving or pursuant to its Government Contracts, except to the extent that
noncompliance or violation will not have a Material Adverse Effect; (iii)
neither the Company nor any other party has terminated, canceled or waived any
material term or condition of any Government Contract, except to the extent that
such termination, cancellation or waiver will not have a Material Adverse
Effect; and (iv) the cost accounting, estimating, property, and procurement
system relating to the Company's Government Contracts are in compliance in all
respects with applicable laws, regulations, and contract provisions, including
applicable cost principles and applicable cost accounting standards, except to
the extent that such noncompliance will not have a Material Adverse Effect.
(b) In addition to the representations and warranties set forth in
Section 2.24, (i) each billed account receivable determined individually
represents a bona fide claim against the Government for sales, services
performed, or other charges arising on or prior to the date hereof, and all the
products delivered and services performed which gave rise to such accounts were
delivered or performed in accordance with applicable Government Contracts; and
(ii) all unbilled or unreserved amounts included in accounts receivable
determined individually will, in the ordinary course of business as currently
conducted and consistent with past practices, mature into and become billed
accounts receivable in the same or greater amount.
(c) Included in the May Financial Statements are all known or
anticipated cost overruns or contract disallowances with respect to all of the
Company's Government Contracts.
(d) Except for "Permitted Liens" which for purposes of this
Agreement shall mean liens securing obligations under the Company's existing
line of credit with Mercantile Bank and Trust Company and those liens made in
accordance with the Assignment of Claims Act (as amended), 31 U.S.C. sec. 3727,
and the Assignment of Contracts Act (as amended), 31 U.S.C. sec. 15, the Company
has not assigned or otherwise conveyed or transferred, or agreed to assign, to
any Person, any Government Contracts to which it is a party, or any account
receivable relating thereto, whether as a security interest or otherwise.
(e) The Company has not received (during the last three years)
any notice or other communication in any form from the Government regarding
its actual or threatened disqualification, suspension, or debarment from
contracting with the Government including any show cause notice or cure notice.
(f) Except as set forth on Schedule 2.21(f) or 2.9 there is no:
(i) pending or (to the knowledge of Sellers or the Company) threatened
investigation relating to any Government Contract to which the Company is a
party; (ii) existing or (to the knowledge of Sellers or the Company) threatened
claim, cost disallowance, pricing adjustment, or adverse audit financing
relating to any Government Contract to which the Company is a party, involving
an amount exceeding $10,000; or (iii) to the knowledge of the Company and each
Seller, termination for default or cure notice or show cause notice proposed or
currently in effect, relating to any Government Contract to which the Company is
a party, involving an amount exceeding $10,000.
2.22 Labor Matters. To the knowledge of the Company and each Seller,
the Company has complied in all material respects with the Occupational Safety
and Health Act, Fair Labor Standards Act, Service Contract Act, the regulations
promulgated under each of the preceding statutes and all other applicable
federal, state, local and foreign laws relating to the employment of labor,
including any provisions thereto relating to wages, bonuses, collective
bargaining, equal opportunity, equal pay and the payment of social security and
similar payroll taxes. No Employees are on strike nor have threatened to
strike. Except as previously disclosed to Buyer in writing and as set forth on
Schedule 2.22, no unfair labor practice charges are pending or, to the knowledge
of the Company and each Seller, are threatened or contemplated against the
Company.
2.23 Compliance with Applicable Laws. The Company is in compliance
with all foreign, federal, state or local laws, statutes, ordinances,
regulations, orders, decrees and judgments applicable to them, the enforcement
of which, if any one were not in compliance, have a Material Adverse Effect.
2.24 Accounts Receivable. Except as previously disclosed to Buyer in
writing and as set forth on Schedule 2.24, the accounts receivable reflected on
the Balance Sheet (or any accounts receivable sold by the Company on a recourse
basis) arose and will arise from bona fide transactions in the ordinary course
of business (except for amounts which are in the aggregate immaterial) and
neither the Company nor Sellers have any reason to believe that such receivable
will not be collected in full or be fully collectible at their face amounts
(less any applicable reserves reflected in the May Financial Statements or
thereafter established on a basis consistent with the reserves reflected on the
May Financial Statements) within 180 days after the Closing except (i) any fee
holdbacks and (ii) any receivables owed to the Company for which payments may be
delayed as a result of the potential closing of non-essential functions of the
U. S. Government after September 30, 1995, due to a failure to enact U. S.
Government funding appropriations affecting such payments.
2.25 Powers of Attorney. Schedule 2.25 lists all Persons holding powers
odf attorney for the Company or, with respect to his position as an officer,
for any officer of the Company.
2.26 Notification of Breaches. The Company shall notify Buyer
immediately upon discovering any inaccuracy or breach of any of the Company's
representations, warranties, covenants and agreements in this Agreement.
Section 3
Representations and Warranties of Sellers
To induce Buyer to enter into and perform under this Agreement, each
Seller hereby represents and warrants to Buyer, as of the date hereof, as
follows:
3.1 Share Ownership. Such Seller owns all of the Shares set opposite
his name on Schedule 1.1 and is the exclusive record and beneficial owner of
such Shares.
3.2 Authorization. Such Seller has full power and authority to enter
into this Agreement and to carry out the Transactions. No other action by or on
behalf of Seller is necessary to authorize and approve this Agreement and the
Transactions, and this Agreement has been duly executed and delivered by, and
is the legal, valid and binding obligation of, Seller, enforceable against
Seller in accordance with its terms and conditions.
3.3 Title to Common Stock. Good and valid title to Shares to be sold
by such Seller to Buyer hereunder, free and clear of any claim, interest,
restriction, mortgage, pledge, lien or security interest will be transferred to
Buyer at the Closing.
3.4 Brokers and Finders. Such Seller has not engaged, or caused to be
incurred any liability to, any finder, broker or sales agent in connection with
the execution, delivery or performance of this Agreement or the Transactions.
3.5 No Violation. Such Seller is not subject to or obligated under any
law, rule or regulation of any governmental authority, or any order, writ,
injunction or decree, or any agreement, instrument, license, franchise or
permit, which would be breached or violated by Seller's execution, delivery and
performance hereof and the consummation of the Transactions. The execution and
delivery of this Agreement by such Seller and the consummation of the
Transactions do not and will not conflict with or result in a breach or
violation of (i) any obligation under any mortgage, lease, agreement or
instrument applicable to such Seller or such Seller's Shares or (ii) any law,
rule, regulation, judgment, order or decree of any government, governmental or
regulatory authority or court having jurisdiction over Seller or such Seller's
Shares. In connection with the offer of the Shares by Seller to Buyer, no form
of general solicitation or general advertising was used by Sellers or the
Company or any representatives of Seller or the Company, including
advertisements, articles, notices or other communications published in any news
paper, magazine or similar medium or broadcast over television or radio, or any
seminar or meeting whose attendees had been invited by any general solicitation
or general advertising.
3.6 Notification of Breaches. Sellers shall notify Buyer immediately
upon discovering any inaccuracy or breach of any of Sellers' or the Company's
representations, warranties, covenants and agreements in this Agreement.
Section 4
Buyer's Representations and Warranties
To induce each Seller to enter into and perform under this Agreement,
Buyer hereby represents and warrants to each Seller, as of the date hereof, as
follows:
4.1 Corporate Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Buyer has full corporate power and authority to carry on its business as it is
now being conducted and to own the properties and assets it now owns.
4.2 Authorization. Buyer has full corporate power and authority to
enter into this Agreement and to carry out the Transactions. Buyer's board of
directors ("Buyer's Board") has duly authorized and approved the execution and
delivery of this Agreement and the Transactions; and no other corporate
proceedings on Buyer's part are necessary to authorize and approve this
Agreement and the Transactions. This Agreement is a legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms and
conditions, except as enforcement may be limited by the Exceptions.
4.3 No Violation. The execution, delivery and performance of this
Agreement by Buyer and the consummation of the Transactions do not and will
not conflict with, result in a breach or violation of, or a default under
(i) Buyer's certificate of incorporation or bylaws, (ii) any obligation under
any mortgage, lease, agreement or instrument applicable to Buyer or any of its
properties or (iii) any law, rule, regulation, judgment, order or decree of any
Governmental Entity having jurisdiction over Buyer or any of its properties,
except in the case of clauses (ii) and (iii) where such conflict, breach,
violation or default would not have a material adverse effect on Buyer's
business, properties or financial condition. Buyer has complied in all material
respects with all applicable laws, and with all applicable rules and regulations
of any Governmental Entity, in connection with Buyer's execution, delivery and
performance of this Agreement and the consummation of the Transactions.
4.4 Governmental Authorities. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Buyer in connection with the execution
and delivery of this Agreement or the consummation of the Transactions, except
for (i) such disclosures, filings, statements and reports under the Securities
Exchange Act of 1934, as amended, as may be required in connection with this
Agreement and the Transactions to be filed with the Securities and Exchange
Commission, and (ii) such other consents, authorizations, filings, approvals
and registrations which if not obtained or made would not have a material
adverse effect on Buyer's ability to consummate the Transactions.
4.5 Investment Representation. Buyer is acquiring the Shares hereunder
for its own account for investment, and not with a view to, or for resale in
connection with, any distribution thereof within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"); provided, however, that the
foregoing shall not restrict any resale or distribution made in compliance with
applicable securities laws. Buyer understands that the Shares have not been
registered under the Securities Act or any blue sky or other state securities
law or regulation (hereinafter collectively referred to as "blue sky laws") in
reliance, in part, upon the representations, warranties and covenants contained
herein. Buyer also understands that it cannot offer for sale, sell or transfer
the Shares unless such offer, sale or transfer thereof has been registered under
the Securities Act and under any applicable blue sky laws or unless an exemption
from such registration is available with respect to any such proposed offer,
sale or transfer.
4.6 Notification of Breaches. Buyer shall notify the Company
immediately upon discovering any inaccuracy or breach of any of Buyer's
representations, warranties, covenants and agreements in this Agreement.
Section 5
Tax Elections
(a) Upon Buyer's request, Sellers agree to join with Buyer in
making a timely election under Section 338(h)(10) of the Code (and any
corresponding elections under state or local law) with respect to the purchase
and sale of the Shares hereunder (the "Election") and Buyer has certified, in
writing, to Sellers the tax reimbursement to Sellers caused by the Election and
Sellers have approved said certification under Section 9.7(b). Sellers, the
Company and Buyer shall timely file all forms necessary to effectuate such
Election. Except as provided for in Section 9.7, Buyer shall have no obligation
to Sellers for any Taxes imposed on Sellers as a result of such Election or the
sale of the Shares. Buyer and Sellers agree that the Purchase Price and the li
abilities of the Company (and any other amounts required to be included as
purchase consideration under applicable regulations) will be allocated among the
assets of the Company for all purposes in a manner consistent with a schedule of
the fair market values of such assets as agreed to by Buyer and the Primary
Sellers in conformity with the regulations promulgated under Section 338(h)(10)
of the Code. Buyer, the Company and Sellers shall file all tax returns in a
manner consistent with such allocations.
(b) Sellers shall cause to be prepared on a timely basis all
federal, state and local income tax returns for the Company, for the period
beginning December 1, 1994 and ending on the Closing Date. Such returns shall
be delivered in draft form to the Company and Buyer for review at least 10
business days prior to their due dates, and such returns shall not be filed
without the consent of the Company and Buyer, which consent shall not be
unreasonably withheld. Subject to compliance with all applicable tax laws,
Sellers, Buyer, and the Company agree that such returns shall be prepared in a
manner consistent with the Company's returns for all taxable periods beginning
before the Closing Date and that such returns shall include all income and
deductions incurred during the period ending on the Closing Date under the
Company's historical accounting methods for federal income tax purposes. The
cost of any tax return(s) for the period prior to the Closing Date required as a
result of the Election and any supplemental filings or information required with
respect to the said tax return(s) shall be paid by Buyer and the said returns
and supplemental filings shall be prepared and filed by Buyer and its
accountants.
Section 6
[ Intentionally Blank ]
Section 7
[ Intentionally Blank ]
Section 8
[ Intentionally Blank ]
Section 9
Indemnification
9.1 Indemnification by Sellers. Subject to the limitations hereinafter
set forth, each Seller hereby, jointly and severally, indemnifies, defends and
holds harmless Buyer, its permitted successors and assigns (collectively, the
"Indemnified Buyers") from and against, and shall reimburse each of the
Indemnified Buyers for, all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and expenses, including
interest, penalties, court costs and reasonable attorneys' fees and expenses,
asserted against, resulting to, imposed upon or incurred by any of the
Indemnified Buyers, directly or indirectly, with respect to any
misrepresentation or breach by the Company or any Seller of any representation,
warranty, undertaking or covenant of the Company or any Seller contained herein.
Notwithstanding this provision, Buyer shall use its best efforts to mitigate
Sellers' liability under this Section 9 (or subsequent recovery on behalf of
Sellers with remittance to Sellers).
9.2 Indemnification by Buyer. Subject to the limitations hereinafter set
forth, Buyer hereby indemnifies, defends and holds harmless Sellers and their
permitted successors and assigns (collectively, the "Indemnified Sellers") from
and against, and shall reimburse each of the Indemnified Sellers for, all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including interest, penalties, court costs and
reasonable attorneys' fees and expenses, asserted against, resulting to, imposed
upon or incurred by any of the Indemnified Sellers, directly or indirectly, with
respect to any misrepresentation or breach by Buyer of any representation,
warranty, undertaking or covenant of Buyer contained herein.
9.3 Claims by Third Parties. An Indemnified Buyer or an Indemnified
Seller, as the case may be, (the "Indemnitee") shall give Buyer or Sellers'
Representative, as the case may be, (the "Indemnifying Party") notice of any
claim or the commencement of any action or proceeding for which such Indemnitee
seeks indemnification, and such Indemnitee shall permit the Indemnifying Party
to assume the defense of any claim or any litigation resulting from such claim
with counsel reasonably satisfactory to the Indemnitee. The failure by any
Indemnitee to give an Indemnifying Party timely notice shall not preclude any
Indemnitee from seeking indemnification from any Indemnifying Party except to
the extent that such failure has materially prejudiced the Indemnifying Party's
ability to defend the claim or litigation. No Indemnifying Party shall settle
any claim for which any Indemnitee seeks indemnification in respect of an
indemnifiable claim hereunder or consent to entry of any judgment in litigation
arising from such a claim without obtaining a release of each Indemnitee from
all liability in respect of such claim or litigation. If an Indemnifying Party
shall not assume the defense of any such claim or litigation resulting
therefrom, or if injunctive relief is sought against an Indemnitee, the
Indemnitee may, but shall have no obligation to, defend against or settle such
claim or litigation in such manner as it may deem appropriate. If an
Indemnifying Party fails to assume, litigate or settle fully any claim or any
litigation arising from any claim under this Section 9.3, the Indemnifying Party
shall promptly reimburse each Indemnitee for the amount of all expenses, legal
or otherwise, incurred by such Indemnitee in connection with the defense against
or settlement of such claim or litigation. Furthermore, if no settlement of the
claim or litigation is made, or if litigation is not defended, the Indemnifying
Party shall promptly reimburse each Indemnitee for the amount of any judgment
rendered with respect to such claim or in such litigation and of all expenses,
legal and otherwise, incurred by each Indemnitee, in the defense against such
claim or litigation.
9.4 Monetary Limitation of Claim. Except in respect of Section 1.4(d),
no claim may be made against the Indemnifying Party for indemnification
pursuant to this Section 9 with respect to any individual item of liability or
damage, unless such claim or claims exceed $25,000 in the aggregate, in which
case the claim or claims may include the first $25,000.
9.5 Limitation of Claim against Sellers. Notwithstanding any other
provision in this Agreement, if a successful claim for indemnification is made
against Sellers pursuant to this Section 9, and, after the Escrow Deposit has
been fully applied to the said claim, any portion of the said claim remains
outstanding (the "Remaining Claim"), the individual liability of any Seller to
pay the Remaining Claim shall be limited to the aggregate amount of all Purchase
Price payments paid or payable to such Seller hereunder.
9.6 Escrow Deposit. Subject to the Escrow Agreement, any claim
pursuant to which Buyer is entitled to indemnification under this Section 9
shall first be satisfied from the Escrow Deposit as provided in the Escrow
Agreement to the extent there are funds remaining in said Escrow Deposit, prior
to proceeding against Sellers.
9.7 Tax Election Indemnification.
(a) If an additional federal, state or local income tax liability for
any Seller is created by the Election, Buyer will reimburse each such Seller for
any such additional tax liability and for the cost to determine the additional
tax.
(b) The procedures to determine and reimburse each Seller for the
additional taxes due to the Election are as follows:
(i) Sellers will cause to be prepared their own 1995
personal income tax returns, at their own cost, based
on a share acquisition (non Section 338 election).
To the extent possible, these returns will be prepared
by April 1, 1996, and submitted to Arthur Andersen
L.L.P.
(ii) Arthur Andersen L.L.P. will make a determination
as to the tax differences applicable to each Seller
caused by the Election, based on the Section 338
asset sale using the K-1's from the Company's final
S Corporation return. Arthur Andersen L.L.P. will
inform each Seller of any revised tax liability.
(iii) Once each affected Seller is in agreement with the
proposed revised tax return recommended by Arthur
Andersen L.L.P., Buyer will reimburse such Seller
within five days of agreement for the additional tax
liability caused by the Election.
(c) Each Seller will minimize any interest and/or underpayment
penalties associated with the Election by using their prior year tax as a basis
for making 1995 estimated tax payments. However, if any interest and/or
underpayment penalties are incurred as a direct result of the Election, Buyer
will immediately reimburse Seller for the interest and/or penalties associated
with the additional tax caused by the Election.
(d) Any subsequent costs associated with an audit of or preparation
of revisions to the Seller's individual 1995 federal, state and local income tax
return to the extent such costs were caused by the Election will be reimbursed
by Buyer. These costs include any additional tax applicable, interest and/or
penalties, and any reasonable accounting or legal fees.
(e) The reimbursement to each Seller of the additional tax caused
by the Election will create taxable income to Seller in 1996. A 1099 Misc or
appropriate form will be issued by the Company for this reimbursement. Buyer
agrees to increase the reimbursement for the added 1996 personal income taxes by
grossing up the additional individual tax computed by Arthur Andersen L.L.P. and
the reimbursement.
20
9.8 Set-off. Subject to Sections 9.4 and 9.6, if Buyer is entitled to
indemnification pursuant to this Section 9, Buyer in its sole discretion, and
upon notice to any Seller may elect to set-off any amount payable by Buyer to
any Seller, hereunder including the Contingent Payments against any amount for
which Buyer is entitled to indemnification under this Section 9 or any other
amount payable by Sellers to Buyer, provided that Buyer shall be indemnified in
the manner provided in this Section 9 for any amount for which it is entitled to
indemnification which is not covered by such set-off.
9.9 Indemnification as Sole Remedy. The right of indemnification
under this Section 9 shall be the sole and exclusive remedy of any of the
parties hereto with respect to any breach, nonperformance, inaccuracy or
misrepresentation by any other party of any warranty, representation, covenant
or agreement contained in this Agreement or in any Schedule, certificate,
agreement, document, instrument or statement delivered pursuant hereto and in
respect of any other claims subject to indemnification under this Section 9.
Section 10
Miscellaneous
10.1 Collateral Agreements, Amendments and Waivers. This Agreement,
which includes the Schedules, together with the documents delivered pursuant
hereto, supersedes all prior documents, understandings and agreements, oral or
written, relating to the Transactions and constitutes the entire understanding
between the parties with respect to the subject matter hereof. Any modification
or amendment to, or waiver of, any provision of this Agreement may be made
only by an instrument in writing executed by the party against whom enforcement
thereof is sought.
10.2 Successors and Assigns. Neither Buyer's nor the Company's nor
Sellers' rights or obligations hereunder may be assigned. Any assignment in
violation of the foregoing shall be null and void. Subject to the preceding
sentences of this Section 10.2, the provisions of this Agreement (and, unless
otherwise expressly provided therein, of any document delivered pursuant to this
Agreement) shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
10.3 Expenses. Each party shall pay all costs and expenses incurred by
it in connection with the negotiation, execution and delivery of this Agreement,
whether or not the Transactions are consummated.
10.4 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws, then, if
possible, such illegal, invalid or unenforceable provision will be modified to
such extent as is necessary to comply with such present or future laws and such
modification shall not affect any other provision hereof, provided that if such
provision may not be so modified such illegality, invalidity or unenforceability
will not affect any other provision, but this Agreement will be reformed,
construed and enforced as if such invalid, illegal or unenforceable provision
had never been contained herein.
10.5 Notices. Any notices, approvals, consents, waivers or other
communications required or permitted to be given hereunder (and, unless
otherwise expressly provided therein, under any document delivered pursuant
hereto) shall be given in writing and, subject to the terms thereof, shall be
deemed to have been conclusively given: (a) on the first business day following
the day timely deposited with Federal Express (or other equivalent national
overnight courier), with the cost of delivery prepaid, to the relevant party at
its address indicated below; (b) on the third business day following the day
duly sent by certified or registered United States mail, postage prepaid and
return receipt requested, to the relevant party at its address indicated below;
or (c) when otherwise actually delivered to the addressee:
Buyer: VSE Corporation
2550 Huntington Avenue
Alexandria, Virginia 22303-1499
Attn: Treasurer
With a copy to: Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Ave., N.W.
Washington, D.C. 20036-5339
Attn: Carter Strong, Esq.
The Company: Energetics Incorporated
7154 Gateway Drive
Columbia, Maryland 21046
Attn: President
Sellers: Thomas S. Bustard
11205 Shadowmere Mews
Columbia, Maryland 21044
or
Jay Leikin
Unit No. 603
2 High Stepper Court
Pikesville, Maryland 21208
With a copy to: Levin & Gann
2 Hopkins Plaza
Baltimore, Maryland 21201
Attn: Stanford G. Gann, Esq.
Each party may change its address for purposes of this Section 10.5 by proper
notice to the other party in accordance with this Section 10.5.
10.6 Survival of Representations, Warranties and Agreements. All
representations, warranties and covenants, agreements and obligations in this
Agreement or in any certificate required to be delivered by this Agreement shall
survive the Closing until the second anniversary of the Closing Date except that
(i) any covenant, agreement or obligation to be performed after the Closing Date
shall survive until such covenant, agreement or obligation has been fully
performed, (ii) the representations and warranties contained in Sections 2.2 and
2.3 shall survive indefinitely, (iii) the representations and warranties
contained in Sections 2.16 and 2.19 shall survive until the fourth anniversary
of the Closing Date and (iv) the Election indemnification contained in Section
9.7 shall survive until the expiration of the applicable statute of limitations.
Notwithstanding the first sentence of this Section 10.6, any representation,
warranty or covenant, agreement or obligation in respect of which indemnity may
be sought shall survive the time at which it would otherwise terminate pursuant
to this Agreement, if notice of the specific breach of the representation,
warranty, covenant, agreement or obligation giving rise to such indemnity shall
have been given under Section 9 prior to such time; provided, however, that such
representation, warranty, covenant, agreement or obligation shall survive only
with respect to the specific breach specified in such notice. No claim for
indemnification under Section 9 hereunder shall be valid nor shall any action in
respect thereof be maintained unless asserted in writing prior to the expiration
of such period of survival in the manner referred to in the immediately
preceding sentence.
10.7 Specific Performance. The parties hereto agree that irreparable
damage would occur if any of provisions of this Agreement were not to be
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity, without any need to post any bond or other security.
10.8 Attorneys' Fees. If any action is instituted by any party or parties
hereto arising under this Agreement, the prevailing party or parties shall be
entitled to recover from the losing party or parties all of its costs and
expenses, including reasonable attorneys' fees, in addition to any other
available remedy.
10.9 Public Announcement. Prior to Closing, neither the Company,
Sellers nor Buyer shall issue or cause the publication of any press release or
other public announcement with respect to the Transactions without the consent
of Buyer or the Company, as the case may be, which consent shall not be
unreasonably withheld, provided that Buyer may issue such press releases or
public announcements as shall be determined appropriate to comply with
applicable law.
10.10 No Third-Party Beneficiaries. No person or entity not a
party to this Agreement shall be deemed to be a third-party beneficiary
hereunder or entitled to any rights hereunder.
10.11 Construction.
(a) The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
(b) As used herein, the neuter gender shall also be deemed to
denote both the masculine and feminine genders. Words such as "herein" and
"hereof" shall be deemed to refer to this Agreement as a whole and not to any
particular provision of this Agreement.
(c) All references herein to Sections shall be deemed to refer to
sections of this Agreement; all references herein to Schedules shall be deemed
to refer to schedules hereto, unless specified to the contrary.
(d) As used herein, "including" means including but not limited
to.
10.12 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the law (other than the law governing
conflict of law questions) of the State of Delaware. Any action to enforce,
arising out of, or relating in any way to, any of the provisions of this
Agreement may be brought and prosecuted in United States District Court for the
District of Maryland, Northern Division, and the parties consent to any
proceeding arising from this Agreement being brought in that forum, and to
service of process by registered mail, return receipt requested, or by any other
manner provided by law.
10.13 Counterparts. This Agreement may be executed in two or
more counterparts, each of which may be executed by one or more of the parties
hereto, but all of which, when taken together, shall constitute but one
agreement binding upon all of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of date first above written.
ENERGETICS INCORPORATED
By: Thomas S. Bustard
Name: Thomas S. Bustard
Title: President
<PAGE>
VSE CORPORATION
By: Donald M. Ervine
Name: Donald M. Ervine
Title: Chairman of the Board
and Chief Executive Officer
THOMAS S. BUSTARD
THOMAS S. BUSTARD
JAMES E. REED
JAMES E. REED
HOWARD E. LOWITT
HOWARD E. LOWITT
JAY LEIKIN
JAY LEIKIN
RENE B. ABARCAR
RENE B. ABARCAR
