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 (Date of earliest event reported): May 31, 1996
-----------------------
NICHOLS RESEARCH CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-15295 63-0713665
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(State or other jurisdiction (Commission File Number) IRS Employer
of incorporation) Identification No.
4040 South Memorial Parkway, Huntsville, Alabama 35802-1326
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(Address, including zip code, of principal executive office)
(205) 883-1140
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 31, 1996, Nichols Research Corporation ("NRC") entered into a
Stock Purchase Agreement (the "Agreement") and purchased all of the issued and
outstanding capital stock of Advanced Marine Enterprises, Inc., a Virginia
corporation ("AME"), from the shareholders of AME pursuant to that Agreement.
The AME shares were purchased for $16,500,000 ($20,000,000 pre-divided
purchase price less a $3,500,000 adjustment for dividends paid by AME prior to
the closing and pursuant to the Agreement (the "Purchase Price"). The Purchase
Price was allocated among AME's shareholders in accordance with their
respective interests in AME. The Purchase Price was paid in cash, except that
the portion of the Purchase Price allocated to the four (4) shareholders of
AME owning more than 85% of the AME shares was paid partly in cash and partly
by delivery to them of 72,044 shares of NRC's $.01 par value common stock (the
"NRC Common Stock"). The NRC Common Stock was allocated among these four (4)
shareholders based on their respective portion of the total AME shares held by
them. The $16,500,000 Purchase Price, as well as the specific number of shares
of NRC Common Stock delivered to the four (4) AME shareholders pursuant to
the Agreement was determined by negotiations between the parties, and not by
any formula or other objective method.
The Purchase Price is based on a Base Book Value of AME of $4,000,000
($7,500,000 pre-divided book value less a $3,500,000 adjustment for dividends
paid by AME prior to the closing and pursuant to the Agreement). If AME's
Actual Book Value as of May 31, 1996, is greater or less than Base Book Value,
the Purchase Price will be increased or decreased by the same dollar amount
as the difference and will be a post closing adjustment to the consideration
paid at closing. Actual Book Value will be the amount of AME's net assets
less liabilities per the balance sheet of AME at May 31, 1996. At closing,
NRC and the shareholders of AME also entered into an Escrow Agreement. From
the cash paid at closing, the AME shareholders placed $2,700,000 in escrow
until May 31, 1998, to apply against any Base Book Value decrease, and any
indemnficiation obligations that arise under the Agreement before the escrow
termination date. If it is determined that AME's Actual Book Value has
exceeded the Base Book Value, the increase in consideration will be paid in
cash by NRC within 30 days of receipt and acceptance of AME's audited balance
sheet at May 31, 1996.
Pursuant to the Agreement, NRC and the four (4) AME shareholders
receiving NRC Common Stock (the "Investors") entered into a Registration
Agreement. The Registration Agreement provides that the Investors, upon
meeting certain conditions, may demand that NRC register the NRC Common Stock
held by the Investors pursuant to a registration statement filed under the
Securities Act of 1933. The Registration Agreement also states that in the
event NRC determines to file a registration statement registering any of its
common stock under the Securities Act of 1933, then NRC will permit the
Investors to include their shares in that offering and registration statement
upon meeting certain conditions.
At closing, John T. Drewry and Otto P. Jons entered into Employment
Agreements with AME. Pursuant to those Employment Agreements, John T. Drewry
will serve as President and Chief Operating Officer of AME for a five (5) year
term, and Otto P. Jons shall serve as Executive Vice President of AME for a
five (5) year term. In addition to provisions governing the salary,
performance bonuses and incentive payments to be paid to Mr. Drewry and Mr.
Jons, the Employment Agreements contain provisions concerning payments to be
paid by AME or the employee in the event of the employee's termination of
employment with AME. The Employment Agreements also contain a covenant not to
compete, a nonsolicitation agreement and an agreement not to disclose
confidential information of AME.
The cash used to acquire the AME shares was borrowed by NRC under an
existing credit agreement between NRC, SouthTrust Bank of Alabama, N.A., First
Alabama Bank, and Corestates Bank, N.A.
The 72,044 shares of NRC Common Stock owned by the four (4) AME
shareholders represent approximately 1.1% of the NRC common stock issued and
outstanding.
As a result of the purchase, NRC currently owns 100% of the outstand-
ing shares of AME. AME provides naval and marine architectural and
engineering services, including the development and support of analytic
software systems, modeling and simulation services and simulator systems,
to the Department of Navy and other customers.
For additional information regarding the Agreement, the Registration
Agreement, the Escrow Agreement, and the Employment Agreements, please refer to
the copies of those documents which are incorporated herein by reference and
included as Exhibits to this Current Report on Form 8-K. The foregoing
discussion is qualified in its entirety by reference to such documents.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
As of the date of filing of this Current Report on Form 8-K, it
is impracticable for NRC to provide the financial statements required by this
Item 7(a). In accordance with Item 7(a)(4) of Form 8-K, such financial
statements shall be filed by amendment to this Form 8-K no later than
60 days after June 15, 1996.
(b) Pro Forma Financial Information.
As of the date of filing of this Current Report on Form 8-K, it is
impracticable for NRC to provide the pro forma financial information required
by this Item 7(b). In accordance with Item 7(b) of Form 8-K, such financial
statements shall be filed by amendment to this Form 8-K no later than 60 days
after June 15, 1996.
(c) Exhibits.
The Exhibits to this Report are listed in the Exhibit Index set forth
elsewhere herein.
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SIGNATURE
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 hereunto duly authorized.
NICHOLS RESEARCH CORPORATION
(Registrant)
By: Chris H. Horgen
--------------------------------
Chris H. Horgen
Chief Executive Officer and
Chairman of the Board
Date: June 13, 1996
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INDEX TO EXHIBITS
-----------------
Exhibit
No. Description
- ------- -----------
2.1 Stock Purchase Agreement
2.2 Escrow Agreement
2.3 John T. Drewry Employment Agreement
2.4 Otto P. Jons Employment Agreement
2.5 Registration Agreement
2.6 Financial Data Schedule - To be filed by Amendment.
99.1 Text of Press Release dated May 31, 1996, issued by Nichols
Research Corporation
99.2 Financial Statements of Advance Marine Enterprises, Inc. - To
be filed by Amendment.
99.3 Pro Forma Financial Information of Advanced Marine Enterprises, Inc. -
To be filed by Amendment.
STOCK PURCHASE AGREEMENT
===================================================
NICHOLS RESEARCH CORPORATION
AND
SERIES A SHAREHOLDERS AND SERIES B SHAREHOLDERS
OF
ADVANCED MARINE ENTERPRISES, INC.
===================================================
DATED: MAY 31, 1996
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I N D E X
SECTION 1 - Purchase and Sale .............................2
1.1 Purchase of Stock ....................................2
1.2 [Intentionally Omitted] ..............................2
1.3 Purchase Price .......................................2
1.4 Closing; Closing Date ................................2
1.5 Deliveries and Proceedings at the Closing ............2
1.5.1 Deliveries by Shareholders .................2
1.5.2 [Intentionally Omitted] ....................2
1.5.3 Deliveries by NRC ..........................2
1.5.4 Other Deliveries ...........................3
1.6 Payment of Certain Taxes .............................3
1.7 Adjustment of Purchase Price .........................3
1.7.1 Closing Balance Sheet ......................3
1.7.2 Closing Balance Sheet Payments .............3
1.7.5 Rights Not Affected ........................4
SECTION 2 - Representations and Warranties of
Series B Shareholders.................................4
2.1 Authorized and Outstanding Common Stock ..............4
2.2 Organization and Standing ............................5
2.3 No Violation .........................................5
2.4 Financial Statements .................................6
2.5 Liabilities ..........................................6
2.6 Accounts Receivable ..................................6
2.7 Fixed Assets and Inventory ...........................7
2.8 Contracts ............................................7
2.9 Corporate Actions ....................................8
2.10 Intellectual Property Rights .........................8
2.11 Insurance Policies ...................................9
2.12 Backlog ..............................................9
2.13 Compensation .........................................9
2.14 Employee Benefits ...................................10
2.15 Environmental Matters ...............................11
2.16 Labor and Employment Matters ........................13
2.17 Title to Assets, Liens and Encumbrances .............14
2.18 Customer Claims and Complaints ......................15
2.19 Secrecy and Non-Competition Agreements ..............16
2.20 Governmental Approvals ..............................16
2.21 Orders, Decrees, Etc ................................16
2.22 Compliance with the Law .............................16
2.23 Actions Not in Ordinary Course and
No Material Change...................................17
2.24 Litigation and Compliances ..........................19
2.25 Taxes and Tax Returns ...............................19
2.26 Bank Accounts .......................................21
2.27 Disclosure ..........................................21
2.28 Proprietary Rights ..................................21
2.29 Software and Information Systems ....................22
2.30 Material Commitments ................................23
2.31 Estoppel Provisions .................................24
2.32 Change in Shareholdings .............................24
2.33 Transactions With Affiliates and Related Parties ....24
2.34 Brokers and Finders .................................24
SECTION 3 - Representations and Warranties of
Series A Shareholders................................24
3.1 Authority ...........................................24
3.2 Ownership ...........................................25
3.3 Surrender to NRC ....................................25
3.4 Enforceability ......................................25
3.5 No Consent ..........................................25
3.6 Estoppel Provisions .................................25
3.7 Representations and Warranties Incorporated by
Reference........................................... 25
SECTION 4 - Representations and Warranties of NRC ........26
4.1 Organization and Standing ...........................26
4.2 Authorization .......................................26
4.3 No Violation ........................................26
4.4 Brokers or Finders ..................................26
4.5 Investment Intent ...................................26
4.6 Disclosure ..........................................27
4.7 Secret Clearance ....................................27
4.8 Disclosure Documents ................................27
SECTION 5 - Examination of the Business ..................27
SECTION 6 - Conditions to the obligations of NRC .........27
6.1 No Inaccuracies .....................................28
6.2 Compliance ..........................................28
6.3 Delivery of Documents ...............................28
6.4 Opinion of Counsel ..................................28
6.5 Resignation .........................................28
6.6 Consents ............................................28
6.7 Employment Agreement ................................29
6.8 Covenant Not to Compete .............................29
6.9 UCC Searches ........................................29
6.10 No Adverse Change ...................................29
6.11 No Interference .....................................29
6.12 FTC Approval ........................................29
6.13 Form 8023-A .........................................30
6.14 Registration Agreement ..............................30
6.15 Cooperation .........................................30
SECTION 7 - Conditions to the Obligations of the
Shareholders.........................................30
7.1 No Inaccuracies .....................................30
7.2 Compliance ..........................................30
7.3 Delivery of Documents ...............................31
7.4 Opinion of Counsel ..................................31
7.5 Employment Agreement ................................31
7.6 Covenant Not to Compete .............................31
7.7 Registration Agreement ..............................31
7.8 FTC Approval ........................................31
7.9 Cooperation .........................................31
7.10 No Adverse Change ...................................31
7.11 No Interference .....................................31
7.12 Consents ............................................32
SECTION 8 - Certain Additional Covenants of the Parties ..32
8.1 Conduct of Business .................................32
8.2 Preservation of Business and Goodwill ...............32
8.3 Notification of Proceedings .........................32
8.4 Use of "AME" Name ...................................32
8.5 Records .............................................33
8.6 Further Assurances; Cooperation .....................33
8.7 Employee Benefit Plans ..............................33
8.7.1 Employee Retirement Benefit Plans .........33
8.7.2 Termination of Plans ......................34
SECTION 9 - Indemnification ..............................34
9.1 Definition ..........................................34
9.2 Indemnification by Shareholders .....................34
9.3 Indemnification by NRC ..............................35
9.4 Procedure for Indemnification .......................35
9.5 Escrow ..............................................36
SECTION 10 - Survival of Representations and Warranties ..37
SECTION 11 - Access to Information and Confidentiality ...37
SECTION 12 - Press Releases ..............................38
SECTION 13 - Further Assurances ..........................38
SECTION 14 - Successors and Assigns ......................38
SECTION 15 - Notices .....................................39
SECTION 16 - Applicable Law; Dispute Resolution ..........39
SECTION 17 - Headings and Construction ...................40
SECTION 18 - Waivers and Amendments ......................40
SECTION 19 - Third Party Rights ..........................40
SECTION 20 - Expenses ....................................41
SECTION 21 - Illegality ..................................41
SECTION 22 - Entire Agreement ............................41
SECTION 23 - Counterparts ................................41
SECTION 24 - Shareholders' Representative ................41
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into on this the
31st day of May, 1996, by and among:
Nichols Research Corporation, a Delaware corporation ("NRC");
Raymond J. Rockwell, Jr., Mary D. Mahler, Lewis R. Sheldon,
Barbara S. Lamade, Frederic S. Hering, Stephen R. Leavy, Geoffrey
D. Fuller, Robert M. Mallard, Gary M. Poquette, Barry L.
Batchelor, Patrick W. Brawley, Kenneth A. Randell, and David A.
Helgerson, Dennis F. Breen, F. Patrick Dougherty, Eugene R.
Miller, Jr., Brian R. Hill, and Peter B. Zahn ("Series A
Shareholders"); and
Simon Glatz, Simon Glatz as Trustee of the Second Amended &
Restated Simon Glatz Revocable Trust, John T. Drewry, Otto P.
Jons, Rifka Glatz and Irving P. Cohen as Trustees of the Corey T.
Glatz Generation Skipping Trust, Rifka Glatz and Irving P. Cohen
as Trustees of the Corey T. Glatz Residuary Trust, Rifka Glatz
and Irving P. Cohen as Trustees of the Terrance A. Glatz
Generation Skipping Trust, Rifka Glatz and Irving P. Cohen as
Trustees of the Terrance A. Glatz Residuary Trust ("Series B
Shareholders").
Series A Shareholders and Series B Shareholders are collectively herein
referred to as the "Shareholders." The Shareholders own all of the issued
and outstanding capital stock of Advanced Marine Enterprises, Inc., a
Virginia corporation ("AME"). AME is engaged principally in providing
naval and marine architectural and engineering services, including the
development and support of analytic software systems, modeling and
simulation services and simulator systems, to the Department of Navy and
other customers (the "AME Business"). NRC is engaged principally in the
information technology business. The Shareholders desire to sell and NRC
desires to purchase all of the issued and outstanding capital stock of AME
owned by the Shareholders on the terms and conditions hereinafter set
forth. Upon closing of the transactions herein described, AME will be a
wholly owned subsidiary of NRC.
THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, the parties
agree as follows:
SECTION 1
PURCHASE AND SALE
1.1 PURCHASE OF STOCK. At the closing referred to in Section 1.4,
and subject to the terms and conditions hereof, the Shareholders shall
sell, assign, transfer and deliver to NRC and NRC shall purchase, in
exchange for the consideration set forth in Section 1.3 below, all of the
issued and outstanding capital stock of AME (the "Shares").
1.2 [INTENTIONALLY OMITTED].
1.3 PURCHASE PRICE. NRC shall pay the Shareholders, subject to the
terms and conditions hereinafter set forth, as full payment for the
transfer of the Shares to NRC, the sum of Twenty Million Dollars
($20,000,000) (the "Purchase Price"). The Purchase Price shall be paid in
immediately available funds and in common stock of NRC. The Purchase Price
shall be allocated among the Shareholders in accordance with SCHEDULE 1.3.
The Purchase Price is subject to adjustment as set forth in Section 1.7.
For purposes of this Agreement, the value of the NRC common stock shall be
equal to the average closing price of the NRC common stock as quoted on the
NASDAQ System for the ten trading days commencing fifteen days prior to the
Closing Date.
1.4 CLOSING; CLOSING DATE. The closing of the purchase and sale
provided for herein (the "Closing") shall take place on May 31, 1996, or on
such other date as the parties may agree (the "Closing Date"), at the
principal offices of AME in Arlington, Virginia, or at such other location
as the parties may agree. At Closing, the parties will execute and deliver
the documents listed in EXHIBIT "A." The parties agree that AME will
report on Form 1120S all income and expenses of AME for the year ended May
31, 1996.
1.5 DELIVERIES AND PROCEEDINGS AT THE CLOSING. At the closing:
1.5.1 DELIVERIES BY SHAREHOLDERS. Each Shareholder will
deliver to NRC certificates evidencing his Shares, duly endorsed for
transfer, in negotiable form, accompanied by stock powers duly executed in
blank or duly executed instruments of transfer, and any other documents
that are necessary to transfer to NRC good title to all of the Shares, free
and clear of all liens, claims, security interests, pledges, charges,
equities, options, restrictions and encumbrances of whatever nature.
1.5.2 [INTENTIONALLY OMITTED].
1.5.3 DELIVERIES BY NRC. NRC will deliver the Purchase Price
to the Shareholders in accordance with Section 1.3.
1.5.4 OTHER DELIVERIES. The closing certificates, opinions
of counsel and other documents required to be delivered pursuant to this
Agreement will be delivered by the Shareholders and NRC. The Shareholders
shall deposit into escrow the sum of $2,700,000 at closing to be held
pursuant to the Escrow Agreement attached hereto as EXHIBIT "B." In the
event of a conflicting provision between this Agreement and the Escrow
Agreement, this Agreement shall control as to the parties hereto.
1.6 PAYMENT OF CERTAIN TAXES. At or prior to the Closing, the
Shareholders shall pay or cause to be paid any and all state or local
transfer, document recording and other similar transactional taxes or
duties (including all stock transfer taxes), if any, payable as a result of
the sale or transfer of the Shares.
1.7 ADJUSTMENT OF PURCHASE PRICE.
1.7.1 CLOSING BALANCE SHEET. As soon as practicable, but in
any event within thirty (30) days after the Closing Date, AME will, with
the cooperation of the accountants for NRC, prepare and deliver to the
representative of the Shareholders identified in Section 24 hereof (the
"Representative") a balance sheet of AME as of the close of business on the
Closing Date (the "Closing Balance Sheet"). The Closing Balance Sheet
shall be prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied by AME. Within ten (10) days
after receipt by the Representative of the Closing Balance Sheet, the
Representative or NRC will notify the other party of disagreement, if any,
with any amount included therein or omitted therefrom, in which case, if
the parties are unable to resolve the disputed items within 15 days after
such notice of disagreement, such items will be submitted to and determined
by the accounting firm of Coopers & Lybrand, L.L.P. ("Coopers & Lybrand"),
whose determination shall be final and binding for all purposes. The fees
and disbursements of Coopers & Lybrand shall be borne 100% by NRC if the
Shareholders are successful with respect to at least thirty-five percent
(35%) of the aggregate amount of disputed items submitted to Coopers &
Lybrand. Otherwise, such fees and disbursements shall be borne 75% by the
Shareholders and 25% by NRC. In the event any change is made in the
Closing Balance Sheet in accordance with this section, such balance sheet
as so changed will be the "Closing Balance Sheet" for the purposes of this
Agreement. The Closing Balance Sheet will be final (i) 10 days after the
Closing Balance Sheet is received by the Representative and NRC in the
event of no dispute or (ii) the resolution of any dispute in accordance
with this section.
1.7.2 CLOSING BALANCE SHEET PAYMENTS. The Purchase Price
payable to the Shareholders will be (i) decreased by the amount, if any, by
which the net assets minus liabilities reflected on the Closing Balance
Sheet is less than $7,500,000 and (ii) increased by the amount, if any, by
which the net assets minus liabilities reflected on the Closing Balance
Sheet is more than $7,500,000. Within ten (10) business days after the
Closing Balance Sheet becomes final, any net increase in the Purchase Price
will be paid by NRC to each of the Shareholders in proportion to his or her
respective share of the Purchase Price and any net decrease in the Purchase
Price will be paid by a distribution to NRC from the Escrow Account. Any
payment required to be made under this section shall be made by wire
transfer of immediately available funds to an account designated by the
recipient.
1.7.4 PRE-CLOSING DIVIDENDS. The Board of Directors of AME
may authorize and pay cash dividends to the Shareholders up to an aggregate
of $3,500,000 during the period commencing after the Interim Balance Sheet
and ending prior to the Closing, notwithstanding Section 8.1 hereof. Any
such dividends declared and paid prior to the Closing shall reduce the
Purchase Price by the amount of such dividend distributions with a
corresponding reduction to the book value of $7,500,000 referred to in
Section 1.7.3 above. Dividends in excess of $3,500,000 may not be declared
or paid without the written consent of NRC. For example, if prior to the
Closing AME declares and pays a dividend of $3,500,000, the Purchase Price
in Section 1.3 shall be $16,500,000 with a prorata adjustment to the
allocation contained in SCHEDULE 1.3 and the book value referred to in
Section 1.7.2 will be reduced to $4,000,000 from $7,500,000. No
adjustment, however, shall be made in the escrow deposit under Section
1.5.4.
1.7.5 RIGHTS NOT AFFECTED. Nothing contained in this Section
1.7 or any other action on the part of NRC pursuant to the provisions of
this Section shall in any way prejudice, or constitute a waiver of, any of
the rights of NRC with respect to the representations and warranties of the
Shareholders contained in Sections 2 and 3 hereof, the covenants of Section
8 hereof, or the indemnifications contained in Section 9 hereof.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF SERIES B SHAREHOLDERS
The Series B Shareholders represent and warrant, jointly and
severally, to NRC as follows:
2.1 AUTHORIZED AND OUTSTANDING COMMON STOCK. As of the date hereof
and as of the Closing, the authorized, issued and outstanding capital stock
of AME and the number of shares of authorized but unissued capital stock of
AME are and will be as follows:
Number of Number of Number of
Shares Shares Issued Shares Subject
Designation Authorized Outstanding to Options
----------- ---------- ------------- --------------
Series A Common Stock 60,000 23,350 -0-
Series B Common Stock 500,000 246,000 -0-
All of the issued and outstanding Shares are validly issued, fully paid and
non-assessable. Set forth on SCHEDULE 2.1 is a list of Series A
Shareholders and Series B Shareholders and the number of Shares held by
such persons on the date hereof and as of the Closing Date.
AME has and at Closing will have no other authorized, issued or outstanding
shares of capital stock nor any outstanding securities, bonds, convertible
securities, subscription agreements, warrants, options, buy-sell
agreements, or other liens, agreements or commitments relating to AME's
capital stock. That certain Amended Stock Purchase Agreement (Series B
Common) and the stock repurchase agreements among AME and the Series A
Shareholders will be terminated upon the closing of the transactions set
forth in this Agreement.
2.2 ORGANIZATION AND STANDING. AME is and will be at Closing a
corporation duly organized, validly existing and in good standing under the
laws of the State of Virginia, and will be at Closing duly qualified to do
business in and in good standing as a foreign corporation in all other
states where the nature of its business or operations or the ownership of
its property requires such qualification. No jurisdiction where it is not
presently qualified as a foreign corporation has made any assertion to AME
that its business or operations or ownership of property makes
qualification as a foreign corporation in such jurisdiction necessary. AME
has all requisite corporate power and authority to own, lease and operate
its properties and carry on its business as and where it is now being
conducted. A copy of AME's Articles of Incorporation and all amendments
thereto as of the date hereof and a copy of its respective By-Laws, as
amended to the date hereof (both certified by the Secretary) have been
furnished to NRC and are true, accurate and complete as of the date hereof.
AME owns no stock or securities of any other corporation or entity, except
as shown on SCHEDULE 2.9(A).
2.3 NO VIOLATION. The execution, delivery and performance of this
Agreement by Shareholders and the consummation of the transactions
contemplated hereunder will not, with or without the giving of notice or
the passage of time or both, (i) violate, conflict with, or constitute a
default (or cause an acceleration) under AME's Articles of Incorporation or
By-laws or any contract, note, lien, license, permit, or instrument to
which AME is a party or by which AME or the Shareholders are bound or which
may affect any of the assets, business or operations of AME, (ii) result in
the creation or imposition of any lien, claim, charge or encumbrance upon
any of AME's properties or assets, or (iii) constitute a violation of any
statute, ordinance, judgment, order, decree, regulation, rule or law of any
court, authority or arbitrator applicable to or relating to AME or any of
the assets, business or operations of AME. This Agreement and all other
agreements and obligations entered into and undertaken in connection with
the transactions contemplated hereby to which the Shareholders and AME are
parties constitute the valid and legally binding obligations of the
Shareholders and AME enforceable against each of them in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy laws and equitable principles. There are no consents, waivers
or approvals of persons or authorities required in connection with the
consummation of the transactions contemplated by this Agreement and the
other agreements referenced herein and no other consents, waivers or
approvals will be required in connection with such consummation.
2.4 FINANCIAL STATEMENTS.
(a) Annexed hereto as SCHEDULE 2.4(A) are financial statements
of AME (the "Financial Statements") consisting of: (i) the unaudited
balance sheet of AME at February 29, 1996 (the "Interim Balance Sheet"),
together with the related statements of income and retained earnings,
changes in stockholder's equity and financial position for the nine (9)
month period ended February 29, 1996, and (ii) the audited balance sheets
of AME at May 31, 1993, May 31, 1994, and May 31, 1995, together with the
audited and related statements of income and retained earnings, changes in
stockholders' equity and financial position for the fiscal years of AME for
such periods.
(b) Except as disclosed in SCHEDULE 2.4(B) , all of the
foregoing Financial Statements, in each case, have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved and with prior periods
except as otherwise expressly stated therein and fairly present the assets,
liabilities and financial condition and results of operations of AME at, or
for the periods ended at, the dates thereof, and are true, complete and
accurate.
2.5 LIABILITIES. There are no debts, liens, claims, liabilities or
obligations of AME, whether accrued, contingent, absolute, direct or
indirect, or matured or unmatured, including, but not limited to,
liabilities for taxes, interest and penalties, except (i) as and to the
extent reflected or reserved against in the Interim Balance Sheet; and (ii)
those disclosed on SCHEDULE 2.5.
2.6 ACCOUNTS RECEIVABLE. All of the accounts receivable of AME are
actual bona fide receivables representing obligations for the total dollar
amount thereof as shown on the Financial Statements and books of AME which
resulted from the ordinary course of business of AME, and are stated on the
Financial Statements net of an appropriate reserve for bad debt and
noncollectible accounts. The accounts receivable of AME as of the Closing
will be fully collectible, less an appropriate reserve for uncollectible
accounts consistent with past practice.
2.7 FIXED ASSETS AND INVENTORY.
(a) The dollar amount of the fixed assets owned by AME as shown
on the Interim Balance Sheet and as acquired thereafter and treated on the
books of AME as an asset does not exceed the cost of same, less
depreciation determined in accordance with generally accepted accounting
principles consistently applied, and AME has not written up the value of
any such fixed assets. The fixed assets and inventory of AME as of the
date of the Interim Balance Sheet, include those items set forth in
SCHEDULE 2.7(A) hereto, and, at Closing, such fixed assets and inventory
will be in existence. The fixed assets of AME are in good working order,
reasonable wear and tear excepted.
(b) AME is not under any liability or obligation with respect to
the return of payments or inventory in the possession of customers and, for
the twelve month period immediately prior to the Closing, AME has not
experienced any claims with respect to defective or unsatisfactory services
or products except as specifically set forth on SCHEDULE 2.7(B). The
inventory of AME existing on the Closing Date shall have been acquired in
the ordinary course of AME's business.
2.8 CONTRACTS.
(a) Except as provided in 2.8(d) below, SCHEDULE 2.8 hereto,
contains a list as of all material verbal or written (i) leases, (ii)
contracts (including employment and independent contractor and professional
contracts), (iii) agencies, (iv) purchase orders, (v) marketing or referral
agreements, (vi) software agreements (including software license
agreements, (vii) maintenance or support agreements, (viii) training
agreements, (ix) royalty agreements, (x) employee benefit, bonus or
compensation agreements, (xi) bids, (xii) government contracts, (xiii)
computer software agreements, (xiv) contracts for the furnishing of all
services, (xv) all contracts for referrals, (xvi) all contracts to obtain
supplies or services, (xvii) subcontracts, (xviii) teaming agreements, and
(xix) all other agreements or understandings between AME and any other
party or person (collectively, "Contracts"), which are not otherwise
attached to any other Schedules of this Agreement. Such list includes
completed Contracts where the services have been performed but the obligor
has not paid. True, correct and complete copies of all of the Contracts
listed on SCHEDULE 2.8 have been made available for inspection and copying
by NRC.
(b) AME's standard agreements identified on SCHEDULE 2.8(B) have
been made available to NRC for copying and inspection.
(c) Since the Interim Balance Sheet, AME has not entered into
any Contracts not in the ordinary course of business except as listed in
SCHEDULE 2.8(C). None of the Contracts to which AME is a party or to which
it is subject or by which it is bound requires the consent of any other
person for the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby. Each of the Contracts to which
AME is a party or to which it is subject or by which it is bound, to the
extent not otherwise already fully performed by AME, is a valid and
existing contract of all of the parties thereto in full force and effect
without modification and there are no pending or threatened disputes
thereunder, and all will continue to be binding (except as to which the
enforceability is limited by bankruptcy laws and equitable principles) in
accordance with their terms after consummation of the transactions
contemplated hereby and each is with unrelated and unaffiliated third
parties and was entered into on an arms-length basis in the ordinary course
of business, except as to agreements with Shareholders listed in SCHEDULE
2.8. Except as disclosed in SCHEDULE 2.8, to the Series B Shareholders'
best knowledge, AME has timely performed all obligations required to be
performed by it and is not in default under any verbal or written Contract
to which it is a party or to which it is subject or by which it is bound
and no event has occurred which, with or without the lapse of time or the
giving of notice, or both, or action by a third party, could result in a
default under any of the forgoing. To the Series B Shareholders' best
knowledge, no other party is in default under any such Contract. None of
the Contracts are materially in excess of the normal, ordinary and usual
requirements of AME's operations.
(d) AME has certain classified government contracts. Prior to
the date hereof, NRC and its representatives have not been given access to
such classified government contracts. Because of government security
restrictions, all or some of these contracts may not have been listed on
SCHEDULE 2.8. Nevertheless, all of the representations and warranties
contained herein apply to such classified contracts insofar as such
application is consistent with the aforesaid security restriction.
2.9 CORPORATE ACTIONS. The minute books of AME contain appropriate
corporate minutes and authorizations for all corporate actions taken by
AME's Board of Directors and Shareholders. AME does not own any stock or
otherwise possess ownership rights in any other corporation or organization
and has no affiliates (other than the Shareholders), except as disclosed in
SCHEDULE 2.9(A). Attached hereto as SCHEDULE 2.9(B) is a list of directors
and officers of AME.
2.10 INTELLECTUAL PROPERTY RIGHTS. SCHEDULE 2.10 hereto sets forth a
true and complete list of all trademarks, service marks, trade names,
patents, patent applications, copyrights, and copyright applications
heretofore or presently used or required to be used by AME in connection
with its business (collectively "Intellectual Property Rights"). Each such
Intellectual Property Right is owned by AME and, except as set forth on
SCHEDULE 2.10, and to the best knowledge of the Series B Shareholders is
not subject to any license, lien, royalty arrangement or pending or
threatened dispute. Except as disclosed in SCHEDULE 2.10 hereto, and to
the best knowledge of the Series B Shareholders, no product or service
marketed, manufactured, sold or licensed, and no marketing, service or
process used by AME infringes any Intellectual Property Right of others and
no product or service marketed, or process used by any other person, firm,
corporation or other entity infringes any Intellectual Property Rights
heretofore or presently used or required to be used by AME. Except as set
forth on SCHEDULE 2.10, and to the best knowledge of the Series B
Shareholders, AME has not received notification of infringement by AME or
any Shareholder of any Intellectual Property Right of others. To the best
knowledge of the Series B Shareholders, no trademark, service mark or trade
name used by AME infringes any trademark, service mark or trade name of
others in the United States of America or any foreign country.
2.11 INSURANCE POLICIES. SCHEDULE 2.11 hereto sets forth a list of all
business, insurance policies held or owned by AME or which name AME as
beneficiaries, and true and correct copies of all such policies have
heretofore been delivered to NRC. All such insurance binders and policies
of AME are valid, outstanding and enforceable and all premiums due thereon
prior to the Closing have been paid. All the insurance policies listed in
SCHEDULE 2.11 will remain in full force and effect during the period
immediately following the Closing. To the best knowledge of the Series B
Shareholders, there are no pending material claims under such insurance
policies. SCHEDULE 2.11 also sets forth all claims filed during the past
twelve (12) months with respect to insurance policies maintained by AME.
2.12 BACKLOG. The backlog of orders, sales and service commitments of
AME, together with all Contracts to which they are parties, consist of
contracts for services of AME which are typical of the types of services
heretofore marketed, sold or rendered by AME and which do not require the
development or application of any materially new or materially more
advanced technology or service than that utilized by AME in the past. No
purchase or expansion of property (other than purchases of inventory
consistent with AME's past ordinary course of business), plant, equipment
or capacity is needed to timely fill the current backlog and current
Contracts.
2.13 COMPENSATION. A list of the names, date of birth, title or job
description, total annual compensation, date of last salary or hourly rate
adjustment and amount thereof, and length of time in current position of
all employees of AME, including a list of accrued vacation and sick leave
benefits and a list of all other benefits provided to each such employee as
of April 4, 1996, has been furnished NRC. AME has not entered into any
commitments or understandings with any employee concerning future
compensation, bonuses and benefits of a material nature other than in the
ordinary course of business, and there are no employment agreements except
as set forth on SCHEDULES 2.8 AND/OR 2.16. All employees of AME are "at
will" and may be terminated at any time by AME.
2.14 EMPLOYEE BENEFITS.
(a) Set forth on SCHEDULE 2.14(A) hereto is an accurate and
complete list of all material employee benefit plans ("Plans") within the
meaning of Section 3(3) of the Employee Retirement Income Security Act
("ERISA"), whether or not any such Plans are otherwise exempt from all or
part of the provisions of ERISA, established, maintained or contributed to
for the benefit of AME's employees, and a list of Pension Plans terminated
prior to the date hereof.
(b) Except as set forth in SCHEDULE 2.14(B), AME does not
maintain, cause to be maintained or contribute to any Plan subject to ERISA
which is not, or in the past has not been, to the best knowledge of the
Series B Shareholders, in substantial compliance with ERISA or the Internal
Revenue Code of 1986 (the "Code"), or which has incurred any accumulated
funding deficiency within the meaning of Section 412 or 418(b) of the Code,
or which has applied for or obtained a waiver from the Internal Revenue
Service of any minimum funding requirement under Section 412 of the Code.
Except as set forth on SCHEDULE 2.14(B), AME has not incurred any liability
to the Pension Benefit Guaranty Corporation ("PBGC") in connection with any
Plan covering any employees of AME.
(c) AME has caused the "group health plan," as such term is
defined in Section 162(i)(3) of the Code, to be maintained, administered
and operated in all material respects in compliance with the applicable
requirements of Section 601 of ERISA and Section 162(k) of the Code, and to
the Series B Shareholders' best knowledge, AME has no liability, including,
but not limited to, additional contributions, fines, penalties or loss of
tax deduction as a result of such administration and operation. AME does
not maintain any Plan (whether qualified or nonqualified within the meaning
of Section 401(a) of the Code) providing for retiree health and/or life
benefits.
(d) Benefits under all Plans are as represented and have not
been and will not be amended subsequent to the date as of which copies
thereof have been provided to NRC and prior to Closing except as required
by law.
(e) Each Plan intended to be qualified under Section 401(a) of
the Code has been determined to be so qualified by the Internal Revenue
Service and nothing has occurred since the date of the last such
determination which resulted or is likely to result in the revocation of
such determination.
(f) The execution of, and consummation of the transactions
contemplated by this Agreement, do not constitute a triggering event under
any Plan, policy, arrangement, statement, commitment or agreement, which
(either alone or upon the occurrence of any additional or subsequent event)
will or may result in any payment (whether of severance pay or otherwise),
acceleration, vesting or increase in benefits to any employee or former
employee or director of AME.
(g) AME has made available for inspection and copying by NRC
true and complete copies of (i) all Plans as now in effect, together with
all amendments thereto which will become effective at a later date, as well
as the latest Internal Revenue Service determination letter obtained with
respect to any such Plan qualified under Section 401(a) or tax-exempt under
Section 501(a) of the Code, and (ii) Form 5500 for the most recent
completed fiscal year for each Plan required to file such form.
2.15 ENVIRONMENTAL MATTERS.
(a) To the Series B Shareholders' best knowledge, AME holds and
is in substantial compliance with all environmental permits, certificates,
licenses, approvals, registrations and authorizations ("Permits") required
under all applicable environmental laws, rules and regulations in
connection with its business as currently operated, and all of such Permits
are in full force and effect. To the Series B Shareholders' best
knowledge, AME has complied with all, and is not in violation of any,
applicable environmental statutes, rules, regulations, ordinances and
orders of any authority, including, those relating to Hazardous Substances
(as defined below).
(b) No notice, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed and, to the Series B
Shareholders' best knowledge, no investigation or review is pending or
threatened by any authority with respect to (i) any alleged violation by
AME of any environmental statute, ordinance, rule, regulation or order of
any authority; or (ii) any alleged failure by AME to have any environmental
Permit, certificate, license approval, registration or authorization
required in connection with their businesses; or (iii) any use, generation,
treatment, storage, recycling, transportation or disposal (collectively,
"Management Activities" with respect to Hazardous Substances) of any
hazardous substance, hazardous waste, hazardous materials, toxic substance,
pollutants or contaminants as defined in federal, state or local laws,
ordinances or regulations and including petroleum products and radioactive
materials generated or used (collectively, "Hazardous Substances") by AME.
(c) AME has not received any request for information, notice of
claim, demand or notification that it is or may be potentially responsible
with respect to any investigation or clean-up of any threatened or actual
release of any Hazardous Substance.
(d) Except as set forth on SCHEDULE 2.15(D) hereto, to the
Series B Shareholders' best knowledge, AME has not conducted any Management
Activities, whatsoever, with respect to any Hazardous Substances on its
properties, identified on SCHEDULE 2.17, or the properties of another nor,
to the best of the Series B Shareholders' knowledge, has anyone else
conducted any Management Activities, whatsoever, on the respective
properties of AME.
(e) Except as set forth on SCHEDULE 2.15(E) hereto and to the
Series B Shareholders' best knowledge, no PCBs or asbestos insulation is or
has been present at the facilities of AME.
(f) Hazardous Substances, if any, for which AME performs
Management Activities (if any) are listed on SCHEDULE 2.15(F), and to the
Series B Shareholders' best knowledge, any Hazardous Substances listed on
SCHEDULE 2.15(F), have been generated by AME in regulated quantities and
have been recycled, treated, stored, disposed of or transported in full
compliance with all applicable laws.
(g) Except as set forth on SCHEDULE 2.15(G) hereto and to the
Series B Shareholders' best knowledge, AME has not transported any
Hazardous Substances or arranged for the transportation of such substances
to any location which is listed or proposed for listing under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. <section><section> 9601-9657 ("CERCLA"), or on any similar
state list, or which is the subject of federal, state or local enforcement
actions or other investigations which may lead to claims against AME or NRC
for clean-up costs, remedial work, damages to natural resources or for
personal injury claims, including, but not limited to, claims under CERCLA.
(h) To the Series B Shareholders' best knowledge, no Hazardous
Substance has been released, spilled, leaked, discharged, disposed of,
pumped, poured, emitted, emptied, injected, leached, dumped or allowed to
escape ("Releases") by AME or any other person from, at, on or under the
properties of AME.
(i) No oral or written notification of a Release or threat of
Release of a Hazardous Substance has been filed by or on behalf of AME, or
to the Series B Shareholders' best knowledge, any other person in relation
to any properties now or previously owned, operated or leased by AME. To
the Series B Shareholders' best knowledge, no such properties are listed or
proposed for listing on the National Priority List promulgated pursuant to
CERCLA, or on any similar state list of sites requiring investigation or
clean-up.
(j) There are no environmental liens on the properties of AME,
and no government actions have been taken or are in process, or to the
Series B Shareholders' best knowledge, pending which could subject AME's
properties to such liens. AME or any other person would not be required to
place any notice or restriction relating to the presence of Hazardous
Substance in the deed to any properties owned by or leased to AME.
(k) In respect of environmental matters, no consent, approval or
authorization of, or registration or filing, with any person or authority
is required in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
(l) There have been no environmental inspections,
investigations, studies, audits, tests, reviews or other analyses conducted
in relation to AME's properties or operations.
(m) To the Series B Shareholders' best knowledge, there are no
facts or circumstances related to environmental matters concerning the
properties or businesses of AME that could lead to any future environmental
claims, liabilities or responsibilities of NRC or AME.
2.16 LABOR AND EMPLOYMENT MATTERS.
(a) SCHEDULE 2.16(A) hereto contains, to the Series B
Shareholders' best knowledge, a complete and correct list and summary
description of all written and oral contracts with employees of AME
(inclusive of officers and directors) together with all bonus, stock
option, and other incentive arrangements, pension and retirement plans,
profit sharing plans, group or individual medical, health, dental,
accident, life and other employee benefit insurance and other employee
compensation or benefit plans, arrangements, understandings or policies
(whether written or oral), except as otherwise disclosed pursuant to
SECTIONS 2.08, 2.13 OR 2.14 hereto, affecting employees of AME and AME is
not in default under any of the foregoing. There have been no claims of
default under any of the foregoing and there are, to the Series B
Shareholders' best knowledge, no facts or conditions which, with or without
the passage of time or the giving of notice or both, would constitute or
result in a default under any of the foregoing. True and complete copies
of all the foregoing have heretofore been delivered by AME to NRC.
(b) SCHEDULE 2.16(B) identifies all written and unwritten
policies and practices describing employment practices, generally, and
termination payments and benefits to terminated employees of AME.
(c) Except as set forth on SCHEDULE 2.16(C), and to the Series B
Shareholders' best knowledge, AME is in compliance with all federal, state,
local or other applicable laws or requirements of any governmental,
regulatory or administrative authority or court respecting preemployment
and employment practices, terms and conditions of employment and wages and
hours and occupational safety and health, including, but not limited to,
the National Labor Relations Act, the Fair Labor Standards Act (including
the Equal Pay Act), Title VII of the Civil Rights Act of 1964, the
Occupational Safety and Health Act of 1970, the Service Contract Act, the
Contract for Work Hours and Safety Standards Act, the Rehabilitation Act of
1973, the Vietnam ERA Veterans Readjustment Assistance Act of 1974,
Executive Order 11246, the Employees Retirement Income Security Act of
1974, and state and local employment, unemployment and worker's
compensation statutes, and AME is not engaged in any unfair labor practice
within the meaning of Section 8 of the National Labor Relations Act. AME
is not party to any collective bargaining agreement and no union
organizational efforts are currently in progress.
(d) Except as disclosed in SCHEDULE 2.16(D) and SCHEDULE 2.24,
there is no administrative or private claim, charge, complaint, dispute,
action, grievance, suit, administrative, arbitration or other proceeding or
investigation, pending, or to the Series B Shareholders' best knowledge,
threatened against AME relating to any of the items or matters referenced
in subparagraph (c) directly above, or with regard to any allegedly accrued
or vested employee benefits or any other common or statutory law claim
involving tort, contract, or equity, and to the Series B Shareholders' best
knowledge, no basis or facts exist for any such claim, charge, complaint,
dispute, grievance, action, suit or legal, administrative, arbitration or
other proceeding or governmental investigation.
(e) There is no labor strike, dispute, slowdown or stoppage
actually pending or threatened against AME, and no such strike, dispute,
slowdown, or stoppage has been experienced by AME since the date of AME's
incorporation.
(f) Except as disclosed on SCHEDULE 2.16(F), there are no
charges, administrative proceedings, investigations or formal complaints of
discrimination pending or, to the Series B Shareholders' best knowledge,
threatened before the Equal Employment Opportunity Commission or any
federal, state or local agency or court. To the Series B Shareholders'
best knowledge, there are no pending or threatened audits of the equal
employment opportunity practices of AME and no basis for any equal
employment opportunity claim exists.
2.17 TITLE TO ASSETS, LIENS AND ENCUMBRANCES.
(a) AME is the owner of, and has good and marketable title to,
free and clear of all security interests, mortgages, pledges, liens,
claims, restrictions, equities, easements, rights-of-way, rights of first
refusal and any other encumbrances and charges whatsoever, or is the lessee
of, all of its respective property and assets, except as set forth on
SCHEDULE 2.17 hereto. AME owns or leases all of the assets used by it in
the operation and conduct of its business or required by AME for the normal
conduct of its business.
(b) SCHEDULE 2.17 sets forth a true and complete list and
description of all real property, land, buildings and improvements leased
by AME as of the Closing. True and correct copies of all leases with
respect to the property listed on SCHEDULE 2.17 have heretofore been made
available to NRC for inspection and copying. Except as disclosed in
SCHEDULE 2.17, all such real property, land and buildings used or leased by
AME as of the Closing are used by or useful to AME in the ordinary course
of business, and the use and occupancy by AME conforms in all material
respects with all applicable laws to the Series B Shareholders' best
knowledge and to the Series B Shareholders' best knowledge are in good
operating condition and in a good state of maintenance and repair. AME
owns no real property, land, buildings or improvements.
(c) Except as set forth on SCHEDULE 2.17, AME has not received
any notices of violations of law, governmental orders, ordinances or
requirements issued by any national, federal, state, municipal or other
governmental, department or authority or corresponding foreign governmental
instrumentality or any fire department or insurance carrier, that would
have a material adverse effect or purport to have a material adverse effect
on use and occupancy of the real property used or leased by AME. All real
property leases are full service leases without any liability of AME to pay
for utilities, sewer, water, taxes and building insurance. All real
property used or leased and the use or lease thereof to the Series B
Shareholders' best knowledge conforms in all material respects with private
covenants and restrictions and all applicable building, zoning,
environmental, land use, and other laws, ordinances, codes, orders and
regulations.
(d) To the Series B Shareholders' best knowledge, the leases
described in SCHEDULES 2.8 OR 2.17 are in full force and effect on the
Closing without any default or breach by AME or any lessor.
(e) AME has not received any notice of any requirements or
recommendations by any insurance company which has issued a policy covering
any part of the real estate used or leased by AME or by any board of fire
underwriters or other body or authority exercising similar functions,
requiring or recommending any repairs or work to be done on any part of
said real estate.
(f) SCHEDULE 2.17 also lists all personal property leased by
AME. The Series B Shareholders make the same representations and
warranties about the personal property leases as made in the other
subclauses of this SECTION 2.17.
2.18 CUSTOMER CLAIMS AND COMPLAINTS. Except as disclosed on SCHEDULE
2.18 and the financial statements, to the Series B Shareholders' best
knowledge, AME has no liability or obligation with respect to the return of
any funds because of products or services provided by it and has not
experienced any unusual or excessive claims with respect to products or
services during the thirty-six months immediately preceding the execution
of this Agreement. No customer, client, or contracting party has requested
that performance under any contract or other agreement be canceled or
delayed for any period of time. No customer liability claim is presently
pending or to the Series B Shareholders' best knowledge threatened or
imminent against AME, or any other person with respect to AME. AME has not
experienced any warranty claims for products or services in the past three
(3) years, except as disclosed on SCHEDULE 2.18.
2.19 SECRECY AND NON-COMPETITION AGREEMENTS. The Shareholders and AME
have not entered into any secrecy or non-competition agreements with any
person with respect to the AME Business except as disclosed on SCHEDULE
2.19. [In no event shall a Shareholder be liable for a breach of this
representation and warranty by another Shareholder.]
2.20 GOVERNMENTAL APPROVALS. Except for the requirements of the Hart-
Scott-Rodino Act, no authorization, novation, approval, order, license,
permit, franchise, or consent and no registration, declaration or filing by
AME with any governmental authority is required in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
2.21 ORDERS, DECREES, ETC. Except as set out in SCHEDULE 2.21, there
are no orders, writs, decrees, injunctions, or rulings of any court,
authority, arbitration tribunal, or any governmental department,
commission, board, agency or instrumentality, domestic or foreign, issued,
or to the best knowledge of the Series B Shareholders, pending or
threatened against, nor consents binding on, AME or any Shareholder,
officer, director or employee of AME, which do or may affect, limit or
control AME or any of its assets or AME's method or manner of doing
business.
2.22 COMPLIANCE WITH THE LAW. Except as otherwise disclosed in the
Schedules hereto, to the Series B Shareholders best knowledge, AME is in
material compliance with all federal, state and local laws, rules, orders
and regulations, including, but not limited to those relating to zoning,
building codes, the Code, antitrust, occupational safety and health,
environmental protection, water or air pollution, ERISA, toxic and
hazardous waste and controlled substances, consumer product safety, product
liability, employment and employment practices, term and conditions of
employment, bidding and contracting procedures, dealings with federal,
state, governmental, municipal or local authorities, hiring, wages, hours,
employee benefit plans and programs, collective bargaining and withholding
and social security taxes, and have received no notices of alleged
violations thereof. No governmental authorities are presently conducting
proceedings against AME, and no such investigation or proceeding is
threatened. AME has obtained all permits, licenses and authorizations
required for the conduct of its affairs as currently conducted and as is
contemplated will be conducted immediately following consummation of the
transactions contemplated hereby, and all of such permits, licenses and
authorizations will remain in full force and effect following such
consummation. True, complete and correct copies of the foregoing permits,
licenses and authorizations have been delivered to NRC. No employee of AME
in the course of his or her employment has been exposed to any chemical or
other Hazardous Substance or material produced by AME which could give rise
to a claim against AME.
2.23 ACTIONS NOT IN ORDINARY COURSE AND NO MATERIAL CHANGE. Except as
disclosed on the list furnished NRC under Section 2.13, since the date of
the Interim Balance Sheet to the date hereof, AME has conducted its
business in a consistent manner without change of policy or procedure
including, without limitation, its practices in connection with the
treatment of expenses, burdens, accounts receivable, liabilities, valuation
of inventory and selling and purchasing policies. Since the Interim
Balance Sheet to the date hereof, the business of AME has been operated
only in the regular and ordinary course and there has been no materially
adverse change in the financial condition or business of AME. Except as
set forth in SCHEDULE 2.23, since the Interim Balance Sheet, AME has not:
(a) Except in the usual and ordinary course of its businesses,
consistent with past practice, incurred any indebtedness or other
liabilities (whether accrued, absolute, contingent or otherwise),
guaranteed any indebtedness or sold any of its assets;
(b) Suffered any damage, destruction or loss, whether or not
covered by insurance;
(c) Except as disclosed pursuant to Section 2.13, and except for
the award of employee bonuses consistent with past AME compensation
practices, increased the regular rate of compensation payable by it to any
employee, or increased such compensation by bonus, percentage, compensation
service award or similar or other arrangement theretofore or thereafter in
effect for the benefit of any of its employees, and no such increase is
required;
(d) Established or agreed to establish any pension, retirement
or welfare plan for the benefit of its employees not heretofore in effect;
(e) Suffered any change in its financial condition, assets,
liabilities or business or suffered any other event or condition of any
character which individually or in the aggregate has had a material adverse
effect on AME, and the Series B Shareholders have no knowledge of any fact
or event unique to AME which they believe will, or reasonably may be
expected to, give rise to any such change;
(f) Experienced any labor organizational efforts or complaints
or entered into any collective bargaining agreements with any union;
(g) Made any single capital expenditure which exceeded $25,000
or made any capital expenditures in the aggregate which exceed $100,000;
(h) Permitted or allowed any of the assets (real, personal or
mixed, tangible or intangible) of AME to be subjected to any mortgage,
pledge, lien, security interest, encumbrance, restriction or charge of any
kind, except the liens created under the exiting Signet Bank line of
credit;
(i) Written down the value of any assets or written off as
uncollectible any notes or accounts receivable or contracts, except for
write-downs and write-offs in the ordinary course of business and
consistent with past practice;
(j) Paid, discharged or satisfied any claims, liabilities or
obligations other than in the usual and ordinary
course of business;
(k) Canceled any debts or claims or waived any claims or rights,
except in the usual and ordinary course of business;
(l) Paid, loaned or advanced any amount to, or sold, transferred
or leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with a
Shareholder or any of the officers or directors of AME, except for
reimbursement of ordinary and reasonable business expenses related to the
business of AME;
(m) Amended or terminated any contract, agreement or license of
significant value, to which AME is a party, except in the ordinary course
of business;
(n) Made any change in any method of accounting or accounting
practice, except for the change to the accrual method of accounting for tax
purposes from the cash method of accounting for tax purposes for the fiscal
year beginning June 1, 1995;
(o) Canceled or failed to continue insurance coverage, other
than key man life insurance;
(p) Acquired, whether by merger, purchase of stock or purchase
of assets, all or substantially all of the business or assets of any other
business or entity, or engaged in negotiations of any sort concerning such
acquisition or acquired assets;
(q) Issued any stock, an option to acquire stock or other
securities, or taken any action with respect thereto, or declared or paid
any dividends, or made or authorized any other distributions to
Shareholders with respect to their Shares, except as permitted under
Section 1.7.4 and common stock issued by the exercise of employee stock
options outstanding prior to the Interim Balance Sheet; or
(r) Amended or repealed its Articles of Incorporation or By-
Laws;
(s) Agreed, whether in writing or otherwise, to take any action
described in this Section 2.23.
2.24 LITIGATION AND COMPLIANCES. AME and certain employees of AME are
defendants in an action pending in the Circuit Court for the County of
Arlington captioned PRC, INC. V. ADVANCED MARINE ENTERPRISES, INC., ET AL.,
in Chancery No. 96-1, wherein PRC, Inc., has alleged that, among other
matters, AME and certain of its employees conspired to unlawfully take the
business of the PRC Engineering Department (the "PRC Litigation"). John L.
Kipp has made a claim for damages arising out of the termination of his
employment and the repurchase of his Series A Common Stock (the "Kipp
Claim"). Except for the PRC Litigation, the Kipp Claim, and except as set
forth on SCHEDULE 2.24 hereto, there is no litigation, proceeding,
arbitration, governmental claim or investigation instituted, or to the
Series B Shareholders' best knowledge, pending or threatened, against or
affecting AME or the assets of AME or which questions or challenges the
validity of this Agreement or any action taken or to be taken pursuant to
this Agreement. The Series B Shareholders have no knowledge or
information, nor have they received any notice from any authority, agency,
corporation, or person of any threatened or pending action of eminent
domain that would condemn or encroach upon the assets or stop or inhibit
the use of the assets of AME for any purpose.
2.25 TAXES AND TAX RETURNS.
(a) AME's federal and state income, franchise, share and ad
valorem tax returns for the fiscal years ended May 31, 1992, May 31, 1993,
May 31, 1994, and May 31, 1995, have been provided to NRC. AME does not
currently owe any taxes not reflected on the Interim Balance Sheet or
incurred thereafter in the ordinary course of business.
(b) Since its incorporation, AME has been and will be at
Closing, an "S Corporation" within the meaning of the Code.
(c) Except as set forth on SCHEDULE 2.25 attached hereto:
(i) Within the times and in the manner prescribed by
law AME has filed all federal, state and local tax returns and extensions
and all tax returns for other governing bodies having jurisdiction to levy
taxes which are required to be filed;
(ii) AME has paid all taxes, interest, penalties,
assessments and deficiencies which have been shown on such returns to be
due, or which have been claimed to be due or which were due prior to
Closing;
(iii) All tax returns or extensions, if any, filed by
AME constitute complete and accurate representations of the tax liabilities
of AME for the periods covered thereunder and accurately set forth all
items (to the extent required to be included or reflected in such returns)
relevant to AME's past and future tax liabilities;
(iv) AME has not waived or extended any applicable
statute of limitations relating to the assessment of federal, state, local
or foreign taxes;
(v) No examinations of the federal, state, local or
foreign tax returns of AME are currently in progress or threatened and no
deficiencies have been asserted or assessed as a result of any audit by the
Internal Revenue Service or any state or local taxing authority and no
deficiency has been proposed or threatened;
(vi) The charges, accruals and reserves for taxes due
by AME or accrued but not yet due from AME, relating to the income,
properties or operations of AME for any periods ending on or before the
Closing or the portion of any period that ends on and includes the Closing
as reflected on AME's Interim Balance Sheet are adequate to cover any such
taxes payable by AME and with respect to charges, accruals and reserves for
taxes arising after the Interim Balance Sheet;
(vii) There is no action, suit, proceeding, audit or
claim to the Series B Shareholders' best knowledge pending or threatened
regarding any taxes of AME;
(viii) All taxes which AME are required by law to
withhold and collect have been duly withheld and collected, and have been
timely paid over to the proper authorities to the extent due and payable;
(ix) To the Series B Shareholders' best knowledge,
there are not any facts which would constitute the basis for the proposal
or assertion of any tax deficiencies for any unexamined year or period or
any year or period for which the applicable Statute of Limitations has not
expired; and
(x) There are no liens for any tax on AME or the
assets of AME, except for ad valorem taxes accrued but not yet due or
payable.
(d) The general ledgers and books of account of AME and all
federal, state and local income, franchise, property and other tax returns
filed by AME are in all respects complete and correct and all records of
AME have been maintained in accordance with good business practice and in
accordance with all applicable procedures required by laws and regulations.
2.26 BANK ACCOUNTS. SCHEDULE 2.26 is a true and complete list as of
the date hereof of all banking institutions in which AME has accounts or
safety deposit boxes, plus the numbers thereof and the names of the persons
authorized to make withdrawals therefrom or have access thereto.
2.27 DISCLOSURE. No representations and warranties by the Series B
Shareholders in this Agreement or any document or certificate furnished or
to be furnished to NRC pursuant hereto contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein and therein not
misleading.
2.28 PROPRIETARY RIGHTS. SCHEDULE 2.28 sets forth a list of material
inventions, trade secrets, processes, proprietary rights, product
specifications, blueprints, drawings, technical data, engineering
information, other proprietary knowledge and know-how, patents, trademarks,
service marks, trade names, copyrights, marks, symbols, logos, and all
material documentation related thereto, and all licenses and agreements in
respect thereof and applications therefor (collectively, "Proprietary
Rights") used or related to AME's Business, except for software and
information systems as defined in Section 2.29. The Proprietary Rights
described on SCHEDULE 2.28 include all of the material Proprietary Rights
necessary for the operation of AME's business; provided that all trade
secrets, processes, product specifications, blueprints, drawings, technical
data and engineering information may be too numerous to list and may be
deleted. Except as set forth on SCHEDULE 2.28, which includes a listing of
material contracts or material licenses pursuant to which AME uses the
intellectual property of third parties, with respect to the Proprietary
Rights, (a) AME is the sole and exclusive owner of and has the sole and
exclusive right to use its Proprietary Rights; (b) no action, suit,
arbitration, or other proceeding or investigation is, to the Series B
Shareholders' best knowledge, pending or threatened which involves any
Proprietary Rights, (c) to the Series B Shareholders' best knowledge, none
of the Proprietary Rights infringes upon, conflicts with, or otherwise
violates the rights of others or is being infringed upon by others,
(d) none of the Proprietary Rights is subject to any outstanding order,
decree, judgment, stipulation, or charge, (e) there are no royalty,
commission, or similar arrangements and no licenses, sublicenses, or
agreements relating to any of the Proprietary Rights, (f) AME has not
received any notice of interference or infringement of or by the
Proprietary Rights, (g) AME has not agreed to indemnify any person or
entity for or against any infringement of or by the Proprietary Rights, (h)
no other material Proprietary Rights not owned by AME are necessary for the
conduct of AME's Business, and (i) to the Series B Shareholders' best
knowledge, no other party is operating a business or otherwise acting in
violation or infringement of, AME's Proprietary Rights. Except as set
forth on SCHEDULE 2.28, AME has good and marketable title to the
Proprietary Rights listed on SCHEDULE 2.28, free and clear of all security
interests, liens, pledges, encumbrances and restrictions. Except as set
forth on SCHEDULE 2.28, all rights of AME in and to its Proprietary Rights
will not be adversely affected by the purchase of all of AME's capital
stock and such purchase does not require the consent or approval of any
third party. AME is not subject to any judgment, order, writ, injunction,
or decree of any court, arbitrator, or governmental agency or
instrumentality, domestic or foreign, and is not party to any agreement,
which restricts or impairs the use of any Proprietary Rights.
2.29 SOFTWARE AND INFORMATION SYSTEMS.
(a) The software described on SCHEDULE 2.29 includes all
information systems, programs and software, other than non-exclusive
commercial software, used in or related to AME's Business or necessary for
the operation of such business. SCHEDULE 2.29 lists all such software and
identifies (a) software which is owned by AME, (b) software which is
licensed to AME, and (c) any other software in which AME has any use,
possessory, or proprietary rights and which is used in or related to its
business and not otherwise disclosed in SCHEDULE 2.28. Except as set forth
on SCHEDULE 2.29, AME has the sole and exclusive right, title, and interest
in and to all software listed on SCHEDULE 2.29. Except as set forth on
SCHEDULE 2.29, AME has good and marketable title to the software listed,
free and clear of all security interests, liens, pledges, encumbrances and
restrictions. Except as set forth on SCHEDULE 2.29, all of the software
which is owned by AME, including all related source codes and
documentation, is owned solely by AME and the source code has not been
disclosed to any unaffiliated entity or person. To the Series B
Shareholders' best knowledge, the AME proprietary software substantially
performs in accordance with published specifications for such software,
subject to normal software defects which may be cured without extraordinary
effort or cost.
(b) SCHEDULE 2.29 incorporates by reference manuals (copies of
which have been made available to and furnished to NRC) which describe the
functions of all proprietary information systems, programs and software of
AME. AME has documentation in reasonable detail relating to all such
proprietary information systems, programs and software. SCHEDULE 2.29
identifies each person or entity to whom AME has licensed or granted any
other rights to any other proprietary information systems, programs and
software. No source code or object code of AME is escrowed for the benefit
of any third party. To the Series B Shareholders' best knowledge, none of
the information systems, programs and software of AME infringe on any
patents, trademarks, copyrights or other rights or intellectual property
rights of any third persons. To the Series B Shareholders' best knowledge,
no information systems, programs and software used or owned by any third
person or entity infringe on any rights of AME in and to the information
systems, programs and software of AME. AME has taken reasonable measures
necessary to maintain and protect the information systems, programs and
software of AME and no claims have been asserted by any person or entity to
the use of the same or challenging or questioning the validity or
effectiveness of the same, and, to the best knowledge of the Series B
Shareholders, there is no valid basis to any such claim.
(c) SCHEDULE 2.29 also contains a list of the current software
development and consulting activities and projects of AME. AME has
described such projects and developments to NRC. AME knows of no
impediments to fully developing and exploiting the information systems,
programs and software currently under development or to performing its
currently pending consulting contracts.
2.30 MATERIAL COMMITMENTS. As used in this SECTION 2.30, the term
"Material Commitments" means each Contract of AME which obligates AME to
sell, license, distribute, deliver or provide products or services
(including, without limitation, consulting services) for a consideration in
excess of $100,000 and over a period of more than one (1) month. SCHEDULE
2.30 sets forth a "Project List" with respect to each Material Commitment.
The Project List sets forth AME's production schedule or performance
schedule, and budget, with regard to each Material Commitment. Except as
described in the Project List, the performance of AME or any other party
involved with each Material Commitment is on schedule and within budget,
and no practical or technological problems have been encountered that might
reasonably be expected to impede completion or materially increase the cost
of AME's performance with a corresponding detriment to profit. Each
Material Commitment was made on a basis calculated to produce a profit
under the circumstances prevailing when it was made, and AME is not aware
of any circumstances that might reasonably be expected to prevent the
realization of a profit. Except as set forth on the Project List, to the
Series B Shareholders' best knowledge, no Material Commitment involves the
development of any product or technology that would infringe on the
proprietary rights of any other party. AME is not bound by any Material
Commitments for the performance of services or delivery of products in
excess of its current ability to provide such services or deliver such
products during the time available to satisfy such commitments; and all
outstanding Material Commitments for the performance or delivery of
products were made on a basis calculated to produce a profit under the
circumstances prevailing when such commitments were made. Copies of
outstanding commitments have been previously made available to NRC and in
all material respects contain the complete and correct terms and conditions
of same.
2.31 ESTOPPEL PROVISIONS. As of the Closing, the Series B
Shareholders acknowledge that they have no right, title, claim, demand,
interest, action or cause of action in, to or against AME in any capacity
whatsoever (whether as a shareholder, officer, director or creditor),
except in respect of their status as employees of AME, and then only to the
extent of accrued and unpaid salary, benefits and reimbursable expenses
under AME policy up to the date of Closing. This Section 2.31 shall be
construed to constitute a release and waiver by the Series B Shareholders
of any and all of the foregoing. Upon the Closing, the Series B
Shareholders shall have no option, warrant or other right to acquire any of
the capital stock of AME.
2.32 CHANGE IN SHAREHOLDINGS. Since the date of the Interim Balance
Sheet, the Shareholders have not exchanged, sold, or otherwise affected
their relative shareholdings of AME, except for the exercise of outstanding
options by the Shareholders.
2.33 TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES. Except as
disclosed on SCHEDULE 2.33 hereto, no Shareholder, officer, director,
employee, family members or any affiliates or relatives of the foregoing
has on the date hereof and since June 1, 1993,
(a) Borrowed money from or loaned money to AME which remains
outstanding;
(b) Had any contractual or other claim, express or implied, of
any kind whatsoever against AME;
(c) Had any interest in any property or assets used by
AME in its businesses; or
(d) Engaged in any other transaction with AME (other
than employment relationships).
2.34 BROKERS AND FINDERS. No broker or finder has been involved in
this transaction on behalf of Shareholders or AME, and neither AME, NRC nor
Shareholders will be obligated to pay any brokers' or finders' fees as a
consequence of any brokerage agreement entered into by action Shareholders
or AME.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SERIES A SHAREHOLDERS
The Series A Shareholders warrant and represent, jointly and
severally, to NRC as follows:
3.1 AUTHORITY. Each of the Series A Shareholders has the full right,
power and authority to enter into this Agreement and to sell, transfer,
assign and deliver the Shares owned by him or her to NRC pursuant to this
Agreement. The sale of the Shares pursuant to this Agreement by the Series
A Shareholders has been duly authorized by AME and does not require consent
or approval by any person.
3.2 OWNERSHIP. Each Series A Shareholder owns legally and
beneficially the Shares set opposite his or her name in SCHEDULE 2.1
hereof, free and clear of all liens, security interests, pledges or
encumbrances and no assignment or transfer of such Shares has been made or
will be made prior to Closing.
3.3 SURRENDER TO NRC. At Closing, the Series A Shareholders shall
assign and deliver to NRC the Shares owned by each Series A Shareholder
free and clear of any liens, claims, charges, pledges, security interests
and encumbrances.
3.4 ENFORCEABILITY. This Agreement has been duly and validly
executed and delivered by the Series A Shareholders and constitutes the
legal, valid and binding obligation of the Series A Shareholders in
accordance with its terms.
3.5 NO CONSENT. No consent of any lender, trustee, director,
security holder or any other person is required for the Series A
Shareholders to enter into this Agreement or to consummate the transactions
contemplated hereby, nor any mortgage, indenture or other agreement to
which the Series A Shareholders are parties or by which they are bound or
that affects any of their respective properties, including, without
limitation the option agreements, conflict with or restrict the execution
and delivery of this Agreement by the Series A Shareholders or the
consummation of the transactions contemplated hereby or thereby.
3.6 ESTOPPEL PROVISIONS. As of the Closing, the Series A
Shareholders acknowledge that they have no title, claim, demand, interest,
action or cause of action in, to or against AME in any capacity whatsoever
(whether as shareholders, officers, directors, or creditors), except in
respect of their status as employees of AME, and then only to the extent of
accrued and unpaid salary, benefits and reimbursable expenses under AME
policy up to the date of Closing. This Section 3.6 shall be construed to
constitute a release by the Series A Shareholders of any and all of the
foregoing and shall constitute a waiver of any and all of the foregoing.
Upon the Closing the Series A Shareholders shall have no option, warrant or
other right to acquire any of the capital stock of AME.
3.7 REPRESENTATIONS AND WARRANTIES INCORPORATED BY REFERENCE. The
Series A Shareholders make the representations and warranties set forth in
the following Sections of this Agreement and the same are hereby
incorporated by reference: 2.5, 2.6, 2.7, 2.8(a),(c),(d), 2.12,
2.14(b),(c),(e), 2.15(a),(d),(f), (g), (h),(i), 2.16(c), 2.18, 2.19, 2.22,
2.24, 2.25(a),(b),(c), 2.27, 2.29(a),(b)(c), 2.30. Whenever context
requires with respect to the representations and warranties incorporated by
reference, Series B Shareholders shall mean Series A Shareholders.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF NRC
NRC represents and warrants to Shareholders as follows:
4.1 ORGANIZATION AND STANDING. NRC is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
4.2 AUTHORIZATION. The Company has all necessary corporate power and
authority under the laws of the State of Delaware and all other applicable
provisions of law to execute and deliver this Agreement, to issue the NRC
common stock as part of the Purchase Price under this Agreement. All
corporate action on the part of the Board of Directors and shareholders of
NRC required for the lawful execution and delivery of this Agreement, and
issuance and delivery of the NRC common stock has been duly and effectively
taken. Upon execution and delivery, this Agreement will be a valid and
binding obligation of NRC except as enforcement may be limited by
bankruptcy, moratorium and other creditors' rights and by the availability
of equitable remedies. Upon Closing, the NRC common stock will be duly
authorized and validly issued, fully paid, non-assessable, and issued in
compliance with federal securities laws and the securities laws of the
State of Virginia. No stockholder of NRC or other person has any
preemptive right of subscription or purchase with respect to the NRC common
stock issued as part of the Purchase Price.
4.3 NO VIOLATION. The execution, delivery and performance of this
Agreement by NRC and the consummation of the transactions contemplated
hereunder will not violate, conflict with or constitute a default under
NRC's Articles of Incorporation or By-Laws or any contract, instrument or
agreement to which it is a party or by which it is bound.
4.4 BROKERS OR FINDERS. No broker or finder has been involved in
this transaction on behalf of NRC, and neither NRC, AME nor Shareholders
will be obligated to pay any brokers' or finders' fees as a consequence of
any action or inaction on NRC's part.
4.5 INVESTMENT INTENT. NRC is acquiring the Shares for investment
for its own account with the intention of holding such Shares for
investment, without any present intention of participating directly or
indirectly in any distribution of all or any part of the Shares. The
certificates evidencing the Shares purchased by NRC shall bear a
restrictive legend to the effect that the Shares may not be sold unless
registered or exempt from registration under applicable securities laws.
4.6 DISCLOSURE. No representations and warranties by NRC to the
Shareholders in this Agreement or any document or certificate furnished or
to be furnished to Shareholders pursuant hereto contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained herein
and therein not misleading.
4.7 SECRET CLEARANCE. After the Closing, the directors elected by
NRC to the AME Board of Directors will have secret clearance.
4.8 DISCLOSURE DOCUMENTS. Prior to execution of this Agreement NRC
furnished the following information to each Series B Shareholder: (i) NRC's
Annual Report on Form 10-K for the fiscal year ended August 31, 1995,
including the 1995 Annual Report to Shareholders and the Proxy Statement
prepared in connection with the annual meeting of shareholders held January
11, 1996; and (ii) NRC's Quarterly Reports on Form 10-Q for the fiscal
quarters ended November 30, 1995, and February 29, 1996.
SECTION 5
EXAMINATION OF THE BUSINESS
Before Closing, attorneys, accountants and any other employees or
consultants representing NRC shall have, subject to the provisions of
Section 11 below, complete access to all the properties, books, contracts,
tax returns, commitments, records, employees, officers, accountants, and
offices of AME with respect to the business of AME and the Shareholders
will furnish to NRC all such documents and all the information with respect
to the business of AME as NRC may reasonably request. In no event shall
any such examination operate as a waiver of any Shareholders'
representations and warranties or relieve the Shareholders of any of their
obligations under this Agreement.
SECTION 6
CONDITIONS TO THE OBLIGATIONS OF NRC
NRC's obligations to effect the transaction contemplated hereby are
subject to the satisfaction of the following conditions and,
notwithstanding anything to the contrary elsewhere herein contained, NRC
shall have the right to terminate this Agreement upon written notice (in
which event neither party shall have any further obligation or
responsibility to proceed to Closing under or by reason of this Agreement)
unless the conditions set out in this Section shall have been satisfied at
or before the Closing. By Closing hereunder, NRC shall be deemed to have
waived any of the following conditions which were not fulfilled as of the
Closing, unless otherwise specified in writing executed by the parties
hereto:
6.1 NO INACCURACIES. NRC's examination of AME shall not have
disclosed any material inaccuracy in the representations and warranties of
the Shareholders set forth in this Agreement and the Schedules attached
hereto; such representations and warranties shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on, as
of and with reference to such date, and NRC shall have received a
certificate to such effect, signed by certain of the Series B Shareholders
substantially in the form set forth in EXHIBITS "C-1," "C-2" AND "C-3,"
which shall constitute further representations and warranties in favor of
NRC and a certificate from the President of AME substantially in the form
set forth in EXHIBIT "D."
6.2 COMPLIANCE. The Shareholders shall have performed and complied
in all respects with and shall not have defaulted in any respect in any
agreement, covenant, condition or obligation contained in or required by
this Agreement to be performed or complied with by them prior to or at
Closing, and NRC shall have received a certificate to such effect signed by
certain of the Series B Shareholders substantially in the form set forth in
EXHIBITS "C-1," "C-2" AND "C-3," respectively, which shall constitute
further representations and warranties in favor of NRC.
6.3 DELIVERY OF DOCUMENTS. NRC shall have received the executed
documents required to be delivered to it pursuant to this Agreement (as
listed in EXHIBIT "A" attached hereto), which executed documents shall
comply in all material respects with this Agreement and shall be in
substantially the respective forms of the Exhibits attached hereto. The
Shareholders shall deposit into escrow the sum of $2,700,000 at closing to
be held pursuant to the Escrow Agreement attached hereto as EXHIBIT "B."
6.4 OPINION OF COUNSEL. NRC shall have received the opinion of
counsel for the Shareholders dated the Closing Date, in substantially the
form set forth in EXHIBIT "E" hereto.
6.5 RESIGNATION. NRC shall have received the written resignation of
the directors of AME and of the trustees, plan administrators and
fiduciaries of any benefit plan of AME as may be requested by NRC.
6.6 CONSENTS. The Shareholders will deliver (or cause to be
delivered) to NRC all consents, novations and approvals of third parties,
including governmental agencies or authorities, required, or as NRC may
deem necessary or appropriate, to give full effect to the transactions
contemplated hereby and to allow AME to carry on its business following the
Closing.
6.7 EMPLOYMENT AGREEMENT. At the Closing, John T. Drewry and Otto
P. Jons shall have executed and delivered the Employment Agreements
attached as EXHIBITS "F-1" AND "F-2," respectively.
6.8 COVENANT NOT TO COMPETE. At the Closing, Simon Glatz shall have
executed and delivered the Covenant Not to Compete substantially in the
forms set forth in EXHIBIT "G."
6.9 UCC SEARCHES. NRC shall have received from the Shareholders
prior to Closing: (i) all of the disclosure Schedules referred to herein
and documents and other materials and information required to be delivered
in connection therewith under this Agreement all of which shall be in form
and substance reasonably acceptable to NRC; and (ii) Uniform Commercial
Code lien searches under the name of AME as debtor. Such searches shall
have been performed both at office of the local place for filing and at the
central place of filing in the State of Virginia. In the event such lien
searches reveal the existence of liens or security interests held by anyone
in the Shares which are the subject of this Agreement, such liens and
security interests shall be terminated by the Shareholders at their expense
at or prior to Closing.
6.10 NO ADVERSE CHANGE. There shall not have been any material
adverse change in the business or the assets of AME. For the purposes of
this Agreement, an "material adverse change" shall mean any development or
discovery of any fact, occurrence, contingency or liability, which
individually or in the aggregate has a material adverse effect on the
financial condition, operations or prospects of the business as a whole.
6.11 NO INTERFERENCE. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions
contemplated hereby or which would limit or adversely affect NRC's
ownership or control of AME or the business of AME, and there shall not
have been threatened, nor shall there be pending, any action or proceeding
by or before any court of governmental agency or other regulatory or
administrative agency or commission, (i) challenging any of the
transactions contemplated by this Agreement or seeking monetary relief by
reason of the consummation of such transactions or (ii) by any present or
former owner of any capital stock or equity interest in AME (whether
through a derivative action or otherwise) against AME or any officer,
director or shareholder of AME in his capacity as such or (iii) which might
have an adverse effect on the business, prospect or condition (financial or
otherwise) of AME, except as disclosed in Section 2.24.
6.12 FTC APPROVAL. The Federal Trade Commission and Justice
Department shall not have disapproved the transaction set forth herein
pursuant to the Hart-Scott-Rodino Act and any waiting periods imposed under
the Hart-Scott-Rodino Act or by the Federal Trade Commission or Justice
Department shall have expired or otherwise lapsed.
6.13 FORM 8023-A. The Shareholders shall execute and deliver IRS Form
8023-A promulgated by the Treasury Department and such other documents as
may be necessary to make an election under Code <section> 338(h)(10).
6.14 REGISTRATION AGREEMENT. The Series B Shareholders shall have
executed and delivered the Registration Agreement attached hereto as
EXHIBIT "H."
6.15 COOPERATION. Each of the Shareholders shall (so far as each is
able) cause the conditions stated above in this Section to be fulfilled.
SECTION 7
CONDITIONS TO THE OBLIGATIONS OF THE
SHAREHOLDERS
The obligation of the Shareholders to effect the transactions
contemplated hereby are subject to the satisfaction of the following
conditions and, notwithstanding anything to the contrary elsewhere herein
contained, the Shareholders shall have the right to terminate this
Agreement upon written notice (in which event neither party shall have any
further obligation or responsibility to proceed to Closing under or by
reason of this Agreement) unless the conditions set out in this Section
shall have been satisfied at or before the Closing. By Closing hereunder,
the Shareholders shall be deemed to have waived any of the following
conditions which were not fulfilled as of the Closing, unless otherwise
specified in writing executed by the parties hereto:
7.1 NO INACCURACIES. All of the representations and warranties of
NRC set forth in this Agreement shall be materially true and correct in all
respects on and as of the Closing Date, with the same force and effect as
though such representations and warranties had been made on, as of and with
reference to such date and the Shareholders shall have received a
certificate signed by an officer of NRC to that effect, substantially in
the form attached hereto as EXHIBIT "I," which shall constitute further
representations and warranties in favor of the Shareholders.
7.2 COMPLIANCE. NRC shall have performed and complied in all
respects with and shall not have defaulted in any respect in any agreement,
covenant, condition or obligation contained in or required by this
Agreement to be performed or complied with by it prior to or at Closing,
and the Shareholders shall have received a certificate signed by an officer
of NRC to that effect, substantially in the form attached hereto as EXHIBIT
"I," which shall constitute further representations and warranties in favor
of the Shareholders.
7.3 DELIVERY OF DOCUMENTS. The Shareholders shall have received the
executed documents required to be delivered to them pursuant to the
Agreement (as listed in EXHIBIT "A"), which executed documents shall comply
in all material respects with this Agreement and shall be in substantially
the forms of the respective Exhibits attached hereto.
7.4 OPINION OF COUNSEL. The Shareholders shall have received the
opinion of counsel for NRC, dated as of the Closing Date, in substantially
the form and substance as set forth in EXHIBIT "J" hereto.
7.5 EMPLOYMENT AGREEMENT. At the Closing, AME and NRC shall have
executed and delivered the Employment Agreements attached hereto as
EXHIBITS "F-1" AND "F-2." NRC shall cause AME to execute and deliver
EXHIBIT "F-1" AND "F-2."
7.6 COVENANT NOT TO COMPETE. At the Closing, NRC and AME shall have
executed and delivered the Covenant Not to Compete attached as EXHIBIT "G."
7.7 REGISTRATION AGREEMENT. NRC shall have executed and delivered
the Registration Agreement attached hereto as EXHIBIT "H."
7.8 FTC APPROVAL. The Federal Trade Commission and Justice
Department shall not have disapproved the transaction set forth herein
pursuant to the Hart-Scott-Rodino Act and any waiting periods imposed under
the Hart-Scott-Rodino Act or by the Federal Trade Commission or Justice
Department shall have expired or otherwise lapsed.
7.9 COOPERATION. NRC shall (so far as it is able) cause the
conditions stated above in this Section to be fulfilled.
7.10 NO ADVERSE CHANGE. There shall not have been any material
adverse change in the business or the assets of NRC. For the purposes of
this Agreement, an "material adverse change" shall include, without
limitation, any development or discovery of any fact, occurrence,
contingency or liability, which individually or in the aggregate has a
material adverse effect on the financial condition, operations or prospects
of the business as a whole.
7.11 NO INTERFERENCE. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions
contemplated hereby or which would limit or adversely affect NRC's
ownership or control of AME or the business of AME, and there shall not
have been threatened, nor shall there be pending, any action or proceeding
by or before any court of governmental agency or other regulatory or
administrative agency or commission, (i) challenging any of the
transactions contemplated by this Agreement or seeking monetary relief by
reason of the consummation of such transactions or (ii) by any present or
former owner of any capital stock or equity interest in NRC (whether
through a derivative action or otherwise) against NRC or any officer,
director or shareholder of NRC in his capacity as such or (iii) which might
have an adverse effect on the business, prospect or condition (financial or
otherwise) of NRC.
7.12 CONSENTS. NRC will deliver (or cause to be delivered) to AME all
consents, novations and approvals of third parties, including governmental
agencies or authorities, required, or as the Shareholders may deem
necessary or appropriate, to give full effect to the transactions
contemplated hereby and to allow AME to carry on its business following the
Closing.
SECTION 8
CERTAIN ADDITIONAL COVENANTS OF THE PARTIES
8.1 CONDUCT OF BUSINESS. The Shareholders covenant that between the
date hereof and the Closing Date, the business of AME will be operated only
in the regular and ordinary course with no material adverse change in the
financial conditions or business of AME and AME shall not have taken or
permitted any of the actions or changes described in Section 2.23(a)
through (s) without the prior written consent of NRC. The Shareholders
shall not transfer any of their Shares prior to the Closing.
8.2 PRESERVATION OF BUSINESS AND GOODWILL. The Shareholders shall
use their best efforts between the date hereof and the Closing Date
(without making any commitment on NRC's behalf) to preserve the business of
AME and to preserve the goodwill of AME's suppliers, customers and others
having business relationships with AME.
8.3 NOTIFICATION OF PROCEEDINGS. The Shareholders shall immediately
notify NRC, in writing, of any claims, actions, lawsuits, investigations or
proceedings filed, initiated, or to the Shareholders best knowledge,
threatened, on or prior to the Closing Date, against any Shareholder or AME
related to the AME Business, or the consummation of the transactions
contemplated by this Agreement, and shall immediately notify NRC, in
writing, of all liens, judgments, orders, deficiencies, assessments or
claims entered, asserted, threatened, or assessed against any Shareholder,
AME or the consummation of such transactions.
8.4 USE OF "AME" NAME. After the Closing, the Shareholders shall not
use or cause to be used the name "Advanced Marine Enterprises" or "AME"
including any variations thereof and shall not interfere with or object to
the exclusive use by NRC or any of its successors or assigns of such name
or any variant thereof, either separately or in conjunction with NRC's
name, in any form(s) whatsoever after the Closing.
8.5 RECORDS. For a period of five (5) years (or such longer period
as may be required by law or as may be reasonably necessary as a result of
audits and tax contests) from the Closing Date, neither NRC nor the
Shareholders shall dispose of or destroy any of their respective business
records and files to the extent they relate primarily to the business of
AME without first offering to turn over possession thereof to the other
party, by written notice to such party at least 60 days prior to the
proposed date of such disposition or destruction. NRC and the Shareholders
shall allow the other parties hereto and their respective representatives
access to all of their business records and files to the extent that they
relate primarily to the business of AME, during normal working hours at
their principal place of business or at any location where such records are
stored, and shall have the right to copy such records and files at the cost
of the party requesting such records; provided, however, that any such
access shall be had or done in such manner so as not to unreasonably
interfere with normal conduct of business. No Shareholder shall be
responsible for records in the possession or control of any other
Shareholder.
8.6 FURTHER ASSURANCES; COOPERATION. At and after the Closing, the
parties hereto will execute and deliver, or cause to be executed and
delivered, such further instruments of conveyance and transfer and take
such further action as the other party may reasonably request to vest in
NRC good, valid and marketable title in and to the Shares and to cause the
options to be surrendered and canceled and otherwise to carry out the
provisions of this Agreement within a reasonable period after such request
and without further cost or expense to the requesting party.
8.7 EMPLOYEE BENEFIT PLANS. AME (prior to Closing) and the
Shareholders shall cooperate and use their best efforts to obtain the
cooperation of the trustees, administrators, investment advisors, and any
other ERISA fiduciary, to assist NRC in the amendment, termination, merger
and distribution of assets (if applicable) from the employee benefit plans
listed in SCHEDULE 8.7. Employees of AME will be given service credits for
service with AME with respect to any employee benefit plans maintained by
NRC in which such employees are eligible to participate.
8.7.1 EMPLOYEE RETIREMENT BENEFIT PLANS.
(i) NRC and AME will merge the AME Section 401(k)
Plan listed in SCHEDULE 8.7.1 into the NRC Profit Sharing/401(k) Plan as
soon as reasonably practicable after the Closing Date, and
(ii) AME will notify all plan participants and the
appropriate government agencies (as required under ERISA and the Code), if
any, of the cessation of further benefit accrual under the AME 401(k) Plan.
(iii) After the Closing Date, the Shareholders will
cooperate to obtain a determination from the IRS regarding the merger of
AME's Section 401(k) Plan.
8.7.2 TERMINATION OF PLANS. The Shareholders shall cooperate
in terminating each of the Plans listed on SCHEDULE 8.7.2 on the
termination dates shown on such Schedule.
SECTION 9
INDEMNIFICATION
9.1 DEFINITION. As used herein, "Damages" shall mean any
obligations, security interests, liens, claims, charges, encumbrances,
pledges, liabilities, indemnities, causes of action, judgments,
settlements, compromises, levies, executions, garnishments, debts,
interest, penalties, fines, remediation costs, clean-up costs, statutory
damages, punitive damages, damages, losses, costs, and expenses (including
without limitation attorney's fees and other costs and expenses incident to
and paid by the indemnified party in connection with the investigation,
preparation, discovery, trial, compromise or settlement of any claim, cause
of action, demand, claim, suit, action or proceeding or otherwise)
incurred, suffered or sustained or paid or required to be paid by the
indemnified party.
9.2 INDEMNIFICATION BY SHAREHOLDERS. Subject to the limitations of
Section 9.6, after Closing the Shareholders, jointly and severally, agree
to and shall, pay, defend and promptly indemnify NRC and AME and the
officers, directors and employees of the foregoing (except the
Shareholders) against, and save and hold NRC and AME (and their respective
officers, directors and employees, except the Shareholders) harmless from
any and all Damages resulting from, arising out of or connected with (i)
any breach or inaccuracy of any of the representations and warranties made
by the Shareholders in or pursuant to this Agreement, the certificates and
documents executed by Shareholders in connection herewith; (ii) the
nonfulfillment of any agreement or covenant made by Shareholder in or
pursuant to this Agreement or any other agreement to which they are
parties; (iii) any liabilities not disclosed on the Closing Balance Sheet
arising with respect to events or omissions on or prior to the Closing Date
even though such liabilities were known, contingent or unknown; (iv) all
Damages suffered by NRC or AME in attempting to collect excess liabilities
from Shareholders; (v) with respect to all contracts of AME, whether or not
disclosed on the Schedules attached hereto, any Damages arising thereunder
due to events or omissions on or prior to the Closing Date; (vi) all
Damages arising in any way from any product or service of AME prior to the
Closing Date; (vii) all Damages arising out of claims that those products
or services of AME sold, used, licensed or leased prior to the date of
Closing infringe upon the Intellectual Property Rights of others; (viii)
all Damages with respect to acts or omissions which occurred with respect
to AME or the Shareholders on or prior to the Closing Date; and (ix) all
Damages resulting from the litigation described in SCHEDULE 2.24 hereto,
including, but not limited to, all Damages arising out of or connected with
the PRC Litigation and the Kipp Claim.
9.3 INDEMNIFICATION BY NRC. Subject to the limitations of Section
9.6, after Closing NRC agrees to and shall pay, defend and promptly
indemnify Shareholders or any applicable Shareholder against, and save and
hold Shareholders harmless from, any and all Damages incurred, suffered or
required to be paid by Shareholders resulting from, arising out of or
connected with (i) any breach or inaccuracy of any of the representations
and warranties made by NRC in this Agreement, or in the certificates and
documents executed by NRC in connection with the consummation of the
transactions contemplated hereby and thereby; (ii) the non-fulfillment of
any agreement or covenant made by NRC in or pursuant to this Agreement or
any other agreement to which NRC is a party; (iii) with respect to
contracts of AME which were disclosed to NRC on the Schedules attached
hereto, any Damages arising thereunder from acts or omissions after the
Closing Date, unless caused by Shareholders as employees of the NRC or AME;
and (iv) all Damages with respect to any acts or omissions which occurred
with respect to AME after the Closing, unless caused by the Shareholders or
unless the result of matters arising on or prior to the Closing.
9.4 PROCEDURE FOR INDEMNIFICATION. Any party seeking indemnification
(the "Indemnified Party") with respect to a third party claim (as opposed
to a claim between the parties, only) shall give written notice (the
"Notice") to the party from whom indemnification is sought (the
"Indemnifying Party") of the facts and circumstances giving rise to the
claim for indemnification. Upon receipt of a Notice respecting a third
party claim, the Indemnifying Party shall have the obligation to either pay
or, subject to the rights of or duties to any insurer having liability
therefor, defend the third party claim, with attorneys reasonably
acceptable to the Indemnified Party, provided that (i) the Indemnifying
Party agrees in writing to be bound by and to promptly pay the full amount
of any final judgment or settlement, (ii) the Indemnified Party is
reasonably assured of the Indemnifying Party's ability to satisfy such
agreement, and (iii) no settlement or compromise of any matter shall be
made without the consent of the Indemnified Party, which consent shall not
be unreasonably withheld. In addition, the Indemnified Party may also
participate at its expense in such contest or defense. Such options shall
be exercised by the giving of notice by the exercising party to the other
parties within ten (10) days of receipt of a Notice. Upon a failure of
Indemnifying Party to pay or assume the defense of the matter or if the
Indemnified Party reasonably rejects the tender of such defense, the
Indemnified Party may proceed to pay, settle, compromise or otherwise
handle the matter and seek indemnification as provided for herein. The
parties acknowledge that pursuant to this Section 9.4 the Shareholders, as
"Indemnifying Party," have agreed to undertake the defense of the PRC
Litigation, the Kipp Claim and the other matters listed in SCHEDULE 2.24
and have agreed to the provisions of the second sentence of this Section
9.4 with respect thereto.
9.5 ESCROW. Each party's indemnification rights hereunder shall be
in addition to and not in lieu of all other rights and remedies of the
parties at law or equity or under any other agreements executed by the
parties, including rights under the Escrow Agreement attached as EXHIBIT
"B."
9.6 LIMITATION ON INDEMNITY OBLIGATION. Each Shareholder's liability
to indemnify NRC under Section 9.2 shall be limited to the aggregate
consideration received by such Shareholder pursuant to Section 1.3 hereof.
NRC's liability to indemnify each Shareholder under Section 9.3 hereof
shall be limited to the aggregate consideration paid to such Shareholder
pursuant to Section 1.3 hereof. With respect to Damages incurred as a
result of a breach of the representations and warranties contained in
Section 2 hereof made only by the Series B Shareholders and not
incorporated by reference in Section 3 hereof, the Series A Shareholders
shall be liable for such breach only to the extent of their share of the
Purchase Price held in escrow under EXHIBIT "B" hereto. The Series A
Shareholders shall have no other liability for the breach of the
representations and warranties made in Section 2 hereof except to the
extent such representations and warranties are incorporated by reference in
Section 3 hereof.
An Indemnified Party shall make no claim against an Indemnifying Party
under this Section 9 unless and until the aggregate monetary amount of all
such claims on a cumulative basis exceeds Two Hundred Thousand Dollars
($200,000.00) (the "Threshold Amount"), in which event the Indemnified
Party may claim indemnification for all Damages, including the Threshold
Amount, subject to the other limitations contained in this Section 9.6.
Notwithstanding the preceding sentence, all Damages with respect to the PRC
Litigation and the Kipp Claim shall be recoverable by NRC as the
Indemnified Party even though such Damages may be less than the Threshold
Amount and any PRC Litigation Damages and Kipp Claim Damages shall not
count against the Threshold Amount with respect to other claims. It shall
not be necessary for an Indemnified Party to pursue the indemnity remedies
herein contained against all Indemnifying Parties and the Indemnified Party
may pursue such remedies against one or more Indemnifying Parties to the
exclusion of one or more Indemnifying Parties. It shall not be necessary
for an Indemnified Party to first attempt to recover its Damages from a
third party before seeking indemnity hereunder.
The Damages which an Indemnifying Party is liable to, for or on behalf
of the Indemnified Party pursuant to this Section 9, shall be reduced
(including, without limitation, retroactively) through subsequent repayment
as described below by an amount equal to any insurance proceeds or
government cost reimbursements actually received by or on behalf of such
Indemnified Party relating to the Damages. If an Indemnified Party shall
have received or shall have paid on its behalf an indemnity payment in
respect of any Damages and insurance proceeds or government cost
reimbursements in respect of such Damages are also received by the
Indemnified Party, then such Indemnified Party shall pay Indemnifying Party
the lesser of (i) the amount of such insurance proceeds or governmental
cost reimbursement, or (ii) the amount of such indemnity payment. The
Indemnified Party covenants and agrees to use all reasonable efforts to
collect all such sums as are available to it under its existing insurance
policies or under government cost reimbursement rules and regulations which
would be applicable to any such Damages.
The representations, warranties and covenants of the trustees under
the Corey T. Glatz Generation Skipping Trust, the Corey T. Glatz Residuary
Trust, the Terrance A. Glatz Generation Skipping Trust and the Terrance A.
Glatz Residuary Trust are made by such trustees in their fiduciary
capacities and not in their individual capacities.
SECTION 10
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations, warranties, covenants, conditions and agreements
contained herein or in any instrument or other document delivered pursuant
to this Agreement or in connection with the transactions contemplated
hereby shall survive the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and any investigation
or audit conducted by either party hereto for a period of five (5) years
after the Closing, except that the limitation period shall be two (2) years
with respect to Sections 2.3, 2.4, 2.6, 2.7(a), 2.9, 2.11, 2.12, 2.13,
2.15, 2.17, 2.20, 2.21, 2.23, 2.26, 2.30, 2.32 and 2.34. Any
indemnification claim pending under Section 9 hereof shall not be affected
by the limitations set forth herein.
SECTION 11
ACCESS TO INFORMATION AND CONFIDENTIALITY
Shareholders and NRC will hold and cause their respective
representatives to hold in strict confidence, unless compelled to disclose
by judicial or administrative process, or in the opinion of its counsel, by
other requirements of law, all documents and information concerning AME
furnished to NRC and all documents and information concerning NRC furnished
to Shareholders in connection with the transactions contemplated by this
Agreement, except, in connection with the foregoing, to the extent that
such information can be shown to have been (i) previously known by NRC
prior to its disclosure to NRC by Shareholders, (ii) previously known by
Shareholders prior to its disclosure to Shareholders by NRC, (iii) in the
public domain through no fault of either Shareholders or NRC, or (iv) later
lawfully acquired by either Shareholder or NRC from other sources. Neither
party will release or disclose such information to any other person, except
in connection with this Agreement to its auditors, financial advisors,
other consultants and advisors. However, the foregoing provisions of this
Section 11 shall not bind or apply to NRC upon the expiration of 120 days
after Closing, but shall continue to be binding on the Shareholders. With
respect to any classified government contracts, the Shareholders will exert
their best efforts to enable NRC and its authorized representatives to
obtain permission from appropriate government agencies to conduct such due
diligence investigations as may be deemed reasonable.
SECTION 12
PRESS RELEASES
Except as required by law, any public announcements regarding the
transactions contemplated hereby shall be made only with the mutual consent
of Shareholders and NRC.
SECTION 13
FURTHER ASSURANCES
Each party hereto agrees to execute and deliver from time to time such
additional instruments or documents reasonably requested by the other party
to effectuate the transactions contemplated by this Agreement.
SECTION 14
SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. No assignment
of this Agreement shall relieve the assigning party of its representations,
warranties, covenants and agreements hereunder and no assignment or
delegation of the other agreements referenced herein shall be permitted
except as authorized under such other agreements.
SECTION 15
NOTICES
All notices, requests, demands and other communications under or in
connection with this Agreement shall be in writing, shall be delivered by
hand or sent by next day air or by certified, return receipt requested, to
the following addresses:
If to Shareholders : John T. Drewry
110 Commonage Drive
Great Falls, Virginia 22066
With a Copy to: David H. Pankey, Esq.
McGuire Woods Battles & Boothe
627 Eye Street, N.W.
Great Falls, Virginia 20006
If to NRC: Nichols Research Corporation
4040 South Memorial Parkway
Huntsville, Alabama 35802
Attn: Chris H. Horgen
With a Copy to: John R. Wynn, Esq.
Lanier Ford Shaver & Payne P.C.
P.O. Box 2087
Huntsville, Alabama 35804
Any of the names and addresses given above may be changed by notice given
as provided above. Notices by hand delivery shall be deemed received on
the date of delivery, provided that notices by hand delivery must be made
to an executive officer of NRC or directly to the Representative. Notices
sent by next-day air shall be deemed received on the next business day and
notices sent by certified mail shall be deemed received on the third
business day after posting, even if such next-day air or certified mail is
unsuccessful because of an uncommunicated change of address, unclaimed, or
refused.
SECTION 16
APPLICABLE LAW; DISPUTE RESOLUTION
(a) DELAWARE LAW. The validity, interpretation and legal effect of
this Agreement shall be governed by the internal substantive laws and not
the choice of law rules of the State of Delaware.
(b) VENUE. Any judicial proceeding brought against Shareholders or
NRC with respect to this Agreement or any other agreements referenced
herein may be brought in any court of competent jurisdiction in Delaware
and, by execution and delivery of this Agreement, each Shareholder and NRC
(i) accepts generally and unconditionally, the personal and subject matter
jurisdiction of such courts and any related appellate court and irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement or any other agreement referenced herein and (ii) irrevocably
waives any objection as to the venue of any such suit, action or proceeding
brought in such a court or that such court is an inconvenient forum.
SECTION 17
HEADINGS AND CONSTRUCTION
The headings in this Agreement are for convenience of reference only
and are not part of the substance of this Agreement. Pronouns used in one
gender or number shall include pronouns of other genders or numbers when
context so requires.
SECTION 18
WAIVERS AND AMENDMENTS
This Agreement or any term hereof may be amended, waived, discharged
or terminated only in writing signed by all of the parties hereto (or, in
the case of the Shareholders by the Representative) or their respective
successors and permitted assigns. A waiver of any breach or failure to
enforce any of the terms or conditions of this Agreement must be in writing
and shall not in any way affect, limit or waive a party's rights hereunder
at any time to enforce strict compliance thereafter with every term or
condition of this Agreement, including the provision(s) that were waived on
any prior occasion.
SECTION 19
THIRD PARTY RIGHTS
Notwithstanding any other provision of this Agreement, this Agreement
shall not create benefits on behalf of any employee, third party or any
other affiliate or unaffiliated person, and this Agreement shall be
effective only as between the parties hereto, their successors and
permitted assigns, except that AME shall be a third party beneficiary of
the indemnity rights under Section 9 hereof after the Closing.
SECTION 20
EXPENSES
Each party shall pay all expenses incurred by him or it in connection
with this Agreement and the transactions hereunder. In no event shall AME
be responsible for any of the expenses of the Shareholders the transactions
under this Agreement.
SECTION 21
ILLEGALITY
In the event that any one or more of the provisions contained in this
Agreement shall be determined to be invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and enforceability of
any such provision in every other respect and the remaining provisions of
this Agreement shall not, in any way, be impaired. The invalid provision
shall be deemed amended to reflect as closely as possible the intent of the
parties as such intent is expressed in this Agreement.
SECTION 22
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior or
contemporaneous representations, warranties and agreements relating to such
subject matter. This Agreement shall be construed in conjunction with the
other agreements referenced herein.
SECTION 23
COUNTERPARTS
This Agreement may be executed in more than one counterpart, all of
which shall, together, constitute one and the same instrument and shall
become effective when one or more counterparts have been signed by NRC and
delivered to Shareholders and one or more counterparts have been signed by
Shareholders and delivered to NRC.
SECTION 24
SHAREHOLDERS' REPRESENTATIVE
The Shareholders hereby appoint John T. Drewry as their agent and
representative and vest him with the full power and authority as attorney-
in-fact to take all such action as may be required to be taken by the
Shareholders, jointly or severally, pursuant to this Agreement and the
Escrow Agreement, to communicate and receive all notices, and to give
notices, counter notices, joint written instructions, and other
communications on behalf of the Shareholders under this Agreement and the
Escrow Agreement, to receive and make all payments to be received or paid
by the Shareholders under this Agreement and the Escrow Agreement, and to
make agreements, compromises, waivers and settlements with respect to this
Agreement and the Escrow Agreement, and to resolve all disputes under this
Agreement and the Escrow Agreement. John T. Drewry is hereby appointed
agent to receive service of process for and on behalf of each Shareholder
with respect to any legal action commenced by NRC or AME against one or
more of the Shareholders. This power of attorney shall be durable and
shall be deemed coupled with an interest and shall survive the death or
incompetency of any Shareholder or Optionholder. John T. Drewry shall
serve as Representative until NRC receives written notice from the Series B
Shareholders who held, prior to the Closing, more than 50% of such stock
that another person has been named Representative. A majority of the
Series B Shareholders shall have the right to remove and to replace John T.
Drewry as the Representative. Any successor Representative shall have all
of the rights and duties hereby conferred on John T. Drewry.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered on the date first appearing above.
NICHOLS RESEARCH CORPORATION
Chris H. Horgen
By:____________________________
Chris H. Horgen, Chief
Executive Officer
SERIES A SHAREHOLDERS:
Raymond J. Rockwell, Jr.
Patrick Brawley
By:_____________________________
Patrick Brawley, Attorney-
In-Fact
Mary D. Mahler
________________________________
Mary D. Mahler
Lewis R. Sheldon
________________________________
Lewis R. Sheldon
Barbara S. Lamade
________________________________
Barbara S. Lamade
David A. Helgerson
________________________________
David A. Helgerson
Barry L. Batchelor
________________________________
Barry L. Batchelor
Patrick W. Brawley
________________________________
Patrick W. Brawley
Stephen R. Leavy
________________________________
Stephen R. Leavy
Frederic S. Hering
________________________________
Frederic S. Hering
Kenneth A. Randell
________________________________
Kenneth A. Randell
Robert M. Mallard
Stephen R. Leavy
By:_____________________________
Stephen R. Leavy, Attorney-
In-Fact
Gary M. Poquette
________________________________
Gary M. Poquette
Geoffrey D. Fuller
Lewis R. Sheldon
By:______________________________
Lewis R. Sheldon, Attorney-
In-Fact
Dennis F. Breen
________________________________
Dennis F. Breen
F. Patrick Dougherty
________________________________
F. Patrick Dougherty
Eugene R. Miller, Jr.
________________________________
Eugene R. Miller, Jr.
Brian R. Hill
________________________________
Brian R. Hill
Peter B. Zahn
________________________________
Peter B. Zahn
SERIES B SHAREHOLDERS:
Simon Glatz
________________________________
Simon Glatz
Simon Glatz
________________________________
Simon Glatz as Trustee
of the Second Amended & Restated
Simon Glatz Revocable Trust
John T. Drewry
________________________________
John T. Drewry
Otto P. Jons
________________________________
Otto P. Jons
Rifka Glatz
________________________________
Rifka Glatz as Trustee
of the Corey T. Glatz
Generation Skipping Trust
Irving P. Cohen
________________________________
Irving P. Cohen as Trustee
of the Corey T. Glatz
Generation Skipping Trust
Rifka Glatz
________________________________
Rifka Glatz as Trustee
of the Corey T. Glatz
Residuary Trust
Irving P. Cohen
________________________________
Irving P. Cohen as Trustee
of the Corey T. Glatz
Residuary Trust
Rifka Glatz
________________________________
Rifka Glatz as Trustee
of the Terrance A. Glatz
Generation Skipping Trust
Irving P. Cohen
________________________________
Irving P. Cohen as Trustee
of the Terrance A. Glatz
Generation Skipping Trust
Rifka Glatz
________________________________
Rifka Glatz as Trustee
of the Terrance A. Glatz
Residuary Trust
Irving P. Cohen
________________________________
Irving P. Cohen as Trustee
of the Terrance A. Glatz
Residuary Trust
<PAGE>
<PAGE>
INDEX OF SCHEDULES TO
STOCK PURCHASE AGREEMENT
SCHEDULE TITLE
1.3 Purchase Price Allocation
2.1 Shareholders and Number of Shares on Closing Date
2.4(a) Financial Statement
2.4(b) Exceptions to Financial Statements
2.5 Liabilities
2.7(a) Assets and Inventory Delivered to NRC
2.7(b) Defective or Unsatisfactory Services or Products Claims
2.8 Contracts Delivered to NRC
2.8(b) AME's Standard Agreements Available to NRC
2.8(c) Contracts Not in the Ordinary Course of Business
2.9(a) Affiliates of AME
2.9(b) Directors and Officers of AME
2.10 Intellectual Property Rights
2.11 Insurance Policies and Claims
2.14(a) Employee Benefit Plans
2.14(b) Plans Not In Compliance With ERISA
2.15(d) Management Activities Regarding Hazardous Substances
2.15(e) PCBs or Asbestos Insulation Present at AME Facilities
2.15(f) Hazardous Substances Generated by AME
2.15(g) Hazardous Substances Transported
2.16(a) Written and Oral Employee Contracts With AME
2.16(b) Written and Unwritten Employee Policies and Practices
2.16(c) Noncompliance Federal, State, Local or Other Applicable Laws
2.16(d) Threatened or Pending Employment Practices Litigation
2.16(f) Threatened or Pending Discrimination Litigation
2.17 Assets, Liens and Encumbrances of AME
2.18 Customer Claims and Complaints
2.19 Secrecy and Non-Competition Agreements
2.21 Orders, Decrees, Etc.
2.23 Actions Not in the Ordinary Course
2.24 Litigation and Compliance
2.25 Taxes
2.26 Bank Accounts
2.28 Proprietary Rights
2.29 Software
2.30 Project List
2.33 Transactions with Affiliates and Related Parties
8.7 Employee Benefit Plan
8.7.1 Section 401(k) Plan
8.7.2 Employee Welfare Benefit Plans
<PAGE>
<PAGE>
LIST OF EXHIBITS
Exhibit A [Intentionally Omitted]
Exhibit B Escrow Agreement
Exhibit C-1 Certificate of Simon Glatz
Exhibit C-2 Certificate of John T. Drewry
Exhibit C-3 Certificate of Otto P. Jons
Exhibit D Certificate from AME President
Exhibit E Opinion of Counsel for Shareholders
Exhibit F-1 John T. Drewry Employment Agreement
Exhibit F-2 Otto P. Jons Employment Agreement
Exhibit G Covenant Not to Compete
Exhibit H Registration Agreement
Exhibit I Certificate from NRC
Exhibit J Opinion of Counsel for NRC
ESCROW AGREEMENT
THIS ESCROW AGREEMENT dated the 31st day of May, 1996 (the "Escrow
Agreement"), is among Raymond J. Rockwell, Jr., Mary D. Mahler, Lewis R.
Sheldon, Barbara S. Lamade, Frederic S. Hering, Stephen R. Leavy, Geoffrey
D. Fuller, Robert M. Mallard, Gary M. Poquette, Barry L. Batchelor, Patrick
W. Brawley, Kenneth A. Randell, and David A. Helgerson, Dennis F. Breen, F.
Patrick Dougherty, Eugene R. Miller, Jr., Brian R. Hill, and Peter B. Zahn
("Series A Shareholders"); and Simon Glatz, Simon Glatz as Trustee of the
Second Amended & Restated Simon Glatz Revocable Trust, John T. Drewry, Otto
P. Jons, Rifka Glatz and Irving P. Cohen as Trustees of the Corey T. Glatz
Generation Skipping Trust, Rifka Glatz and Irving P. Cohen as Trustees of
the Corey T. Glatz Residuary Trust, Rifka Glatz and Irving P. Cohen as
Trustees of the Terrance A. Glatz Generation Skipping Trust, Rifka Glatz
and Irving P. Cohen as Trustees of the Terrance A. Glatz Residuary Trust
("Series B Shareholders") (collectively, the Series A Shareholders and the
Series B Shareholders shall be referred to as the "Sellers"); Nichols
Research Corporation, a Delaware corporation ("Buyer"); Advanced Marine
Enterprises, Inc., a Virginia corporation ("AME"); and SouthTrust Bank of
Alabama, N.A. (the "Escrow Agent").
W I T N E S E T H
Pursuant to that certain Stock Purchase Agreement dated May 31, 1996,
(the "Purchase Agreement"), Buyer has acquired the outstanding capital
stock of AME. Capitalized terms used herein unless otherwise defined shall
have the meaning ascribed to such terms in the Purchase Agreement.
Pursuant to Section 9 of the Purchase Agreement, the Sellers have agreed to
indemnify Buyer and AME and have agreed that the funds deposited pursuant
to this Escrow Agreement shall secure the indemnification obligations and
also secure the obligation to return part of the Purchase Price if required
by Section 1.7 of the Purchase Agreement.
Therefore, pursuant to the Purchase Agreement and in consideration of
the mutual covenants hereinafter contained, the parties hereby agree as
follows:
SECTION 1. On even date herewith and upon the Closing of the
Purchase Agreement, Sellers have caused to be deposited with the Escrow
Agent the sum of Two Million Seven Hundred Thousand ($2,700,000) (the
"Escrow Money"). The Escrow Money shall be held by the Escrow Agent
hereunder as partial security for the performance by Sellers of their
indemnification obligations set forth in Section 9.2 of the Purchase
Agreement and/or to pay Buyer all or any part of any Purchase Price
reduction as provided in Section 1.7 of the Purchase Agreement, subject to
the terms and conditions hereof.
SECTION 2. In the event the Purchase Price shall be decreased
under the provisions of Section 1.7, the amount of such decrease shall be
paid by the Escrow Agent to the Buyer out of the Escrow Money and any
interest, dividends and investment results thereon, provided, however, that
if payment by the Escrow Agent to Buyer would reduce the amount of the
Escrow Money held under this Escrow Agreement to the greater of $2,350,000
or the value of all Claims (as herein defined) filed against the Escrow
Money by Buyer or AME, then the Escrow Agent shall distribute to Buyer an
amount of the Escrow Money, together with interest, dividends and
investment results thereon, as shall not reduce the Escrow Money below the
greater of such amounts. If the entire amount of the decreased Purchase
Price is not paid by the Escrow Agent to the Buyer out of the Escrow Money,
the remaining decreased Purchase Price shall be paid by the Sellers to
Buyer in proportion to each Seller's share of the Purchase Price allocated
under SCHEDULE 1.3 of the Purchase Agreement. The Escrow Agent shall
disburse any decreased Purchase Price under this Section and Section 1.7 of
the Purchase Agreement to Buyer either (i) upon the joint written
instructions of Buyer and Sellers or (ii) written instructions of Buyer
which shall have appended a copy of a letter or other written memorandum
from the Buyer, or in the event of a dispute in regard thereto, a written
memorandum from Coopers & Lybrand, L.L.P., in the event of a dispute,
stating that there has been a Purchase Price reduction under the provisions
of Section 1.7 of the Purchase Agreement and the amount of such Purchase
Price reduction. Sellers shall not be entitled to file any documents or
take any other action which would prevent the Escrow Agent from paying any
decreased Purchase Price to Buyer pursuant to the written instructions of
Buyer (or Coopers & Lybrand, L.L.P., in the event of a dispute). Any
remaining portion of the Escrow Money after any distribution thereof to the
Buyer as a result of the decreased Purchase Price shall continue to be held
under the provisions of this Escrow Agreement and distributed in accordance
with the other provisions of this Escrow Agreement.
SECTION 3. The Escrow Money and any interest, dividends and
investment results thereon shall be held by the Escrow Agent for the
account of the Sellers, subject to written instruction signed jointly by
the Buyer and Sellers or as otherwise provided herein.
SECTION 4. (a) At anytime on or prior to the Escrow Termination
Date, as hereafter defined, with respect to the Escrow Money, Buyer or AME
may give written notice (the "Initial Notice") to Sellers and the Escrow
Agent of a claim (a "Claim") for indemnification resulting from any Damages
(as defined in the Purchase Agreement) suffered, sustained or incurred by
Buyer or AME or that may reasonably be expected to be suffered by Buyer or
AME as a result of any matters made the subject of Section 9.2 of the
Purchase Agreement or otherwise arising out of the transactions
contemplated by and made the subject of the Purchase Agreement. If the
Sellers dispute such Claim, the Sellers shall send written notice to Buyer
and the Escrow Agent that such Claim is disputed within ten (10) days after
Sellers are deemed to have received the Initial Notice (a "Counter
Notice"). Thereafter, except as provided in the next sentence, the Escrow
Agent shall not deliver any of the Escrow Money or interest, dividends or
investment results thereon made the subject of the Claim to the Buyer, AME
or Sellers except upon joint written instructions of the Buyer, AME and
Sellers. As an alternative to joint written instructions, Buyer, AME or
Sellers may give a notice (a "Claim Notice") to the other party and the
Escrow Agent to the effect that a Claim on all or part of the Escrow Money
(and accrued interest, dividends and investment results) has been resolved,
which notice shall set forth the amount of the Claim to be delivered to
Buyer, AME or Sellers, if any, and shall have appended a copy of a judicial
order, judgment or decree which evidences a resolution of the Claim,
including a certification that neither party has filed an appeal or that
any appeal which has been filed has been finally resolved.
(b) Upon receipt of the Claim Notice with all
necessary attachments, or upon receipt of joint written instructions, the
Escrow Agent shall promptly deliver to Buyer, AME or Sellers the amount due
either as set forth in the Claim Notice, if any, or the amounts set forth
in the joint written instructions.
(c) Buyer or AME may file Claims on both the Escrow
Money and any interest, dividends or investment results thereon, less
disbursement made of net income under Section 5 hereof. If a Claim on less
than all of the Escrow Money and any interest, dividends and investment
results thereon is filed and all or any part of such Claim is ultimately
paid to Buyer or AME, then, in addition to the amount of the Claim required
to be paid to Buyer or AME as a result of joint written instructions or a
Claim Notice, the Escrow Agent shall pay to Buyer, out of any remaining
Escrow Money and any interest, dividends and investment results thereon, an
amount of interest, dividends and investment results equal to the interest,
dividends and investment results allocable to the amount of the Claim
actually paid to the Buyer or AME from the date of the Initial Notice until
the date all or any part of the Claim is paid to Buyer, less disbursements
made of net income under Section 5 hereof.
(d) With respect to all amounts held in the Escrow
Account (and the income earned thereon), the Escrow Termination Date shall
be the earlier of:
(i) May 31, 1998, or
(ii) the date the Escrow Agent no longer holds any funds.
On the Escrow Termination Date, the Escrow Agent shall deliver any
remaining Escrow Money, including any accrued interest, dividends and
investment results thereon, less disbursements of net income made under
Section 5 hereof, to the Representative, unless an Initial Notice, Claim,
or Claim Notice is pending, in any of which cases the amount claimed,
together with interest, dividends and investment results on the amount
claimed from the date of the Initial Notice to the Escrow Termination Date,
shall be retained by the Escrow Agent until a resolution of such pending
Claims. Upon final resolution of the pending Claims and disbursements of
the amounts retained by the Escrow Agent in accordance with Claim Notices
or joint written instructions, this Escrow Agreement shall terminate. All
funds distributed by Escrow Agent to Sellers hereunder shall be distributed
to the Representative for the benefit of the Sellers. It shall be the
responsibility of the Representative to distribute to each Seller his
portion of the funds distributed from the Escrow Account in accordance with
the Purchase Price allocation in SCHEDULE 1.3 of the Purchase Agreement.
(e) The Representative of the Sellers appointed in
Section 24 of the Purchase Agreement is authorized (i) to take all actions
permitted hereunder by the Sellers, including joint instructions, Counter
Notices, and Claim Notices on behalf of the Sellers, (ii) to agree to,
dispute or settle and compromise any Claim, Counter Notice and Claim
Notice given hereunder for and on behalf of the Sellers, (iii) to receive
and respond to any notice or other communication given to the Sellers
hereunder and (iv) to receive all payments on behalf of the Sellers
pursuant to this Escrow Agreement. The Escrow Agent, Buyer and AME shall
be fully protected in dealing exclusively with the Representative as the
authorized agent of the Sellers and the Sellers shall indemnify and hold
harmless the Escrow Agent, Buyer and AME from any liability arising out of
or in connection with the authorization herein granted the Representative
to act for and on behalf of the Sellers.
SECTION 5. The Escrow Agent shall reinvest any interest, dividends
and investment results earned on the Escrow Money. For tax purposes,
interest, dividends and investment results earned on the Escrow Money shall
be taxed to the Sellers in proportion to their share of the Purchase Price
as shown on SCHEDULE 1.3 of the Purchase Agreement, except only so much of
same that is actually distributed to Buyer during any tax period. The
Sellers shall furnish the Escrow Agent with their taxpayer identification
numbers simultaneously upon execution of this Escrow Agreement and a
statement from the Sellers that they are not subject to backup withholding.
The Escrow Agent shall disburse to the Representative for distribution to
the Sellers, in accordance with SCHEDULE 1.3 of the Purchase Agreement,
thirty percent (30%) of the net income earned during each calendar year
within thirty (30) days after the end of such year.
SECTION 6. All notices and other communications under this Escrow
Agreement shall (a) be in writing (which shall include communications by
facsimile), (b) be (i) sent by registered mail or certified mail, postage
prepaid, return receipt requested or by facsimile, or (ii) delivered by
hand, (c) be given at the following respective addresses and facsimile
numbers and to the attention of the following persons:
(i) If to Sellers, to:
John T. Drewry
110 Commonage Drive
Great Falls, Virginia 22066
Telephone No.: (703)759-5829
Facsimile No.: (703)413-9220
(with a copy to:)
David H. Pankey, Esq.
McGuire Woods Battles & Boothe
627 Eye Street, N.W.
Washington, D.C. 20006
Telephone: (202)857-1700
Facsimile: (202)857-1737
(ii) If to Buyer, to:
Nichols Research Corporation
4040 Memorial Parkway, South
Huntsville, Alabama 35802-1326
Attention: Chief Executive Officer
Telephone: (205)883-1140
Facsimile: (205)880-0367
(with a copy to:)
Lanier Ford Shaver & Payne P.C.
200 West Court Square, Suite 5000
P.O. Box 2087
Huntsville, Alabama 35804
Attention: John R. Wynn, Esq.
Telephone: (205)535-1100
Facsimile: (205)533-9322
(iii) If to the Escrow Agent, to:
SouthTrust Bank of Alabama, N.A.
P.O. Box 267
Huntsville, Alabama 35804
Attention: Richard George
Telephone: (205)551-4126
Facsimile: (205)551-4038
or at such other address or facsimile number or to the attention of such
other person as the party to whom such information pertains may hereafter
specify for the purpose in a notice to the other specifically captioned
"Notice of Change of Address," and (d) be effective or deemed delivered or
furnished (i) if given by mail, on the third day after such communication
is deposited in the mail, addressed as above provided, (ii) if given by
facsimile, when such communication is transmitted to the appropriate number
determined as above provided in this Section 6 and the appropriate
acknowledgement is received and (iii) if given by hand delivery, when left
at the address of the addressee addressed as above provided, except that
notices of a change of address or facsimile number shall not be deemed
furnished until received.
SECTION 7. (a) The Escrow Agent shall not be under any duty to
give the property held hereunder any greater degree of care than it gives
its own similar property.
(b) The Escrow Agent may act in reliance upon any
instrument or signature believed to be genuine and may assume that any
person purporting to give any writing, Initial Notice, Counter-Notice,
Claim Notice, Claim, advice or instruction in connection with the
provisions hereof has been duly authorized to do so.
(c) The Escrow Agent may act relative hereto upon
advice of counsel in reference to any matter connected herewith, and shall
not be liable for any acts or omissions unless caused by its negligence or
willful misconduct.
(d) This Escrow Agreement sets forth exclusively the
duties of the Escrow Agent with respect to any and all matters pertinent
hereto and no implied duties or obligations shall be read into this Escrow
Agreement against the Escrow Agent.
(e) The Escrow Agent makes no representation as to the
validity, value, genuineness or the collectibility of any security or
document, or instrument or property held or delivered to it.
(f) Buyer and Sellers agree that they shall be equally
responsible for the payment of all reasonable expenses, disbursements and
advances incurred or made by the Escrow Agent in performance of such duties
hereunder, including reasonable fees, expenses and disbursements of its
counsel. The Sellers' share of any such fees and expenses of the Escrow
Agent may be withheld and paid from the Escrow Money. The immediately
preceding sentence survives, despite any termination of this Escrow
Agreement or the resignation or removal of the Escrow Agent.
(g) The Escrow Agent does not have and will not have
any interest in any of the Escrow Money deposited or held hereunder but is
serving only as escrow holder and having only possession thereof.
(h) All Escrow Money received by the Escrow Agent
shall be invested and reinvested by the Escrow Agent in one year treasury
notes which may be purchased through SouthTrust Securities, Inc., except
the Escrow Agent may hold a sufficient amount in a money market fund (which
may include a money market fund of the Escrow Agent or its affiliate) to
meet anticipated distributions.
(i) In the event the Escrow Agent before the
termination of the escrow created by this Escrow Agreement receives or
becomes aware of conflicting demands or claims with respect to this escrow
or the rights of any of the parties hereto, or any funds, securities,
property or documents deposited herein or affected hereby, the Escrow Agent
shall have the right to discontinue any or all further acts on its part
until such conflict is resolved to its satisfaction. The Escrow Agent
shall have the further right but not the obligation to commence or defend
any action or proceedings for the determination of such conflict including,
but without limiting the generality of the foregoing, a suit in
interpleader brought by the Escrow Agent. In the event the Escrow Agent
files a suit in interpleader, and delivers to the court all funds,
securities, property or documents then in deposit hereunder, it shall
thereupon be fully released and discharged from all further obligations to
perform any and all duties or obligations imposed upon it by this Escrow
Agreement. Buyer and Sellers agree that they shall be equally responsible
for the payment of all costs, damages, judgments and expenses, including
reasonable attorneys' fees, suffered or incurred by the Escrow Agent in
connection with or arising out of its escrow (except those caused by Escrow
Agent's own negligence or willful misconduct). However, as between the
Buyer and the Sellers, the nonprevailing party with respect to a Claim
shall be required to pay the costs and expenses of the prevailing party
including the prevailing party's share of all of the costs, damages and
expenses of the Escrow Agent, if any.
(j) The Escrow Agent shall not be liable for any error
of judgment or for any act done or omitted by it in good faith, or for
anything which it may in good faith do or refrain from doing in connection
herewith; nor shall the Escrow Agent be liable if, in the event of any
dispute or question as to its duties or obligations hereunder, it acts in
accordance with written opinion of its legal counsel, which may include
attorneys who are members of or who are employed by the Escrow Agent. The
Escrow Agent is authorized to act upon any document believed by it to be
genuine and to be signed by the proper party or parties, and will incur no
liability in so acting.
SECTION 8. (a) This Escrow Agreement and the Purchase Agreement
constitute the entire understanding among the parties in connection with
the subject matter hereof, and no waiver or modification of the terms
hereof shall be valid unless in writing signed by the party to be charged
and only to the extent therein set forth.
(b) This Escrow Agreement shall be governed by, and
construed in accordance with, the internal substantive laws and not the
choice of laws rules of the State of Alabama.
(c) This Escrow Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective heirs,
administrators, executors, successors and assigns.
(d) This Escrow Agreement may be executed in any
number of counterparts, each of which shall be deemed an original of this
Escrow Agreement and all of which taken together shall constitute one and
the same instrument.
(e) If one or more provisions of this Escrow Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Escrow Agreement and the balance of this Escrow
Agreement shall be enforceable in accordance with its terms.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Escrow Agreement the day and year first above written.
NICHOLS RESEARCH CORPORATION, a
Delaware corporation
Chris H. Horgen
By:_____________________________
Chris H. Horgen
Its Chief Executive Officer
"Buyer"
ADVANCED MARINE ENTERPRISES, INC., a
Virginia corporation
John T. Drewry
By:_____________________________
John T. Drewry
Its President
"AME"
SOUTHTRUST BANK OF ALABAMA, N.A.
Glenda Thompson
By: ____________________________
Its Trust Officer
"Escrow Agent"
SERIES A SHAREHOLDERS:
Raymond J. Rockwell, Jr.
Patrick Brawley
By:_____________________________
Patrick Brawley, Attorney-
In-Fact
Mary D. Mahler
________________________________
Mary D. Mahler
Lewis R. Sheldon
________________________________
Lewis R. Sheldon
Barbara S. Lamade
________________________________
Barbara S. Lamade
David A. Helgerson
________________________________
David A. Helgerson
Barry L. Batchelor
________________________________
Barry L. Batchelor
Patrick W. Brawley
________________________________
Patrick W. Brawley
Stephen R. Leavy
________________________________
Stephen R. Leavy
Frederic S. Hering
________________________________
Frederic S. Hering
Kenneth A. Randell
________________________________
Kenneth A. Randell
Robert M. Mallard
Stephen R. Leavy
By:_____________________________
Stephen R. Leavy, Attorney-
In-Fact
Gary M. Poquette
________________________________
Gary M. Poquette
Geoffrey D. Fuller
Lewis R. Sheldon
By:______________________________
Lewis R. Sheldon, Attorney-
In-Fact
Dennis F. Breen
________________________________
Dennis F. Breen
F. Patrick Dougherty
________________________________
F. Patrick Dougherty
Eugene R. Miller, Jr.
________________________________
Eugene R. Miller, Jr.
Brian R. Hill
________________________________
Brian R. Hill
Peter B. Zahn
________________________________
Peter B. Zahn
SERIES B SHAREHOLDERS:
Simon Glatz
________________________________
Simon Glatz
Simon Glatz
________________________________
Simon Glatz as Trustee
of the Second Amended & Restated
Simon Glatz Revocable Trust
John T. Drewry
________________________________
John T. Drewry
Otto P. Jons
________________________________
Otto P. Jons
Rifka Glatz
________________________________
Rifka Glatz as Trustee of the
Corey T. Glatz
Generation Skipping Trust
Irving P. Cohen
________________________________
Irving P. Cohen as Trustee
of the Corey T. Glatz
Generation Skipping Trust
Rifka Glatz
________________________________
Rifka Glatz as Trustee
of the Corey T. Glatz
Residuary Trust
Irving P. Cohen
________________________________
Irving P. Cohen as Trustee
of the Corey T. Glatz
Residuary Trust
Rifka Glatz
________________________________
Rifka Glatz as Trustee
of the Terrance A. Glatz
Generation Skipping Trust
Irving P. Cohen
________________________________
Irving P. Cohen as Trustee
of the Terrance A. Glatz
Generation Skipping Trust
Rifka Glatz
________________________________
Rifka Glatz as Trustee
of the Terrance A. Glatz
Residuary Trust
Irving P. Cohen
________________________________
Irving P. Cohen as Trustee
of the Terrance A. Glatz
Residuary Trust
"Sellers"
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into on the 31st day of May, 1996, by and
between JOHN T. DREWRY, whose address is 110 Commonage Drive, Great Falls,
Virginia 22066 (herein called the "Employee"); and ADVANCED MARINE
ENTERPRISES, INC., a Virginia corporation ("AME"), whose address is 1725
Jefferson Davis Highway, Suite 1300, Arlington, Virginia 23202; and NICHOLS
RESEARCH CORPORATION, a Delaware corporation ("NRC"), whose address is 4040
South Memorial Parkway, Huntsville, Alabama 35802.
W I T N E S S E T H:
WHEREAS, this Agreement is executed on the date of the closing of that
certain Stock Purchase Agreement by and among NRC, the Employee and the
other shareholders and optionholders of AME (the "Purchase Agreement")
whereby AME became a wholly owned subsidiary of NRC;
WHEREAS, AME is engaged principally in providing naval and marine
architectural and engineering services, including the development and
support of analytic software systems, modeling and simulation services and
simulator systems, to the Department of Navy and other customers (the "AME
Business");
WHEREAS, the Employee has valuable knowledge and experience related to
the AME Business; and
WHEREAS, AME desires to obtain the services of the Employee as
President of AME and the Employee is willing to render such services to AME
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. DUTIES.
Subject to the terms and provisions of this Agreement, AME hereby
employs Employee and Employee hereby accepts employment by AME as President
of AME. The Employee's duties shall include the duties and
responsibilities identified on Schedule I attached hereto. The Employee
shall perform such other tasks and duties as may be assigned by AME from
time to time, consistent with the Employee's training and experience and
with the position of President of AME. The Employee shall devote his full
time, attention, skill and efforts to the tasks and duties assigned by AME.
The Employee shall carry out his duties under the general supervision of
the Board of Directors of AME. The Employee hereby agrees to undertake
such travel as may be required in the performance of his duties. The
reasonable travel expenses of the Employee shall be reimbursed in
accordance with AME's reimbursement policy in effect from time to time.
The Employee shall not be required to relocate from the Arlington,
Virginia, area without his consent.
2. COMPENSATION.
(a) BASE SALARY. AME shall pay the Employee a base monthly salary of
$20,417 per month through August 31, 1996, and a base monthly salary of
$16,667 per month thereafter payable during the Term of Employment, as
hereinafter defined, in accordance with the standard payroll practices of
AME. Beginning September 1, 1997, such salary may be increased from time
to time in the discretion of the AME Board of Directors consistent with NRC
executive compensation practices.
(b) PERFORMANCE BONUSES. No performance bonus shall be paid for the
fiscal period ending August 31, 1996. Subject to the limitation of Section
2(d) below, during the three year period commencing September 1, 1996, and
ending August 31, 1999, the Employee shall be entitled to an annual
performance bonus, if any, equal to the sum of (1) two percent (2%) of
AME's Earnings Base (as hereinafter defined) up to an Earnings Base of
$4,000,000 if the Earnings Base exceeds $1,000,000 and (2) three and one-
half percent (3-1/2%) of the amount by which the Earnings Base exceeds
$4,000,000. Commencing September 1, 1999, Employee shall be entitled to
participate in the performance bonus plan, if any, currently maintained by
NRC and described in Section 2.9 of the NRC policy manual on a basis
consistent with the manner in which corporate vice presidents of NRC
benefit under such plan.
(c) INCENTIVE PAYMENTS. Subject to the limitation of Section 2(d)
below, the Employee shall be entitled to receive incentive payments, if
any, as follows:
(i) $150,000 for the fiscal year ending August 31, 1997, if
during such fiscal year AME achieves an Earnings Base
of at least $3,000,000;
(ii) Either $75,000 for the fiscal year ending August 31,
1998, if during such fiscal year AME achieves an
Earnings Base of at least $3,350,000, but less than
$3,764,999, or $150,000 for the fiscal year ending
August 31, 1998, if during such year AME achieves an
Earnings Base of at least $3,765,000.
(d) LIMITATION ON PERFORMANCE BONUS AND INCENTIVE PAYMENT. The
Employee shall be entitled to the greater of the performance bonus under
Section 2(b) above or the incentive payment under Section 2(c) above for
each such fiscal year, but not both. The Employee understands that he may
be entitled to neither a performance bonus nor an incentive payment if AME
does not achieve the Earnings Base required under Section 2(b) or 2(c)
above.
(e) EARNINGS BASE. The "Earnings Base" shall mean AME earnings for
the fiscal year ended August 31 before interest, income taxes and
amortization of good will, except that (i) working capital advances from
NRC to AME in excess of $1,000,000 shall bear interest at the commercial
base rate of interest announced by SouthTrust Bank from time to time and
such interest shall be treated as an expense of AME in determining Earnings
Base, and (ii) AME shall be allocated an NRC corporate charge of no more
than 2.05% of AME value added costs which shall be treated as an expense of
AME in determining Earnings Base. There shall be excluded from the
computation of Earnings Base the revenue and expenses of any business unit
not within AME's current business organization unless the Employee and Otto
P. Jons consent to the inclusion of such business unit. There shall be
excluded from the computation of Earnings Base AME expenditures directed by
NRC or AME which are not related to or connected with AME's Business unless
the Employee and Otto P. Jons consent thereto. For purposes of determining
Earnings Base, all compensation and other costs of this Agreement and that
certain employment agreement of Otto P. Jons of even date herewith shall be
expenses of AME and not NRC. For this purpose, "value added costs" are all
costs except payments to subcontractors and payments for contract
materials. The determination of Earnings Base shall be made in accordance
with generally accepted accounting principles ("GAAP") as consistently
applied by AME, except as modified by the preceding language. The
following procedures shall be observed in the determination of gross
revenues and Earnings Base:
(i) NRC's Chief Financial Officer ("CFO") shall prepare and
deliver to Employee a proposed statement for each fiscal
year ending August 31, 1997, 1998, and 1999 within forty-
five (45) days of the end of such fiscal year, setting forth
in reasonable detail the basis for the calculation.
Employee and his accountants shall have the right to consult
with the appropriate personnel of NRC, AME and their agents
and shall have the right to examine on a concurrent basis
any and all work papers, schedules and other documents
prepared by AME, NRC or their accountants in connection with
the proposed statement of gross revenues and Earnings Base.
(ii) Employee may dispute the proposed gross revenues and
Earnings Base statement by notifying AME in writing setting
forth in reasonable detail, to the extent possible, the
amount(s) in dispute and the basis for such dispute, within
thirty (30) days of Employee's receipt of the proposed
statement. In the event of such a dispute, the CFO and
Employee's accountants shall attempt in good faith to
resolve such dispute, and any resolution by them as to any
disputed amount(s) shall be final, binding and conclusive on
Employee, AME and NRC.
(iii) If Employee's accountants and the CFO do not resolve any
such dispute within fifteen (15) days of the date of receipt
by AME and NRC of Employee' written notice of dispute, the
CFO and Employee's accountants shall, within five (5)
additional days, submit any such unresolved dispute to an
independent accounting firm of national reputation appointed
jointly by Employee and AME (neither of which may
unreasonably withhold or delay such appointment) (the
"Independent Accounting Firm"), which firm shall, within
forty (40) days of each submission, resolve each such item
remaining in dispute within the range of amounts proposed by
Employee and the CFO, and such resolution shall be binding
and conclusive on Employee, AME, and NRC. The fees and
disbursements of the Independent Accounting Firm ("IAF")
shall be borne 100% by AME if the Employee is successful
with respect to at least thirty-five percent (35%) of the
aggregate amount of disputed items submitted to the IAF.
Otherwise, such fees and disbursements shall be borne 75% by
the Employee and 25% by AME. Any payment by AME to the IAF
shall be excluded from the determination of the Earnings
Base if the Employee is successful with respect to at least
thirty-five percent (35%) of the disputed amount.
(f) STOCK OPTIONS. The Employee shall receive a stock option grant
on September 3, 1996, to purchase 12,000 shares of NRC common stock at a
price equal to the fair market value of such stock on the date of grant
provided Employee is employed by AME or NRC on such date. The stock
options shall be subject to the terms and conditions contained in the NRC
1991 Stock Option Plan, including vesting, exercise and nontransferability,
as the same may be amended from time to time. To the extent possible, such
option shall be designated an incentive stock option.
(g) FRINGE BENEFITS. The Employee shall participate in any group
health insurance, vacation and sick leave plans, and other benefit plans
available to employees of AME generally in accordance with their terms and
conditions which plans may be amended or terminated by AME at any time.
The excess disability and excess ($200,000) life insurance policies for the
benefit of the Employee in effect prior to the closing of the Purchase
Agreement shall be cancelled one year from the date hereof, unless assigned
pursuant to the following sentence. If requested in writing by the
Employee, such excess life insurance policy and such disability insurance
policy shall be assigned by AME to the Employee, provided the same have not
lapsed and may be assigned by their terms. The AME company automobile
assigned to Employee prior to the closing of the Purchase Agreement shall
continue to be afforded Employee under the existing terms and provisions
relating to use of such vehicle by Employee for a period of three years
from the date hereof. The Employee shall have the option after three years
from the date of this Agreement to purchase the automobile from AME for a
price not to exceed the net book value determined by GAAP consistently
applied by AME, provided the Employee reimburses to AME any amounts
determined by Defense Contract Audit Agency to be unallowable and therefore
non-reimbursable under government contracts. Such option to purchase the
automobile shall lapse and be null and void if not exercised within thirty
(30) days after the third anniversary date hereof by tendering the purchase
price to AME.
3. TERM OF EMPLOYMENT.
This Agreement shall commence on the date hereof and shall end five
(5) years from such date (the "Term of Employment"), unless terminated
earlier as provided in Section 4 below, or extended as provided in this
Section 3. Upon expiration of the initial Term of Employment, unless
earlier terminated as provided herein, the Employee's employment shall
continue automatically month-to-month until terminated by either party with
at least thirty (30) days' prior written notice with or without cause.
4. TERMINATION BEFORE EXPIRATION OF TERM OF EMPLOYMENT.
The termination of the employment of the Employee during the initial
Term of Employment may be effected in one of the following ways:
(a) BY AME, FOR CAUSE. Termination by AME shall be deemed to be for
cause only upon:
(i) Employee's conviction of or pleading guilty to a felony or
debarment regarding federal contracts;
(ii) Refusal or failure by the Employee, without reasonable
excuse or proper authorization, to carry out any reasonable
instructions of AME consistent with Employee's rights or
duties as set forth in this Agreement;
(iii) Material breach of this Agreement;
(iv) The Employee's willful misconduct in the execution of his
duties, including without limitation breach of fiduciary
duty, dishonesty, theft of company property or the breach of
the duty of loyalty owed AME.
If AME intends to terminate for cause, AME shall provide notice to
Employee of intent to terminate his employment, stating the termination
provision in this Agreement relied upon and setting forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination under the provisions so indicated, and shall provide Employee
with an opportunity to cure the alleged default or breach within thirty
(30) days of receipt of the notice, provided that if the matter is not
curable within such thirty (30) day period, the Employee shall not be
deemed in default if the Employee commences immediately to cure the matter
and proceeds diligently thereafter to complete the cure, further provided
that the alleged breach or default must be cured within ninety (90) days of
receipt of the notice. AME shall not be required to give more than one
notice with respect to the same matter. Notwithstanding the foregoing, no
notice and no cure right shall be required with respect to termination for
cause under 4(a)(i) or 4(a)(iv).
(b) BY AME, WITHOUT CAUSE. Any termination of Employee by AME for
reasons other than as set forth in subsections 4(a), (e), (f) or (g) shall
be a termination without cause. AME may terminate the employment of
Employee without cause by thirty (30) days' prior written notice at any
time.
(c) BY EMPLOYEE, FOR GOOD REASON. Termination by the Employee shall
be deemed for good reason only because of a material breach by AME of this
Agreement. In all cases in which Employee intends to terminate for Good
Reason, the Employee shall provide AME with notice of intent to terminate
this Agreement, stating the facts and circumstances giving rise to a breach
of this Agreement claimed to provide a basis for termination under the
provisions so indicated, and shall provide AME with an opportunity to cure
the alleged default or breach within thirty (30) days of receipt of the
notice, provided that if the matter is not curable within such thirty (30)
day period, AME shall not be deemed in default if it commences immediately
to cure the matter and proceeds diligently thereafter to complete the cure,
further provided that the alleged breach or default must be cured within
ninety (90) days of receipt of the notice. Employee shall not be required
to give more than one such notice with respect to the same matter.
(d) BY THE EMPLOYEE, WITHOUT GOOD REASON. Any termination by
Employee for reasons other than as set forth in subsections 4(c), (e), (f)
or (g) shall be a termination without good reason. The Employee may
terminate his employment without good reason upon thirty (30) days' prior
written notice at any time.
(e) DEATH OF THE EMPLOYEE.
(f) DISABILITY OF EMPLOYEE. If, during the Term of Employment, a
physician selected by AME and the Employee determines that the Employee has
become physically or mentally disabled so as to be unable to carry out the
normal and usual duties of his employment for six (6) continuous months,
and reasonable accommodation cannot be made to allow the Employee to
continue to perform his duties full-time, his employment hereunder may be
terminated at the election of AME or the Employee.
(g) MUTUAL CONSENT. The parties by mutual consent may terminate
Employee's employment.
5. CONSEQUENCES OF TERMINATION.
The termination of the employment of Employee will cause the following
results:
(a) PAYMENTS ON CERTAIN TERMINATIONS; LIQUIDATED DAMAGES FROM
EMPLOYEE. If the termination is by AME under Section 4(a) above, or is by
the Employee under Section 4(d) above, the following payments shall be
made:
(i) AME will pay the Employee within five (5) days after the
date of termination any unpaid base monthly salary under
Section 2(a) prorated to the date of termination, the amount
of any accrued annual vacation pay to which he may be
entitled under AME's vacation plan and benefits, with such
compensation and benefits (if any) paid only through the
date termination occurs.
(ii) If such termination occurs within the first twenty four (24)
months of this Employment Agreement, the Employee shall pay
to AME as liquidated damages and not as a penalty an amount
equal to the product of the base monthly salary under
Section 2(a) on the date of termination multiplied by six
(6). If such termination occurs after the first twenty-four
(24) months of this Employment Agreement, there shall be
substituted for six (6) in the first sentence of this
Section 5(a)(ii) above the appropriate number set forth
below:
(A) four (4), if termination occurs after the second
year and prior to the third year;
(B) two (2), if termination occurs after the third
year and before the fourth year; and
(C) zero (0), if termination occurs after the fourth
year.
The liquidated damages may be prepaid. For example, if
employment is terminated 24 months after the date hereof,
the liquidated damages would be $66,668 ($16,667 X 4). The
liquidated damages shall be paid in 12 equal, consecutive
monthly installments without interest commencing 30 days
after termination, provided that, if any monthly installment
is not paid within 10 days after notice of default, the
entire amount of liquidated damages shall be paid in lump
sum immediately.
(b) PAYMENTS ON CERTAIN TERMINATIONS; LIQUIDATED DAMAGES FROM AME.
If the termination is by AME under Section 4(b) above, or is by the
Employee under Section 4(c) above, AME shall pay to the Employee, in
addition to the amounts set forth in 5(a)(i) above, as liquidated damages
and not as a penalty, the following amounts:
(i) If such termination occurs within the first eighteen (18)
months of this Employment Agreement, an amount equal to the
product of the base monthly salary under Section 2(a) on the
date of termination multiplied by the greater of (A) six or
(B) twenty-four minus the number of full months of
employment by the Employee on the date of termination. If
such termination occurs after the first eighteen (18) months
of this Employment Agreement, an amount equal to the product
of base monthly salary under Section 2(a) on the date of
termination multiplied by the lesser of (A) six or (B) the
number of full months remaining after the date of
termination until expiration of the initial Term of
Employment assuming the Term of Employment is not terminated
early. For example, if employment is terminated two years
after the date hereof, the liquidated damages would be
$100,002 ($16,667 X 6). The liquidated damages shall be
paid in 12 equal, consecutive monthly installments without
interest commencing 30 days after termination, provided
that, if any monthly installment is not paid within 10 days
after notice of default, the entire amount of liquidated
damages shall be paid in lump sum immediately. The
liquidated damages may be prepaid.
(ii) If such termination occurs prior to August 31, 1998, the
full amount of the performance bonus under Section 2(b)
hereof or the incentive payment under Section 2(c) hereof
shall be paid to Employee if AME achieves the financial
performance required under Section 2(b) or Section 2(c)
which would entitle the Employee to such payment if his
employment had not terminated after application of the
limitation under Section 2(d) hereof.
(c) MUTUAL GROUNDS FOR TERMINATION OR CONSENT. If the parties
mutually agree to terminate under Section 5(g), neither party shall owe the
other party the liquidated damages set forth above in Sections 5(a)(ii) or
5(b).
(d) DEATH OR DISABILITY. In the event of the Employee's death or
disability, the following provisions will apply:
(i) Upon his death, the Employee's estate will be entitled to
receive the amount set forth in Section 5(a)(i) and the
benefits set forth in any plans of AME then in effect and
applicable under the circumstances. The Employee or his
estate shall be entitled to no other compensation or
benefits in the event of death other than the right of the
Employee's estate to exercise any or all stock options
exercisable but not yet exercised during the period of three
(3) months after the date of death.
(ii) Upon termination on account of disability, Employee will be
entitled to receive the amount set forth in Section 5(a)(i)
and the benefits set forth in any plans of AME then in
effect and applicable under the circumstances. The Employee
or his personal representative shall be entitled to no other
compensation or benefits in the event of disability, except
as provided in Section 5(f) of the NRC 1991 Stock Option
Plan.
(e) MITIGATION. The Employee shall not be required to mitigate the
amount of payment provided for in this Section 5 by seeking employment.
(f) RELEASE. The amounts set forth above in this Section 5 shall be
paid and received in complete release and discharge of any other obligation
under this Employment Agreement of AME or NRC to Employee or Employee to
AME or NRC resulting from termination of his employment, except that the
provisions for termination herein contained shall not affect the rights and
remedies of AME or NRC under Section 9 hereof. The provisions of Sections
6, 7 and 9 shall survive any termination of employment.
(g) TERMINATION AFTER FIVE YEARS. After the initial Term of
Employment of five years, only the amounts specified in Section 5(a)(i)
shall be due the Employee upon termination and neither party shall be
liable for any other payment hereunder.
6. NON-DISCLOSURE COVENANTS AND PROPRIETARY MATTERS.
(a) NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Unless authorized or
instructed in writing by AME, the Employee shall not, except as required in
the conduct of AME's business or in response to a lawful subpoena or
discovery order or as may otherwise be required by law during or at any
time after the Term of Employment, disclose to others or use any of AME's
inventions or discoveries or its respective secret or confidential
information or data (oral, written, or in machine readable form) which the
Employee may obtain during the course of or in connection with the
Employee's employment (or employment or affiliation with any company that
transfers to AME such information or data), including such inventions,
discoveries, information or data relating to machines, equipment, products,
systems, software, contracts, contract performance, research or
development, designs, computations, formulas, manufacturing procedures,
prices and earnings, customer lists, and suppliers, whether or not
developed by the Employee, by others in AME or obtained by AME from third
parties, and irrespective of whether or not such inventions, discoveries,
information, knowledge or data have been identified by AME as secret or
confidential, unless and until, and then to the extent and only to the
extent that, such inventions, discoveries, information, knowledge or data
become available to the public otherwise than by the Employee's act or
omission.
(b) PATENTS. The Employee agrees to disclose immediately to AME or
any persons designated by it and to assign to AME or its successors or
assigns, all inventions made, discovered, or first reduced to practice by
the Employee, solely or jointly with others, during the Term of Employment
or within a period of six months from the date of termination of such
employment (either during or outside of the Employee's working hours and
either on or off AME's premises as it relates to the subject matter of
employment), which inventions are made, discovered or conceived either in
the course of such employment, or with the use of AME's time, material,
facilities or funds, or which are directly related to any investigations or
obligations undertaken by AME; and the Employee hereby grants and agrees to
grant the right to AME and its nominees to obtain, for its own benefit and
in its own name (entirely at its expense) patents and patent applications
including original, continuation, reissue, utility and design patents, and
applications, patents of addition, confirmation patents, registration
patents, petty patents, utility models, and all other types of patents and
the like, and all renewals and extensions of any of them for those
inventions in any and all countries; and the Employee shall assist AME, at
AME's expense, without further charge during the term of the Employee's
employment, and after termination of the Employee's employment to the
extent such assistance does not unreasonably interfere with the Employee's
performance of subsequent employment, at the same base salary rate
(excluding any bonuses, incentive or deferred compensation or other
benefits and based upon a forty hour work week) as during the last year of
the Employee's employment (determined on an hourly basis for this purpose),
through counsel designated by AME, to execute, acknowledge, and deliver all
such further papers, including assignments, applications for Letters Patent
(of the United States or of any foreign country), oaths, disclaimers or
other instruments and to perform such further acts, including giving
testimony or furnishing evidence in the prosecution or defense of appeals,
interferences, suits and controversies relating to any aforesaid inventions
as may reasonably be deemed necessary by AME or its nominees to effectuate
the vesting or perfecting in AME or its nominees of all right, title and
interest in and to said inventions, applications and patents.
(c) COPYRIGHTS. The Employee agrees to disclose immediately to AME
or any persons designated by it and to assign to AME, at its option, or its
successors or assigns, all works of authorship, including all writings,
computer programs, software, and firmware, written or created by the
Employee solely or jointly with others, during the course of his employment
by AME (either during or outside of the Employee's working hours and either
on or off AME's premises as it relates to the subject matter of
employment), which works are made or conceived either in the course of such
employment, or with the use of AME's time, material, facilities or funds,
or which are directly related to any investigations or obligations
undertaken by AME; and the Employee hereby agrees that all such works are
works made for hire, of which AME is the author and the beneficiary of all
rights and protections afforded by the law of copyright in any and all
countries; and the Employee will assist AME at AME's expense without
further charges during the term of his employment, and after termination of
his employment to the extent such assistance does not unreasonably
interfere with the Employee's performance of subsequent employment, at the
same base salary rate (excluding any bonuses, incentive or deferred
compensation or other benefits) as during the last year of his employment
(determined on an hourly basis for this purpose assuming a forty hour work
week), through counsel designated by AME, to execute, acknowledge, and
deliver all such further papers, including assignments, applications for
copyright registration (in the United States or in any foreign country),
oaths, disclaimers or other instruments, and to perform such further acts,
including giving testimony or furnishing evidence in the prosecution or
defense of appeals, interferences, suits and controversies relating to any
aforesaid works, as may be deemed necessary by AME or by its nominees to
effectuate the vesting or perfecting in AME or its nominees of all rights
and interest in and to said works and copies thereof, including the
exclusive rights of copying and distribution.
(d) RECORDS. The Employee shall keep complete, accurate and
authentic accounts, notes, data and records of all inventions made,
discovered or developed and all works of authorship written or created by
the Employee as aforesaid in the manner and form requested by AME.
(e) RETURN OF AME PROPERTY. All computer or other hardware, computer
software, computer programs, source codes, object codes, magnetic tapes,
printouts, samples, notes, records, reports, documents, customer lists,
photographs, catalogues and other writings, whether copyrightable or not,
relating to or dealing with AME's business and plans, and those of others
entrusted to AME, which are prepared or created by the Employee or which
may come into his possession during or as a result of his employment, are
the property of AME, as applicable, and upon termination of his employment,
the Employee agrees to return all such computer software, computer
programs, source codes, object codes, magnetic tapes, printouts, samples,
notes, records, reports, documents, customer lists, photographs, catalogues
and writings and all copies thereof to AME. The Employee is not required
to turn over personal notes unnecessary and unrelated to the AME business,
such as a personal diary or rolodex.
7. NON-SOLICITATION AND NON-COMPETITION. During the "Restriction Period"
(as hereinafter defined) and within the "Territory" (as hereinafter
defined), the Employee shall not directly or indirectly, compete with AME
or NRC with respect to the AME Business and the Employee shall not (i)
solicit the business of AME from any customer of AME or any entity
controlled by AME; (ii) directly or indirectly, hire any employees of AME
or any entity controlled by or controlling AME or cause any entity with
which the Employee is affiliated to hire any such employees of AME; (iii)
engage in, represent in any way or be connected with, as a consultant,
officer, director, partner, employee, sales representative, proprietor,
member, stockholder (except for stock ownership of less than 1% in a
publicly owned corporation) or otherwise, any business competing with the
business of AME as conducted by AME on the date hereof or during the period
of Employee's employment by AME.
As used herein, the "Restriction Period" shall mean the period while
the Employee is employed by AME and the period following termination of
employment as determined below:
(i) Twenty-four (24) months after the date the Employee
ceases to be employed by AME if such employment
terminates within two (2) years of the date hereof;
(ii) Eighteen (18) months after the Employee ceases to be
employed by AME if such employment terminates after two
(2) years from the date hereof and before three (3)
years from the date hereof;
(iii) Twelve (12) months after the Employee ceases to be
employed by AME if such employment terminates after
three (3) years from the date hereof and before four
(4) years from the date hereof;
(iv) Nine (9) months after the Employee ceases to be
employed by AME if such employment terminates after
four (4) years from the date hereof and before five (5)
years from the date hereof;
(v) Six (6) months after the Employee ceases to be employed
by AME if such employment terminates after five (5)
years from the date hereof.
As used herein, the "Territory" shall mean the United States of America and
any other country in which AME does business after the date hereof while
Employee is employed by AME or NRC and its subsidiaries. As used herein,
the term "employees" shall mean persons who are, at the time in question,
current employees of AME or its affiliates or who were, within six (6)
months of the date of the prohibited hiring, employees of AME or its
affiliates. For this purpose, affiliates of AME shall include NRC and its
subsidiaries.
8. NO CONFLICT.
Employee represents and warrants that he is not a party to or
otherwise subject to or bound by the terms of any contract, agreement or
understanding which in any manner would limit or otherwise affect his
ability to perform his obligations hereunder, including without limitation
any contract, agreement or understanding containing terms and provisions
similar in any manner to those contained in Sections 6 and 7 hereof.
9. SURVIVAL OF COVENANTS; EFFECT.
(a) REMEDY. The covenants on the part of the Employee contained or
referred to in Sections 6 and 7 above shall survive termination of this
Agreement, and the existence of any claim or cause of action of the
Employee against AME, whether predicated on this Agreement or otherwise.
The Employee agrees that a remedy at law for any breach of the foregoing
covenants contained or referred to in Sections 6 and 7 would be inadequate,
that AME would suffer irreparable harm as a result and that AME shall be
entitled to a temporary and permanent injunction or an order for specific
performance of such covenants without the necessity of proving actual
damage to AME and without the posting of any bond or other security. Any
breach (whether or not material) by AME shall not release the Employee from
his obligations under Sections 6 and 7.
(b) REASONABLENESS. The Employee hereby represents and acknowledges
that AME is relying on the covenants in Sections 6 and 7 in entering into
this Agreement and that the restrictions in Sections 6 and 7 are fair and
reasonable. The Employee acknowledges that AME presently intends to do
business throughout the United States and that the geographic scope of the
covenants in Section 7 is reasonable and necessary to protect the interests
of AME. The Employee acknowledges that the restrictions in Sections 6 and
7 are a material inducement to NRC to enter into the Purchase Agreement.
(c) CARE. It is the intent of the parties that the provisions of
Sections 6 and 7 shall be enforced to the fullest extent permissible under
the laws and public policies of each jurisdiction in which enforcement is
sought. If any particular provision of Sections 6 and 7 shall be
adjudicated to be invalid or unenforceable, such provision(s) of Sections 6
and 7 shall be deemed amended to provide restrictions to the fullest extent
permissible and consistent with applicable law and policies, and such
amendment shall apply only with respect to the particular jurisdiction in
which such adjudication is made. If such deemed amendment is not allowed
by the adjudicating body, the offending provision, only, shall be deleted
and the remainder of Sections 6 and 7 shall not be affected.
10. ASSIGNMENT.
The rights and obligations of AME under this Agreement may be assigned
or delegated by AME to any affiliate of AME or to any successors in
interest of AME or of that part of the business of AME to which this
Agreement applies so long as the duties of Employee are not materially
affected. Any other assignment of this Agreement shall require the written
consent of Employee. After the date hereof, AME may change its name and
such name change shall not affect the rights and duties of the parties
hereto. This Agreement may not be assigned and any duties of the Employee
may not be delegated by the Employee, but any amounts owing to the Employee
upon his death shall inure to the benefit of his estate. In the event of
any merger or other corporate reorganization of AME wherein AME is not the
surviving entity, provisions reasonably satisfactory to Employee shall be
made to ensure the Employee that the compensation and other benefits of
this Agreement are not diminished thereby.
11. NOTICES.
All notices or other communications which may be or are required to be
given, served or sent by either party to the other party pursuant to this
Agreement shall be in writing, addressed to its/his residence or place of
business as set forth above, and shall be mailed by first-class certified
mail, return receipt requested, postage prepaid, next-day air delivery, or
transmitted by facsimiles or hand delivery. Such notice or other
communication shall be deemed sufficiently given, served, sent or received
for all purposes at such time as it is delivered to the addressee or at
such time as delivery is refused by the addressee upon presentation. Each
party may designate by notice in writing an address to which any notice or
communication may thereafter be so given, served or sent.
12. APPLICABLE LAW JURISDICTION.
This Agreement shall be governed by, construed and enforced in
accordance with the internal substantive laws and not the choice of law
rules of the State of Delaware.
13. EFFECTIVENESS/INTERPRETATION.
The parties acknowledge and agree that this Agreement has been
negotiated at arm's length between parties equally sophisticated and
knowledgeable in the matters dealt with herein. Each party has been
represented by counsel of its or his own choosing. Accordingly, any rule
of law or legal decision that would require interpretation of any
ambiguities in the Agreement against the party that drafted it is not
applicable and is waived.
14. SEVERABILITY.
If any of the articles, sections, paragraphs, clauses or provisions of
this Agreement shall be held by a court of last resort to be invalid, the
remainder of this Agreement shall not be affected thereby.
15. ENTIRE AGREEMENT.
The foregoing contains the entire agreement between the parties
relating to the subject matter of this Agreement, and may not be altered or
amended except by an instrument in writing approved by AME and signed by
the parties hereto, and this Agreement supersedes all prior understandings
and agreements relating to employment of the Employee by AME. The waiver
of any rights under this Agreement on any one or more occasions shall not
constitute a waiver on any subsequent occasion.
IN WITNESS WHEREOF, AME has caused this Agreement to be executed by
its duly authorized officers and the Employee has hereunto set his hand as
of the date first above written.
ADVANCED MARINE ENTERPRISES, INC.,
a Virginia corporation
By: Otto P. Jons
_______________________________
Its: Executive Vice President
NICHOLS RESEARCH CORPORATION,
a Delaware corporation
By: Chris H. Horgen
-------------------------------
Chris H. Horgen, Chief
Executive Officer
John T. Drewry
__________________________________
JOHN T. DREWRY, Employee
<PAGE>
<PAGE>
SCHEDULE I
DUTIES OF EMPLOYEE
A. DUTIES OF EMPLOYEE: PRESIDENT, CHIEF OPERATING OFFICER
1. Responsible for directing the business with the objective of providing
maximum profit and return on invested capital.
2. Responsible for establishing current and long-term objectives, plans
and policies.
3. Representative for the company with its major customers, the financial
community and the public.
4. Directs, administers and coordinates the activities of the corporation
in accordance with policies, goals and objectives.
5. Assists in the development of corporate policies and goals that cover
company operations, personnel, financial performance and growth.
6. Responsible for the organization's overall financial plans and
policies along with its accounting practices.
7. Member of Advisory Committee for the Nichols Research Corporation
("NRC") Board of Directors.
8. Distribution of NRC stock options to individual AME employees
(exclusive of the President and Executive Vice President) from the
number of options authorized by NRC to be granted.
B. AUTHORITIES OF EMPLOYEE
Consistent with NRC objectives, business plans and operating budgets
formulated for the AME business unit and within the constraints developed
by the AME Board of Directors to ensure continuing cost competitiveness:
1. All bid/no-bid decisions.
2. All cost and price proposals.
3. Employee compensation packages.
4. Capital asset purchases.
5. Leases and other infrastructure investments.
6. All employee benefits and associated insurance policies except where
consolidation with NRC plans is required by ERISA.
7. Other as assigned.
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into on the 31st day of May, 1996, by and
between OTTO P. JONS, whose address is 11742 Gainsborough Road, Potomac,
Maryland 20854 (herein called the "Employee"); and ADVANCED MARINE
ENTERPRISES, INC., a Virginia corporation ("AME"), whose address is 1725
Jefferson Davis Highway, Suite 1300, Arlington, Virginia 23202; and NICHOLS
RESEARCH CORPORATION, a Delaware corporation ("NRC"), whose address is 4040
South Memorial Parkway, Huntsville, Alabama 35802.
W I T N E S S E T H:
WHEREAS, this Agreement is executed on the date of the closing of that
certain Stock Purchase Agreement by and among NRC, the Employee and the
other shareholders and optionholders of AME (the "Purchase Agreement")
whereby AME became a wholly owned subsidiary of NRC;
WHEREAS, AME is engaged principally in providing naval and marine
architectural and engineering services, including the development and
support of analytic software systems, modeling and simulation services and
simulator systems, to the Department of Navy and other customers (the "AME
Business");
WHEREAS, the Employee has valuable knowledge and experience related to
the AME Business; and
WHEREAS, AME desires to obtain the services of the Employee as
Executive Vice President of AME and the Employee is willing to render such
services to AME upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. DUTIES.
Subject to the terms and provisions of this Agreement, AME hereby
employs Employee and Employee hereby accepts employment by AME as Executive
Vice President of AME. The Employee's duties shall include the duties and
responsibilities identified on Schedule I attached hereto. The Employee
shall perform such other tasks and duties as may be assigned by AME from
time to time, consistent with the Employee's training and experience and
with the position of Executive Vice President of AME. The Employee shall
devote his full time, attention, skill and efforts to the tasks and duties
assigned by AME. The Employee shall carry out his duties under the general
supervision of the Board of Directors of AME. The Employee hereby agrees
to undertake such travel as may be required in the performance of his
duties. The reasonable travel expenses of the Employee shall be reimbursed
in accordance with AME's reimbursement policy in effect from time to time.
The Employee shall not be required to relocate from the Arlington,
Virginia, area without his consent.
2. COMPENSATION.
(a) BASE SALARY. AME shall pay the Employee a base monthly salary of
$20,417 per month through August 31, 1996, and a base monthly salary of
$16,667 per month thereafter payable during the Term of Employment, as
hereinafter defined, in accordance with the standard payroll practices of
AME. Beginning September 1, 1997, such salary may be increased from time
to time in the discretion of the AME Board of Directors consistent with NRC
executive compensation practices.
(b) PERFORMANCE BONUSES. No performance bonus shall be paid for the
fiscal period ending August 31, 1996. Subject to the limitation of Section
2(d) below, during the three year period commencing September 1, 1996, and
ending August 31, 1999, the Employee shall be entitled to an annual
performance bonus, if any, equal to the sum of (1) two percent (2%) of
AME's Earnings Base (as hereinafter defined) up to an Earnings Base of
$4,000,000 if the Earnings Base exceeds $1,000,000 and (2) three and one-
half percent (3-1/2%) of the amount by which the Earnings Base exceeds
$4,000,000. Commencing September 1, 1999, Employee shall be entitled to
participate in the performance bonus plan, if any, currently maintained by
NRC and described in Section 2.9 of the NRC policy manual on a basis
consistent with the manner in which corporate vice presidents of NRC
benefit under such plan.
(c) INCENTIVE PAYMENTS. Subject to the limitation of Section 2(d)
below, the Employee shall be entitled to receive incentive payments, if
any, as follows:
(i) $150,000 for the fiscal year ending August 31, 1997, if
during such fiscal year AME achieves an Earnings Base
of at least $3,000,000;
(ii) Either $75,000 for the fiscal year ending August 31,
1998, if during such fiscal year AME achieves an
Earnings Base of at least $3,350,000, but less than
$3,764,999, or $150,000 for the fiscal year ending
August 31, 1998, if during such year AME achieves an
Earnings Base of at least $3,765,000.
(d) LIMITATION ON PERFORMANCE BONUS AND INCENTIVE PAYMENT. The
Employee shall be entitled to the greater of the performance bonus under
Section 2(b) above or the incentive payment under Section 2(c) above for
each such fiscal year, but not both. The Employee understands that he may
be entitled to neither a performance bonus nor an incentive payment if AME
does not achieve the Earnings Base required under Section 2(b) or 2(c)
above.
(e) EARNINGS BASE. The "Earnings Base" shall mean AME earnings for
the fiscal year ended August 31 before interest, income taxes and
amortization of good will, except that (i) working capital advances from
NRC to AME in excess of $1,000,000 shall bear interest at the commercial
base rate of interest announced by SouthTrust Bank from time to time and
such interest shall be treated as an expense of AME in determining Earnings
Base, and (ii) AME shall be allocated an NRC corporate charge of no more
than 2.05% of AME value added costs which shall be treated as an expense of
AME in determining Earnings Base. There shall be excluded from the
computation of Earnings Base the revenue and expenses of any business unit
not within AME's current business organization unless the Employee and John
T. Drewry consent to the inclusion of such business unit. There shall be
excluded from the computation of Earnings Base AME expenditures directed by
NRC or AME which are not related to or connected with AME's Business unless
the Employee and John T. Drewry consent thereto. For purposes of
determining Earnings Base, all compensation and other costs of this
Agreement and that certain employment agreement of John T. Drewry of even
date herewith shall be expenses of AME and not NRC. For this purpose,
"value added costs" are all costs except payments to subcontractors and
payments for contract materials. The determination of Earnings Base shall
be made in accordance with generally accepted accounting principles
("GAAP") as consistently applied by AME, except as modified by the
preceding language. The following procedures shall be observed in the
determination of gross revenues and Earnings Base:
(i) NRC's Chief Financial Officer ("CFO") shall prepare and
deliver to Employee a proposed statement for each fiscal
year ending August 31, 1997, 1998, and 1999 within forty-
five (45) days of the end of such fiscal year, setting forth
in reasonable detail the basis for the calculation.
Employee and his accountants shall have the right to consult
with the appropriate personnel of NRC, AME and their agents
and shall have the right to examine on a concurrent basis
any and all work papers, schedules and other documents
prepared by AME, NRC or their accountants in connection with
the proposed statement of gross revenues and Earnings Base.
(ii) Employee may dispute the proposed gross revenues and
Earnings Base statement by notifying AME in writing setting
forth in reasonable detail, to the extent possible, the
amount(s) in dispute and the basis for such dispute, within
thirty (30) days of Employee's receipt of the proposed
statement. In the event of such a dispute, the CFO and
Employee's accountants shall attempt in good faith to
resolve such dispute, and any resolution by them as to any
disputed amount(s) shall be final, binding and conclusive on
Employee, AME and NRC.
(iii) If Employee's accountants and the CFO do not resolve any
such dispute within fifteen (15) days of the date of receipt
by AME and NRC of Employee' written notice of dispute, the
CFO and Employee's accountants shall, within five (5)
additional days, submit any such unresolved dispute to an
independent accounting firm of national reputation appointed
jointly by Employee and AME (neither of which may
unreasonably withhold or delay such appointment) (the
"Independent Accounting Firm"), which firm shall, within
forty (40) days of each submission, resolve each such item
remaining in dispute within the range of amounts proposed by
Employee and the CFO, and such resolution shall be binding
and conclusive on Employee, AME, and NRC. The fees and
disbursements of the Independent Accounting Firm ("IAF")
shall be borne 100% by AME if the Employee is successful
with respect to at least thirty-five percent (35%) of the
aggregate amount of disputed items submitted to the IAF.
Otherwise, such fees and disbursements shall be borne 75% by
the Employee and 25% by AME. Any payment by AME to the IAF
shall be excluded from the determination of the Earnings
Base if the Employee is successful with respect to at least
thirty-five percent (35%) of the disputed amount.
(f) STOCK OPTIONS. The Employee shall receive a stock option grant
on September 3, 1996, to purchase 12,000 shares of NRC common stock at a
price equal to the fair market value of such stock on the date of grant
provided Employee is employed by AME or NRC on such date. The stock
options shall be subject to the terms and conditions contained in the NRC
1991 Stock Option Plan, including vesting, exercise and nontransferability,
as the same may be amended from time to time. To the extent possible, such
option shall be designated an incentive stock option.
(g) FRINGE BENEFITS. The Employee shall participate in any group
health insurance, vacation and sick leave plans, and other benefit plans
available to employees of AME generally in accordance with their terms and
conditions which plans may be amended or terminated by AME at any time.
The excess disability and excess ($200,000) life insurance policies for the
benefit of the Employee in effect prior to the closing of the Purchase
Agreement shall be cancelled one year from the date hereof, unless assigned
pursuant to the following sentence. If requested in writing by the
Employee, such excess life insurance policy and such disability insurance
policy shall be assigned by AME to the Employee, provided the same have not
lapsed and may be assigned by their terms. The AME company automobile
assigned to Employee prior to the closing of the Purchase Agreement shall
continue to be afforded Employee under the existing terms and provisions
relating to use of such vehicle by Employee for a period of three years
from the date hereof. The Employee shall have the option after three years
from the date of this Agreement to purchase the automobile from AME for a
price not to exceed the net book value determined by GAAP consistently
applied by AME, provided the Employee reimburses to AME any amounts
determined by Defense Contract Audit Agency to be unallowable and therefore
non-reimbursable under government contracts. Such option to purchase the
automobile shall lapse and be null and void if not exercised within thirty
(30) days after the third anniversary date hereof by tendering the purchase
price to AME.
3. TERM OF EMPLOYMENT.
This Agreement shall commence on the date hereof and shall end five
(5) years from such date (the "Term of Employment"), unless terminated
earlier as provided in Section 4 below, or extended as provided in this
Section 3. Upon expiration of the initial Term of Employment, unless
earlier terminated as provided herein, the Employee's employment shall
continue automatically month-to-month until terminated by either party with
at least thirty (30) days' prior written notice with or without cause.
4. TERMINATION BEFORE EXPIRATION OF TERM OF EMPLOYMENT.
The termination of the employment of the Employee during the initial
Term of Employment may be effected in one of the following ways:
(a) BY AME, FOR CAUSE. Termination by AME shall be deemed to be for
cause only upon:
(i) Employee's conviction of or pleading guilty to a felony or
debarment regarding federal contracts;
(ii) Refusal or failure by the Employee, without reasonable
excuse or proper authorization, to carry out any reasonable
instructions of AME consistent with Employee's rights or
duties as set forth in this Agreement;
(iii) Material breach of this Agreement;
(iv) The Employee's willful misconduct in the execution of his
duties, including without limitation breach of fiduciary
duty, dishonesty, theft of company property or the breach of
the duty of loyalty owed AME.
If AME intends to terminate for cause, AME shall provide notice to
Employee of intent to terminate his employment, stating the termination
provision in this Agreement relied upon and setting forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination under the provisions so indicated, and shall provide Employee
with an opportunity to cure the alleged default or breach within thirty
(30) days of receipt of the notice, provided that if the matter is not
curable within such thirty (30) day period, the Employee shall not be
deemed in default if the Employee commences immediately to cure the matter
and proceeds diligently thereafter to complete the cure, further provided
that the alleged breach or default must be cured within ninety (90) days of
receipt of the notice. AME shall not be required to give more than one
notice with respect to the same matter. Notwithstanding the foregoing, no
notice and no cure right shall be required with respect to termination for
cause under 4(a)(i) or 4(a)(iv).
(b) BY AME, WITHOUT CAUSE. Any termination of Employee by AME for
reasons other than as set forth in subsections 4(a), (e), (f) or (g) shall
be a termination without cause. AME may terminate the employment of
Employee without cause by thirty (30) days' prior written notice at any
time.
(c) BY EMPLOYEE, FOR GOOD REASON. Termination by the Employee shall
be deemed for good reason only because of a material breach by AME of this
Agreement. In all cases in which Employee intends to terminate for Good
Reason, the Employee shall provide AME with notice of intent to terminate
this Agreement, stating the facts and circumstances giving rise to a breach
of this Agreement claimed to provide a basis for termination under the
provisions so indicated, and shall provide AME with an opportunity to cure
the alleged default or breach within thirty (30) days of receipt of the
notice, provided that if the matter is not curable within such thirty (30)
day period, AME shall not be deemed in default if it commences immediately
to cure the matter and proceeds diligently thereafter to complete the cure,
further provided that the alleged breach or default must be cured within
ninety (90) days of receipt of the notice. Employee shall not be required
to give more than one such notice with respect to the same matter.
(d) BY THE EMPLOYEE, WITHOUT GOOD REASON. Any termination by
Employee for reasons other than as set forth in subsections 4(c), (e), (f)
or (g) shall be a termination without good reason. The Employee may
terminate his employment without good reason upon thirty (30) days' prior
written notice at any time.
(e) DEATH OF THE EMPLOYEE.
(f) DISABILITY OF EMPLOYEE. If, during the Term of Employment, a
physician selected by AME and the Employee determines that the Employee has
become physically or mentally disabled so as to be unable to carry out the
normal and usual duties of his employment for six (6) continuous months,
and reasonable accommodation cannot be made to allow the Employee to
continue to perform his duties full-time, his employment hereunder may be
terminated at the election of AME or the Employee.
(g) MUTUAL CONSENT. The parties by mutual consent may terminate
Employee's employment.
5. CONSEQUENCES OF TERMINATION.
The termination of the employment of Employee will cause the following
results:
(a) PAYMENTS ON CERTAIN TERMINATIONS; LIQUIDATED DAMAGES FROM
EMPLOYEE. If the termination is by AME under Section 4(a) above, or is by
the Employee under Section 4(d) above, the following payments shall be
made:
(i) AME will pay the Employee within five (5) days after the
date of termination any unpaid base monthly salary under
Section 2(a) prorated to the date of termination, the amount
of any accrued annual vacation pay to which he may be
entitled under AME's vacation plan and benefits, with such
compensation and benefits (if any) paid only through the
date termination occurs.
(ii) If such termination occurs within the first twenty four (24)
months of this Employment Agreement, the Employee shall pay
to AME as liquidated damages and not as a penalty an amount
equal to the product of the base monthly salary under
Section 2(a) on the date of termination multiplied by six
(6). If such termination occurs after the first twenty-four
(24) months of this Employment Agreement, there shall be
substituted for six (6) in the first sentence of this
Section 5(a)(ii) above the appropriate number set forth
below:
(A) four (4), if termination occurs after the second
year and prior to the third year;
(B) two (2), if termination occurs after the third
year and before the fourth year; and
(C) zero (0), if termination occurs after the fourth
year.
The liquidated damages may be prepaid. For example, if
employment is terminated 24 months after the date hereof,
the liquidated damages would be $66,668 ($16,667 X 4). The
liquidated damages shall be paid in 12 equal, consecutive
monthly installments without interest commencing 30 days
after termination, provided that, if any monthly installment
is not paid within 10 days after notice of default, the
entire amount of liquidated damages shall be paid in lump
sum immediately.
(b) PAYMENTS ON CERTAIN TERMINATIONS; LIQUIDATED DAMAGES FROM AME.
If the termination is by AME under Section 4(b) above, or is by the
Employee under Section 4(c) above, AME shall pay to the Employee, in
addition to the amounts set forth in 5(a)(i) above, as liquidated damages
and not as a penalty, the following amounts:
(i) If such termination occurs within the first eighteen (18)
months of this Employment Agreement, an amount equal to the
product of the base monthly salary under Section 2(a) on the
date of termination multiplied by the greater of (A) six or
(B) twenty-four minus the number of full months of
employment by the Employee on the date of termination. If
such termination occurs after the first eighteen (18) months
of this Employment Agreement, an amount equal to the product
of base monthly salary under Section 2(a) on the date of
termination multiplied by the lesser of (A) six or (B) the
number of full months remaining after the date of
termination until expiration of the initial Term of
Employment assuming the Term of Employment is not terminated
early. For example, if employment is terminated two years
after the date hereof, the liquidated damages would be
$100,002 ($16,667 X 6). The liquidated damages shall be
paid in 12 equal, consecutive monthly installments without
interest commencing 30 days after termination, provided
that, if any monthly installment is not paid within 10 days
after notice of default, the entire amount of liquidated
damages shall be paid in lump sum immediately. The
liquidated damages may be prepaid.
(ii) If such termination occurs prior to August 31, 1998, the
full amount of the performance bonus under Section 2(b)
hereof or the incentive payment under Section 2(c) hereof
shall be paid to Employee if AME achieves the financial
performance required under Section 2(b) or Section 2(c)
which would entitle the Employee to such payment if his
employment had not terminated after application of the
limitation under Section 2(d) hereof.
(c) MUTUAL GROUNDS FOR TERMINATION OR CONSENT. If the parties
mutually agree to terminate under Section 5(g), neither party shall owe the
other party the liquidated damages set forth above in Sections 5(a)(ii) or
5(b).
(d) DEATH OR DISABILITY. In the event of the Employee's death or
disability, the following provisions will apply:
(i) Upon his death, the Employee's estate will be entitled to
receive the amount set forth in Section 5(a)(i) and the
benefits set forth in any plans of AME then in effect and
applicable under the circumstances. The Employee or his
estate shall be entitled to no other compensation or
benefits in the event of death other than the right of the
Employee's estate to exercise any or all stock options
exercisable but not yet exercised during the period of three
(3) months after the date of death.
(ii) Upon termination on account of disability, Employee will be
entitled to receive the amount set forth in Section 5(a)(i)
and the benefits set forth in any plans of AME then in
effect and applicable under the circumstances. The Employee
or his personal representative shall be entitled to no other
compensation or benefits in the event of disability, except
as provided in Section 5(f) of the NRC 1991 Stock Option
Plan.
(e) MITIGATION. The Employee shall not be required to mitigate the
amount of payment provided for in this Section 5 by seeking employment.
(f) RELEASE. The amounts set forth above in this Section 5 shall be
paid and received in complete release and discharge of any other obligation
under this Employment Agreement of AME or NRC to Employee or Employee to
AME or NRC resulting from termination of his employment, except that the
provisions for termination herein contained shall not affect the rights and
remedies of AME or NRC under Section 9 hereof. The provisions of Sections
6, 7 and 9 shall survive any termination of employment.
(g) TERMINATION AFTER FIVE YEARS. After the initial Term of
Employment of five years, only the amounts specified in Section 5(a)(i)
shall be due the Employee upon termination and neither party shall be
liable for any other payment hereunder.
6. NON-DISCLOSURE COVENANTS AND PROPRIETARY MATTERS.
(a) NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Unless authorized or
instructed in writing by AME, the Employee shall not, except as required in
the conduct of AME's business or in response to a lawful subpoena or
discovery order or as may otherwise be required by law during or at any
time after the Term of Employment, disclose to others or use any of AME's
inventions or discoveries or its respective secret or confidential
information or data (oral, written, or in machine readable form) which the
Employee may obtain during the course of or in connection with the
Employee's employment (or employment or affiliation with any company that
transfers to AME such information or data), including such inventions,
discoveries, information or data relating to machines, equipment, products,
systems, software, contracts, contract performance, research or
development, designs, computations, formulas, manufacturing procedures,
prices and earnings, customer lists, and suppliers, whether or not
developed by the Employee, by others in AME or obtained by AME from third
parties, and irrespective of whether or not such inventions, discoveries,
information, knowledge or data have been identified by AME as secret or
confidential, unless and until, and then to the extent and only to the
extent that, such inventions, discoveries, information, knowledge or data
become available to the public otherwise than by the Employee's act or
omission.
(b) PATENTS. The Employee agrees to disclose immediately to AME or
any persons designated by it and to assign to AME or its successors or
assigns, all inventions made, discovered, or first reduced to practice by
the Employee, solely or jointly with others, during the Term of Employment
or within a period of six months from the date of termination of such
employment (either during or outside of the Employee's working hours and
either on or off AME's premises as it relates to the subject matter of
employment), which inventions are made, discovered or conceived either in
the course of such employment, or with the use of AME's time, material,
facilities or funds, or which are directly related to any investigations or
obligations undertaken by AME; and the Employee hereby grants and agrees to
grant the right to AME and its nominees to obtain, for its own benefit and
in its own name (entirely at its expense) patents and patent applications
including original, continuation, reissue, utility and design patents, and
applications, patents of addition, confirmation patents, registration
patents, petty patents, utility models, and all other types of patents and
the like, and all renewals and extensions of any of them for those
inventions in any and all countries; and the Employee shall assist AME, at
AME's expense, without further charge during the term of the Employee's
employment, and after termination of the Employee's employment to the
extent such assistance does not unreasonably interfere with the Employee's
performance of subsequent employment, at the same base salary rate
(excluding any bonuses, incentive or deferred compensation or other
benefits and based upon a forty hour work week) as during the last year of
the Employee's employment (determined on an hourly basis for this purpose),
through counsel designated by AME, to execute, acknowledge, and deliver all
such further papers, including assignments, applications for Letters Patent
(of the United States or of any foreign country), oaths, disclaimers or
other instruments and to perform such further acts, including giving
testimony or furnishing evidence in the prosecution or defense of appeals,
interferences, suits and controversies relating to any aforesaid inventions
as may reasonably be deemed necessary by AME or its nominees to effectuate
the vesting or perfecting in AME or its nominees of all right, title and
interest in and to said inventions, applications and patents.
(c) COPYRIGHTS. The Employee agrees to disclose immediately to AME
or any persons designated by it and to assign to AME, at its option, or its
successors or assigns, all works of authorship, including all writings,
computer programs, software, and firmware, written or created by the
Employee solely or jointly with others, during the course of his employment
by AME (either during or outside of the Employee's working hours and either
on or off AME's premises as it relates to the subject matter of
employment), which works are made or conceived either in the course of such
employment, or with the use of AME's time, material, facilities or funds,
or which are directly related to any investigations or obligations
undertaken by AME; and the Employee hereby agrees that all such works are
works made for hire, of which AME is the author and the beneficiary of all
rights and protections afforded by the law of copyright in any and all
countries; and the Employee will assist AME at AME's expense without
further charges during the term of his employment, and after termination of
his employment to the extent such assistance does not unreasonably
interfere with the Employee's performance of subsequent employment, at the
same base salary rate (excluding any bonuses, incentive or deferred
compensation or other benefits) as during the last year of his employment
(determined on an hourly basis for this purpose assuming a forty hour work
week), through counsel designated by AME, to execute, acknowledge, and
deliver all such further papers, including assignments, applications for
copyright registration (in the United States or in any foreign country),
oaths, disclaimers or other instruments, and to perform such further acts,
including giving testimony or furnishing evidence in the prosecution or
defense of appeals, interferences, suits and controversies relating to any
aforesaid works, as may be deemed necessary by AME or by its nominees to
effectuate the vesting or perfecting in AME or its nominees of all rights
and interest in and to said works and copies thereof, including the
exclusive rights of copying and distribution.
(d) RECORDS. The Employee shall keep complete, accurate and
authentic accounts, notes, data and records of all inventions made,
discovered or developed and all works of authorship written or created by
the Employee as aforesaid in the manner and form requested by AME.
(e) RETURN OF AME PROPERTY. All computer or other hardware, computer
software, computer programs, source codes, object codes, magnetic tapes,
printouts, samples, notes, records, reports, documents, customer lists,
photographs, catalogues and other writings, whether copyrightable or not,
relating to or dealing with AME's business and plans, and those of others
entrusted to AME, which are prepared or created by the Employee or which
may come into his possession during or as a result of his employment, are
the property of AME, as applicable, and upon termination of his employment,
the Employee agrees to return all such computer software, computer
programs, source codes, object codes, magnetic tapes, printouts, samples,
notes, records, reports, documents, customer lists, photographs, catalogues
and writings and all copies thereof to AME. The Employee is not required
to turn over personal notes unnecessary and unrelated to the AME business,
such as a personal diary or rolodex.
7. NON-SOLICITATION AND NON-COMPETITION. During the "Restriction Period"
(as hereinafter defined) and within the "Territory" (as hereinafter
defined), the Employee shall not directly or indirectly, compete with AME
or NRC with respect to the AME Business and the Employee shall not (i)
solicit the business of AME from any customer of AME or any entity
controlled by AME; (ii) directly or indirectly, hire any employees of AME
or any entity controlled by or controlling AME or cause any entity with
which the Employee is affiliated to hire any such employees of AME; (iii)
engage in, represent in any way or be connected with, as a consultant,
officer, director, partner, employee, sales representative, proprietor,
member, stockholder (except for stock ownership of less than 1% in a
publicly owned corporation) or otherwise, any business competing with the
business of AME as conducted by AME on the date hereof or during the period
of Employee's employment by AME.
As used herein, the "Restriction Period" shall mean the period while
the Employee is employed by AME and the period following termination of
employment as determined below:
(i) Twenty-four (24) months after the date the Employee
ceases to be employed by AME if such employment
terminates within two (2) years of the date hereof;
(ii) Eighteen (18) months after the Employee ceases to be
employed by AME if such employment terminates after two
(2) years from the date hereof and before three (3)
years from the date hereof;
(iii) Twelve (12) months after the Employee ceases to be
employed by AME if such employment terminates after
three (3) years from the date hereof and before four
(4) years from the date hereof;
(iv) Nine (9) months after the Employee ceases to be
employed by AME if such employment terminates after
four (4) years from the date hereof and before five (5)
years from the date hereof;
(v) Six (6) months after the Employee ceases to be employed
by AME if such employment terminates after five (5)
years from the date hereof.
As used herein, the "Territory" shall mean the United States of America and
any other country in which AME does business after the date hereof while
Employee is employed by AME or NRC and its subsidiaries. As used herein,
the term "employees" shall mean persons who are, at the time in question,
current employees of AME or its affiliates or who were, within six (6)
months of the date of the prohibited hiring, employees of AME or its
affiliates. For this purpose, affiliates of AME shall include NRC and its
subsidiaries.
8. NO CONFLICT.
Employee represents and warrants that he is not a party to or
otherwise subject to or bound by the terms of any contract, agreement or
understanding which in any manner would limit or otherwise affect his
ability to perform his obligations hereunder, including without limitation
any contract, agreement or understanding containing terms and provisions
similar in any manner to those contained in Sections 6 and 7 hereof.
9. SURVIVAL OF COVENANTS; EFFECT.
(a) REMEDY. The covenants on the part of the Employee contained or
referred to in Sections 6 and 7 above shall survive termination of this
Agreement, and the existence of any claim or cause of action of the
Employee against AME, whether predicated on this Agreement or otherwise.
The Employee agrees that a remedy at law for any breach of the foregoing
covenants contained or referred to in Sections 6 and 7 would be inadequate,
that AME would suffer irreparable harm as a result and that AME shall be
entitled to a temporary and permanent injunction or an order for specific
performance of such covenants without the necessity of proving actual
damage to AME and without the posting of any bond or other security. Any
breach (whether or not material) by AME shall not release the Employee from
his obligations under Sections 6 and 7.
(b) REASONABLENESS. The Employee hereby represents and acknowledges
that AME is relying on the covenants in Sections 6 and 7 in entering into
this Agreement and that the restrictions in Sections 6 and 7 are fair and
reasonable. The Employee acknowledges that AME presently intends to do
business throughout the United States and that the geographic scope of the
covenants in Section 7 is reasonable and necessary to protect the interests
of AME. The Employee acknowledges that the restrictions in Sections 6 and
7 are a material inducement to NRC to enter into the Purchase Agreement.
(c) CARE. It is the intent of the parties that the provisions of
Sections 6 and 7 shall be enforced to the fullest extent permissible under
the laws and public policies of each jurisdiction in which enforcement is
sought. If any particular provision of Sections 6 and 7 shall be
adjudicated to be invalid or unenforceable, such provision(s) of Sections 6
and 7 shall be deemed amended to provide restrictions to the fullest extent
permissible and consistent with applicable law and policies, and such
amendment shall apply only with respect to the particular jurisdiction in
which such adjudication is made. If such deemed amendment is not allowed
by the adjudicating body, the offending provision, only, shall be deleted
and the remainder of Sections 6 and 7 shall not be affected.
10. ASSIGNMENT.
The rights and obligations of AME under this Agreement may be assigned
or delegated by AME to any affiliate of AME or to any successors in
interest of AME or of that part of the business of AME to which this
Agreement applies so long as the duties of Employee are not materially
affected. Any other assignment of this Agreement shall require the written
consent of Employee. After the date hereof, AME may change its name and
such name change shall not affect the rights and duties of the parties
hereto. This Agreement may not be assigned and any duties of the Employee
may not be delegated by the Employee, but any amounts owing to the Employee
upon his death shall inure to the benefit of his estate. In the event of
any merger or other corporate reorganization of AME wherein AME is not the
surviving entity, provisions reasonably satisfactory to Employee shall be
made to ensure the Employee that the compensation and other benefits of
this Agreement are not diminished thereby.
11. NOTICES.
All notices or other communications which may be or are required to be
given, served or sent by either party to the other party pursuant to this
Agreement shall be in writing, addressed to its/his residence or place of
business as set forth above, and shall be mailed by first-class certified
mail, return receipt requested, postage prepaid, next-day air delivery, or
transmitted by facsimiles or hand delivery. Such notice or other
communication shall be deemed sufficiently given, served, sent or received
for all purposes at such time as it is delivered to the addressee or at
such time as delivery is refused by the addressee upon presentation. Each
party may designate by notice in writing an address to which any notice or
communication may thereafter be so given, served or sent.
12. APPLICABLE LAW JURISDICTION.
This Agreement shall be governed by, construed and enforced in
accordance with the internal substantive laws and not the choice of law
rules of the State of Delaware.
13. EFFECTIVENESS/INTERPRETATION.
The parties acknowledge and agree that this Agreement has been
negotiated at arm's length between parties equally sophisticated and
knowledgeable in the matters dealt with herein. Each party has been
represented by counsel of its or his own choosing. Accordingly, any rule
of law or legal decision that would require interpretation of any
ambiguities in the Agreement against the party that drafted it is not
applicable and is waived.
14. SEVERABILITY.
If any of the articles, sections, paragraphs, clauses or provisions of
this Agreement shall be held by a court of last resort to be invalid, the
remainder of this Agreement shall not be affected thereby.
15. ENTIRE AGREEMENT.
The foregoing contains the entire agreement between the parties
relating to the subject matter of this Agreement, and may not be altered or
amended except by an instrument in writing approved by AME and signed by
the parties hereto, and this Agreement supersedes all prior understandings
and agreements relating to employment of the Employee by AME. The waiver
of any rights under this Agreement on any one or more occasions shall not
constitute a waiver on any subsequent occasion.
IN WITNESS WHEREOF, AME has caused this Agreement to be executed by
its duly authorized officers and the Employee has hereunto set his hand as
of the date first above written.
ADVANCED MARINE ENTERPRISES, INC.,
a Virginia corporation
John T. Drewry
By: ____________________________
Its President
NICHOLS RESEARCH CORPORATION,
a Delaware corporation
Chris H. Horgen
By: ____________________________
Its Chief Executive Officer
Otto P. Jons
________________________________
OTTO P. JONS, Employee
<PAGE>
<PAGE>
SCHEDULE I
A. DUTIES OF EMPLOYEE--EXECUTIVE VICE PRESIDENT
1. BUSINESS DEVELOPMENT: Identify and/or create business
development opportunities; make bid decisions and develop
proposed strategies; execute public and customer relation
programs.
2. PRODUCT DEVELOPMENT: Oversee product development performed by
division directors and integrate them as appropriate; perform a
continuing review of product development processes with the
objective of improvement and innovation.
3. PERSONNEL DEVELOPMENT: Use recruited as well as internal
personnel development and training to maintain a stable base of
talented, qualified and motivated professionals.
4. QUALITY MANAGEMENT: Maintain a quality management program as a
prerequisite for Items 1 through 3 above.
5. ADMINISTRATION: Execute, as appropriate, the responsibilities
for company-internal operation, including contract management,
facility management, administrative support and related
functions; develop and/or maintain documentation on standards,
policies and practices.
6. TECHNOLOGY DEVELOPMENT: Member of the NRC Technology Development
Council.
B. AUTHORITIES OF EMPLOYEE
Consistent with NRC objectives, business plans and operating budgets
formulated for the AME business unit and within the constraints
developed by the AME Board of Directors to ensure continuing cost
competitiveness:
1. Authorize expenditures for capital investment in infra-structure,
such as tools/computer technology, techniques and advanced
methods.
2. Authorize salaries and employee compensation package to attract
and retain qualified personnel.
3. Other as assigned.
<PAGE>
<PAGE>
REGISTRATION AGREEMENT
=====================================
ADVANCED MARINE ENTERPRISES, INC.
ACQUISITION
=====================================
DATED: MAY 31, 1996
<PAGE>
<PAGE>
I N D E X
1. Purchase and Sale of Shares ...............................1
2. Representations and Warranties of Investors ...............1
(a) Authorization ........................................1
(b) Purchase for Own Account for Investment ..............1
(c) Understanding of Risks ...............................2
(d) Investor's Qualifications ............................2
(e) No General Solicitation ..............................2
(f) Compliance with Securities Laws ......................2
(g) Restrictions on Transfer .............................2
(h) Rule 144 .............................................2
(i) Legends and Stop-Transfer Orders .....................3
3. Representations and Warranties of the Company .............3
(a) Requisite Power and Authorization ....................3
(b) Disclosure Documents .................................4
(c) Compliance With Other Agreements .....................4
4. Registration Rights .......................................4
(a) Definitions ..........................................4
(b) Form S-3 Registration ................................5
(c) Demand Registration ..................................6
(d) Piggyback Registration ...............................8
(e) Obligations of the Company ..........................10
(f) Furnish Information .................................12
(g) Delay of Registration ...............................12
(h) Indemnification .....................................13
(i) "Market Stand-Off" Agreement ........................16
(j) Reporting ...........................................16
(k) Termination of the Company's Obligations ............16
(e) Buy Back Option .....................................16
5. Miscellaneous. ...........................................17
(a) Governing Law .......................................17
(b) Further Instruments .................................17
(c) Successors; No Other Beneficiaries ..................17
(d) Counterparts ........................................17
(e) Entire Agreement ....................................17
(f) Notices .............................................18
(g) Finders' Fee ........................................18
(h) Amendments and Waivers ..............................18
(i) Severability ........................................18
(j) Aggregation of Stock ................................19
(k) No Conflicting Agreement ............................19
<PAGE>
<PAGE>
REGISTRATION AGREEMENT
This Registration Agreement (the "Agreement") is made and entered into
as of May 31, 1996 (the "Effective Date") by and among Nichols Research
Corporation, a Delaware corporation (the "Company") and those parties
listed on the signature page hereof as "Investors" (who are referred to
individually as an "Investor" and collectively as the "Investors").
In consideration of the above recitals and the mutual covenants made
herein, the parties hereby agree as follows:
1. PURCHASE AND SALE OF SHARES. Pursuant to that certain Stock
Purchase Agreement dated May 31, 1996, each Investor has purchased from the
Company, and the Company has sold to each Investor, the number of shares of
the Company's Common Stock, $0.01 par value, set forth in SCHEDULE 1.3 to
the Stock Purchase Agreement (the "Shares"), in consideration of such
Investor's delivery to the Company of Series B common stock of Advance
Marine Corporation, Inc. ("AME"). This Agreement is a condition to the
closing of the transactions set forth in the Stock Purchase Agreement and
any breach of this Agreement shall be deemed to constitute a breach of the
Stock Purchase Agreement.
2. REPRESENTATIONS AND WARRANTIES OF INVESTORS. Each Investor
represents and warrants, severally, to the Company that:
(a) AUTHORIZATION. This Agreement constitutes the valid and
legally binding obligation of such Investor, enforceable in accordance with
its terms, except as such enforcement is limited by bankruptcy, insolvency
and similar laws affecting the enforcement of creditors rights generally
and equitable remedies, and except as indemnity provisions in the
enforcement of Section 4 of this Agreement (relating to registration
rights) may be limited by law, and such Investor (if an individual) is over
nineteen (19) years of age, and such Investor has full legal capacity,
power and authority to enter into and be bound by this Agreement.
(b) PURCHASE FOR OWN ACCOUNT FOR INVESTMENT. Such Investor is
purchasing the Shares for such Investor's own account for investment
purposes only and not with a view to, or for sale in connection with, a
distribution of the Shares within the meaning of the Securities Act of
1933, as amended (the "1933 Act"). Such Investor has no present intention
of selling or otherwise disposing of all or any portion of the Shares and
no one other than such Investor has any beneficial ownership of any of the
Shares.
(c) UNDERSTANDING OF RISKS. Such Investor is fully aware of:
(i) the investment risks and merits associated with such Investor's
purchase of the Shares and (ii) the lack of liquidity of the Shares and the
restrictions on transferability of the Shares (e.g., that such Investor may
not be able to sell or dispose of the Shares or use them as collateral for
loans).
(d) INVESTOR'S QUALIFICATIONS. Such Investor is an "accredited"
investor as defined under Regulation D under the 1933 Act, and has
conducted a due diligence review of the Company of a nature and duration
sufficient to make such Investor aware of the general business and
financial circumstances of the Company, or by reason of such Investor's
business or financial experience, such Investor is capable of evaluating
the merits and risk of this investment, has the ability to protect such
Investor's own interests in this transaction and is financially capable of
bearing a total loss of this investment. Prior to the execution of the
Stock Purchase Agreement, such Investor has received and reviewed (i) the
materials referred to in Section 3(b) hereof and (ii) this Agreement.
(e) NO GENERAL SOLICITATION. At no time was such Investor
presented with or solicited by any publicly issued or circulated newspaper,
mail, radio, television or other form of general advertising or
solicitation in connection with the offer, sale and purchase of the Shares.
(f) COMPLIANCE WITH SECURITIES LAWS. Such Investor understands
and acknowledges that, in reliance upon the representations and warranties
made by Investors herein, the Shares are not being registered with the
Securities and Exchange Commission ("SEC" or "Commission") under the 1933
Act and applicable state securities laws, but instead are being issued
under an exemption or exemptions from the registration and qualification
requirements of the 1933 Act and other applicable state securities laws
which impose certain restrictions on such Investor's ability to transfer
the Shares.
(g) RESTRICTIONS ON TRANSFER. Such Investor understands that
such Investor may not transfer any Shares unless such Shares are registered
under the 1933 Act and qualified under applicable state securities laws or
unless exemptions from such registration and qualification requirements are
available. Such Investor understands that only the Company may file a
registration statement with the SEC.
(h) RULE 144. In addition, such Investor has been advised that
SEC Rule 144 ("Rule 144") promulgated under the 1933 Act, which permits
certain limited sales of unregistered securities, is not presently
available with respect to the Shares and, in any event, requires that the
Shares be held for a minimum of two years, and in certain cases three
years, after they have been purchased and paid for (within the meaning of
Rule 144), before they may be resold under Rule 144.
(i) LEGENDS AND STOP-TRANSFER ORDERS. Such Investor understands
that certificates or other instruments representing any of the Shares
acquired by such Investor will bear legends substantially similar to the
following, in addition to any other legends required by federal or state
laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
In the event the Company does not receive an opinion of counsel in
form and substance satisfactory to the Company with respect to a proposed
transfer as specified above, in order to ensure and enforce compliance with
the restrictions imposed by applicable law and those referred to in the
foregoing legends, or elsewhere herein, the Company may issue appropriate
"stop transfer" instructions to its transfer agent with respect to any
certificate or other instrument representing Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to each Investor, severally, that:
(a) REQUISITE POWER AND AUTHORIZATION. The Company has all
necessary corporate power and authority under the laws of the State of
Delaware and all other applicable provisions of law to execute and deliver
this Agreement, to issue the Shares under the Stock Purchase Agreement and
to carry out the provisions of this Agreement. All corporate action on the
part of the Board of Directors and shareholders of the Company required for
the lawful execution and delivery of this Agreement, and issuance and
delivery of the Shares has been duly and effectively taken. Upon execution
and delivery, this Agreement will be valid and binding obligations of the
Company except as enforcement may be limited by bankruptcy, moratorium and
other creditors' rights and by the availability of equitable remedies, and
except as the indemnity provisions of Section 4 of this Agreement (relating
to registration rights) may be limited by law. The Shares are duly
authorized and validly issued, fully paid, non-assessable, and issued in
compliance with federal securities laws and the securities laws of the
State of Virginia. No stockholder of the Company or other person has any
preemptive right of subscription or purchase with respect to the Shares.
(b) DISCLOSURE DOCUMENTS. Prior to execution of the Stock
Purchase Agreement the Company furnished the following financial
information to each Investor: (i) the Company's Annual Report on Form 10-K
for the fiscal year ended August 31, 1995, including the 1995 Annual Report
to Shareholders and the Proxy Statement prepared in connection with the
annual meeting of shareholders held January 11, 1996; and (ii) the
Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended
November 30, 1995, and February 29, 1996.
(c) COMPLIANCE WITH OTHER AGREEMENTS. Neither the execution and
delivery of, nor the performance by the Company of its registration
obligations under, nor the consummation of any transaction or execution of
any instrument contemplated by, this Agreement or the Shares, has
constituted or resulted in, or will constitute or result in, a default
under or breach or violation of any term or provision of the Company's
Bylaws, Certificate of Incorporation, or contracts with shareholders or
third parties, state or federal regulations, or judgments or decrees and
will not result in acceleration of any debt or result in the imposition of
any lien or encumbrance on the property or assets of the Company.
(d) FORM S-3 ELIGIBILITY. The Company is currently eligible to
file Form S-3 with respect to the Registrable Securities.
4. REGISTRATION RIGHTS.
(a) DEFINITIONS. For purposes of this Section 4:
(i) "Register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement
in compliance with the 1933 Act, and the declaration or ordering of
effectiveness of such registration statement.
(ii) "Registrable Securities" means the Shares,
excluding, however, all Registrable Securities sold by the Investors
pursuant to an exemption under the Act.
(iii) "Holder" means any person owning of record
Registrable Securities that have not been sold to the public or any
assignee of record of such Registrable Securities to whom rights under this
Section 4 have been assigned in accordance with this Agreement.
(iv) "Form S-3" means such form under the 1933 Act as
is in effect on the date hereof or any successor registration form under
the 1933 Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents
filed by the Company with the SEC.
(b) FORM S-3 REGISTRATION. If at any time after August 31,
1996, the Company receives from any Holder or Holders of Registrable
Securities a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder
or Holders, then the Company shall:
(i) Promptly give written notice of the proposed
registration and the Holder's or Holders' request therefor, and any related
qualification or compliance, to all other Holders of Registrable
Securities; and
(ii) As soon as practicable, effect such registration
and all such qualifications and compliances as may be so requested and as
would permit or facilitate the sale and distribution of all or such portion
of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable
Securities of any other Holder or Holders joining in such request as are
specified in a written request given within twenty (20) days after receipt
of such written notice from the Company; provided, however, that the
Company will not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 4(b): (A) if Form S-3
is not available for such offering by the Holders; (B) if the Holders,
together with the holders of any other securities of the Company entitled
to inclusion in such registration, propose to sell Registrable Securities
and such other securities (if any) at an aggregate price to the public of
less than $1,000,000; or (C) if the Company furnishes to the Holders a
certificate signed by the President or Chief Executive Officer of the
Company stating that in the good faith judgment of the Board of Directors
of the Company it would be seriously detrimental to the Company and its
shareholders for such Form S-3 Registration to be effected at such time, in
which event the Company will have the right to defer the filing of the Form
S-3 registration statement for a period of not more than one hundred twenty
(120) days after receipt of the request of the Holder or Holders under this
Section 4(b), except this provision allowing a delay in the filing of Form
S-3 shall not apply in the event of suspension of demand registration
rights under Section 4(d)(iii) and 4(i).
(iii) Subject to the foregoing, the Company will file a
Form S-3 registration statement covering the Registrable Securities
pursuant to this Section 4(b) as soon as practicable after receipt of the
request or requests of the Holders for such registration. The Company will
pay the expenses incurred in connection with registration requested
pursuant to this Section 4(b), (excluding underwriters' or brokers'
discounts and commissions), including without limitation all filing,
registration and qualification, printers' and accounting fees and the
reasonable fees of counsel for the Company. The selling Holder or Holders
shall be responsible for their own attorney fees and the fees of other
advisors employed by them.
(iv) The Company is obligated to effect only one (1)
such Form S-3 Registration pursuant to this Section 4(b).
(c) DEMAND REGISTRATION.
(i) If the Company receives at any time after August
31, 1996, a written request from the Holders of at least a majority of the
Registrable Securities then outstanding that the Company file a
registration statement under the 1933 Act covering the registration of
Registrable Securities (including any related qualifications under or
compliance with "blue sky" and other state securities laws), and if, as
determined by the Company, such registration is not available on Form S-3
as provided in Section 4(b) above, then the Company will, within ten (10)
business days after the receipt thereof, give written notice of such
request to all Holders, and effect, as soon as practicable, the
registration under the 1933 Act (including any related qualifications under
or compliance with "blue sky" and other state securities laws) of all
Registrable Securities which the Holders so request to be registered and
included in such registration, subject only to the limitations of this
Section 4(c), provided that the Registrable Securities requested by all
Holders to be registered pursuant to such request must be at least 50% of
all Registrable Securities then outstanding.
(ii) If the Holders initiating the registration request
under this Section 4(c) (the "Initiating Holders") intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, they will so advise the Company as a part of their request
made pursuant to this Section 4(c), and the Company will include such
information in the written notice referred to in Section 4(c)(i) hereof.
In such event, the right of any Holder to include such Holder's Registrable
Securities in such registration will be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder)
to the extent provided herein. All Holders proposing to distribute their
securities through such underwriting will enter into an underwriting
agreement in customary form with the managing underwriter or underwriters
selected for such underwriting by the Company. The Company will select the
underwriter(s) for such registration, after consultation with the Holders
of a majority of the Registrable Securities to be included in such
registration. Notwithstanding any other provision of this Section 4(c), if
the underwriter(s) advise(s) the Company, in writing, that marketing
factors require a limitation of the number of securities to be underwritten
then the Company will so advise all Holders of Registrable Securities which
would otherwise be underwritten, pursuant hereto, and the number of
Registrable Securities that may be included in the underwriting will be
reduced as required by the underwriter(s) and allocated among the Holders
of Registrable Securities on a pro rata basis according to the number of
Registrable Securities then outstanding held by each Holder requesting
registration (including the Initiating Holders). Any Registrable
Securities excluded and withdrawn from such underwriting will be withdrawn
from the registration.
(iii) The Company is obligated to effect only one (1)
such demand registrations pursuant to this Section 4(c); provided, however,
that in the event of underwriter cutbacks as set forth above, the Company
shall be required to effect such additional registrations under this
Section 4(c) or under Section 4(d) as may be required to register the
Registrable Securities defined hereunder.
(iv) Notwithstanding the foregoing, if the Company
furnishes to Holders requesting the filing of a registration statement
pursuant to this Section 4(c), a certificate signed by the President or
Chief Executive Officer of the Company stating that (A) in the good faith
judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for such registration
statement to be filed and it is therefore essential to defer the filing of
such registration statement, then the Company will have the right to defer
such filing for a period of not more than one hundred twenty (120) days
after receipt of the request of the Initiating Holders or (B) the Company
intends to have in effect a registration of its own securities within
ninety (90) days after the date of such notice from such Holders as set
forth in Section 4(c)(i) hereof, then the requesting Holders will withdraw
such demand and such demand will not be taken into account for purposes of
Section 4(c)(iii) hereof and the provisions of Section 4(d) hereof will
apply to such offering by the Company.
(v) The expenses incurred in connection with a demand
registration pursuant to this Section 4(c), including, without limitation,
all registration and qualification fees, printers' and accounting fees,
fees and disbursements of counsel for the Company, (but excluding
underwriters' discounts and commissions), will be borne by the Company.
The selling Holder or Holders shall be responsible for their own attorney
fees and the fees of other advisors employed by them. Each Holder
participating in a demand registration pursuant to this Section 4(c) will
bear its proportionate share of all discounts, commissions or other amounts
payable to underwriters or brokers in connection with such offering.
Notwithstanding the foregoing, the Company will not be required to pay for
any expenses of any demand registration proceeding begun pursuant to this
Section 4(c) if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities
requested to be registered, unless the Holders of a majority of the
Registrable Securities then outstanding agree to forfeit their right to the
one demand registration right afforded pursuant to this Section 4(c) (in
which case all demand registration rights automatically will be forfeited
by all Holders of Registrable Securities); provided, further, however, that
if at the time of such withdrawal, the withdrawing Holders have learned of
a material adverse change as compared to the Company's most recent
quarterly financial statement in the condition, business, or prospects of
the Company not known to the Holders at the time of their request for such
registration and have withdrawn their request for registration with
reasonable promptness after learning of such material adverse change, then
the Holders will not be required to pay any of such expenses, and all
Holders will retain all of their rights pursuant to this Section 4(c).
(d) PIGGYBACK REGISTRATION. The Company will use its best
efforts to notify all Holders of Registrable Securities in writing at least
sixty (60) days (but in no event less than twenty (20) days) prior to the
Company filing any registration statement under the 1933 Act for purposes
of effecting a public offering of securities of the Company (including, but
not limited to, registration statements relating to secondary offerings of
securities of the Company, but excluding registration statements relating
to any employee benefit plan or a corporate acquisition or reorganization)
and will afford each such Holder an opportunity to include in such
registration statement (and any related qualification under or compliance
with "blue sky" or other state securities laws) all or any part of the
Registrable Securities then held by such Holder. Each Holder desiring to
include in any such registration statement all or any part of the
Registrable Securities held by such Holder will, within twenty (20) days
after receipt of the above-described notice from the Company, so notify the
Company in writing, and in such notice will inform the Company of the
number of Registrable Securities such Holder wishes to include in such
registration statement. If a Holder decides not to include all of such
Holder's Registrable Securities in any registration statement thereafter
filed by the Company, such Holder will nevertheless continue to have the
right to include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by the Company with
respect to offerings of its securities, all upon the terms and conditions
set forth herein, including the registration rights under Section 4(b) and
4(c) hereof.
(i) If the registration statement under which the
Company gives notice under this Section 4(d) is for an underwritten
offering, the Company will so advise the Holders of Registrable Securities.
In such event, the right of any such Holder's Registrable Securities to be
included in a registration pursuant to this Section 4(d) will be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their
Registrable Securities through such underwriting will enter into an
underwriting agreement in customary form with the managing underwriter or
underwriters selected for such underwriting. Notwithstanding any other
provision of this Agreement, if the managing underwriter determines in good
faith that marketing factors require a limitation of the number of shares
to be underwritten, the number of shares that may be included in the
underwriting will be allocated (A) first to the Company, (B) second, to any
(1) Holders or (2) other persons who have piggyback registration rights
granted by the Company that are at parity with the rights of the Holders
under this Section 4(d) (including without limitation the piggyback
registration rights granted by the Company to other persons pursuant to
registration rights agreements and, in each case, who request the inclusion
of their securities in the registration statement), and (C) third, to any
persons with piggyback rights subordinate to those of the Holders who
request the inclusion of their securities in the registration statement;
PROVIDED, however, that the number of Restricted Securities proposed to be
registered by the Holders hereunder may not, without the prior consent of a
majority of the Holders of the Registrable Securities proposed to be so
registered, be reduced to less than five percent (5%) of the total value of
the securities to be distributed through the underwriting. If not all
securities of Holders or other persons described in clause (B) above can be
included in a registration, the allocation among such Holders and other
persons will be on a pro rata basis according to the relation that the
number of securities which each such Holder or other person has requested
be so included bears to the total number of shares requested by all
requesting Holders and such other persons to be included. If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter,
delivered at least five business days prior to the effective date of the
registration statement. Any Registrable Securities excluded or withdrawn
from such underwriting will be excluded and withdrawn from the
registration. For any Holder which is a partnership or corporation, the
partners, retired partners and shareholders of such Holder, or the estates
and family members of any such partners and retired partners and any trusts
for the benefit of any of the foregoing persons will be deemed to be a
single "Holder," and any pro rata reduction with respect to such "Holder"
will be based upon the aggregate amount of shares carrying registration
rights owned by all entities and individuals included in such "Holder," as
defined in this sentence.
(ii) The expenses incurred in connection with a
piggyback registration pursuant to this Section 4(d) (excluding
underwriters' and brokers' discounts and commissions), including, without
limitation all federal and "blue sky" or other state securities
registration and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company will be borne by the Company.
The selling Holder or Holders shall be responsible for their own attorney
fees and the fees of other advisors employed by them.
(iii) In the event notice is given by the Company
pursuant to this Section 4(d) of piggyback registration rights, the Holders
shall not have the right to cause the Company to register their Registrable
Securities under Section 4(b) or 4(c) hereof until expiration of a period
of time commencing on the date notice of piggyback registration rights is
given and ending on a date determined by the Company or an underwriter of
securities of the Company in good faith not to exceed one hundred eighty
(180) days following the effective date of the registration statement under
the 1933 Act. In order to enforce the foregoing covenant, the Company may
impose stop transfer instructions with respect to the Registrable
Securities of each Holder until the end of such period. If the Company
abandons or withdraws its Registration statement prior to the effective
date thereof, this restriction shall lapse on the date of such withdrawal.
(e) OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the
Company shall, as expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become effective. Upon the
request of the Holders of a majority of the Registrable Securities
registered pursuant to Form S-3, the Company will use its best efforts to
keep such registration statement effective until the first to occur of (i)
two years after the effective date of such registration statement or (ii)
the Registrable Securities are eligible for resale under Rule 144 of the
1933 Act. The Company shall notify the Holders thirty (30) days in advance
if such registration on Form S-3 shall no longer be effective with respect
to the Shares registered thereunder.
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the 1933 Act with respect to the disposition of all
securities covered by such registration statement.
(iii) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by them that are included in such
registration.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities or "blue sky" laws of such jurisdictions as will be reasonably
requested by the Holders, provided that the Company will not be required in
connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions.
(v) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter(s) of such
offering. Each Holder participating in such underwriting will also enter
into and perform its obligations under such an agreement.
(vi) Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of
the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing. In such event
the Company will supplement such registration statement and furnish a copy
thereof to each Holder.
(vii) Furnish, at the request of any Holder requesting
registration of Registrable Securities, on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities
are being sold through underwriters, or, if such securities are not being
sold through underwriters, on the date that the registration statement with
respect to such securities becomes effective, (i) an opinion, dated as of
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders requesting registration, addressed to
the underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (ii) a "comfort" letter dated as of such date,
from the independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.
(viii) Qualify the shares registered pursuant hereto for
listing on the National Association of Securities Dealers Automated
Quotation System.
(ix) Insure there is a transfer agent and registrar for
the shares registered pursuant hereto.
In addition, each Investor and the underwriter engaged by such
Investor, if any, shall be entitled to: (x) subject to execution of a non-
disclosure agreement on terms and conditions reasonably acceptable to such
Investor and the Company, and at such Investor's expense, conduct such
diligence with respect to the business and affairs of the Company as such
Investor deems reasonably necessary as a prospective selling shareholder or
underwriter of the Registrable Securities, and (y) review and comment on
any offering materials, including but not limited to the registration
statement and prospectus, which contain information relating to such
Investor and its relationship with the Company.
(f) FURNISH INFORMATION. It will be a condition precedent to
the obligations of the Company to take any action pursuant to Sections
4(b), 4(c) and 4(d) hereof that the selling Holders will furnish to the
Company such information regarding themselves, the Registrable Securities
held by them, and the intended method of disposition of such securities as
is reasonably required to effect the registration of their Registrable
Securities.
(g) DELAY OF REGISTRATION. No Holder will have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect
to the interpretation or implementation of this Section 4.
(h) INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement under Sections 4(b), 4(c) or 4(d)
hereof:
(i) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, trustees, officers
and directors of each Holder, any underwriter (as defined in the 1933 Act)
for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the 1933 Act or the Securities Exchange
Act of 1934, as amended, (the "1934 Act"), against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the 1933 Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
acts, omissions or violations (collectively a "Violation"):
(A) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein
or any amendments or supplements thereto;
(B) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make
the statements therein not misleading; or
(C) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any federal or state securities law
or any rule or regulation promulgated under the 1933 Act, the 1934 Act or
any federal or state securities law in connection with the offering covered
by such registration statement;
and the Company will reimburse each such Holder, partner, trustee, officer
or director, underwriter or controlling person for any legal or other
expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided however, that the indemnity agreement contained in this
Section 4(h)(i) will not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent will not be unreasonably
withheld), nor will the Company be liable in any such case for any such
loss, claim, damage, liability or action to the extent that it arises out
of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in
connection with such registration by such Holder, partner, trustee,
officer, director, underwriter or controlling person of such Holder.
(ii) To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed the registration statement, each
person, if any, who controls the Company within the meaning of the 1933
Act, any underwriter and any other Holder selling securities under such
registration statement or any of such other Holder's partners, trustees,
directors or officers or any person who controls such Holder within the
meaning of the 1933 Act or the 1934 Act, against any losses, claims,
damages or liabilities joint or several) to which the Company or any such
director, officer, controlling person, underwriter or other such Holder,
partner, trustee or director, officer or controlling person of such other
Holder may become subject under the 1933 Act, the 1934 Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such Violation
occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such
registration; and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, partner, trustee, officer,
director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim damage, liability or
action; provided, however, that the indemnity agreement contained in this
Section 4(h)(ii) will not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent will not be unreasonably
withheld; and provided further, that the total amounts payable in indemnity
by a Holder under this Section 4(h)(ii) in respect of any Violation will
not exceed the net proceeds received by such Holder in the registered
offering out of which such Violation arises.
(iii) Promptly after receipt by an indemnified party
under this Section 4(h) of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under
this Section 4(h), deliver to the indemnifying party a written notice of
the commencement thereof and the indemnifying party will have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party will have the right to retain
its own counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend
such action, will relieve such indemnifying party to the extent of such
prejudice of any liability to the indemnified party under this Section
4(h), but the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 4(h).
(iv) The foregoing indemnity agreements of the Company
and Holders are subject to the condition that, insofar as they relate to
any Violation made in a preliminary prospectus but eliminated or remedied
in the amended prospectus on file with the SEC at the time the registration
statement in question becomes effective or the amended prospectus filed
with the SEC pursuant to SEC Rule 424(b) (the "Final Prospectus"), such
indemnity agreement will not inure to the benefit of any person if a copy
of the Final Prospectus was furnished to the indemnified party and was not
furnished to the person asserting the loss, liability, claim or damage at
or prior to the time such action is required by the 1933 Act.
(v) In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in
which either (A) the indemnified party exercising rights under this
Agreement, or any controlling person of any such indemnified party, makes a
claim for indemnification pursuant to this Section 4(h) but it is
judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 4(h)
provides for indemnification in such case, or (B) contribution under the
Securities Act may be required on the part of any such indemnified party or
any such controlling person in circumstances for which indemnification is
provided under this Section 4(h); then, and in each such case, the Company
and such Holder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others)
in such proportion as determined by law based on the relative fault of each
party; provided, however, that, in any such case, (A) no such Holder will
be required to contribute any amount in excess of the public offering price
of all such Registrable Securities offered and sold by such Holder pursuant
to such registration statement; and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
1933 Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
(vi) The obligations of the Company and Holders under
this Section 4(h) will survive the completion of any offering of
Registrable Securities in a registration statement, and otherwise, and the
sale and transfer of the Registrable Securities.
(i) "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees
that such Holder will not, to the extent requested in good faith by the
Company or an underwriter of securities of the Company, sell or otherwise
transfer or dispose of any Registrable Securities (other than to donees or
partners of the Holder who agree to be similarly bound) for up to that
period of time (not exceeding 180 days) following the effective date of a
registration statement of the Company filed under the 1933 Act as is
requested by the managing underwriter(s) of such offering. In order to
enforce the foregoing covenant, the Company may impose stop transfer
instructions with respect to the Registrable Securities of each Holder
until the end of such period.
(j) REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time
permit the sale of the Registrable Securities to the public without
registration, and to maintain the eligibility of the Company to file Form
S-3, the Company will use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under
the 1933 Act and the 1934 Act.
(k) TERMINATION OF THE COMPANY'S OBLIGATIONS. The Company will
have no obligations pursuant to Section 4(b), Section 4(c) or Section 4(d)
hereof with respect to: (A) any request or requests for registration made
by any Holder on a date more than two (2) years after the date hereof; or
(B) any Registrable Securities which in the opinion of counsel to the
Company may be sold in a three (3) month period without registration under
the 1933 Act pursuant to Rule 144. Notwithstanding the foregoing, the
Company will have no obligations pursuant to Section 4(d) hereof with
respect to a Holder following the registration of all or part of such
Holder's Registrable Securities.
(e) BUY BACK OPTION. In lieu of registering the Registrable
Securities of a Holder pursuant to Section 4(b), (c) or (d) hereof, the
Company may purchase all of the Registrable Securities from such Holder at
a per share price equal to the average daily per share closing price of the
Common Stock of the Company on the National Association of Securities
Dealers' Automated Quotation System during the ten (10) trading days
following the Company's receipt of such registration request pursuant to
Section 4(b), (c) or (d) above.
5. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the internal laws of the State of Delaware
applicable to contracts made among residents of, and wholly to be performed
within, the State of Delaware, without regard to principles of conflict of
laws or choice of laws.
(b) FURTHER INSTRUMENTS. From time to time, each party hereto
will execute and deliver such instruments and documents as may be
reasonably necessary to carry out the purposes and intent of this
Agreement.
(c) SUCCESSORS; NO OTHER BENEFICIARIES. This Agreement will be
binding upon and will inure to the benefit of the executors,
administrators, legal representatives, heirs, successors, and assigns of
the parties hereto; PROVIDED, however, that (i) rights of Investors
hereunder may be transferred only in connection with (and to the transferee
of) the Shares purchased by an Investor under the Stock Purchase Agreement,
but the Company may prohibit such transfer of rights (but not the transfer
of stock) if the transfer to a particular transferee would not, in the good
faith judgment of the Company's Board of Directors, be in the Company's
best interests, and (ii) any transferee of any Shares affected by this
Agreement to whom rights are so transferred (a "Permitted Transferee") will
be required, as a condition precedent to acquiring such Shares, to agree in
writing to be bound by all the terms and conditions of this Agreement
applicable to such Permitted Transferee's transferor, and (iii) upon and
after such transfer the Permitted Transferee will be deemed to be a
Investor for purposes of this Agreement. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the
parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
(d) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. This Agreement will
be effective among the parties signatory hereto upon such counterpart
signature by all initial parties hereto.
(e) ENTIRE AGREEMENT. This Agreement constitutes and contains
the entire agreement and understanding of the parties regarding the subject
matter of this Agreement and supersedes in their entirety any and all prior
negotiations, correspondence, understandings and agreements among the
parties respecting the subject matter hereof.
(f) NOTICES. Unless otherwise provided, notice required or
permitted to be given to a party pursuant to the provisions of this
Agreement will be in writing and will be effective and deemed given under
this Agreement on the earliest of (i) the date of personal delivery, or
(ii) the date of delivery by facsimile, or (iii) the business day after
deposit with a nationally-recognized courier or overnight service,
including Federal Express or Express Mail, for United States deliveries or
three (3) business days after such deposit for deliveries outside of the
United States, or (iv) three (3) business days after deposit in the United
States mail by registered or certified mail for United States deliveries.
All notices not delivered personally or by facsimile will be sent with
postage and other charges prepaid and properly addressed to the party to be
notified at the address set forth in the stock transfer records of the
Company in the case of a Holder and to 4040 South Memorial Parkway,
Huntsville, Alabama 35802, in the case of the Company, or at such other
address as such party may designate by ten (10) days' advance written
notice to the other parties hereto. All notices for delivery outside the
United States will be sent by facsimile, or by nationally recognized
courier or overnight service, including Express Mail. Any notice given
hereunder to more than one person will be deemed to have been given, for
purposes of counting time periods hereunder, on the date given to the last
party required to be given such notice. Notices to the Company will be
marked to the attention of the President.
(g) FINDERS' FEE. Each party represents that it neither is nor
will be obligated for any finders' fee or commission in connection with
this Agreement. Each party agrees to indemnify and to hold the other
parties hereto harmless from any liability for any commission or
compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which such
party or any of its officers, partners, employees or representatives is
responsible.
(h) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of the Agreement may be waived
(either generally or in a particular) instance and either retroactively or
prospectively), only with the written consent of the Company and by
Investors holding at least a majority of all shares held by the Investors.
Any amendment or waiver effected in accordance with this Section 5(h) will
be binding upon the Company, each Investor, and their permitted transferees
and assignees.
(i) SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provisions will be
excluded from this Agreement to the extent unenforceable and the balance of
such provisions, and of this Agreement, will be interpreted as if such
provision or part and hereof were so excluded and will be enforceable in
accordance with its terms.
(j) AGGREGATION OF STOCK. All shares of Common Stock held or
acquired by affiliated entities or persons will be aggregated together for
the purpose of determining the availability of any rights under this
Agreement.
(k) NO CONFLICTING AGREEMENT. The Company shall not enter into
any agreement without the written consent of the Holders which restricts or
impairs the rights of the Holders under this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
COMPANY:
Nichols Research Corporation
Chris H. Horgen
By: ____________________________
Title: Chief Executive Officer
INVESTORS:
Simon Glatz
________________________________
Simon Glatz
Simon Glatz
________________________________
Simon Glatz as Trustee
of the Second Amended & Restated
Simon Glatz Revocable Trust
John T. Drewry
________________________________
John T. Drewry
Otto P. Jons
________________________________
Otto P. Jons
<PAGE>
<PAGE>
NRC
Nichols Research Corporation
4040 S. Memorial Parkway
P.O. Box 400002
Huntsville, AL 35815-1502
FOR IMMEDIATE RELEASE
FOR ADDITIONAL INFORMATION
- --------------------------
Patsy L. Hattox
Vice President
Investor Relations
(205)883-1170 (Ext. 1447)
NICHOLS RESEARCH CORPORATION (NRC)
ANNOUNCES ACQUISITION OF
ADVANCED MARINE ENTERPRISES, INC.
HUNTSVILLE, ALABAMA, May 31, 1996 - Chris H. Horgen, Chief Executive
Officer of Nichols Research Corporation (NRC) announced today that NRC
acquired Advanced Marine Enterprises, Inc. (AME), headquartered in
Arlington, Virginia, with additional facilities in Cherry Hill, New Jersey;
Fulton, Maryland; and Memphis, Tennessee. A press release was issued
announcing the signed Letter of Intent on April 2, 1996.
AME is one of the nation's leading naval architecture and marine
engineering service firms. AME has been and continues to be on the
forefront of the development of simulation and virtual reality technology
for naval and marine applications. In addition to traditional naval
architecture and marine engineering services, AME provides support in ship
acquisition management, production support, human systems integration, and
ship survivability and protection.
AME, founded in 1976, had revenues of $29.1 million in FY95 (May 31,
1995), and currently employs over 300 people. Approximately 90% of AME's
business is defense related and 10% is in the commercial marine simulator
business. AME's primary business areas are Ship Design and Engineering and
Information Technology (I/T) Services. AME will become a wholly owned
subsidiary of Nichols Federal Business Segment, and Mr. John T. Drewry and
Mr. Otto P. Jons will remain as President and Executive Vice President,
respectively.
Nichols Research Corporation, headquartered in Huntsville, Alabama,
provides information systems and technical services for commercial
entities, state governments, Department of Defense and non-defense Federal
Government clients. The Company's stock is traded on the Over-the-Counter
Market under the NASDAQ symbol: NRES.
<PAGE>
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