STOCK TRANSFER AGREEMENT
This Stock Transfer Agreement dated as of February 10, 1999 among
Government Technology Services, Inc., a Delaware corporation ("GTSI") and
BTG, Inc., a Virginia corporation ("BTG"). Capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Asset
Purchase Agreement dated as of February 12, 1998 among GTSI, BTG and
certain BTG subsidiaries (the "Purchase Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement, GTSI purchased
substantially all of the assets of the Division;
WHEREAS, concurrently with the execution of the Purchase Agreement,
GTSI and the BTG Group entered into certain ancillary agreements, including
the Escrow Agreement, Trademark License Agreement, Database and Software
Agreement, Standstill Agreement, Transition Services Agreement, Lockbox
Agreement, Sales Commission and Bonus Agreement, Royalty Subcontracts,
Novation Subcontracts, Novation Agreements, Warehouse Sublease Agreement,
Chattanooga Sublease Agreement and Assignment and Assumption of the Germany
Lease (collectively, with the Purchase Agreement, the "Transaction
Documents"); and
WHEREAS, concurrently herewith, GTSI, BTG, BTG Technology Systems,
Inc., a Virginia corporation ("BTG Systems"), and Concept Automation, Inc.
of America, a Virginia corporation (together with BTG and BTG Systems, the
"BTG Group") are executing and closing an Agreement dated the date hereof
(the "Agreement") resolving certain disagreements among them regarding
their respective rights and obligations under certain Transaction
Documents, and the Agreement contemplates that GTSI and BTG shall
concurrently execute and close this Stock Transfer Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements
set forth herein, the parties hereto hereby agree as follows:
Article I
Definitions; Closing
Section 1.01. Definitions
(a) The following terms used herein shall have the following
meanings:
"Affiliate" means with respect to any Person, any Person now or
hereafter controlling, controlled by or under common control with such
Person.
"Common Stock" means common stock, par value $.005 per share, of GTSI.
"Escrow Shares" means the 300,000 shares of Common Stock held by the
Escrow Agent in accordance with the Escrow Agreement and being released to
BTG concurrently with the Closing pursuant to the Agreement.
"GTSI Note" means the promissory note in the form attached hereto as
Exhibit 1.
"GTSI Shares" means the Optioned Shares, the Repurchased Shares and
the Transferred Shares.
"Lien" means any adverse claim, restriction on voting or transfer or
pledge, lien, mortgage, hypothecation, collateral assignment, charge,
encumbrance, easement, covenant, restriction, title defect, encroachment or
security interest of any kind.
"Optioned Shares" means the 1,300,000 shares of Common Stock acquired
by BTG pursuant to the Purchase Agreement, including the Escrow Shares,
which are subject to the Repurchase Option.
"Person" means and includes an individual, a partnership, a joint
venture, a corporation, a limited liability company, an unincorporated
organization or a government or a department or agency thereof.
"Repurchased Shares" means the 400,000 shares of Common Stock acquired
by BTG pursuant to the Purchase Agreement which are being repurchased by
GTSI in accordance with Section 2.02.
"Transferred Shares" means the 200,000 shares of Common Stock acquired
by BTG pursuant to the Purchase Agreement which are being transferred to
GTSI in accordance with Section 2.01.
(b) The following terms shall have the meanings assigned to such
terms in the
following Sections:
Term Section
Agreement Recitals
BTG Recitals
BTG Group Recitals
Closing 1.02
Option Period 3.01(a)
Option Price 3.01(a)
Per Share Amount 3.02(a)
Purchase Agreement Recitals
Repurchase Option 3.01(a)
Transaction Documents Recitals
Section 1.02. Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Arent
Fox Kintner Plotkin & Kahn, PLLC, 1050 Connecticut Avenue, N.W.,
Washington, D.C. at 10:30 a.m. local time, simultaneously with the
execution and delivery of this Stock Transfer Agreement, the Agreement and
the Ancillary Agreements (as defined in the Agreement); provided, however,
that the parties intend that the Closing shall deemed to be effective, and
the transactions contemplated hereby shall be deemed to occur
simultaneously at 5:00 p.m. local time on the date hereof.
Article II
The Transferred Shares and the Repurchased Shares
Section 2.01. Transferred Shares. At the Closing, BTG shall transfer
to GTSI, at no cost to GTSI, the Transferred Shares, free and clear of all
Liens, by delivering to GTSI certificates representing the Transferred
Shares duly endorsed for transfer in blank or with assignment separate from
certificates duly endorsed, with all necessary transfer tax stamps, if any,
affixed or provided for.
Section 2.02. Repurchased Shares. At the Closing, (a) BTG shall sell
to GTSI, and GTSI shall purchase from BTG, the Repurchased Shares, free and
clear of all Liens, by delivering to GTSI certificates representing the
Repurchased Shares duly endorsed for transfer in blank or with assignment
separate from certificates duly endorsed, with all necessary transfer tax
stamps, if any, affixed or provided for, and (b) in payment therefor, GTSI
shall deliver the GTSI Note to BTG.
Article III
The Optioned Shares
Section 3.01. Repurchase Option.
(a) BTG hereby grants to GTSI the exclusive option (the
"Repurchase
Option") to purchase all or any part of the Optioned Shares for a per share
price (the "Option Price") of $5.25 at any time or from time to time until
the fifth anniversary of the Closing (the "Option Period") by delivery of
written notice to BTG specifying the number of Optioned Shares being
purchased and the date, no more than 10 days after such notice, on which
payment therefor will be made. The closing on the purchase and sale of
such Optioned Shares shall be held at GTSI's principal office on the date
specified in such notice. At such closing, certificates representing the
Optioned Shares to be sold shall be delivered to GTSI, duly endorsed for
transfer in blank or with assignment separate from certificates duly
endorsed, with all necessary transfer tax stamps, if any, affixed or
provided for, against delivery of payment in immediately available funds or
a promissory note, as provided below, of an amount equal to the product of
the number of Optioned Shares being purchased and the Option Price. All
Optioned Shares purchased pursuant to the Repurchase Option shall be
delivered by BTG to GTSI free and clear of all Liens. Payment by GTSI upon
exercise of the Repurchase Option shall be in immediately available funds
unless notice of exercise of the Repurchase Option is delivered to BTG on
or before December 31, 1999, in which case payment in connection with such
notice may be made, in GTSI's discretion, either in immediately available
funds or by the delivery of a promissory note substantially in the form of
Exhibit 2 hereto, the terms of which (depending on the number of Optioned
Shares purchased) shall be as set forth on Exhibit 3 hereto.
(b) If after the Closing the number of shares of Common Stock
represented by
the original number of Optioned Shares is increased or decreased as a
result of any increase or decrease in the number of issued shares of Common
Stock resulting from the declaration of a dividend or the making of a
distribution on the outstanding Common Stock, the subdivision or
reclassification of the outstanding Common Stock into a greater number of
shares or the combination or reclassification of the outstanding Common
Stock into a smaller number of shares, the Option Price shall be adjusted
by multiplying the Option Price in effect immediately prior to such
adjustment by a fraction, the numerator of which shall be the number of
Optioned Shares issuable upon the exercise of the Repurchase Option
immediately prior to such adjustment, and the denominator of which shall be
the number of Optioned Shares issuable upon the exercise of the Repurchase
Option immediately thereafter.
(c) The parties agree that, effective as of the Closing, Section
2.02 of the
Standstill Agreement shall be amended to delete clauses (b) and (d)
therefrom, so that transfers described therein will thereafter require the
prior written consent of GTSI duly authorized by a majority of the members
of the GTSI Board.
(d) BTG agrees to provide written notification to GTSI of BTG's
bona fide
intention to dispose of or otherwise transfer any GTSI Shares pursuant to
Section 2.02(c) of the Standstill Agreement no less than 10 business days
prior to the intended disposition or transfer. GTSI shall have the
absolute right, but not the obligation, in its sole discretion to exercise
the Repurchase Option at any time prior to the date of such intended
disposition with respect to any Repurchase Shares covered by such
notification.
(e) BTG agrees that it shall be a condition to any permitted
Transfer (as
defined in the Standstill Agreement) under Section 2.02(a) or (e) of the
Standstill Agreement that the transferee agree in writing to be bound by
the terms of the Repurchase Option.
(f) Subject to the terms and conditions of this Section 2.02(f),
the parties
agree that BTG may solicit a bona fide, third party buyer ("Prospective
Buyer") for all or part of the Optioned Shares. If BTG delivers a written
notice to GTSI identifying the Prospective Buyer, the number of Optioned
Shares proposed to be purchased by the Prospective Buyer, and the proposed
price, terms of sale and closing date, accompanied by a copy of the written
offer (the "Offer") signed by the Prospective Buyer with respect to such
proposed purchase, GTSI shall have the right, but not the obligation, in
its sole discretion, and the Offer must so reflect, to exercise the
Repurchase Option with respect to the Optioned Shares which are the subject
of the Offer and immediately thereafter to sell such Optioned Shares to the
Prospective Buyer on the same terms and conditions as are set forth in the
Offer. Closing on the purchase of the Optioned Shares by GTSI shall be
held in accordance with the provisions set forth in Section 3.01(a) and
closing on the sale of such Optioned Shares to the Prospective Buyer shall
be held at the same location immediately thereafter. If GTSI exercises the
Repurchase Option and sells the Optioned Shares to the Prospective Buyer in
accordance with this Section 3.01(f), the payment from BTG to GTSI under
Section 3.02(a) shall not be required with respect to such transaction.
GTSI agrees to consider in good faith any Offer properly delivered to it
hereunder, subject to its absolute discretion to reject any such Offer. If
GTSI rejects an Offer, BTG must retain the Optioned Shares in accordance
with the terms of this Agreement.
Section 3.02. Sale of Optioned Shares by BTG.
(a) If BTG sells during the Option Period any of the Optioned
Shares as
permitted under the Standstill Agreement, BTG agrees as a condition to any
such sale to pay to GTSI concurrently with or prior to such sale an amount
in cash equal to the product of the number of Optioned Shares being sold
and $0.50 (the "Per Share Price").
(b) If after the Closing the number of shares of Common Stock
represented by
the original number of Optioned Shares is increased or decreased as a
result of any increase or decrease in the number of issued shares of Common
Stock resulting from the declaration of a dividend or the making of a
distribution on the outstanding Common Stock, the subdivision or
reclassification of the outstanding Common Stock into a greater number of
shares or the combination or reclassification of the outstanding Common
Stock into a smaller number of shares, the Per Share Price shall be
adjusted by multiplying the Per Share Price in effect immediately prior to
such adjustment by a fraction, the numerator of which shall be the number
of Optioned Shares issuable upon the exercise of the Repurchase Option
immediately prior to such adjustment, and the denominator of which shall be
the number of Optioned Shares issuable upon the exercise of the Repurchase
Option immediately thereafter.
Section 3.03. Stock Legend. On the date of the Closing, BTG shall
cause the certificates evidencing the Optioned Shares to be tendered to
GTSI's transfer agent, First Union National Bank, which shall issue to BTG
stock certificates of the same denomination in exchange therefor bearing
the following modified legends:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE
STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT UPON DELIVERY
TO THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY IN FORM AND
SUBSTANCE TO IT THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
OF A STANDSTILL AGREEMENT DATED FEBRUARY 12, 1998 BY AND BETWEEN THE
CORPORATION AND BTG, INC. AND MAY NOT BE TRANSFERRED EXCEPT IN
COMPLIANCE THEREWITH.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
OF A STOCK TRANSFER AGREEMENT DATED FEBRUARY 10, 1999 BY AND BETWEEN
BTG, INC., AND THE CORPORATION AND MAY NOT BE TRANSFERRED EXCEPT IN
COMPLIANCE THEREWITH.
Article IV
Representations of BTG
Section 4.01. Authorization, Binding Obligations and No Conflicts.
BTG has full power and authority to enter into this Stock Transfer
Agreement and to perform the transactions contemplated hereby. This Stock
Transfer Agreement has been duly authorized, executed and delivered by BTG
and is a valid and binding obligation of BTG. The execution, delivery and
performance by BTG of this Stock Transfer Agreement, the fulfillment of and
compliance with the terms and provisions hereof, and the consummation by
BTG of the transactions contemplated hereby do not require any consent or
approval other than that which has been obtained, conflict with or result
in a breach by BTG of any of the terms or provisions of, or constitute a
default under, any applicable law, rule, or regulation or any applicable
decree, judgment or order of any court, federal or state regulatory body,
administrative agency or other governmental body having jurisdiction over
BTG, or the certificate of incorporation or bylaws of BTG.
Section 4.02. Disclosure. BTG acknowledges that it has received
adequate
access to financial and other information concerning GTSI and the GTSI
Shares and has had the opportunity to ask questions of and receive answers
from GTSI concerning such stock and to obtain therefrom any additional
information necessary to make an informed decision regarding the
disposition of such stock hereunder. BTG has received copies of each
report, registration statement and definitive proxy statement filed by GTSI
with the Securities and Exchange Commission since March 31, 1997.
. Section 4.03. Accredited Investor. BTG has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks with respect to the disposition of the GTSI
Shares. BTG is an "accredited investor" as that term is defined in Rule
501 of Regulation D promulgated under the Securities Act.
Section 4.04. Title; Beneficial Ownership. BTG has good, valid and
marketable title to the GTSI Shares, free and clear of all Liens, with full
right and lawful authority to sell and transfer the GTSI Shares to GTSI
under this Stock Transfer Agreement, and BTG is transferring such title to
the Transferred Shares and the Repurchased Shares to GTSI at the Closing.
Except with respect to the GTSI Shares, no member of the BTG Group or any
Affiliate thereof beneficially owns any Common Stock or has the right to
acquire under any circumstance any Common Stock. No member of the BTG
Group is a party to a written or oral agreement with respect to the GTSI
Shares except for this Stock Transfer Agreement, the Agreement and the
Transaction Documents.
Section 4.05. Absence of Litigation. There is no action, suit,
claim, arbitration, proceeding or investigation, at law or in equity, or
before or by any court, arbitrator or governmental authority, pending, or,
to the knowledge of any member of the BTG Group, threatened or reasonably
anticipated against, affecting or involving any member of the BTG Group,
wherein an unfavorable decision, ruling or finding would adversely affect
the validity or enforceability of, or the authority or ability of BTG to
perform its obligations under, this Stock Transfer Agreement.
Article V
Representations of GTSI
Section 5.01. Authorization, Binding Obligations and No Conflicts.
GTSI
has full power and authority to enter into this Stock Transfer Agreement
and to perform the transactions contemplated hereby. This Stock Transfer
Agreement has been duly authorized, executed and delivered by GTSI and is a
valid and binding obligation of GTSI. The execution, delivery and
performance by GTSI of this Stock Transfer Agreement, the fulfillment of
and compliance with the terms and provisions hereof, and the consummation
by GTSI of the transactions contemplated hereby do not require any consent
or approval other than that which has been obtained, conflict with or
result in a breach by GTSI of any of the terms or provisions of, or
constitute a default under, any applicable law, rule, or regulation or any
applicable decree, judgment or order of any court, federal or state
regulatory body, administrative agency or other governmental body having
jurisdiction over GTSI, or the certificate of incorporation or bylaws of
GTSI.
Section 5.02. Absence of Litigation. There is no action, suit,
claim, arbitration, proceeding or investigation, at law or in equity, or
before or by any court, arbitrator or governmental authority, pending, or,
to the knowledge of GTSI, threatened or reasonably anticipated against,
affecting or involving GTSI, wherein an unfavorable decision, ruling or
finding would adversely affect the validity or enforceability of, or the
authority or ability of GTSI to perform its obligations under, this Stock
Transfer Agreement.
ARTICLE VI
Miscellaneous
Section 6.01. Entire Agreement. This Stock Transfer Agreement,
together with the Agreement and the Ancillary Agreements, constitute the
entire agreement among the parties with respect to the subject matter
hereof and supersedes all prior written and oral and all contemporaneous
oral agreements and understandings with respect to the subject matter
hereof.
Section 6.02. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including
telecopy or similar writing) and shall be given,
if to BTG, to:
Edward H. Bersoff
President and Chief Executive Officer
BTG, Inc.
3877 Fairfax Ridge Road
Fairfax, VA 22030
telecopier: (703) 383-4000
with a copy to:
Deborah Fox, Esq.
General Counsel
BTG, Inc.
3877 Fairfax Ridge Road
Fairfax, VA 22030
telecopier: (703) 383-4205
if to GTSI, to:
M. Dendy Young
President and Chief Executive Officer
Government Technology Services, Inc.
3901 Stonecroft Boulevard
Chantilly, VA 20151-1010
telecopier: (703) 222-5217
with a copy to:
Gerald P. McCartin
Arent Fox Kintner Plotkin & Kahn, PLLC
1050 Connecticut Ave., N.W.
Washington, DC 20036-5339
telecopier: (202) 857-6395
or such other address as such party may hereafter specify for the purpose
by notice to the other parties hereto. Each such notice, request or other
communication shall be effective (a) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this section
and the appropriate telecopy confirmation is received, or (b) if given by
any other means, when delivered at the address specified in this Section.
Section 6.03. No Waivers. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
Section 6.04. Successors and Assigns. The provisions of this Stock
Transfer Agreement shall be binding upon and inure to the benefit of
parties hereto and their respective successors and assigns, provided that
no party may assign, delegate or otherwise transfer any of its rights or
obligations under this Stock Transfer Agreement without the consent of the
other parties hereto; provided, however, that, without the prior consent of
GTSI, BTG may collaterally assign their rights hereunder, subject to the
terms and conditions hereunder and without relieving BTG of any obligation
or liability hereunder, to a financing institution or federal lending
agency, as used in 31 U.S.C. Section 3527 and 41 U.S.C. Section 15, as
security for BTG's obligations to such financing institution or agency.
Section 6.05. Governing Law. This Stock Transfer Agreement shall be
construed in accordance with and governed by the law of the Commonwealth of
Virginia regardless of the law that might otherwise govern under principles
of conflicts of laws applicable thereto, except with respect to matters of
corporate law as they apply to GTSI, which shall be governed by the
Delaware General Corporation Law.
Section 6.06. Counterparts; Effectiveness. This Stock Transfer
Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Stock Transfer Agreement shall
become effective when each party hereto shall have received counterparts
hereof signed by all of the other parties hereto.
Section 6.07. Expenses. Except as otherwise provided in this Stock
Transfer Agreement, each party will be solely responsible for such party's
legal, accounting, and other costs and expenses associated with the
transactions contemplated by this Stock Transfer Agreement. If any action
at law or in equity is necessary to enforce or interpret the terms of this
Stock Transfer Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition
to any other relief to which such party may be entitled.
Section 6.08. Terms Generally. The definitions in Article I shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation." All references herein to Articles, Sections,
Exhibits and Schedules shall be deemed references to Articles and Sections
of, and Exhibits and Schedules to, this Stock Transfer Agreement unless the
context shall otherwise require. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed
in accordance with generally accepted accounting principles.
Section 6.09. No Third-Party Beneficiaries. This Stock Transfer
Agreement shall not confer any rights or remedies upon any Person other
than the parties and their respective successors and permitted assigns.
Section 6.10. Specific Performance. Each of the parties acknowledges
and agrees that the other party would be damaged irreparably in the event
any of the provisions of this Stock Transfer Agreement are not performed in
accordance with their specific terms or otherwise are breached.
Accordingly, each of the parties agrees that the other party shall be
entitled to an injunction or injunctions to prevent breaches of the
provisions of this Stock Transfer Agreement and to enforce specifically
this Stock Transfer Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof
having jurisdiction over the parties and the matter (subject to the
provisions set forth in Section 6.11), in addition to any other remedy to
which it may be entitled, at law or in equity.
Section 6.11. Jurisdiction. Each of the parties consents to the
exclusive jurisdiction of the federal courts of the Eastern District of
Virginia for any legal action, suit or proceeding arising out of or in
connection with this Stock Transfer Agreement or the transactions
contemplated hereby, and agrees that any such action, suit, or proceeding
may be brought only in such courts. If such forum is not available, each
of the parties consents to the exclusive jurisdiction of the Circuit Court
of Fairfax County, Virginia, for any such action, suit or proceeding. Each
of the parties further waives any objection to the laying of venue for any
suit, action or proceeding in such courts. Each of the parties agrees to
accept and acknowledge service of any and all process that may be served in
any suit, action or proceeding. Each of the parties agrees that any
service of process upon it mailed by registered or certified mail, return
receipt requested to such party at the address provided in Section 6.02
shall be deemed in every respect effective service of process upon such
party in any such suit, action or proceeding. Each of the parties agrees
to waive any right it might have to a trial by jury in any such suit,
action or proceeding.
Section 6.12. Further Assurances. Each of the parties shall, without
further consideration, use reasonable efforts to execute and deliver to the
other such additional documents and take such other action as the other may
reasonably request to carry out the intent of this Agreement and the
transactions contemplated hereby.
Section 6.13. Survival. The representations, warranties and
covenants of GTSI and BTG contained in this Stock Transfer Agreement shall
survive the Closing.
[Signatures on the following page]
IN WITNESS WHEREOF, the parties hereto have caused this Stock Transfer
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
GOVERNMENT TECHNOLOGY SERVICES, INC.,
a Delaware corporation
By: /s/ STEPHEN L. WAECHTER
-------------------------------
Stephen L. Waechter
Chief Financial Officer
BTG, INC.,
a Virginia corporation
By: /s/ EDWARD H. BERSOFF
-------------------------------
Edward H. Bersoff, President and
Chief Executive Officer