Exhibit 2.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made this _____ day of
September, 1997 by and among STMS Acquisition Corp., a Delaware corporation
("Purchaser") with a place of business at 1306 Squire Court, Sterling, Virginia
20166; Dunn Computer Corporation, a Delaware corporation with its principal
place of business at 1306 Squire Court, Sterling, Virginia 20166 ("Dunn"); STMS,
Inc. a Virginia corporation ("Company") with a place of business at 44880 Falcon
Place, suite 100, Sterling, Virginia 20016; John Signorello an individual with
an address at __________, Timothy McNamee an individual with an address at
__________, and Steve Salmon, an individual residing at _________________
(Messrs. Signorello, McNamee and Salmon are collectively referred to herein as
the "Majority Stockholders"); and each of the other stockholders of the Company
who execute this Agreement (the Majority Stockholders and each of the other
stockholders who execute this Agreement are collectively referred to herein as
"Sellers."
RECITALS
WHEREAS, the Sellers desire to sell, transfer and assign to Purchaser
and the Purchaser desires to purchase from Sellers all of the issued and
outstanding shares of the Company's common stock (as such term is hereinafter
defined).
WHEREAS, the parties wish to set forth certain agreements ancillary to
such purchase and sale.
NOW THEREFORE, in consideration of the mutual promises herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
1. SALE OF STOCK
(a) STOCK TO BE ACQUIRED. At the Closing and upon the terms and
subject to the conditions of this Agreement, and upon the representations,
warranties and covenants herein made, Sellers shall sell to Purchaser, and
Purchaser agrees to purchase from Sellers, all of the issued and outstanding
shares of common stock of the Company ("Shares"), for the Purchase Price
hereinafter set forth.
(b) PURCHASE PRICE. Upon the terms and subject to the
conditions set forth in this Agreement, upon the representations, warranties and
covenants made herein, and in exchange for the Shares, Purchaser hereby agrees
to pay and deliver to Sellers, in accordance with Schedule 1(b), at the Closing,
an aggregate of One Hundred Thousand (100,000) shares of Dunn's common
stock to be issued on a pro rata basis among the Sellers in the amounts set
forth on Schedule 1(b)("Purchase Price" or "Stock Payment").
(c) CLOSING. The closing of the Acquisition of the Shares (the
"Closing") will take place at the Offices of Purchaser on September , 1997,
or such other date as is agreed upon by the parties ("Closing Date"). At the
Closing each of the Sellers shall transfer to Purchaser good and marketable
title to the Shares owned by such Seller immediately prior to the Closing, free
and clear of any and all liens, claims, encumbrances and adverse interests of
any kind, by delivering to the Purchaser the certificates for the Shares in
negotiable form, duly endorsed in blank, or with stock transfer powers attached
thereto. In addition, at the Closing each party shall execute and deliver the
Concurrent Agreements under Section 8 herein to which each party is also a
party. At the Closing the Sellers shall make available the written resignations
of all of the directors of the Company effective as of the Closing and shall
cause to be made available the books and records of the Company to Purchaser.
At the Closing, the Company and the Sellers shall deliver to Purchaser all
certificates, opinions and other documents referred to Section 6(a) hereof and
Purchaser shall deliver to the Company and the Sellers all certificates,
opinions and other documents referred to in Section 6(b) hereof. At any time
and from time to time after the Closing, the parties shall duly execute,
acknowledge and deliver all such further assignments, conveyances, instruments
and documents, and shall take such other action consistent with the terms of
this Agreement as are reasonably necessary to carry out the transactions
contemplated by this Agreement. The Closing will be subject to the conditions
herein discussed in Section 6 hereof.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND MAJORITY
STOCKHOLDERS. The Company and the Majority Stockholders jointly and severally
represent and warrant to Purchaser, which representations and warranties shall
survive the Closing, that:
(a) ORGANIZATION, STANDING, ETC. OF THE COMPANY. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Virginia and has full corporate power and authority to
conduct its business as presently conducted by it and to enter into and perform
this Agreement and to carry out the transactions contemplated by this Agreement.
The Company is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the activities conducted
by it or character of its properties owned or leased by it makes such
qualification necessary and the failure to so qualify would have a material
adverse effect on the business, financial condition or results of operations of
the Company. The Company has no subsidiaries and does not own any shares of
capital stock of any other corporation.
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(b) CAPITALIZATION. The authorized capital stock of the Company
consists of 10,000,000 shares of Class A Common Stock with no par value, 100
shares of Class B Common Stock and 1,235 shares of preferred stock. As of the
date hereof, there were outstanding 8,090,600 shares of Class A Common Stock, no
shares of Class B Common Stock and no shares of preferred stock, as listed on
Schedule 2(b), SCHEDULING EACH SELLER/STOCKHOLDER AND THE NUMBER OF SHARES
OWNED, all of which is being acquired hereunder. In addition, _______________
shares of capital stock have been reserved for issuance in connection with
outstanding rights, warrants, options or agreements for the purchase of capital
stock from the Company. No person is entitled to any preemptive or similar
right with respect to the issuance of any capital stock of the Company.
(c) AUTHORITY FOR AGREEMENT; CONFLICT WITH AUTHORITY. The
execution, delivery, and performance of this Agreement by the Company has been
duly authorized by all necessary corporate action, and this Agreement
constitutes a valid and binding obligation of the Company and the Sellers
enforceable against them in accordance, with its terms. The execution and
carrying out of the transactions contemplated by this Agreement and compliance
with its provisions by the Company and Sellers will not violate any provision of
law and will not conflict with or result in any breach of any of the terms,
conditions, or provisions of, or constitute a default under the Company's
Certificate of Incorporation or its By-Laws or, in any material respect, any
indenture, lease, loan agreement or other instrument to which the Company or any
Seller is a party or by which it or their or any of it or their properties are
bound, or any decree, judgment, order, statute, rule or regulation applicable to
the Company or any Seller.
(d) GOVERNMENTAL CONSENT, ETC. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration, or
filing with, any governmental authority is required on the part of the Company
or any Seller in connection with the execution and delivery of this Agreement,
or the consummation of the other transactions contemplated by this Agreement.
(e) LITIGATION. There is no action, suit or proceeding, or
governmental inquiry or investigation, pending or threatened against the
Company, and the Company is in compliance in all material respects with all laws
and regulations materially affecting it, its properties and its business.
(f) FINANCIAL STATEMENTS. The Company has furnished to Purchaser
a true and correct copy of the Company's unaudited balance sheet and
accompanying income statement and statement of cash flow (the "Financial
Statement") as of July 31, 1997 (the
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"Balance Sheet Date"), an audited financial statement for the fiscal year ended
December 31, 1996, as well as audited financial statements for the preceding one
fiscal year (the "Audited Statements"). The Financial Statement and the Audited
Statements fairly present the financial condition of the Company as of the dates
thereof, and have been prepared in accordance with generally accepted accounting
principles consistently applied, and with regard to the Financial Statement
only, subject to normal year end audit adjustments and accruals, which
adjustments and accruals shall not be material. There has been no material
adverse change in the financial conditions, operations or business of the
Company since the Balance Sheet Date, and the Company has not incurred any
material liability since the Balance Sheet Date, other than those incurred in
the ordinary course of business. Except as set forth on the Financial
Statement, the Company had no material liabilities, contingent or otherwise,
liability for taxes, commitments extending for over one year or requiring the
expenditure of more than $50,000 in the aggregate or unrealized or anticipated
losses aggregating a material amount. The inventory shown in the Financial
Statement is in good and saleable condition and in amounts and types reasonably
required in the conduct of the Company's business.
(g) TITLE TO PROPERTIES; LIENS. The Company has good title to,
or a valid and current leasehold interest in, the properties and assets
reflected on the Financial Statement, except those disposed of since the date
thereof in the ordinary course of business, and such properties and assets are
free and clear of all liens, security interests, charges and encumbrances,
except (i) as disclosed on the Financial Statement, (ii) liens for current taxes
not yet due and payable, and (iii) such imperfections of title or zoning
restrictions, easements or encumbrances, if any, as do not materially interfere
with the present use of such property or assets.
(h) PRIOR ISSUANCE OF SHARES. All presently outstanding shares
of capital stock of the Company have been sold and issued in compliance with
applicable federal and state securities laws and are validly issued, fully paid
and nonassessable.
(i) MATERIAL CONTRACTS. Except as disclosed on Schedule 2(i)
and other than purchase orders issued for merchandise in the normal course of
business, the Company is not a party to or bound by any indenture, lease,
license, agreement, contract or commitment (collectively, "Contracts") which
requires future expenditures by the Company in excess of $50,000 or which is
otherwise material to the Company's business or operations. There are no
defaults under any Contracts.
(j) COMPLIANCE WITH OTHER INSTRUMENTS. The Company
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is not in violation of any term or provisions of its Certificate of
Incorporation or By-Laws, or of any material term of any instrument, loan
agreement, agreement, judgment, decree, order, statute, rule or regulation
applicable to the Company.
(k) LABOR RELATIONS. The Company has no pension, benefit, stock
option, bonus, retirement or similar plan or obligation, and all payments due
under any benefit plan are current. The Company is not a party to any
collective bargaining agreement and, to the best of its knowledge. No
organization efforts are presently being made with respect to any of its
employees. The Company has complied in all material respects with all
applicable laws (including, but not limited to, ERISA), and regulations relating
to employment matters including, but not limited to, those relating to wages,
hours, discrimination and payment of social security and similar taxes.
(l) TAX RETURNS AND PAYMENT. All of the tax returns and reports
of the Company required by law to be filed have been duly and accurately filed
and all taxes shown due thereon have been paid and all payroll tax withholdings
have been timely deposited. There are in effect no waivers of the applicable
statute of limitations for federal, state or local taxes for any period. No
deficiency assessment or proposed adjustment of the Company's federal, state and
local taxes is pending, and the Company has no knowledge of any proposed
liability for any tax to be imposed upon its properties or assets, for which
there is not an adequate reserve reflected in the Financial Statement.
(m) PATENTS, TRADEMARKS.The Company has no patents, trademarks
and copyrights. The business of the Company is being carried on without known
conflicts with patents, licenses, trademarks, copyrights, trade names and trade
secrets of others and to the best of the Company's knowledge, no other persons
are conducting their businesses in conflict with patents, licenses, trademarks,
copyrights, trade names and trade secrets used by the Company.
(n) ENVIRONMENTAL MATTERS. To the best knowledge of the
Company, neither the real property or the buildings, improvements, fixtures or
equipment forming a part of the real property owned by the Company
("Facilities"), is in violation of or the subject of any investigations or
inquiry or enforcement action by any governmental authority for the recovery of
environmental response costs for compliance with remedial obligations under any
applicable law pertaining to "Hazardous Substances" as that term is defined in
the Comprehensive Environmental Response, Compensation and Liability Act of
1990, as amended, as codified at 49 U.S.C. Section 9601 ET SEC. ("CERCLA"), the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 ET SEC., the
Resource Conservation and Recovery
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Act, 42 U.S.C. Section 6901 ET SEC., or any applicable state or local
governmental statues, ordinances or regulations. The Company has not
transported, stored, treated, disposed of, nor has it aallowed or arranged for
any third party to transport, store, treat or dispose of Hazardous Substances.
The Company does not use and has not used any Underground Storage Tanks (as
defined in RCRA).
(o) COMPLIANCE WITH LAWS AND REGULATIONS. The Company has
complied in all material respects with all laws and regulations applicable to
the conduct of its business, including, but not limited to, all regulations of
the Federal Trade Commission.
(p) INSURANCE. The Company has in full force and effect fire,
casualty, workers compensation and general liability insurance policies, with
extended coverage, in amounts equal to that which is carried by business
entities operating businesses similar to that of the Company.
(q) OPERATION SINCE THE BALANCE SHEET DATE. Since the Balance
Sheet date, the Company:
(1) has operated its business substantially as it was
operated prior to that date and only in the ordinary course;
(2) has not created or otherwise become liable with respect
to any indebtedness or declared or made any dividend or distribution of cash,
assets or capital stock;
(3) has maintained or kept current its books, accounts,
records, payroll, and filings in the usual and ordinary course of business,
consistent with standard practice;
(4) has not made any capital expenditure, commitment or
investment other than in the ordinary course of business;
(5) has not lost any customer which accounted for 5% or
more of the Company's annual revenue.
(r) MINUTE BOOKS. The minute books of the Company contain a
complete summary of all meetings of directors and stockholders since the time of
incorporation and reflect all transactions referred to in such minutes
accurately in all material aspects.
(s) EMPLOYMENT AGREEMENTS. The Company has no employment
agreement with any director, officer or employee of the Company. All other
employees of the Company are terminable at will without expense or liability to
the Company.
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(t) WARRANTY CLAIMS. There are no pending or threatened claims
against the Company or any work performed by the Company for any customer,
including but not limited to, any services rendered under any warranties,
whether express of implied, by the customer of the Company, nor does there exist
any basis therefor.
(u) PRODUCT LIABILITY CLAIMS. There are no pending or
threatened product liability claims by customers or any third parties of the
Company with respect to the business or operations of the Company, any products
now or previously manufactured and/or sold by the Company, nor does there exist
a basis therefor.
(v) FULL DISCLOSURE. Neither the Financial Statement, Audited
Statements nor the representations and warranties of the Company contained in
this Agreement contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein or herein not
misleading.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND DUNN. The
Purchaser and Dunn jointly and severally represent and warrant to the Company
and the Sellers, which representations and warranties shall survive the Closing,
that:
(a) ORGANIZATION, STANDING, ETC, OF THE PURCHASER AND DUNN. The
Purchaser and Dunn are each corporations duly organized, validly existing and in
good standing under the laws of the State of Delaware and each has full
corporate power and authority to conduct its business as presently conducted by
it and to enter into and perform this Agreement and to carry out the
transactions contemplated by this Agreement. The Purchasaer and Dunn are each
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the nature of the activities conducted by it or
character of its properties owned or leased by it makes such qualification
necessary and the failure to so qualify would have a material adverse effect on
the business, financial condition or results of operations of the Purchaser or
Dunn, as the case may be. The Purchaser and Dunn will obtain as expeditiously
as possible all required authorizations of governmental authorities necessitated
by the operations of the Purchaser and Dunn in the future, the absence of which
would have a material adverse effect on said operations.
(b) CAPITALIZATION. The authorized capital stock of Dunn
consists of 20,000,000 shares of common stock, $.001 par value, and 2,000,000
shares of blank check preferred stock, $.001 par value.
(c) AUTHORITY FOR AGREEMENT. The execution,
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delivery, and performance of this Agreement by the Purchaser and Dunn have been
duly authorized by all necessary corporate action, and this Agreement
constitutes a valid and binding obligation of the Purchaser and Dunn enforceable
against each of them in accordance with its terms. The execution and carrying
out of the transactions contemplated by this Agreement and compliance its with
provisions by the Purchaser and Dunn will not violate any provision of law and
will not conflict with or result in any breach of any of the terms, conditions,
or provisions of, or constitute a default under, their respective Certificates
of Incorporation or By-Laws or, in any material respect, any indenture, lease,
loan agreement, agreement, or other instrument to which the Purchaser or Dunn is
a party or by which it or any of its properties are bound, or any decree,
judgment, order, statute, rule or regulation applicable to the Purchaser or
Dunn.
(d) COMMON STOCK. The shares of Common Stock being sold and
purchased hereunder have been duly and validly authorized, will be validly
issued, fully paid and nonassessable after issuance and sale to the Sellers
pursuant to the Agreement and will be free of any liens or encumbrances created
by or as the result of action by Dunn. No further approval or authorization of
the stockholders of Dunn is required for the issuance and sale of the Common
Stock as contemplated herein. The shares of Common Stock to be issued hereunder
will not be issued in violation of any preemptive rights.
(e) SECURITIES LAWS. The offer, sale and issuance of the Common
Stock being sold and purchased hereunder are exempt from: (i) the registration
requirements of the Securities Act and (ii) the registration or qualifications
provisions of state Blue Sky laws.
(f) AUTHORIZATIONS. No authorization, approval, order, license,
permit or consent of, or filing or registration with, any court or governmental
authority (other than any filing as may be required in order to comply with any
of the Securities Act of 1933, as amended (the "Securities Act") or under
applicable state "Blue Sky" laws (all of which shall be made by Dunn) or in
connection with the registration of the resale of the common stock to be issued
pursuant to Section 1(b) as provided in Registration Rights Agreement entered to
be entered into at Closing) or consent of any other party is required in
connection with the authorization, delivery and performance by the Purchaser and
Dunn of this Agreement, the Employment Agreements or the Registration Rights
Agreement except for such authorizations, approvals, consents, filings or
registrations as are obtained by the Closing Date.
(g) LITIGATION. There is no action, suit or proceeding or
governmental inquiry or investigation pending, or
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threatened against Dunn or the Purchaser, and Dunn and the Purchaser are each in
compliance in all material respects with all laws and regulations materially
affecting each of them and their respective properties and businesses.
(h) INVESTMENT INTENTION. The Purchaser is acquiring the Shares
of investment purposes only, and not with a view to or for resale in connection
with, any offering or distribution thereof. The Purchaser and Dunn each
recognizes and agrees that the Shares have not been registered under the
Securities Act or applicable state securities or "Blue Sky" laws, and that the
Shares may not be resold absent such registration or pursuant to an exemption
therefrom.
(i) REGISTRATION. The information included or incorporated by
reference in any filing made under the Registration Rights Agreement will not,
at the time such filing becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements made not misleading,
except that no representation or warranty is made by Dunn with respect to
statements made or incorporated by reference with respect to statements made or
incorporated by reference in such filing based upon information provided by the
Sellers for inclusion therein.
(j) MISCELLANEOUS. All representations and warranties of the
Purchaser and Dunn set forth in this Agreement and all information set forth by
the Purchaser and/or Dunn in any schedules or exhibits hereto are true and
complete in all material respects and no such representation, warranty or
information contains any untrue statement of material fact or, to the
Purchaser's and Dunn's knowledge, omits any material fact necessary in order to
make such representation and warranty, in light of the circumstances under which
it is made, not false or misleading.
(k) FILINGS WITH SECURITIES AND EXCHANGE COMMISSION. No
information set forth by Dunn in any filings made with the Securities and
Exchange Commission contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements made not misleading.
4. INVESTMENT REPRESENTATIONS OF SELLERS. Each of the Sellers
individually represent and warrant as follows:
(a) AUTHORITY. Each Seller has full power and authority to
enter into and to perform this Agreement in accordance with its terms. Each
Seller has good and valid title to his or her shares, free and clear of all
liens and encumbrances.
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(b) INVESTMENT REPRESENTATIONS. Each Seller represents and
warrants that he or she is acquiring the Common Stock for his or her own
account, for investment and not with a view to, or for sale in connection with,
any distribution of such Common Stock, or any part thereof.
(c) INVESTMENT EXPERIENCE; ACCESS TO INFORMATION. Each Seller
represents and warrants that, during the course of this transaction and prior to
the purchase of any securities, he or she has had the opportunity to ask
questions of and receive answers from Dunn concerning the terms and conditions
of the offering of Common Stock and to obtain any additional information
necessary to verify the accuracy of the representations and warranties and other
information contained in this Agreement. Each Seller confirms that all
documents, records and books pertaining to its investment in Dunn and requested
by him or her have been made available or delivered to him or her.
(d) ABSENCE OF REGISTRATION. Each Seller understands that:
(1) The Common Stock to be sold and issued hereunder is
unregistered and may be required to be held indefinitely unless it is
subsequently registered under the Securities Act, or an exemption from such
registration is available.
(2) Rule 144 promulgated under the Securities Act ("Rule
144"), which provides for certain limited sales of unregistered securities, is
not presently available with respect to the Securities.
(e) RESTRICTIONS ON TRANSFER. Each Seller agrees that he or she
will not, and is restricted from, offer, sell, pledge, hypothecate, or otherwise
dispose of any common stock of Dunn acquired by Seller pursuant to this
agreement unless such offer, sale, pledge, hypothecation or other disposition is
(i) registered under the Securities Act, or (ii) such offer, sale, pledge,
hypothecation or other disposition thereof is exempt from registration under the
Securities Act, and (b) until such time as such stock is registered under the
Securities Act, the certificates representing the Securities shall bear a legend
stating in substance:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND SUCH LAWS, OR SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS OTHERWISE EXEMPT FROM
REGISTRATION UNDER SAID ACT AND SUCH LAWS.
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(f) TRANSFER INSTRUCTIONS. Each Seller agrees that Purchaser
may provide for appropriate transfer instructions to implement the provisions of
Section 4(e) hereof.
(g) ECONOMIC RISK. Each Seller understands that he or she must
bear the economic risk of the investment represented by the purchase of
Securities for an indefinite period.
5. COVENANTS
(a) ACCESS TO RECORDS AND PROPERTIES OF THE COMPANY.
(1) Between the date of this Agreement and the Closing,
Sellers shall give to Purchaser and its agents and representatives, including
but not limited to its accountants, attorneys and consultants, such access to
the premises, books and records of the Company, and to cause the officers and
employees of the Company to furnish such financial and operating data and other
information with respect to the Company, as Purchaser shall from time to time
reasonably request in a manner so as not to interfere with the ordinary course
of business of the Company.
(2) In the event the sale and purchase hereunder shall not
be consummated, Sellers and Purchaser shall treat as confidential all documents,
materials and other information which they shall have obtained regarding the
Sellers or Purchaser during the course of the negotiations leading to the
transaction contemplated hereby, the investigation of the Seller or Purchaser,
and the preparation of this Agreements, and shall return all copies of
non-public documents and materials which have been furnished in connection
therewith. However, nothing contained herein shall prohibit Sellers or
Purchaser from:
(i) using such documents, materials and other
information in connection with any action or proceeding brought or any claim
asserted by Sellers or Purchaser in respect of any breach of any representation,
warranty or covenant made pursuant to this Agreement; or
(ii) supplying or filing such documents, material or
other information (1) to federal, state or local government, agency or authority
to the extent required in connection with the obtaining of any other consent,
waiver, amendment, modification, approval, authorization, permit or license
which may be necessary to effectuate this Agreement and to consummate the
transactions contemplated hereby or (2) to the extent required under legal
process by subpoena or other court order.
(b) OPERATION OF THE COMPANY PRIOR TO CLOSING. From
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the date hereof until Closing, except as otherwise expressly contemplated by
this agreement or to the extent that Purchaser shall otherwise expressly consent
in writing, the Company shall operate its business as presently operated and
solely in the ordinary course, and, consistent with such operation, the Sellers:
1. shall not effect any amendment to the Company's
Certificate or Articles of Incorporation or Bylaws;
2. shall not change the Company's corporate name or permit
the use thereof by any other person;
3. except for matters expressly permitted under this
Agreement, shall not pay or agree to pay to any employee, officer, or director
of the Company, compensation that is in excess of the current compensation level
of such employee, officer, or director, except for annual increases in the
ordinary course of business consistent with prior practices and consistent with
bonus and commission policies in effect on the date of this Agreement;
4. shall not merge or consolidate the Company with any
other corporation, association, partnership, joint venture or other entity or
allow it to acquire or agree to acquire any corporation, association,
partnership, joint venture, or other entity;
5. shall not sell, transfer, pledge or otherwise dispose
of any assets of the Company, except in the ordinary course of business
consistent with prior practices;
6. shall not create, incur, assume, or guarantee any
indebtedness for money borrowed by the Company, any other corporation or any
individual except in the ordinary course of business, or create or suffer to
exist any mortgage, lien, or other encumbrance on any of its properties or
assets, real or personal, except those in existence on the date hereof;
7. shall not make any capital expenditure, or series of
related capital expenditures, in excess of $20,000 not previously approved by
Purchaser;
8. except as set forth herein, shall not declare or pay
any dividends on or make any distributions of any kind with respect to any of
the Company's capital stock;
9. shall maintain the facilities, Assets, and properties
of the Company in good operating repair, order, and condition, reasonable wear
and tear excepted, and to notify Purchaser immediately upon any loss of, damage
to, or destruction of any of the assets of the Company;
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10. shall maintain in full force and effect with respect to
the assets, employees and business of the Company, all present insurance
coverage of the types and in the amounts as are in effect as of the date of this
Agreement and to apply the proceeds received under any such insurance policy or
as a result of any loss or destruction of or damage to any assets of the
Company, to the repair or replacement of such assets;
11. shall use its best efforts to preserve the present
employees, reputation and business organization of the Company, and the
relationship of the Company with its customers and others having business
dealings with it;
12. shall not permit the issuance of any additional shares
of the capital stock of the Company or take any action affecting the
capitalization of the Company;
13. shall refrain from taking any action, and not suffer to
exist any event or occurrence, which would render any representation and
warranty contained herein inaccurate in all material respects at any time
between the date hereof and the Closing, including as of the Closing, and to
promptly advise Purchaser of any breach of any representation and warranty,
covenant, condition or obligation of Sellers hereunder;
14. shall comply with and not be in default or violation
under any law, regulation, decree or order applicable to the business,
operations or assets of the Company; and
15. shall not enter into any contract or arrangement which
obligates the Company to expend more than $10,000.
(c) COMPETING TRANSACTIONS. The Sellers shall not take any
action, directly or indirectly, to cause, promote, negotiate or authorize any
transaction competing or interfering with the transaction contemplated by this
Agreement, including without limitation any merger, consolidation or
reorganization, acquisition or disposition of the Shares.
(d) RESTRICTION ON TRANSFER. From the date hereof until Closing,
Sellers shall not without the written consent of Purchaser sell, assign, pledge,
donate, transfer or otherwise dispose of any shares of the capital stock of the
Company or permit any shares of the capital stock of the Company to be sold,
assigned, pledged, donated, transferred or otherwise disposed of or enter into
any agreement in which the Sellers agree to take such action.
(e) PUBLIC DISCLOSURE. No press or public disclosure, either
written or oral, of this Agreement or the transaction contemplated hereby shall
be made by any party except with the prior written consent of the other, or
except as may be
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required by applicable law, and in all cases subject to the reporting
requirements imposed upon Dunn.
(f) DISTRIBUTION OF STOCK PAYMENT. Sellers covenant and warrant
that the Stock Payment referred to in Section 1(b) hereof will be distributed to
the shareholders of Sellers in accordance with such Sellers' respective stock
ownership in the Company and in accordance with all applicable laws.
6. CONDITIONS TO CLOSING.
(a) CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS ON THE
CLOSING DATE. The obligations of the Purchaser on the Closing Date as provided
in Section 1(a) shall be subject to the satisfaction on or prior to the Closing
Date of the following conditions precedent, any one or more of which may be
waived by the Purchaser:
(1) REPRESENTATIONS AND WARRANTIES. The representations
and warranties by the Company and Majority Stockholders in Section 2 hereof
shall be true and accurate on and as of the Closing.
(2) PERFORMANCE. The Company and the Sellers shall have
performed and complied with all agreements and conditions contained herein or in
other ancillary documents incident to the transactions contemplated by this
Agreement required to be performed or complied with by it prior to or at the
Closing.
(3) CONSENTS, ETC, The Company and the Sellers shall have
secured all permits, consents and authorizations that shall be necessary,
desirable or required lawfully to consummate this Agreement.
(4) COMPLIANCE CERTIFICATE. The Company and the Sellers
shall have delivered to the Purchaser or its representative at the Closing an
Officer's Certificate to the effect that the representations and warranties of
the Company continue to be true and accurate on the Closing, and that all
conditions specified herein have been fulfilled.
(5) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory in substance and form to the Purchaser and its counsel, and the
Purchaser and its counsel shall have received all such counterpart originals (or
certified or other copies) of such documents as they may reasonably request.
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(6) OPINION OF COMPANY'S AND SELLERS' COUNSEL. The
Purchaser shall have received from counsel for the Company and the Sellers, a
favorable opinion, dated the date of the Closing and satisfactory in form and
substance to the Purchaser and its counsel, with respect to the representations
and warranties set forth in Sections 3(a) to 3(e).
(7) EMPLOYMENT AND NON-COMPETE AGREEMENT. Timothy McNamee,
John Signorello and Steve Salmon shall have delivered employment and non-compete
agreements, acceptable in form and substance to the Purchaser.
(8) RESIGNATIONS. Sellers and the Company shall cause the
members of the Board of Directors of the Company to resign at or prior to the
Closing.
(b) CONDITIONS PRECEDENT TO COMPANY'S AND SELLERS' OBLIGATIONS.
The obligations of the Company and the Sellers on the Closing Date as provided
in Section 1(a) shall be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions precedent, any one or more of which may be
waived by the Company and Sellers.
(1) REPRESENTATIONS AND WARRANTIES. The representations
and warranties by the Purchaser and Dunn in Section 3 hereof shall be true and
accurate on and as of the Closing Date.
(2) PERFORMANCE. The Purchaser shall have performed and
complied with all agreements and conditions contained herein or in other
ancillary documents incident to the transactions contemplated by this Agreement
required to be performed or complied with by it prior to or at the Purchaser.
(3) CONSENTS. ETC, The Purchaser shall have secured all
permits, consents and authorizations that shall be necessary or required
lawfully to consummate this Agreement.
(4) COMPLIANCE CERTIFICATE. The Purchaser shall have
delivered to the Company and the Sellers at the Closing an Officer's Certificate
to the effect that the representations and warranties of the Purchaser continue
to be true and accurate on the Closing Date, and that all conditions specified
in Sections 5(b)(1) and (2), inclusive, have been fulfilled.
(5) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory in substance and form to the Company and its counsel, and the
Company and its counsel shall have received all such counterpart originals (or
certified or other copies) of such documents as they may reasonably request.
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(6) OPINION OF PURCHASER'S COUNSEL. The Company and the
Sellers shall have received from counsel for the Purchaser, a favorable opinion,
dated the date of the Closing and satisfactory in form and substance to the
Company, the Sellers and their counsel, with respect to the representations and
warranties set forth in Sections 3(a) and (b), inclusive.
(7) INTERMEDIARIES FEE. Purchaser shall pay One Hundred
and Fifty Thousand Dollars ($150,000) to Ferris, Baker & Watts in full
satisfaction of all amounts due them by either party hereunder.
(8) DUNN STOCKHOLDER APPROVAL. Stockholders of Dunn shall
have consented to the transaction contemplated hereby.
7. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE SELLERS. The Majority Stockholders
("Indemnitors") jointly and severally hereby agree to indemnify and hold
harmless Purchaser against all losses, liabilities, costs, damages and expenses,
including attorneys fees, incurred by Purchaser resulting from, arising out of,
or connected with:
(1) any damage or deficiency resulting from the material
breach of any representation or warranty under Section 2 in this Agreement or
any instrument furnished to Purchaser hereunder, any material misrepresentation
or omission, material breach of warranty, material nonfulfillment of any
agreement on the part of the Indemnitors under this Agreement or from any
misrepresentation in or omission from any certificate, document or other
instrument furnished or to be furnished to Purchaser hereunder;
(2) all undisclosed liabilities of the Company of any
nature, whether accrued, absolute, contingent or otherwise, existing at the
Closing;
(3) the material nonfulfillment of any covenant made by the
Indemnitors or the Company in this Agreement or in any instrument furnished by
the Indemnitors or the Company to Purchaser or in connection with the Closing;
and
(4) all actions, suits, proceedings, demands, assessments,
judgments, costs, including attorneys fees, and expenses incident to any of the
foregoing.
(b) PURCHASER'S AND DUNN'S INDEMNIFICATION. The Purchaser and Dunn
shall jointly and severally indemnify and hold each of the Sellers harmless from
and against any and all claims, liabilities,
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losses, damages, costs, and expenses (including, without limitation, court
costs, and costs of appeal) incurred by any of the Sellers because of any
material inaccuracy in, or material breach or material violation of the
representations, warranties, and covenants made by any of the Purchaser or Dunn
in this Agreement.
(c) NOTICE AND CONTROL OF LITIGATION. If any claim or liability is
asserted in writing against a party entitled to indemnification under this
Section 7 (the "Indemnified Party") which would give rise to a claim under this
Section 7, the Indemnified Party shall notify the person providing the indemnity
("Indemnifying Party") in writing of the same within fifteen (15) days of
receipt of such written assertion of a claim or liability. The Indemnifying
Party shall have the right to defend a claim and control the defense, settlement
and prosecution of any litigation. If the Indemnifying Party, within ten (10)
days after notice of such claim, fails to give the Indemnified Party notice that
the Indemnifying Party intends to defend such claim, the Indemnified Party will
(upon further notice to the Indemnifying Party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for account and
risk of the Indemnifying Party, subject to the right of the Indemnifying Party
to assume the defense of such claim at any time prior to settlement, compromise
or final determination thereof. Anything in this Section 7(c) notwithstanding,
(i) if there is a reasonable probability that a claim may materially and
adversely affect the Indemnified Party other than as a result of money damages
or other money payments, the Indemnified Party shall have the right, at its own
cost and expense, to defend, compromise and settle the part of such claim which
would not result in money damages or other money payments, and (ii) the
Indemnifying Party shall not, without the written consent of the Indemnified
Party (which consent shall not be unreasonably withheld), settle or compromise
any claim or consent to the entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant to the Indemnified Party a
release from all liability in respect to such claim. All parties agree to
cooperate fully as necessary in the defense of such matters. Should the
Indemnified Party fail to notify the Indemnifying Party in the time required
above, this indemnity shall terminate and be of no further force and effect with
respect to the subject matter of the required notice in the event that the
Indemnified Party's failure to notify in the time required above materially
adversely affects the Indemnifying Party's ability to defend such matter.
(d) LIMITATIONS TO REPRESENTATIONS, WARRANTIES, AND INDEMNIFICATION.
(i) Each of the representations and warranties set forth in this
Agreement shall survive for a period of two (2) years after the Closing Date,
and thereafter all such representations and
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warranties shall be extinguished. Furthermore, no claim may be asserted
(including, but not limited to commencement of litigation) under this Agreement
for damages or indemnification or for any cause of action after three (3) years
following the Closing Date.
(ii) Notwithstanding any provision in this Agreement to the contrary,
the Majority Shareholders shall not be required to indemnify any person under
this Section 7 or under any other provision of the Agreement, or to pay any
damages to another party for a breach of a representation, warranty, agreement,
or covenant, or any other claim under this Agreement or the agreements related
hereto, unless such damages, individually or in the aggregate, exceed $_____
(the "floor"), at which point such the Majority Shareholders shall be
responsible for all such Indemnifiable Damages or damages for such breach or
other claim that may arise in excess of the Floor.
8. CONCURRENT AGREEMENTS. At the Closing, the Purchaser shall enter
into certain employment and non-compete agreements, copies of which are annexed
hereto as Exhibit 8 ("Employment Agreements"), with Timothy McNamee, John
Signorello and Steve Salmon.
9. MISCELLANEOUS.
(a) BROKERS. The Purchaser on the one hand and the Majority
Stockholders and the Company on the other hand represent and warrant to each
other that, other than Ferris, Baker & Watts, no broker, investment banker or
finder is entitled to any financial advisory fee, brokerage fee or finder's fee
or other similar payment from it or him or her, as the case may be, with respect
to the execution of this Agreement or the transactions contemplated hereby. The
Purchaser and Dunn on the one hand and the Majority Stockholders and the Company
on the other hand each agree to hold each other harmless against and in respect
of all claims, losses, liabilities and expenses which may be asserted by any
broker or other person who claims to be entitled to a broker's or finder's fee
or similar fee or commission from it or him or her as the case may be, in
respect of the execution of this Agreement, or the consummation of the
transactions contemplated hereby, by reason of it, his or her acting at the
request of said person.
(b) EXPENSES. Each party shall bear its own costs, including
attorneys fees, involved in the negotiating of this Agreement and consummation
of the transactions contemplated hereby.
(c) SURVIVAL OF AGREEMENTS. Subject only to Section 7(d), all
agreements, covenants, representations and warranties contained herein or made
in writing in connection with the transactions contemplated hereby shall survive
the execution and delivery of this Agreement.
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(d) NOTICES. All notices, requests, consents and other
communications herein shall be in writing and shall be mailed by first class or
certified mail, postage prepaid, sent by overnight courier or personally
delivered to the party at such address as indicated on the first page hereof or
such other addresses as each of the parties hereto may provide from time to time
to the other parties by written notice in accordance with the terms of this
Section 9(d). For purposes of computing the time periods set forth in this
Agreement, the date of mailing shall be deemed to be the delivery date.
(e) MODIFICATIONS; WAIVER. This Agreement may not be amended or
modified without the written consent of the parties hereto.
(f) ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
hereby, and supersedes all negotiations, agreements, representations, warranties
and commitments, whether in writing or oral, prior to the date hereof.
(g) SUCCESSORS AND ASSIGNS. All of the terms of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective successor and assigns of the parties hereto.
(h) REMEDIES AT LAW OR IN EQUITY. If any party shall default in
any of its respective obligations under this Agreement following ten (10)
business days' notice thereof and such default shall be continuing or if any
representation or warranty of the respective parties made in this agreement or
in any certificate, report or other instrument delivered under or pursuant to
any term hereof shall be untrue or misleading when taken as a whole in any
material respect as of the date of this Agreement or as of the Closing Date or
as of the date it was made, furnished or delivered, the other party may proceed
to protect and enforce its rights by suit in equity or action at law, whether
for the specific performance of any term contained in this Agreement or for an
injunction against the breach of any such term or in furtherance of the exercise
of any power granted in this Agreement, or to enforce any other legal or
equitable right of such party or to take any one or more of such actions, but
only as to matters which have not been waived or consented to by the other
parties in accordance with Section 8(d). In the event the non-breaching party
brings such an action against the breaching party, the prevailing party in such
dispute shall be entitled to recover from the other party all fees, costs and
expenses of enforcing any right of such prevailing party under or with respect
to this Agreement, including without limitation such reasonable fees and
expenses of attorneys and accountants, which shall include, without limitation,
all fees, costs and expenses of appeals.
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(i) REMEDIES CUMULATIVE: WAIVER. No remedy referred to herein
is intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available at law or in equity. No
express or implied waiver of any default shall be a waiver of any future or
subsequent default. The failure or delay in exercising any rights granted a
party hereunder shall not constitute a waiver of any such right and any single
or partial exercise of any particular right shall not exhaust the same or
constitute a waiver of any other right provided herein.
(j) EXHIBITS AND DOCUMENTATION. All Exhibits and Schedules
annexed hereto and all documentation referred to herein, are incorporated in and
made a part of this Agreement as if set forth herein. Any matter disclosed on
any documentation herein or Exhibit or Schedule hereto shall be deemed also to
have been disclosed on any other applicable documentation referred to herein, as
the case may be.
(k) EXECUTION AND COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together shall constitute one
instrument.
(l) EVENTS OF TERMINATION. Anything herein or elsewhere to
contrary notwithstanding, this Agreement may be terminated by written notice of
termination at any time before the purchase of the Assets (i) by mutual written
consent of the parties; or (ii) by written notice by Purchaser to Sellers if on
the Closing Date the representations and warranties of Seller are determined to
be incorrect, inaccurate or misleading in any material respect as determined by
Purchaser.
(m) GOVERNING LAW AND SEVERABILITY. This Agreement shall be
governed by the laws of the Commonwealth of Virginia, without regard to its
conflict of laws principles. If any provision of this Agreement or any
application thereof is held to be unenforceable, the remainder of the Agreement
and any application of such provision shall not be affected thereby and to the
extent permitted by law, there shall be substituted for the provisions held
unenforceable, provisions which shall, as nearly as possible have the same
economic effect as the provisions held unenforceable.
(n) HEADINGS. The descriptive headings of the Sections hereof
and the Schedules and Exhibits hereto are inserted for convenience only and do
not constitute a part of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
STMS ACQUISITION CORP. STMS, Inc.
By:____________________________ By:____________________________
Thomas P. Dunne
President
DUNN COMPUTER CORPORATION
By:____________________________
Thomas P. Dunne
President
_______________________________
John Signorello
______________________________
Timothy McNamee
______________________________
Steve Salmon
______________________________
[Name]
______________________________
[Name]
______________________________
[Name]
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