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STOCK EXCHANGE AND STOCK PURCHASE AGREEMENT
among:
CAYENTA.COM, INC.,
a Delaware corporation
CAYENTA OPERATING COMPANY.,
a Delaware corporation
THE TITAN CORPORATION,
a Delaware corporation
ASSIST CORNERSTONE TECHNOLOGIES, INC.,
a Utah corporation
and
SELLING SHAREHOLDERS
Dated as of December 7, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
1.1 Exchange of Shares................................................1
1.2 No Fractional Shares..............................................2
1.3 Cayenta Shares....................................................2
1.4 Appraisal Rights..................................................2
1.5 Closing...........................................................3
2. SALE AND PURCHASE OF SHARES.............................................3
2.1 Sale and Purchase of Shares.......................................3
2.2 Purchase Price....................................................3
2.3 Post-Closing Adjustment...........................................5
3. REPRESENTATIONS AND WARRANTIES OF ASSIST AND SELLING SHAREHOLDERS.......6
3.1 Due Organization; No Subsidiaries; Etc............................6
3.2 Certificate of Incorporation and Bylaws; Records..................7
3.3 Capitalization, Etc...............................................7
3.4 Financial Statements..............................................9
3.5 Absence of Changes................................................9
3.6 Title to Assets..................................................11
3.7 Bank Accounts....................................................12
3.8 Receivables; Major Customers.....................................12
3.9 Inventory........................................................12
3.10 Equipment, Etc...................................................13
3.11 Real Property....................................................13
3.12 Proprietary Assets...............................................13
3.13 Contracts........................................................15
3.14 Liabilities; Major Suppliers.....................................16
3.15 Compliance With Legal Requirements...............................17
3.16 Governmental Authorizations......................................18
3.17 Tax Matters......................................................19
3.18 Employee and Labor Matters.......................................20
3.19 Benefit Plans; ERISA.............................................21
3.20 Environmental Matters............................................23
3.21 Sale of Products; Performance of Services........................24
i.
<PAGE>
TABLE OF CONTENTS
Continued
PAGE
3.22 Insurance........................................................25
3.23 Related Party Transactions.......................................26
3.24 Certain Payments, Etc............................................27
3.25 Proceedings; Orders..............................................27
3.26 Authority; Binding Nature of Agreements..........................28
3.27 Non-Contravention; Consents......................................29
3.28 Year 2000 Compliance.............................................30
(a) Brokers....................................................30
3.29 Full Disclosure..................................................30
3.30 No Other Representations or Warranties...........................31
4. REPRESENTATIONS AND WARRANTIES OF CAYENTA AND CAYENTA SUB..............31
4.1 Due Organization.................................................31
4.2 Authority; Binding Nature of Agreements..........................31
4.3 Non-Contravention; Consents......................................31
4.4 Capitalization, Etc..............................................32
4.5 Financial Statements.............................................33
4.6 No Adverse Change................................................33
(a) 34
4.8 Brokers..........................................................34
4.9 No Other Representations or Warranties...........................34
5. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.............34
5.1 Selling Shareholder Bears Economic Risk..........................34
5.2 Acquisition for Own Account......................................35
5.3 Selling Shareholder Can Protect Its Interest.....................35
5.4 Accredited Investor..............................................35
5.5 Company Information..............................................35
5.6 Rule 144.........................................................35
5.7 Residence........................................................35
5.8 Selling Shareholder..............................................36
6. PRE-CLOSING COVENANTS OF ASSIST AND SELLING SHAREHOLDERS...............36
ii.
<PAGE>
TABLE OF CONTENTS
Continued
PAGE
6.1 Access and Investigation.........................................36
6.2 Operation of Business............................................37
6.3 Filings and Consents.............................................38
6.4 Notification; Updates to Disclosure Schedule.....................39
6.5 Payment of Indebtedness by Related Parties.......................40
6.6 No Negotiation...................................................40
6.7 Best Efforts.....................................................40
6.8 Confidentiality..................................................40
7. PRE-CLOSING COVENANTS OF CAYENTA AND CAYENTA SUB.......................41
8. CONDITIONS PRECEDENT TO CAYENTA'S OR CAYENTA SUB'S OBLIGATION TO CLOSE.41
8.1 Satisfactory Completion of Pre-Acquisition Review................41
8.2 Accuracy of Representations......................................41
8.3 Performance of Obligations.......................................42
8.4 Approval of Cayenta's Board of Directors; Consents...............42
8.5 No Material Adverse Change.......................................42
8.6 Regulation D.....................................................42
8.7 Cash Out of Options..............................................42
8.8 Section 351 Plan.................................................42
8.9 Closing Documents................................................42
8.10 No Proceedings...................................................43
8.11 No Claim Regarding Stock Ownership or Sale Proceeds..............43
8.12 No Prohibition...................................................43
8.13 Confidential Information and Invention Assignment Agreements.....44
9. CONDITIONS PRECEDENT TO ASSIST'S AND SELLING SHAREHOLDERS'
OBLIGATION TO CLOSE ...................................................44
9.1 Accuracy of Representations......................................44
9.2 Cayenta's Performance............................................44
9.3 Closing Documents................................................44
10. TERMINATION............................................................45
10.1 Termination Events...............................................45
iii.
<PAGE>
TABLE OF CONTENTS
Continued
PAGE
10.2 Termination Procedures...........................................45
10.3 Effect of Termination............................................45
11. INDEMNIFICATION, ETC...................................................46
11.1 Survival of Representations and Covenants........................46
11.2 Indemnification by Selling Shareholders..........................46
11.3 Threshold........................................................47
11.4 Right to Require Cure of Breach..................................48
11.5 No Contribution..................................................48
11.6 Interest.........................................................48
11.7 Setoff/ Limited Recourse.........................................48
11.8 Defense of Third Party Claims....................................49
11.9 Exercise of Remedies by Indemnitees Other Than Cayenta
and Cayenta Sub..................................................49
11.10 Indemnification by Cayenta and Cayenta Sub.......................49
12. MISCELLANEOUS PROVISIONS...............................................50
12.1 Selling Shareholders' Agent......................................50
12.2 Further Assurances...............................................51
12.3 Retirement of Debt...............................................51
12.4 Stock Options....................................................52
12.5 Fees and Expenses................................................52
(i) 53
12.6 Attorneys' Fees..................................................53
12.7 Notices..........................................................53
12.8 Publicity........................................................54
12.9 Time of the Essence..............................................55
12.10 Headings.........................................................55
12.11 Counterparts.....................................................55
12.12 Governing Law; Venue.............................................55
12.13 Successors and Assigns...........................................56
12.14 Remedies Cumulative; Specific Performance........................56
12.15 Waiver...........................................................56
iv.
<PAGE>
TABLE OF CONTENTS
Continued
PAGE
12.16 Amendments.......................................................57
12.17 Severability.....................................................57
12.18 Parties in Interest..............................................57
12.19 Entire Agreement.................................................57
12.20 Construction.....................................................57
12.21 Negotiation of Disputes..........................................57
12.22 Ernst & Young LLP Consent........................................58
12.23 Titan as Signing Party...........................................58
12.24 Assist's Legal Counsel...........................................58
12.25 Directors' and Officers' Insurance...............................58
EXHIBITS
Exhibit A: Certain Definitions
Exhibit B: Amended and Restated Certificate of Incorporation
Exhibit C: Investor Rights Agreement
Exhibit D: Selling Shareholders Address List
Exhibit E: Section 351 Plan
Exhibit F: General Release
Exhibit G: Opinion Letter
Exhibit H: List of Key Employees
v.
<PAGE>
STOCK EXCHANGE AND STOCK PURCHASE AGREEMENT
THIS STOCK EXCHANGE AND STOCK PURCHASE AGREEMENT (the "Agreement") is made
and entered into as of December 7, 1999, by and among CAYENTA.COM, INC., a
Delaware corporation ("Cayenta"), CAYENTA OPERATING COMPANY, a Delaware
corporation ("Cayenta Sub"), THE TITAN CORPORATION, a Delaware corporation
("Titan"), ASSIST CORNERSTONE TECHNOLOGIES, INC., a Utah corporation ("Assist"
or the "Company"), and the following parties (the "Selling Shareholders"): SCOTT
E. PYNES, JERRY L. MCMILLAN, KENNETH R. SAWYER, ANDREAS SEEMULLER, HENRY J.
EYRING, VERN R. CHRISTENSEN, GREGORY C. ESTY, BATCHELDER & PARTNERS, INC., E.
SCOTT ANDERSON, GUY M. CAMERON, MARNIE NUTTALL-MARTINEZ, RANDALL CROCKER, PAUL
SCHWEET, STUART CLIFTON, MARK S. HOWLETT, C. BURTON STOHL, MARLON R. BERRETT AND
PACIFIC MEZZANINE FUND, LP. Certain capitalized terms used in this Agreement are
defined on Exhibit A.
RECITALS
A. The Selling Shareholders own or will own as of the Closing 9,723,455 shares
of the Common Stock of Assist (the "Shares"), which will constitute all of the
outstanding common stock of Assist as of the Closing.
B. The Selling Shareholders wish to exchange with Cayenta a total of 2,015,838
of the Shares for a total of 516,458 shares of Class A common stock of Cayenta
(the "Exchange") pursuant to Cayenta's plan adopted pursuant to Section 351 of
the Code (the "351 Plan") and pursuant to the terms set forth in this Agreement
(which are a part of the 351 Plan).
C. Concurrently with the Closing of the Exchange, Titan and the other
stockholders of Cayenta Sub will exchange all of the outstanding shares of
capital stock of Cayenta Sub for shares of capital stock of Cayenta in
accordance with the 351 Plan.
D. Concurrently with the Closing of the Exchange, the Selling Shareholders wish
to sell to Cayenta Sub a total of 7,707,617 of the Shares pursuant to the terms
set forth in this Agreement.
AGREEMENT
The parties to this Agreement agree as follows:
1. EXCHANGE OF SHARES TRANSACTION
1.1 Exchange of Shares. At the Closing, the Selling Shareholders shall
exchange, assign, transfer and deliver to Cayenta a total of 2,015,838 of the
Shares (the "Exchanged Shares") to Cayenta, and Cayenta shall exchange and
deliver to the Selling Shareholders a total of 516,458 shares of Class A common
stock, $.001 par value, of Cayenta (the "Cayenta Shares"), on the terms and
subject to the conditions set forth in this Agreement. Each of the Selling
Shareholders will exchange with Cayenta 20.7% of the total Shares owned by such
Selling Shareholder.
1.
<PAGE>
1.2 No Fractional Shares. No fractional shares of Cayenta common stock
shall be issued in the exchange with Cayenta, and no certificates for any such
fractional shares shall be issued. In lieu of such fractional shares, any
Selling Shareholder who would otherwise be entitled to receive a fraction of a
share of Cayenta common stock (after aggregating all fractional shares of
Cayenta Shares issuable to such holder) shall be paid in cash the dollar amount
(rounded to the nearest whole cent), without interest, determined by multiplying
such fraction by $6.58.
1.3 Cayenta Shares. The Cayenta Shares shall have the voting and other
rights set forth in the form of Amended and Restated Certificate of
Incorporation attached as Exhibit B. Each Cayenta Share shall be entitled to the
appraisal rights set forth in Section 1.4 and the co-sale, participation and
registration rights set forth in the Investor Rights Agreement attached as
Exhibit C hereto. In addition, each Cayenta Share shall be subject to the
restrictions on transfer and right of first refusal set forth in the Investor
Rights Agreement.
1.4 Appraisal Rights. In the event that the Class A common stock of
Cayenta (or any class of common stock of Cayenta for which the Class A common
stock held by the Selling Shareholders are exchanged) is not traded on a
national securities exchange or Nasdaq Stock Market within four years from the
Closing Date, then the Selling Shareholders holding at least 50% of the Cayenta
Shares may require Cayenta to engage a nationally recognized investment banking
firm to determine the Fair Market Value of the Cayenta Class A Common Stock upon
terms usual for engagements of this type. The "Fair Market Value" shall mean the
fair market value of the business of Cayenta as determined by such investment
banking firm utilizing and weighing in its sole discretion applicable generally
accepted enterprise valuation methodologies which may include the market
multiple approach, earnings approach, net asset value approach and discounted
cash flow approach based upon the financial statements of Cayenta and
projections prepared by Cayenta using reasonable assumptions and without
reflecting any minority or restricted stock discounts. To the extent consistent
with generally accepted enterprise valuation methodologies, the investment
banking firm may consider the consideration that Cayenta would receive upon the
exercise of outstanding options or warrants included in the fully diluted
capitalization of Cayenta (on a discounted or other appropriate basis). The
"Fair Market Value per Share" shall be determined based upon the fully diluted
capitalization of Cayenta. If the Agent does not agree with the investment
banking firm's determination of the Fair Market Value per Share, then the Agent
may engage, at the Selling Shareholders' expense, a second nationally recognized
investment banking firm to determine the Fair Market Value per Share of the
Class A common stock of Cayenta upon terms usual for engagements of this type.
If the two investment banking firms cannot agree upon a Fair Market Value per
Share within 45 days after the engagement of the second investment banking firm,
then the two investment banking firms shall designate a third investment banking
firm to determine a Fair Market Value per Share within the range of the Fair
Market Value per Share determinations of the other two investment banking firms.
The third investment banking firm's determination shall be final and binding on
Cayenta and the Selling Shareholders. For a period of 90 days after the final
determination of the Fair Market Value per Share (the "Put Period"), each of the
Selling Shareholders who continue to hold Cayenta Shares shall have a right to
put the Cayenta Shares to Titan for purchase at the Fair Market Value per Share
(the "Put Right"). If the Put Right is not exercised within the Put Period, then
Titan shall have the right for a period of 90 days following the final day of
the Put Period to call the Cayenta Shares from any or all of the Selling
2.
<PAGE>
Shareholders (the "Call Right") at the Fair Market Value per Share. The closing
of each exercise of Put Right or the Call Right shall occur within 30 days after
the exercise of the applicable Put Right by each Selling Shareholder or the Call
Right by Titan. Titan may pay the purchase price in cash or in freely tradable
shares of common stock of Titan so long as Titan common stock is then traded on
the New York Stock Exchange or the Nasdaq Stock Market. If Titan elects to use
common stock of Titan, the number of shares of Titan common stock given for each
share of the Cayenta Shares sold will be determined by dividing the Fair Market
Value per Share by the average closing price of a share of Titan common stock on
the New York Stock Exchange (or its principal exchange or market, if not the New
York Stock Exchange) for the 20 trading days ending immediately prior to the
closing date for the put or the call transaction as reported in the Wall Street
Journal.
1.5 Closing. The closing of the Exchange and the closing of the purchase
and sale of the Purchased Shares (as defined in Section 2.1) in accordance with
Section 1.5 (the "Closing") shall take place at the offices of Cooley Godward,
LLP, 4365 Executive Drive, Suite 1100, San Diego, CA 92121 at 10:00 a.m.
(California time) on the later of December 13, 1999 or the date two business
days following the satisfaction of all conditions to the Closing (or at such
other place or time as Cayenta and the Agent may jointly designate). For
purposes of this Agreement: "Scheduled Closing Time" shall mean the time and
date as of which the Closing is required to take place pursuant to this Section
1.5; and "Closing Date" shall mean to the time and date as of which the Closing
actually takes place. At the Closing, the Selling Shareholders shall deliver to
Cayenta the stock certificates representing the Exchanged Shares, duly endorsed
(or accompanied by duly executed stock powers) and Cayenta shall deliver to each
Selling Shareholder stock certificates for the Cayenta Shares issuable to each
such Selling Shareholder.
2. SALE AND PURCHASE OF SHARES.
2.1 Sale and Purchase of Shares. At the Closing, the Selling Shareholders
shall sell, assign, transfer and deliver a total of 7,707,617 Shares (the
"Purchased Shares") to Cayenta Sub, and Cayenta Sub shall purchase the Purchased
Shares from the Selling Shareholders, on the terms and subject to the conditions
set forth in this Agreement. Each of the Selling Shareholders will sell to
Cayenta Sub 79.3% of the total Shares owned by such Selling Shareholder. At the
Closing, the Selling Shareholders shall deliver to Cayenta the stock
certificates representing the Purchased Shares, duly endorsed (or accompanied by
duly executed stock powers), and Cayenta shall deliver the First Installment of
the Purchase Price to the Agent.
2.2 Purchase Price.
(a) For purposes of this Agreement:
(i) The "Applicable Fraction" shall mean the fraction
determined by dividing one by 7,707,617, which is the total number of Purchased
Shares.
(ii) "Debt" means all debt of Assist, including without
limitation, bank indebtedness, related party debt, redeemable nonconvertible
preferred stock, subordinated debt, intercompany debt, the redemption price of
the Series A preferred stock, including accrued but unpaid dividends on Series A
preferred stock and the redemption price of the Series B preferred
3.
<PAGE>
stock, and capital leases, but excluding trade payables and other current
liabilities incurred or made in the ordinary course of business and consistent
with past practices (e.g. payroll and commissions). The current portion of any
principal or interest on any indebtedness shall constitute Debt regardless of
whether it is classified as a current liability under GAAP. "Net Debt" means
Debt as of the Closing Date minus $3,100,000.00.
(iii) The "First Installment" shall be the Purchase Price less
$3,000,000.00.
(iv) The "Second Installment" shall be the Purchase Price less
(a) the First Installment, (b) $1,300,000.00 and (c) any setoffs made in
accordance with Section 11.7 of this Agreement, with interest on the Second
Installment at the rate of 8% per annum accruing from the Closing Date to the
payment date of the Second Installment.
(v) The "Third Installment" shall be the Purchase Price less
(a) the First Installment, (b) the Second Installment and (c) any setoffs made
in accordance with Section 11.7 of this Agreement, with interest on the Third
Installment at the rate of 8% per annum accruing from the Closing Date to the
payment date of the Third Installment.
(vi) The "Purchase Price" shall be $13,000,000.00 less
(without duplication) (a) each dollar of Net Debt as of the Closing Date, (b)
each dollar of negative Working Capital as of the Closing Date, (c) each dollar
of Transaction Expenses as defined in Section 12.5 and (d) each dollar paid by
Assist for the termination of outstanding options or warrants to acquire Assist
common stock. The Purchase Price shall be increased by an amount equal to (x)
the aggregate cash received by Assist in connection with the exercise of vested
options or warrants to acquire Assist common stock and (y) the aggregate amount
of any Debt (excluding any Net Debt) cancelled in connection with the exercise
of any warrants to acquire Assist capital stock. The Purchase Price shall be
calculated at the Closing using an estimate of the Working Capital as of the
Closing Date. The final determination of the Purchase Price shall be determined
based upon the post-closing audit conducted in accordance with Section 2.3.
(b) The Purchase Price shall be payable by Cayenta Sub as follows:
(i) The First Installment shall be deliverable as of the
Closing against delivery of the stock certificates at the Closing in accordance
with Section 2.3. The First Installment shall be paid to the Agent for
distribution to the Selling Shareholders. Each Selling Shareholder will receive
the Applicable Fraction of the First Installment for each of the Purchased
Shares owned by such Selling Shareholder.
(ii) The Second Installment shall be paid on the second
business day following the completion of the audit and the determination of any
adjustments to the Purchase Price pursuant to Section 2.3. Each Selling
Shareholder will receive the Applicable Fraction of the Second Installment for
each of the Purchased Shares owned by such Selling Shareholder. The Second
Installment shall be paid to the Agent for distribution to the Selling
Shareholders. Cayenta Sub's obligation to make the payment contemplated by this
Section 2.2(b)(ii) shall be subject to any right of setoff that Cayenta Sub may
be entitled to exercise (pursuant to Section 11.7). In addition, if Cayenta Sub
shall have made in good faith any claim for
4.
<PAGE>
indemnification against any of the Selling Shareholders pursuant to this
Agreement and such claim shall not have been setoff in accordance with Section
11.7, then Cayenta Sub may withhold a good faith estimate of such claim (and the
associated interest) from the Second Installment and pay the remaining portion
of the Second Installment with interest on the portion paid.
(iii) The Third Installment shall be payable on the first
business day after the eighteen-month anniversary of the Closing Date (or on
such earlier date as Cayenta Sub may elect). Each Selling Shareholder will
receive the Applicable Fraction of the Third Installment for each of the
Purchased Shares owned by such Selling Shareholder. The Third Installment shall
be paid to the Agent for the distribution to the Selling Shareholders. Cayenta
Sub's obligation to make the payment contemplated by this Section 2.2(b)(iii)
shall be subject to any right of setoff that Cayenta Sub may be entitled to
exercise (pursuant to Section 11.7). In addition, if Cayenta Sub shall have made
in good faith any claim for indemnification against any of the Selling
Shareholders pursuant to this Agreement and such claim shall not have been
setoff in accordance with Section 11.7, then Cayenta Sub may withhold a good
faith estimate of such claim (and the associated interest) from the Third
Installment and pay the remaining portion of the Third Installment with interest
on the portion paid.
(c) Cayenta Sub shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable to any holder or former holder of
capital stock of Assist pursuant to this Agreement such amounts as Cayenta Sub
or Assist may be required to deduct or withhold therefrom under the Code or
under any provision of state, local or foreign tax law (or, in the alternative,
Cayenta Sub at its option may request tax information and other documentation so
no withholding is necessary). To the extent such amounts are so deducted or
withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the Person to whom such amounts would otherwise have been
paid.
2.3 Post-Closing Adjustment.
(a) The Purchase Price shall be subject to post-closing adjustment
as follows: the Purchase Price shall be reduced dollar for dollar to the extent
of any negative Working Capital as of the Closing Date as shown on the Audited
Balance Sheet that was not deducted in determining the Purchase Price on the
Closing Date and shall be reduced by any Net Debt, as shown on the Audited
Balance Sheet, that was not deducted in determining the Purchase Price on the
Closing Date. The foregoing adjustments shall be made without double counting
any single item of debt in both the calculation of Working Capital and the
determination of Debt.
(b) Within 90 days following the Closing, Arthur Andersen LLP
("Arthur Andersen") shall audit Assist's balance sheet as of the Closing Date
(the "Closing Balance Sheet") and Assist's statements of operations, changes in
shareholders' equity and cash flows for the period from January 1, 1999 to and
including the Closing Date for conformity to GAAP and issue a draft report
thereon. Cayenta Sub shall provide to Agent a copy of the draft report. Any
adjustment to the Closing Balance Sheet proposed by Arthur Andersen, including
adjustments to Working Capital, shall be subject to review by auditors retained
by the Selling Shareholders (the "Assist Auditors") which review shall be
completed no later than 30 days after the Agent receives the report from Arthur
Andersen. If the opinions of Arthur Andersen and the Assist
5.
<PAGE>
Auditors differ as to the necessity of the adjustment, a third auditing firm
mutually agreeable to Cayenta Sub and the Agent shall be selected to review the
disputed adjustments. The decision of the third independent auditing firm shall
be made no later than 30 days after the selection and engagement of such firm.
The decision of the third independent auditing firm regarding any such
adjustment shall be binding on the parties. The final determination of the
amounts payable hereunder shall be based on the final determination of the
Working Capital as set forth in the final audited Closing Balance Sheet (the
"Audited Balance Sheet") and each component in the calculation of such amounts
shall be made using the Audited Balance Sheet. Cayenta Sub shall be responsible
for the fees and expenses of Arthur Andersen and the Selling Shareholders shall
be responsible for the fees and expenses of the Assist Auditors. Notwithstanding
anything in this Agreement to the contrary, if the services of a third
independent auditing firm are required pursuant to this Section, Cayenta Sub and
the Agent (on behalf of the Selling Shareholders) shall each bear and pay 50% of
all fees and expenses of such auditing firm.
3. REPRESENTATIONS AND WARRANTIES OF ASSIST AND SELLING SHAREHOLDERS
Except as set forth in the disclosure schedules attached hereto (each a
"Schedule," and collectively, the "Disclosure Schedule"), as of the date of this
Agreement and as of the Closing, Assist and each of the Selling Shareholders
jointly but not severally represents and warrants, to and for the benefit of the
Indemnitees, as follows:
3.1 Due Organization; No Subsidiaries; Etc.
(a) Assist is a corporation duly organized, validly existing and in
good standing under the laws of the State of Utah and has all necessary power
and authority:
(i) to conduct its business in the manner in which its
business is currently being conducted;
(ii) to own and use its assets in the manner in which its
assets are currently owned and used; and
(iii) to perform its obligations under all Assist Contracts.
(b) Assist has never conducted any business under or otherwise used,
for any purpose or in any jurisdiction, any fictitious name, assumed name, trade
name or other name, other than the names "Assist International Inc.",
"Interactive Systems, Inc.", "McMillan, Schow and Pynes, Inc."
(c) Assist is not required to be qualified, authorized, registered
or licensed to do business as a foreign corporation in any jurisdiction other
than the jurisdictions identified in Part 3.1 of the Disclosure Schedule. Assist
is in good standing as a foreign corporation in each of the jurisdictions
identified in Part 3.1 of the Disclosure Schedule.
(d) Part 3.1 of the Disclosure Schedule accurately sets forth (i)
the names of the members of Assist's board of directors, (ii) the names of the
members of each committee of Assist's board of directors, and (iii) the names
and titles of Assist's officers.
6.
<PAGE>
(e) Neither Assist nor any of its shareholders has ever approved, or
commenced any proceeding or made any election contemplating, the dissolution or
liquidation of Assist or the winding up or cessation of Assist's business or
affairs.
(f) Assist has no subsidiaries, and Assist has never owned,
beneficially or otherwise, any shares or other securities of, or any direct or
indirect interest of any nature in, any Entity other than a shell subsidiary
that was dissolved. Assist has not agreed and is not obligated to make any
future investment in or capital contribution to any other Entity.
3.2 Certificate of Incorporation and Bylaws; Records.
(a) Assist has delivered to Cayenta accurate and complete copies of:
(i) Assist's certificate of incorporation and bylaws,
including all amendments thereto;
(ii) the stock records of Assist; and
(iii) the minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) of the shareholders of Assist, the board of directors of Assist and
all committees of the board of directors of Assist.
There have been no officially called and noticed meetings or other
proceedings of the shareholders of Assist, the board of directors of Assist or
any committee of the board of directors of any of Assist that are not fully
reflected in such minutes or other records.
(b) There has not been any violation of any of the provisions of
Assist's certificate of incorporation or bylaws or of any resolution adopted by
Assist's shareholders, Assist's board of directors or any committee of Assist's
board of directors; and no event has occurred, and no condition or circumstance
exists, that might (with or without notice or lapse of time) constitute or
result directly or indirectly in such a violation.
(c) The books of account, stock records, minute books and other
records of Assist are accurate, up-to-date and complete in all material
respects, and have been maintained in accordance with sound and prudent business
practices. All of the records of Assist are in the actual possession and direct
control of Assist. Assist has in place an adequate and appropriate system of
internal controls which is at least as comprehensive and effective as the
systems of internal controls customarily maintained by Comparable Entities.
3.3 Capitalization, Etc.
(a) The authorized capital stock of Assist consists of:
(i) 20,000,000 shares of common stock having a par value of
$.001 per share, of which 4,661,645 shares have been issued and are outstanding
as of the date of this Agreement and of which 9,723,455 shares shall have been
issued and shall be outstanding as of
7.
<PAGE>
the Closing Date following the exercise of all then outstanding options and
warrants to acquire common stock of Assist;
(ii) 12,800 shares of preferred stock having a par value of
$.001 per share, of which 6,200 have been designated Series A preferred stock
and 6,600 have been designated Series B preferred stock. 6,200 shares of Series
A preferred are issued and outstanding and are convertible into 413,333 shares
of common stock of Assist. 5000 shares of Series B preferred stock are issued
and outstanding, none of which is convertible into common stock of Assist; and
(iii) Cayenta will acquire at the Closing, good and valid
title to the Exchanged Shares free and clear of any Encumbrances. Cayenta Sub
will acquire at the Closing, good and valid title to the Purchased Shares free
and clear of any Encumbrances. All of such Shares are owned by the Selling
Shareholders in the amounts indicated on the Schedule of Shareholders attached
as Part 3.3(a) and are being sold to Cayenta hereunder.
(b) All of the Exchanged Shares and all of the Purchased Shares (i)
have been duly authorized and validly issued, (ii) are fully paid and
non-assessable, (iii) were issued in compliance with any applicable preemptive
or similar rights and (iv) have been issued in full compliance with all
applicable securities laws and other applicable Legal Requirements and in
compliance with all applicable Contracts. The Selling Shareholders have
delivered or, at the Closing shall deliver, to Cayenta and Cayenta Sub,
respectively, accurate and complete copies of the stock certificates evidencing
the Exchanged Shares and the Cayenta Shares.
(c) Except as set forth in Part 3.3 of the Disclosure Schedule,
there is no:
(i) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any shares of the capital
stock or other securities of Assist;
(ii) outstanding security, instrument or obligation that is or
may become convertible into or exchangeable for any shares of the capital stock
or other securities of Assist;
(iii) Contracts under which Assist is or may become obligated
to sell or otherwise issue any shares of its capital stock or any other
securities; or
(iv) condition or circumstance that may directly or indirectly
give rise to or provide a basis for the assertion of a claim by any Person to
the effect that such Person is entitled to acquire or receive any shares of
capital stock or other securities of Assist.
(d) Except as set forth in Part 3.3 of the Disclosure Schedule,
Assist has never repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities. All securities so reacquired by Assist were
reacquired in full compliance with the applicable provisions of the Utah Revised
Business Corporations Act and with all other applicable Legal Requirements.
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3.4 Financial Statements.
(a) Assist has delivered to Cayenta the following financial
statements and notes (collectively, the "Assist Financial Statements"):
(i) the audited balance sheet of Assist as of December 31,
1998, and the related audited consolidated statements of operations, changes in
shareholders' equity and cash flows of Assist for the year then ended, together
with the notes thereto and the unqualified report and certification of Ernst &
Young LLP relating thereto;
(ii) the audited balance sheet of Assist as of December 31,
1997, and the related audited statements of operations, changes in shareholders'
equity and cash flows of Assist for the year then ended, together with the notes
thereto and the unqualified report and certification of Ernst & Young LLP
relating thereto; and
(iii) the unaudited balance sheet of Assist as of September
30, 1999 (the "Unaudited Interim Balance Sheet"), and the related unaudited
statements of operations, changes in shareholders' equity and cash flows of
Assist for the nine months then ended.
(b) All of the Assist Financial Statements are accurate and complete
in all material respects The financial statements and notes referred to in
Section 3.4(a)(i) present fairly the financial position of Assist as of December
31, 1998 and the results of operations, changes in shareholders' equity and cash
flows of Assist for the year then ended. The financial statements and notes
referred to in Sections 3.4(a)(ii) and 3.4(a)(iii) present fairly the financial
position of Assist as of the respective dates thereof and the results of
operations, changes in shareholders' equity and cash flows of Assist for the
periods covered thereby. The Assist Financial Statements have been prepared in
accordance with generally accepted accounting principles, applied on a
consistent basis throughout the periods covered, except that the financial
statements referred to in Section 3.4(a)(iii) do not contain footnotes and are
subject to normal recurring year-end audit adjustment consistent with Assist
past practices.
3.5 Absence of Changes. Except as set forth in Part 3.5 of the Disclosure
Schedule, since December 31, 1998
(a) there has not been any material adverse change in Assist's
business, condition, assets, liabilities, operations, financial performance or
net income (or in any aspect or portion thereof), and no event has occurred that
might have a material adverse effect on Assist's business, condition, assets,
liabilities, operations, financial performance or net income (or on any aspect
or portion thereof);
(b) there has not been any material loss, damage or destruction to,
or any material interruption in the use of, any of Assist's assets (whether or
not covered by insurance);
(c) Assist has not (i) declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, or (ii) repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
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(d) Assist has not sold or otherwise issued any shares of capital
stock or any other securities;
(e) Assist has not amended its certificate of incorporation or
bylaws and has not effected or been a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(f) Assist has not purchased or otherwise acquired any asset from
any other Person, except for supplies and equipment acquired by Assist in the
Ordinary Course of Business;
(g) Assist has not leased or licensed any asset from any other
Person that is either incorporated in any product or service sold by Assist or
that had lease or license payments that exceeded $25,000 since December 31,
1998;
(h) Assist has not made any capital expenditure in excess of $20,000
per item and $200,000 in the aggregate;
(i) Assist has not sold or otherwise transferred, and has not leased
or licensed, any asset to any other Person except for products sold or licensed
by Assist from its inventory in the Ordinary Course of Business;
(j) Assist has not written off as uncollectible, or established any
extraordinary reserve with respect to, any individual account receivable in an
amount of more than $20,000 or other indebtedness owing to Assist or
collectively in an amount of more than $200,000;
(k) Assist has not pledged or hypothecated any of its assets or
otherwise permitted any of its assets to become subject to any Encumbrance;
(l) Assist has not made any loan or advance to any other Person;
(m) Assist has not (i) established or adopted any Employee Benefit
Plan, or (ii) paid any bonus or made any profit-sharing or similar payment to
any directors, officers or employees other than pursuant to Employee Benefit
Plans that were established or adopted prior to December 31, 1998 and that were
not amended since December 31, 1998, in amounts consistent with prior bonus or
profit-sharing amounts, or increased the amount of the wages, salary,
commissions, fringe benefits or other compensation or remuneration payable to,
any of its directors, officers or employees;
(n) Assist has not entered into, and neither Assist nor any of the
assets owned or used by Assist has become bound by, any Contract that is not an
Excluded Contract;
(o) no Contract by which Assist or any of the assets owned or used
by Assist is or was bound, or under which Assist has or had any rights or
interest (other than an Excluded Contract), has been amended or terminated;
(p) Assist has not incurred, assumed or otherwise become subject to
any Liability, other than accounts payable (of the type required to be reflected
as current liabilities in
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the "liabilities" column of a balance sheet prepared in accordance with GAAP)
incurred by Assist in the Ordinary Course of Business;
(q) Assist has not discharged any Encumbrance or discharged or paid
any indebtedness or other Liability, except for accounts payable that (i) are
reflected as current liabilities in the "liabilities" column of the Unaudited
Interim Balance Sheet or have been incurred by Assist since September 30, 1999
in the Ordinary Course of Business, and (ii) have been discharged or paid in the
Ordinary Course of Business;
(r) Assist has not forgiven any debt or otherwise released or waived
any material right or claim;
(s) Assist has not changed any of its methods of accounting or
accounting practices in any respect;
(t) Assist has not entered into any transactions or taken any other
action outside the Ordinary Course of Business; and
(u) Assist has not agreed, committed or offered (in writing or
otherwise) to take any of the actions referred to in clauses "(c)" through "(t)"
above.
3.6 Title to Assets.
(a) Assist owns, and has good, valid and marketable title to, all
assets purported to be owned by it, including:
(i) all assets reflected on the Unaudited Interim Balance
Sheet (except for inventory sold by Assist since September 30, 1999 in the
Ordinary Course of Business);
(ii) all assets acquired by Assist since September 30, 1999
(except for inventory sold by Assist since September 30, 1999 in the Ordinary
Course of Business);
(iii) all assets referred to in Parts 3.8, 3.10 and 3.12 of
the Disclosure Schedule and all of Assist's rights under Assist Contracts; and
(iv) all other assets reflected in Assist's books and records
as being owned by Assist.
Except as set forth in Part 3.6 of the Disclosure Schedule, all of said
assets are owned by Assist free and clear of any Encumbrances except for any
lien for Taxes that are not yet due and payable.
(b) Part 3.6 of the Disclosure Schedule identifies all assets that
are being leased or licensed to Assist (except for any Proprietary Asset that is
licensed to Assist under any third party software license generally available to
the public at a cost of less than $1,000 per copy).
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3.7 Bank Accounts. Part 3.7 of the Disclosure Schedule accurately sets
forth, with respect to each account maintained by or for the benefit of Assist
at any bank or other financial institution:
(a) the name and location of the institution at which such account
is maintained;
(b) the name in which such account is maintained and the account
number of such account;
(c) a description of such account and the purpose for which such
account is used;
(d) the current balance in such account;
(e) the rate of interest being earned on the funds in such account;
and
(f) the names of all individuals authorized to draw on or make
withdrawals from such account.
Except as provided in Part 3.7 of the Disclosure Schedule, there are no
safe deposit boxes or similar arrangements maintained by or for the benefit of
Assist.
3.8 Receivables; Major Customers.
(a) Part 3.8 of the Disclosure Schedule provides an accurate and
complete breakdown and aging of all accounts receivable, notes receivable and
other receivables of Assist as of September 30, 1999.
(b) Except as set forth in Part 3.8 of the Disclosure Schedule, all
existing accounts receivable of Assist (including those accounts receivable
reflected on the Unaudited Interim Balance Sheet that have not yet been
collected and those accounts receivable that have arisen since September 30,
1999 and have not yet been collected):
(i) represent valid obligations of customers of Assist arising
from bona fide transactions entered into in the Ordinary Course of Business; and
(ii) are current and will be collected in full (without any
counterclaim or setoff, subject to write-offs for bad debt not to exceed the
reserve for bad debt on the Interim Balance Sheet) or in the Ordinary Course of
Business consistent with Assist's historical collection experience.
(c) No customer has accounted for more than 10% of Assist annual
revenues in each of its fiscal years ended December 31, 1997 and December 31,
1998 and on an annualized basis during the fiscal year ending December 31, 1999.
3.9 Inventory. Part 3.9 of the Disclosure Schedule provides an accurate
and complete breakdown of all inventory (including raw materials, work in
process and finished
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goods) of Assist as of September 30, 1999. All of Assist's existing inventory
(including all inventory that is reflected on the Unaudited Interim Balance
Sheet and that has not been disposed of by Assist since September 30, 1999):
(a) is of such quality and quantity as to be usable and saleable by
Assist in the Ordinary Course of Business;
(b) has been priced at the lower of cost or market value; and
(c) is free of any material defect or deficiency that is not covered
through a third party manufacturer's warranty.
The inventory levels maintained by Assist (i) are not excessive in light
of Assist's normal operating requirements, and (ii) are adequate for the conduct
of Assist's operations in the Ordinary Course of Business.
3.10 Equipment, Etc.
(a) Part 3.10 of the Disclosure Schedule accurately identifies all
equipment, furniture, fixtures, improvements and other tangible assets (other
than inventory) owned by Assist. Part 3.10 also accurately identifies all
tangible assets leased to Assist.
(b) Each asset identified or required to be identified in Part 3.10
of the Disclosure Schedule:
(i) is structurally sound, free of material defects and
deficiencies and in good condition and repair (ordinary wear and tear excepted);
(ii) complies in all respects with, and is being operated and
otherwise used in full compliance with, all applicable Legal Requirements; and
(iii) is adequate for the uses to which it is being put.
The assets identified in Part 3.10 of the Disclosure Schedule are adequate
for the conduct of Assist's business in the manner in which such business is
currently being conducted.
3.11 Real Property. Assist does not own any real property or any interest
in real property, except for the leaseholds created under the real property
leases identified in Part 3.13 of the Disclosure Schedule. Part 3.11 of the
Disclosure Schedule provides an accurate description of the premises covered by
said leases and the facilities located on such premises. Assist enjoys peaceful
and undisturbed possession of such premises.
3.12 Proprietary Assets.
(a) Part 3.12(a) of the Disclosure Schedule sets forth, with respect
to each Proprietary Asset of Assist registered with any Governmental Body or for
which an application has been filed with any Governmental Body, (i) a brief
description of such Assist Proprietary Asset, and (ii) the names of the
jurisdictions covered by the applicable registration or application.
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Part 3.12(a) of the Disclosure Schedule identifies and provides a brief
description of all other material Proprietary Assets owned by Assist. Part
3.12(a) of the Disclosure Schedule identifies and provides a brief description
of each Proprietary Asset licensed to Assist by any Person (except for any
Proprietary Asset that is licensed to Assist under any third party software
license generally available to the public at a cost of less than $1,000 per
copy), and identifies the license agreement under which such Proprietary Asset
is being licensed to Assist. Except as set forth in Part 3.12(a) of the
Disclosure Schedule, Assist has good, valid and marketable title to all of the
Proprietary Assets used in its business free and clear of all liens and other
Encumbrances, and has a valid right (contractual or otherwise) to use all
Proprietary Assets identified in Part 3.12(a) of the Disclosure Schedule. Except
as set forth in Part 3.12(a) of the Disclosure Schedule, Assist is not obligated
to make any payment to any Person for the use of any Proprietary Asset. Except
as set forth in Part 3.12(a) of the Disclosure Schedule, Assist has not
developed jointly with any other Person any Proprietary Asset with respect to
which such other Person has any rights.
(b) Assist has taken all commercially reasonable measures and
precautions to protect and maintain the confidentiality and secrecy of all
Proprietary Assets (except Proprietary Assets whose value would be unimpaired by
public disclosure) and otherwise to maintain and protect the value of all
Proprietary Assets. Except as set forth in Part 3.12(a) of the Disclosure
Schedule, Assist has not disclosed or delivered to any Person, or permitted the
disclosure or delivery to any Person of, (i) the source code, or any portion or
aspect of the source code, of any Proprietary Asset, or (ii) the object code, or
any portion or aspect of the object code, of any Proprietary Asset.
(c) None of the Proprietary Assets infringes or conflicts with any
Proprietary Asset owned or used by any other Person except for any inadvertent
infringement of which Assist is unaware that does not impose any material
liability on Assist or cause Assist to spend any material amount to replace any
Proprietary Assets. Assist is not infringing, misappropriating or making any
unlawful use of, and Assist has not at any time infringed, misappropriated or
made any unlawful use of, or received any notice or other communication (in
writing or otherwise) of any actual, alleged, possible or potential
infringement, misappropriation or unlawful use of, any Proprietary Asset owned
or used by any other Person. To the Knowledge of Assist, no other Person is
infringing, misappropriating or making any unlawful use of, and no Proprietary
Asset owned or used by any other Person infringes or conflicts with, any
Proprietary Asset.
(d) Except as set forth in Part 3.12(d) of the Disclosure Schedule:
(i) each Proprietary Asset conforms in all material respects with any
specification, documentation, performance standard, representation or statement
made or provided with respect thereto by or on behalf of Assist; and (ii) during
the last 24 months, there has not been any material claim by any customer or
other Person alleging that any Proprietary Asset (including each version thereof
that has ever been licensed or otherwise made available by Assist to any Person)
does not conform in all material respects with any specification, documentation,
performance standard, representation or statement made or provided by or on
behalf of Assist other than reports of programming errors that (x) occur or are
experienced from time to time by customers using Assist's products in a unique
or custom fashion, (y) have been resolved or are resolvable through Assist's
help desk (without the devotion of material additional resources) and (z) are
consistent
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with the experience of Comparable Entities, and, to the knowledge of Assist,
there is no basis for any such claim.
(e) Proprietary Assets constitute all the Proprietary Assets
necessary to enable Assist to conduct its business in the manner in which such
business has been and is being conducted. Except as set forth in Part 3.12(e) of
the Disclosure Schedule, (i) Assist has not licensed any of its Proprietary
Assets to any Person on an exclusive basis, and (ii) Assist has not entered into
any covenant not to compete or Contract limiting its ability to exploit fully
any of its Proprietary Assets or to transact business in any market or
geographical area or with any Person.
(f) Except as disclosed in Part 3.12 of the Disclosure Schedule, all
Proprietary Assets of Assist do not and will not contain any viruses, which
shall mean any computer code designed to disrupt, disable, harm, or otherwise
impede in any manner, the operation of the computer program, or any other
associated software, firmware, hardware, or network (including local area or
wide-area networks), in a manner not intended by the creator(s) of such
software, firmware, hardware, or network.
3.13 Contracts.
(a) Part 3.13 of the Disclosure Schedule identifies and provides an
accurate and complete description of each Assist Contract, except for any
Excluded Contract. Assist has delivered to Cayenta accurate and complete copies
of all Assist Contracts identified in Part 3.13 of the Disclosure Schedule,
including all amendments thereto.
(b) Each Assist Contract is valid and in full force and effect, and
is enforceable by Assist in accordance with its terms. No Assist Contract
contains any term or provision that is extraordinary for similar types of
commercial contracts or licenses.
(c) Except as set forth in Part 3.13 of the Disclosure Schedule:
(i) Assist has not violated or breached, or declared or
committed any default under, any Assist Contract and to Assist's Knowledge, no
other Person has violated, breached or committed any default under any Assist
Contract;
(ii) no event has occurred, and no circumstance or condition
exists, that reasonably might (with or without notice or lapse of time) (A)
result in a violation or breach of any of the provisions of any Assist Contract
by Assist or, to Assist's Knowledge by any Person other than Assist, (B) give
any Person (other than Assist) the right to declare a default or exercise any
remedy under any Assist Contract, (C) give any Person (other than Assist) the
right to accelerate the maturity or performance of any Assist Contract, or (D)
give any Person (other than Assist) the right to cancel, terminate or modify any
Assist Contract;
(iii) Assist has not received any notice or other
communication (in writing or otherwise) regarding any actual, alleged, possible
or potential violation or breach of, or default under, any Assist Contract; and
(iv) Assist has not waived any of its rights under any Assist
Contract.
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(d) To the Knowledge of Assist, none of its customers under existing
Assist Contracts is insolvent or unable to satisfy its current or future
monetary obligations and other obligations and Liabilities to Assist.
(e) Except as set forth in Part 3.13 of the Disclosure Schedule:
(i) Assist has never guaranteed or otherwise agreed to cause,
insure or become liable for, and Assist has never pledged any of its assets to
secure, the performance or payment of any obligation or other Liability of any
other Person; and
(ii) Assist has never been a party to or bound by (A) any
joint venture agreement, partnership agreement, profit-sharing agreement,
cost-sharing agreement, loss-sharing agreement or similar Contract, or (B) any
Contract that creates or grants to any Person, or provides for the creation or
grant of, any stock appreciation right, phantom stock right or similar right or
interest.
(f) The performance of the Assist Contracts will not result in any
violation of or failure to comply with any material Legal Requirement.
(g) No Person is renegotiating, or has the right to renegotiate, any
amount paid or payable to Assist under any Assist Contract or any other term or
provision of any Assist Contract.
(h) The Contracts identified in Part 3.13 of the Disclosure Schedule
and the Excluded Contracts collectively constitute all of the Contracts
necessary to enable Assist to conduct its business in the manner in which its
business is currently being conducted.
(i) Part 3.13 of the Disclosure Schedule identifies and provides an
accurate and complete description of each proposed Contract as to which any bid,
offer, award, written proposal, term sheet or similar document has been
submitted or received by Assist since September 30, 1999.
3.14 Liabilities; Major Suppliers.
(a) Assist has no Liabilities, except for:
(i) liabilities identified as such in the "liabilities" column
of the Unaudited Interim Balance Sheet;
(ii) accounts payable (of the type required to be reflected as
current liabilities in the "liabilities" column of a balance sheet prepared in
accordance with GAAP) incurred by Assist in the Ordinary Course of Business
since September 30, 1999; and
(iii) Assist's obligations under the Contracts listed in Part
3.13 of the Disclosure Schedule and under Excluded Contracts, to the extent that
the existence of such obligations is ascertainable solely by reference to such
Contracts.
(b) Part 3.14 of the Disclosure Schedule:
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(i) provides an accurate and complete breakdown and aging of
Assist's accounts payable as of September 30, 1999;
(ii) provides an accurate and complete breakdown of all
customer deposits and other deposits held by Assist as of the date of this
Agreement; and
(iii) provides an accurate and complete breakdown of Assist's
long-term debt as of the date of this Agreement.
(c) Assist has not paid, and Assist is not and will not become
liable for the payment of, any fees, costs or expenses of the type referred to
in Section 12.5(a).
(d) Part of the Disclosure Schedule accurately identifies, and
provides an accurate and complete breakdown of the amounts paid to, each
supplier or other Person that received (i) more than $200,000 from Assist in
1997, (ii) more than $200,000 from Assist in 1998, or (iii) more than $150,000
from Assist in the first three quarters of 1999.
3.15 Compliance With Legal Requirements.
(a) Except as set forth in Part 3.15 of the Disclosure Schedule:
(i) Assist is in material compliance with each Legal
Requirement that is applicable to it or to the conduct of its business or the
ownership or use of any of its assets;
(ii) Assist has at all times been in material compliance with
each Legal Requirement that is or was applicable to it or to the conduct of its
business or the ownership or use of any of its assets;
(iii) no event has occurred, and no condition or circumstance
exists, that might (with or without notice or lapse of time) constitute or
result directly or indirectly in a violation by Assist of, or a failure on the
part of Assist to comply with, any material Legal Requirement; and
(iv) Assist has never received, at any time, any notice or
other communication (in writing or otherwise) from any Governmental Body or any
other Person regarding (i) any actual, alleged, possible or potential violation
of, or failure to comply with, any Legal Requirement, or (ii) any actual,
alleged, possible or potential obligation on the part of Assist to undertake, or
to bear all or any portion of the cost of, any cleanup or any remedial,
corrective or response action of any nature.
(b) Assist has delivered to Cayenta an accurate and complete copy of
each report, study, survey or other document in Assist's possession or if not in
Assist's possession of which it is aware and to which Assist has access that
addresses or otherwise relates to the compliance of Assist with, or the
applicability to Assist of, any Legal Requirement.
(c) To the Knowledge of Assist and the Selling Shareholders, no
Governmental Body has proposed or is considering any Legal Requirement that, if
adopted or otherwise put into effect, (i) may have an adverse effect on Assist's
business, condition, assets,
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liabilities, operations, financial performance, net income or prospects or on
the ability of Assist or any of the Selling Shareholders to comply with or
perform any covenant or obligation under any of the Transactional Agreements, or
(ii) may have the effect of preventing, delaying, making illegal or otherwise
precluding any of the Transactions.
3.16 Governmental Authorizations.
(a) Part 3.16 of the Disclosure Schedule identifies:
(i) each Governmental Authorization that is held by Assist;
and
(ii) each other Governmental Authorization that, to the
Knowledge of Assist and the Selling Shareholders, is held by any of Assist's
employees is necessary in connection with Assist's business.
Assist has delivered to Cayenta accurate and complete copies of all of the
Governmental Authorizations identified in Part 3.16 of the Disclosure Schedule,
including all renewals thereof and all amendments thereto. Each Governmental
Authorization identified or required to be identified in Part 3.16 of the
Disclosure Schedule is valid and in full force and effect.
(b) Except as set forth in Part 3.16 of the Disclosure Schedule:
(i) Assist and its employees are and have at all times been,
in material compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in Part 3.16
of the Disclosure Schedule;
(ii) no event has occurred, and no condition or circumstance
exists, that might (with or without notice or lapse of time) (A) constitute or
result directly or indirectly in a violation of or a failure to comply with any
material term or requirement of any Governmental Authorization identified or
required to be identified in Part 3.16 of the Disclosure Schedule, or (B) result
directly or indirectly in the revocation, withdrawal, suspension, cancellation,
termination or modification of any Governmental Authorization identified or
required to be identified in Part 3.16 of the Disclosure Schedule;
(iii) Assist has never received, and, to the Knowledge of
Assist, no employee of Assist has ever received, any notice or other
communication (in writing or otherwise) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible or potential violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or (B) any actual, proposed, possible or potential revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations required to be identified in Part
3.16 of the Disclosure Schedule have been duly filed on a timely basis with the
appropriate Governmental Bodies, and each other notice or filing required to
have been given or made with respect to such Governmental Authorizations has
been duly given or made on a timely basis with the appropriate Governmental
Body.
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(c) The Governmental Authorizations identified in Part 3.16 of the
Disclosure Schedule constitute all of the Governmental Authorizations necessary
(i) to enable Assist to conduct its business in the manner in which its business
is currently being conducted, and (ii) to permit Assist to own and use its
assets in the manner in which they are currently owned and used.
3.17 Tax Matters.
(a) Each Tax required to have been paid, or claimed by any
Governmental Body to be payable, by Assist (whether pursuant to any Tax Return
or otherwise) has been duly paid in full or on a timely basis. Any Tax required
to have been withheld or collected by Assist has been duly withheld and
collected; and (to the extent required) each such Tax has been paid to the
appropriate Governmental Body.
(b) Part 3.17 of the Disclosure Schedule accurately identifies all
Tax Returns required to be filed by or on behalf of Assist with any Governmental
Body with respect to any taxable period beginning January 1, 1993 and ending on
or before the Closing Date ("Assist Returns"). All Assist Returns (i) have been
or will be filed when due, and (ii) have been, or will be when filed, accurately
and completely prepared in compliance with all applicable Legal Requirements.
All amounts shown on the Assist Returns to be due on or before the Closing Date,
and all amounts otherwise payable in connection with the Assist Returns on or
before the Closing Date, have been or will be paid on or before the Closing
Date. Assist has delivered to Cayenta accurate and complete copies of all Assist
Returns filed since December 31, 1996.
(c) The Assist Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with GAAP. Assist will establish, in the Ordinary Course
of Business, reserves adequate for the payment of all Taxes for the period from
September 30, 1999 through the Closing Date, and Assist will disclose the dollar
amount of such reserves to Cayenta on or prior to the Closing Date.
(d) Each Assist Return relating to income Taxes that has been filed
with respect to any period ended on or prior to December 31, 1995 has either (i)
been examined and audited by all relevant Governmental Bodies, or (ii) by virtue
of the expiration of the limitation period under applicable Legal Requirements,
is no longer subject to examination or audit by any Governmental Body. Part 3.17
of the Disclosure Schedule accurately identifies each examination or audit of
any Assist Return that has been conducted since January 1, 1997. Assist has
delivered to Cayenta accurate and complete copies of all audit reports and
similar documents (to which Assist has access) relating to Assist Returns.
Except as set forth in Part 3.17 of the Disclosure Schedule, no extension or
waiver of the limitation period applicable to any of the Assist Returns has been
granted (by Assist or any other Person), and no such extension or waiver has
been requested from Assist.
(e) From inception through June 30, 1997, the Company was an S
corporation for federal tax purposes within the meaning of Section 1361(a)(1) of
the Code and the Company was not and is not subjection to the imposition of any
tax under Section 1374 of the Code for any period prior to the Company's
termination of its S corporation status effective June 30, 1997.
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(f) Except as set forth in Part 3.17 of the Disclosure Schedule, no
claim or other Proceeding is pending or has been threatened against or with
respect to Assist in respect of any Tax. There are no unsatisfied Liabilities
for Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by Assist. Assist has not entered into or has become
bound by any agreement or consent pursuant to Section 341(f) of the Code. Assist
will not be, required to include any adjustment in taxable income for any tax
period (or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of transactions
or events occurring, or accounting methods employed, prior to the Closing.
(g) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of Assist that, individually or collectively, could give
rise directly or indirectly to the payment of any amount that would not be
deductible pursuant to Section 280G or Section 162 of the Code. Assist is not,
and has never been, a party to or bound by any tax indemnity agreement, tax
sharing agreement, tax allocation agreement or similar Contract.
3.18 Employee and Labor Matters.
(a) Part 3.18 of the Disclosure Schedule accurately sets forth, with
respect to each employee of Assist (including any employee of Assist who is on a
leave of absence or on layoff status):
(i) the name of such employee and the date as of which such
employee was originally hired by Assist;
(ii) such employee's title, and a description of such
employee's duties and responsibilities;
(iii) the aggregate dollar amount of the compensation
(including wages, salary, commissions, director's fees, fringe benefits,
bonuses, profit-sharing payments and other payments or benefits of any type)
received by such employee from Assist with respect to services performed in
1998;
(iv) such employee's annualized compensation as of the date of
this Agreement;
(v) each Current Benefit Plan in which such employee
participates or is eligible to participate; and
(vi) any Governmental Authorization that is held by such
employee and that is necessary in connection with Assist's business.
(b) Part 3.18 of the Disclosure Schedule accurately identifies each
former employee of Assist who is receiving or is scheduled to receive (or whose
spouse or other dependent is receiving or is scheduled to receive) any benefits
(whether from Assist or
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otherwise) relating to such former employee's employment with Assist; and Part
3.18 of the Disclosure Schedule accurately describes such benefits.
(c) Except as set forth in Part 3.18 of the Disclosure Schedule,
Assist is not a party to or bound by, and Assist has never been a party to or
bound by, any employment agreement or any union contract, collective bargaining
agreement or similar Contract.
(d) The employment of each of Assist's employees is terminable by
Assist at will. Assist has delivered to Cayenta accurate and complete copies of
all employee manuals and handbooks, disclosure materials, policy statements and
other materials relating to the employment of the current and former employees
of Assist.
(e) To the Knowledge of Assist and the Selling Shareholders:
(i) no employee of Assist intends to terminate his employment
with Assist;
(ii) no employee of Assist has received an offer to join a
business that may be competitive with Assist's business; and
(iii) no employee of Assist is a party to or is bound by any
confidentiality agreement, noncompetition agreement or other Contract (with any
Person) that may have a material adverse effect on (A) the performance by such
employee of any of his duties or responsibilities as an employee of Assist, or
(B) Assist's business or operations.
(f) Assist is not engaged, and has never been engaged, in any unfair
labor practice of any nature. There has never been any slowdown, work stoppage,
labor dispute or union organizing activity, or any similar activity or dispute,
affecting Assist or any of their employees. There is not now pending, and no
Person has threatened to commence, any such slowdown, work stoppage, labor
dispute or union organizing activity or any similar activity or dispute. No
event has occurred, and no condition or circumstance exists, that might directly
or indirectly give rise to or provide a basis for the commencement of any such
slowdown, work stoppage, labor dispute or union organizing activity or any
similar activity or dispute.
3.19 Benefit Plans; ERISA.
(a) Part 3.19 of the Disclosure Schedule identifies and provides an
accurate description of each Current Benefit Plan and each Past Benefit Plan.
Assist has never established, adopted, maintained, sponsored, contributed to,
participated in or incurred any Liability with respect to any Employee Benefit
Plan, except for Company Plans identified in Part 3.19 of the Disclosure
Schedule; and Assist has never provided or made available any fringe benefit or
other benefit of any nature to any of its employees, except as set forth in Part
3.19 of the Disclosure Schedule.
(b) No Company Plan:
(i) provides or provided any benefit guaranteed by the Pension
Benefit Guaranty Corporation;
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(ii) is or was a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA; or
(iii) is or was subject to the minimum funding standards of
Section 412 of the Code or Section 302 of ERISA.
There is no Person that (by reason of common control or otherwise) is or
has at any time been treated together with Assist as a single employer within
the meaning of Section 414 of the Code.
(c) Assist has delivered to Cayenta, with respect to each Company
Plan:
(i) an accurate and complete copy of such Company Plan and all
amendments thereto (including any amendment that is scheduled to take effect in
the future);
(ii) an accurate and complete copy of each Contract (including
any trust agreement, funding agreement, service provider agreement, insurance
agreement, investment management agreement or recordkeeping agreement) relating
to such Company Plan;
(iii) an accurate and complete copy of any description,
summary, notification, report or other document that has been furnished to any
employee of Assist with respect to such Company Plan;
(iv) an accurate and complete copy of any form, report,
registration statement or other document that has been filed with or submitted
to any Governmental Body with respect to such Company Plan; and
(v) an accurate and complete copy of any determination letter,
notice or other document that has been issued by, or that has been received by
Assist from, any Governmental Body with respect to such Company Plan.
(d) Each Current Benefit Plan is being operated and administered in
compliance in all material respects with the provisions thereof, and each
Company Plan has at all times been operated and administered in compliance in
all material respects with the provisions thereof. Each contribution or other
payment that is required to have been accrued or made under or with respect to
any Company Plan has been duly accrued and made on a timely basis.
(e) Each Current Benefit Plan complies and is being operated and
administered in compliance in all material respects with, and each Company Plan
has at all times complied and been operated and administered in full compliance
with, all applicable reporting, disclosure and other requirements of ERISA and
the Code and all other applicable Legal Requirements. Assist has never incurred
any Liability to the Internal Revenue Service or any other Governmental Body
with respect to any Company Plan; and no event has occurred, and no condition or
circumstance exists, that reasonably might (with or without notice or lapse of
time) give rise directly or indirectly to any such Liability. None of the
Companies, and no Person that is or was an administrator or fiduciary of any
Company Plan (or that Assists or has Assisted as an agent of Assist or any such
administrator or fiduciary), has engaged in any transaction or has otherwise
Assisted or failed to Assist in a manner that has subjected or may subject
Assist to any
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Liability for breach of any fiduciary duty or any other duty. No Company Plan,
and no Person that is or was an administrator or fiduciary of any Company Plan
(or that Assists or has Assisted as an agent of any such administrator or
fiduciary):
(i) has engaged in a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code;
(ii) has failed to perform any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA; or
(iii) has taken any action that (A) may subject such Company
Plan or such Person to any Tax, penalty or Liability relating to any "prohibited
transaction," or (B) may directly or indirectly give rise to or serve as a basis
for the assertion (by any employee or by any other Person) of any claim under,
on behalf of or with respect to such Company Plan.
(f) No inaccurate or misleading representation, statement or other
communication has been made or directed (in writing or otherwise) to any current
or former employee of Assist (i) with respect to such employee's participation,
eligibility for benefits, vesting, benefit accrual or coverage under any Company
Plan or with respect to any other matter relating to any Company Plan, or (ii)
with respect to any proposal or intention on the part of Assist to establish or
sponsor any Employee Benefit Plan or to provide or make available any fringe
benefit or other benefit of any nature.
(g) Except as set forth in Part 3.19 of the Disclosure Schedule,
Assist has not advised any of its employees (in writing or otherwise) that it
intends or expects to establish or sponsor any Employee Benefit Plan or to
provide or make available any fringe benefit or other benefit of any nature in
the future.
3.20 Environmental Matters.
(a) Assist is not liable or potentially liable for any response cost
or natural resource damages under Section 107(a) of CERCLA, or under any other
so-called "superfund" or "superlien" law or similar Legal Requirement, at or
with respect to any site.
(b) None of the Companies has ever received any notice or other
communication (in writing or otherwise) from any Governmental Body or other
Person regarding any actual alleged, possible or potential Liability arising
from or relating to the presence, generation, manufacture, production,
transportation, importation, use, treatment, refinement, processing, handling,
storage, discharge, release, emission or disposal of any Hazardous Material. No
Person has ever commenced or threatened to commence any contribution action or
other Proceeding against Assist in connection with any such actual, alleged,
possible or potential Liability; and no event has occurred, and no condition or
circumstance exists, that may directly or indirectly give rise to, or result in
Assist becoming subject to, any such Liability.
(c) Except as set forth in Part 3.20 of the Disclosure Schedule,
none of the Companies has ever generated, manufactured, produced, transported,
imported, used, treated, refined, processed, handled, stored, discharged,
released or disposed of any Hazardous Material (whether lawfully or unlawfully).
Except as set forth in Part 3.20 of the Disclosure Schedule,
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none of the Companies has ever permitted (knowingly or otherwise) any Hazardous
Material to be generated, manufactured, produced, used, treated, refined,
processed, handled, stored, discharged, released or disposed of (whether
lawfully or unlawfully):
(i) on or beneath the surface of any real property that is, or
that has at any time been, owned by, leased to, controlled by or used by Assist;
(ii) in or into any surface water, groundwater, soil or air
associated with or adjacent to any such real property; or
(iii) in or into any well, pit, pond, lagoon, impoundment,
ditch, landfill, building, structure, facility, improvement, installation,
equipment, pipe, pipeline, vehicle or storage container that is or was located
on or beneath the surface of any such real property or that is or has at any
time been owned by, leased to, controlled by or used by Assist.
(d) All property that is owned by, leased to, controlled by or used
by Assist, and all surface water, groundwater, soil and air associated with such
property:
(i) is free of any Hazardous Material and any harmful chemical
or physical conditions; and
(ii) is free of any material environmental contamination of
any nature.
(e) Each storage tank or other storage container that is or has been
owned by, leased to, controlled by or used by Assist, or that is located on or
beneath the surface of any real property owned by, leased to, controlled by or
used by Assist:
(i) is in sound condition; and
(ii) has been demonstrated by accepted testing methodologies
to be free of any corrosion or leaks.
3.21 Sale of Products; Performance of Services.
(a) Each product that has been sold by Assist and each service that
has been performed by any Assist for any Person:
(i) conformed and complied in all in all material respects
with the terms and requirements of any applicable warranty or other Contract and
with all applicable Legal Requirements; and
(ii) was free of any design defects, programming errors,
construction defects or other defects or deficiencies at the time of sale other
than programming errors that (x) occur or are experienced from time to time by
customers using Assist's products in a unique or custom fashion, (y) have been
resolved or are resolvable through Assist's help desk (without the devotion of
material additional resources) and (z) are consistent with the experience of
Comparable Entities. All design integration services, repair services,
technical, maintenance and other services that have been performed by the
Companies were performed properly and in full
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conformity with the terms and requirements of all applicable warranties and
other Contracts and with all applicable Legal Requirements.
(b) Assist will not incur or otherwise become subject to any
Liability arising directly or indirectly from any product manufactured or sold,
or any services performed by Assist on or at any time prior to the Closing Date
except for claims made on warranties in any Contracts entered into prior to the
Closing Date which shall not in the aggregate exceed the warranty reserve on the
Closing Balance Sheet.
(c) No product manufactured or sold by Assist has been the subject
of any recall or other similar action; and no event has occurred, and no
condition or circumstance exists, that might (with or without notice or lapse of
time) directly or indirectly give rise to or serve as a basis for any such
recall or other similar action relating to any such product.
(d) Except as set forth in Part 3.21 of the Disclosure Schedule, no
customer or other Person has ever asserted or threatened to assert any material
claim against Assist (i) under or based upon any warranty provided by or on
behalf of Assist, or (ii) under or based upon any other warranty relating to any
product sold by Assist or any services performed by Assist. To the Knowledge of
Assist and the Selling Shareholders, no event has occurred, and no condition or
circumstance exists, that reasonably might (with or without notice or lapse of
time) directly or indirectly give rise to or serve as a basis for the assertion
of any such claim.
(e) Assist has in place and at all times has had in place, an
adequate and appropriate quality control system that is at least as
comprehensive and effective as the quality control systems customarily
maintained by Comparable Entities.
3.22 Insurance.
(a) Part 3.22 of the Disclosure Schedule accurately sets forth, with
respect to each insurance policy maintained by or at the expense of, or for the
direct or indirect benefit of, Assist:
(i) the name of the insurance carrier that issued such policy
and the policy number of such policy;
(ii) whether such policy is a "claims made" or an
"occurrences" policy;
(iii) a description of the coverage provided by such policy
and the material terms and provisions of such policy (including all applicable
coverage limits, deductible amounts and co-insurance arrangements and any
non-customary exclusions from coverage);
(iv) the annual premium payable with respect to such policy,
and the cash value (if any) of such policy; and
(v) a description of any claims pending, and any claims that
have been asserted in the past, with respect to such policy.
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Part 3.22 also identifies (1) each pending application for insurance that
has been submitted by or on behalf of Assist, and (2) each self-insurance or
risk-sharing arrangement affecting Assist or any of its assets. Assist has
delivered to Cayenta accurate and complete copies of all of the insurance
policies identified in Part 3.22 of the Disclosure Schedule (including all
renewals thereof and endorsements thereto) and all of the pending applications
identified in Part 3.22 of the Disclosure Schedule.
(b) Each of the policies identified in Part 3.22 of the Disclosure
Schedule is valid, enforceable and in full force and effect. All of the
information contained in the applications submitted in connection with said
policies was (at the times said applications were submitted) accurate and
complete, and all premiums and other amounts owing with respect to said policies
have been paid in full on a timely basis. The nature, scope and dollar amounts
of the insurance coverage provided by said policies are sufficient to adequately
insure Assist's business, assets, operations, key employees, services and
potential liabilities.
(c) Except as set forth in Part 3.22 of the Disclosure Schedule,
there is no pending claim under or based upon any of the policies identified in
Part 3.22 of the Disclosure Schedule; and no event has occurred, and no
condition or circumstance exists, that might (with or without notice or lapse of
time) directly or indirectly give rise to or serve as a basis for any such
claim.
(d) Assist has not received:
(i) any notice or other communication (in writing or
otherwise) regarding the actual or possible cancellation or invalidation of any
of the policies identified in Part 3.22 of the Disclosure Schedule or regarding
any actual or possible adjustment in the amount of the premiums payable with
respect to any of said policies;
(ii) any notice or other communication (in writing or
otherwise) regarding any actual or possible refusal of coverage under, or any
actual or possible rejection of any claim under, any of the policies identified
in Part 3.22 of the Disclosure Schedule; or
(iii) any indication that the issuer of any of the policies
identified in Part 3.22 of the Disclosure Schedule may be unwilling or unable to
perform any of its obligations thereunder.
3.23 Related Party Transactions. Except as set forth in Part 3.23 of the
Disclosure Schedule:
(a) no Related Party has, and no Related Party has at any time since
December 31, 1997 had, any direct or indirect interest of any nature in any
asset used in or otherwise relating to the business of Assist;
(b) no Related Party is, or has at any time since December 31, 1997
been, indebted to Assist;
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(c) since December 31, 1997, no Related Party has entered into, or
has had any direct or indirect financial interest in, any Contract, transaction
or business dealing of any nature involving Assist;
(d) no Related Party is competing, or has at any time since December
31, 1997 competed, directly or indirectly, with Assist in any market served by
Assist;
(e) no Related Party has any claim or right against Assist; and
(f) no event has occurred, and no condition or circumstance exists,
that reasonably might (with or without notice or lapse of time) directly or
indirectly give rise to or serve as a basis for any claim or right in favor of
any Related Party against Assist.
3.24 Certain Payments, Etc. Neither Assist, nor any officer, employee,
agent or other Person associated with or acting for or on behalf of Assist, has
at any time, directly or indirectly:
(a) used any corporate funds (i) to make any unlawful political
contribution or gift or for any other unlawful purpose relating to any political
activity, (ii) to make any unlawful payment to any governmental official or
employee, or (iii) to establish or maintain any unlawful or unrecorded fund or
account of any nature;
(b) intentionally made any false or fictitious entry, or failed to
make any entry that should have been made, in any of the books of account or
other records of Assist;
(c) made any payoff, influence payment, bribe, rebate, kickback or
unlawful payment to any Person;
(d) performed any favor or given any gift which was not deductible
for federal income tax purposes;
(e) made any unlawful payment to any Person, or provided any
unlawful favor or anything of value (whether in the form of property or
services, or in any other form) to any Person, for the purpose of obtaining or
paying for (i) favorable treatment in securing business, or (ii) any other
special concession; or
(f) agreed, committed, offered or attempted to take any of the
actions described in clauses "(a)" through "(e)" above.
3.25 Proceedings; Orders.
(a) Except as set forth in Part 3.25 of the Disclosure Schedule,
there is no pending Proceeding, and no Person has threatened to commence any
Proceeding:
(i) that involves Assist or that otherwise relates to or
reasonably might affect Assist's business or any of the assets owned or used by
Assist (whether or not Assist is named as a party thereto); or
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(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
Transactions.
Except as set forth in Part 3.25 of the Disclosure Schedule, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
might directly or indirectly give rise to or serve as a basis for the
commencement of any such Proceeding.
(b) Except as set forth in Part 3.25 of the Disclosure Schedule,
since January 1, 1996, no Proceeding has ever been commenced by or against
Assist; and no Proceeding otherwise involving or relating to Assist has been
pending or to Assist's Knowledge threatened at any time.
(c) Assist has delivered to Cayenta accurate and complete copies of
all pleadings, correspondence and other written materials to which Assist has
access that relate to the Proceedings identified in Part 3.25 of the Disclosure
Schedule.
(d) There is no Order to which Assist, or any of the assets owned or
used by Assist, is subject; and none of the Selling Shareholders is subject to
any Order that relates to Assist's business or to any of the assets owned or
used by Assist.
(e) To the Knowledge of Assist and the Selling Shareholders, no
officer or employee of Assist is subject to any Order that prohibits such
officer or employee from engaging in or continuing any conduct, activity or
practice relating to Assist's business.
(f) There is no proposed Order that, if issued or otherwise put into
effect, (i) may have an adverse effect on Assist's business, condition, assets,
liabilities, operations, financial performance or net income (or on any aspect
or portion thereof) or on the ability of Assist or any of the Selling
Shareholders to comply with or perform any covenant or obligation under any of
the Transactional Agreements, or (ii) may have the effect of preventing,
delaying, making illegal or otherwise interfering with any of the Transactions.
3.26 Authority; Binding Nature of Agreements.
(a) Assist has the absolute and unrestricted right, power and
authority to enter into and to perform its obligations under this Agreement; and
the execution, delivery and performance by Assist of this Agreement have been
duly authorized by all necessary action on the part of Assist and its board of
directors and officers. This Agreement constitutes the legal, valid and binding
obligation of Assist, enforceable against Assist in accordance with its terms.
(b) Each Selling Shareholder has the absolute and unrestricted
right, power and capacity to enter into and to perform such Selling
Shareholder's obligations under each of the Transactional Agreements to which
such Selling Shareholder is or may become a party. This Agreement constitutes
the legal, valid and binding obligation of each of the Selling Shareholders,
enforceable against each of the Selling Shareholders in accordance with its
terms. Upon the execution of each of the other Transactional Agreements at the
Closing, each of such other Transactional Agreements will constitute the legal,
valid and binding obligation of each Selling Shareholder who is a party thereto,
and will be enforceable against such Selling Shareholder in accordance with its
terms.
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(c) The respective spouses of the Selling Shareholders have the
absolute and unrestricted right, power and capacity to execute and deliver and
to perform their obligations under the Spousal Consents, if any, being executed
by them. Said Spousal Consents constitute their legal, valid and binding
obligations, enforceable against them in accordance with their terms.
(d) The Agent has the unrestricted right, power, authority and
capacity to act for and bind each of the Selling Shareholders with respect to
all matters relating to the Transactional Agreements and the Transactions.
3.27 Non-Contravention; Consents. Except as set forth in Part 3.27 of the
Disclosure Schedule, neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of Assist's certificate of incorporation or bylaws, or (ii) any
currently effective resolution adopted by Assist's shareholders, Assist's board
of directors or any committee of Assist's board of directors;
(b) contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Assist or any of the Selling Shareholders, or
any of the assets owned or used by Assist, is subject;
(c) cause Assist, Cayenta or any affiliate of Cayenta to become
subject to, or to become liable for the payment of, any Tax;
(d) cause any of the assets owned or used by Assist to be reassessed
or revalued by any taxing authority or other Governmental Body;
(e) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by Assist or any of its employees or that otherwise relates to
Assist's business or to any of the assets owned or used by Assist;
(f) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Assist Contracts (other than
any Excluded Contract);
(g) give any Person the right under any Assist Contract (other than
any Excluded Contract) to, (i) declare a default or exercise any remedy under
any Assist Contracts, (ii) accelerate the maturity or performance of any Assist
Contracts, or (iii) cancel, terminate or modify any Assist Contract;
(h) contravene, conflict with or result in a violation or breach of
or a default under any provision of, or give any Person the right to declare a
default under, any Contract to
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which any of the Selling Shareholders is a party or by which any of the Selling
Shareholders is bound; or
(i) result in the imposition or creation of any Encumbrance upon or
with respect to any material asset owned or used by Assist.
Except as set forth in Part 3.27 of the Disclosure Schedule, neither
Assist nor any of the Selling Shareholders was, is or will be required to make
any filing with or give any notice to, or to obtain any Consent from, any Person
in connection with the execution and delivery of any of the Transactional
Agreements or the consummation or performance of any of the Transactional.
3.28 Year 2000 Compliance. All of Assist's products and internal systems
are designed to be used prior to, during and after the year 2000, and are Year
2000 Compliant. At Cayenta's request, Assist will provide evidence demonstrating
adequate testing of Assist's products and internal systems to assure that they
are Year 2000 Compliant.
(a) Brokers. Neither Assist nor any of the Selling Shareholders has
agreed or become obligated to pay, or has taken any action that might result in
any Person claiming to be entitled to receive, any brokerage commission,
finder's fee or similar commission or fee in connection with any of the
Transactions.
3.29 Full Disclosure.
(a) None of the Transactional Agreements contains or will contain
any material untrue statement of fact; and none of the Transactional Agreements
omits or will omit to state any material facts necessary to make any of the
representations, warranties or other statements or information contained therein
not misleading in light of the circumstances in which they were made.
(b) Except as set forth in Part 3.29 of the Disclosure Schedule,
there is no fact within the Knowledge of Assist (other than publicly known facts
relating exclusively to political or economic matters of general applicability
that will adversely affect all Comparable Entities) that (i) might have a
material adverse effect on Assist's business, condition, assets, liabilities,
operations, financial performance or net income (or on any aspect or portion
thereof) or on the ability of Assist or any of the Selling Shareholders to
comply with or perform any covenant or obligation under any of the Transactional
Agreements, or (ii) may have the effect of preventing, delaying, making illegal
or otherwise preventing any of the Transactions.
(c) The information in the Information Statement regarding Assist
will not, as of the date of the Information Statement or as of the Closing Date,
(i) contain any statement that is inaccurate or misleading with respect to any
material fact, (ii) omit to state any material fact; or (iii) omit to state any
material fact necessary in order to make such information (in the light of the
circumstances under which it is provided) not false or misleading.
(d) All of the information set forth in the Disclosure Schedule is
accurate and complete in all respects.
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(e) Assist and the Selling Shareholders have provided Cayenta and
Cayenta's Representatives with full and complete access to all of Assist's
records and other documents and data.
3.30 No Other Representations or Warranties. Neither Assist nor any
Selling Shareholder shall be deemed to have made to Cayenta, Cayenta Sub or
Titan or to any other Person any representation or warranty other than as
expressly made in this Agreement or any other Transactional Agreement, in the
Disclosure Schedule or in the Closing Certificate. Without limiting the
generality of the foregoing, neither Assist nor any Selling Shareholder makes
any representation or warranty with respect to any projections, estimates or
budgets relating to future operations or results of operations of Assist
heretofore delivered or made available to Cayenta, Cayenta Sub or Titan or any
of their Representatives.
4. REPRESENTATIONS AND WARRANTIES OF CAYENTA AND CAYENTA SUB
Cayenta and Cayenta Sub each represents and warrants, to and for the
benefit of the Selling Shareholders, as follows:
4.1 Due Organization. Cayenta is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all necessary power and authority to conduct its business in the manner in which
its business is currently being conducted and to own and use its assets in the
manner in which its assets are currently owned and used. Cayenta Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all necessary power and authority to conduct
its business in the manner in which its business is currently being conducted
and to own and use its assets in the manner in which its assets are currently
owned and used. Cayenta and Cayenta Sub are not required to be qualified,
authorized, registered or licensed to do business as a foreign corporation in
any jurisdiction other than California and Virginia except where the failure to
be so qualified has not had and reasonably is not expected to have a material
adverse effect on the business or financial condition of Cayenta.
4.2 Authority; Binding Nature of Agreements. Cayenta and Cayenta Sub each
has the absolute and unrestricted right, power and authority to enter into and
to perform its obligations under the Transaction Agreements; and the execution,
delivery and performance by Cayenta and Cayenta Sub of the Transaction
Agreements have been duly authorized by all necessary action on the part of
Cayenta and its stockholders, board of directors and officers and by Cayenta Sub
and its stockholders, board of directors and officers. This Agreement
constitutes the legal, valid and binding obligation of Cayenta and Cayenta Sub,
enforceable against Cayenta and Cayenta Sub, respectively, in accordance with
its terms.
4.3 Non-Contravention; Consents. Except as set forth in Part 4.3 of the
Disclosure Schedule, neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of Cayenta's or Cayenta Sub's certificate of incorporation or
bylaws, or (ii) any resolution
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adopted by Cayenta's or Cayenta Sub's stockholders, Cayenta's or Cayenta Sub's
board of directors or any committee of Cayenta's or Cayenta Sub's board of
directors;
(b) contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Cayenta or any of the assets owned or used by
Cayenta, is subject or to which Cayenta Sub or any of the assets owned or used
by Cayenta Sub is subject;
(c) cause Cayenta or Cayenta Sub or any affiliate of Cayenta or
Cayenta Sub to become subject to, or to become liable for the payment of, any
Tax;
(d) cause any of the assets owned or used by Cayenta or Cayenta Sub
to be reassessed or revalued by any taxing authority or other Governmental Body;
(e) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by Cayenta or Cayenta Sub or any of their respective employees or
that otherwise relates to Cayenta's or Cayenta Sub's business or to any of the
assets owned or used by Cayenta or Cayenta Sub;
(f) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Contracts of Cayenta or
Cayenta Sub;
(g) give any Person the right under any Cayenta or Cayenta Sub
Contracts (other than Excluded Contracts) to (i) declare a default or exercise
any remedy under any Contracts of Cayenta or Cayenta Sub, (ii) accelerate the
maturity or performance of any Contracts of Cayenta or Cayenta Sub, or (iii)
cancel, terminate or modify any Contracts of Cayenta or Cayenta Sub; or
(h) result in the imposition or creation of any Encumbrance upon or
with respect to any material asset owned or used by Cayenta or Cayenta Sub.
Except as set forth in Part 4.3 of the Disclosure Schedule, neither Cayenta nor
Cayenta Sub was, is or will be required to make any filing with or give any
notice to, or to obtain any Consent from, any Person in connection with the
execution and delivery of any of the Transactional Agreements or the
consummation or performance of any of Transactions contemplated by this
Agreement.
4.4 Capitalization, Etc.
(a) The authorized capital stock of Cayenta consists of:
(i) 100,000,000 shares of Class A common stock having a par
value of $.001 per share, none of which is outstanding as of the date of this
Agreement;
(ii) 50,000,000 shares of Class B common stock having a par
value of $.001 per share, none of which is outstanding as of the date of this
Agreement;
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(iii) 2,345,000 shares of Series A preferred stock having a
par value of $.001 per share, none of which is outstanding as of the date of
this Agreement;
(iv) 15,000,000 shares of preferred stock (excluding the
Series A preferred stock) having a par value of $.001 per share; and
(v) 3,343,800 shares that will be reserved for issuance under
options and warrants.
(b) Upon Closing and the issuance of the Cayenta Shares pursuant to
this Agreement and upon the concurrent closing of the other transactions that
are part of Section 351 Plan, the following shares of capital stock of Cayenta
will be issued and outstanding:
(i) 10,000,000 shares of Class B common stock;
(ii) 566,458 shares of Class A common stock; and
(iii) 2,345,000 shares of Series A preferred stock.
(c) Upon Closing pursuant to this Agreement and upon the concurrent
closing of the other transactions that are part of the Section 351 Plan, all of
the capital stock of Cayenta Sub will be owned by Cayenta.
(d) The Cayenta Shares when issued and delivered in accordance with
this Agreement in the Exchange shall be duly and validly authorized and issued,
fully paid and nonassessable.
4.5 Financial Statements. Cayenta Sub has delivered to Assist the
unaudited balance sheet of Cayenta Sub as of September 30, 1999, and the related
unaudited statements of operations, changes in shareholders' equity and cash
flows of Cayenta Sub for the nine months then ended (collectively, the "Cayenta
Financial Statements"). All of the Cayenta Financial Statements are accurate and
complete in all respects, subject to normal year end audit adjustments. The
financial statements present fairly the financial position of Cayenta Sub as of
September 30, 1999 and the results of operations, changes in shareholders'
equity and cash flows of Cayenta Sub for nine months then ended. The Cayenta
Financial Statements have been prepared in accordance with generally accepted
accounting principles, applied on a consistent basis throughout the periods
covered.
4.6 No Adverse Change. There has not been any material adverse change in
Cayenta or Cayenta Sub's business, condition, assets, liabilities, operations,
financial performance or net income (or in any aspect or portion thereof) since
September 30, 1999, and no event since September 30, 1999 has occurred that
reasonably might have a material adverse effect on Cayenta or Cayenta Sub's
business, condition, assets, liabilities, operations, financial performance or
net income (or in any aspect or portion thereof).
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4.7 Proceedings.
(a) There is no pending Proceeding, and no Person has threatened to
commence any Proceeding:
(i) that involves Cayenta or Cayenta Sub or that otherwise
relates to or reasonably might affect Cayenta's or Cayenta Sub's business or any
of the assets owned or used by Cayenta or Cayenta Sub (whether or not Cayenta or
Cayenta Sub is named as a party thereto); or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
Transactions.
(b) No event has occurred, and no claim, dispute or other condition
or circumstance exists, that might directly or indirectly give rise to or serve
as a basis for the commencement of any such Proceeding.
4.8 Brokers. Except for fees payable to Batchelder & Partners, Inc. by
Titan, Cayenta has not agreed or become obligated to pay, and has not taken any
action that might result in any Person claiming to be entitled to receive, any
brokerage commission, finder's fee or similar commission or fee in connection
with any of the Transactions.
4.9 No Other Representations or Warranties. Neither Cayenta, Cayenta Sub
nor Titan shall be deemed to have made to Assist, the Selling Shareholders or to
any other Person any representation or warranty other than as expressly made in
this Agreement or any other Transaction Agreement, in the Closing Certificate.
Without limiting the generality of the foregoing, neither Cayenta, Cayenta Sub,
nor Titan makes any representation or warranty with respect to any projections,
estimates or budgets relating to future operations or results of operations of
Cayenta or Cayenta Sub heretofore delivered or made available to Assist or any
of their Representatives.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each Selling Shareholder understands, or has been advised by its Purchaser
Representative, that Cayenta Shares have not been registered under the
Securities Act. Each Selling Shareholder also understands, or has been advised
by its Purchaser Representative, that Cayenta Shares are being issued pursuant
to an exemption from registration contained in the Securities Act based in part
upon such Selling Shareholder's representations contained in this Agreement.
Each Selling Shareholder hereby represents and warrants, to and for the benefit
of Cayenta and Assist, as follows:
5.1 Selling Shareholder Bears Economic Risk. The Selling Shareholder has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to Cayenta so that he or it is
capable of, or has been advised by his or its Purchaser Representative
regarding, evaluating the merits and risks of an investment in Cayenta and has
the capacity to protect his or its own interests. The Selling Shareholder must
bear the economic risk of this investment indefinitely unless Cayenta Shares are
registered pursuant to the Securities Act, or an exemption from registration is
available. The Selling Shareholder
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understands that Cayenta has not made any commitment to register any of its
shares under the Securities Act of 1933, as amended. The Selling Shareholder
also understands that there is no assurance that any exemption from registration
under the Securities Act will be available and that, even if available, such
exemption may not allow the Selling Shareholder to transfer all or any portion
of Cayenta Shares under the circumstances, in the amounts or at the times the
Selling Shareholder might propose.
5.2 Acquisition for Own Account. The Selling Shareholder is acquiring
Cayenta Shares for the Selling Shareholder's own account for investment only,
and not with a view towards their distribution.
5.3 Selling Shareholder Can Protect Its Interest. The Selling Shareholder
represents that either (i) by reason of his or its, or of its management's,
business or financial experience, the Selling Shareholder has the capacity to
protect its own interests in connection with the transactions contemplated by
this Agreement or (ii) he or it has had its interests represented by a Purchaser
Representative (as defined in Rule 501 of Regulation D) in the transactions
contemplated by this Agreement. Further, the Selling Shareholder is aware of no
publication of any advertisement in connection with the transactions
contemplated in the Agreement.
5.4 Accredited Investor. The Selling Shareholder represents either (i)
that he or it is an accredited investor within the meaning of Regulation D under
the Securities Act or (ii) that he or it has been advised by a Purchaser
Representative (as defined in Rule 501 of Regulation D).
5.5 Company Information. The Selling Shareholder has received and read the
information provided by Cayenta or has had such information explained by its
Purchaser Representative and either the Selling Shareholder or its Purchaser
Representative has had an opportunity to discuss Cayenta's business, management
and financial affairs with directors, officers and management of Cayenta and has
had the opportunity to review Cayenta's operations and facilities. The Selling
Shareholder or his or its Purchaser Representative has also had the opportunity
to ask questions of and receive answers from, Cayenta and its management
regarding the terms and conditions of this investment.
5.6 Rule 144. The Selling Shareholder acknowledges and agrees that Cayenta
Shares must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available. The
Selling Shareholder has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act as in effect from time to time, which
permits limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about Cayenta, the resale
occurring following the required holding period under Rule 144 and the number of
shares being sold during any three-month period not exceeding specified
limitations.
5.7 Residence. If the Selling Shareholder is an individual, then the
Selling Shareholder resides in the state or province identified in the address
of the Selling Shareholder set forth on Exhibit D; if the Selling Shareholder is
a partnership, corporation, limited liability company or other entity, then the
office or offices of the Selling Shareholder in which its
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investment decision was made is located at the address or addresses of the
Selling Shareholder set forth on Exhibit D.
5.8 Selling Shareholder.
(a) The Selling Shareholder has the capacity and financial
capability to comply with and perform all of such Selling Shareholder's
covenants and obligations under each of the Transactional Agreements to which
such Selling Shareholder is or may become a party.
(b) No Selling Shareholder:
(i) has, at any time, (A) made a general assignment for the
benefit of creditors, (B) filed, or |
