Agreement and Plan of Merger and Reorganization - Embarcadero Technologies Inc. and Advanced Software Technologies Inc.
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
EMBARCADERO TECHNOLOGIES, INC.
AST ACQUISITION CORPORATION,
ADVANCED SOFTWARE TECHNOLOGIES, INCORPORATED
AND
R. GALE DANIEL, AS SHAREHOLDER REPRESENTATIVE
DATED AS OF OCTOBER 24, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS 1
Section 1.01 Certain Defined Terms 1
ARTICLE II. THE MERGER 9
Section 2.01 The Merger 9
Section 2.02 Closing 9
Section 2.03 Effective Time 9
Section 2.04 Effect of the Merger 9
Section 2.05 Tax and Accounting Treatment 9
Section 2.06 Articles of Incorporation; Bylaws; Directors and Officers of Surviving
Corporation 10
ARTICLE III. CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES 10
Section 3.01 Closing Payment; Earn-out 10
Section 3.02 Conversion of Securities and Related Matters 11
Section 3.03 Capital Stock of Merger Sub 12
Section 3.04 Dissenting Shares 12
Section 3.05 Surrender of Certificates and Agreements 12
Section 3.06 No Further Ownership Rights 13
Section 3.07 Lost, Stolen or Destroyed Certificates 13
Section 3.08 Taking of Further Action 13
Section 3.09 Funds Remaining after Six Months 13
Section 3.10 Escrow Fund 14
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 14
Section 4.01 Organization and Qualification; Subsidiaries 14
Section 4.02 Articles of Incorporation and Bylaws; Corporate Books and Records 15
Section 4.03 Capitalization 15
Section 4.04 Authority Relative to this Agreement 16
Section 4.05 No Conflict; Required Filings and Consents 16
Section 4.06 Permits; Compliance with Laws 17
Section 4.07 Financial Statements 17
Section 4.08 Absence of Certain Changes or Events 18
Section 4.09 Accounts Receivable 20
Section 4.10 Customers; Suppliers 20
Section 4.11 Sales and Purchase Order Backlog 21
Section 4.12 Product and Service Warranties 21
Section 4.13 Employee Benefit Plans; Labor Matters 21
Section 4.14 Employees 24
Section 4.15 Material Contracts 25
Section 4.16 Guaranties 25
Section 4.17 Litigation 25
Section 4.18 Environmental Matters 25
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TABLE OF CONTENTS
(Continued)
Section 4.19 Intellectual Property 26
Section 4.20 Taxes 28
Section 4.21 Properties and Assets 30
Section 4.22 Brokers 30
Section 4.23 Certain Business Practices 30
Section 4.24 Interested Party Transactions 31
Section 4.25 Vote Required; Consents. 31
Section 4.26 Board Approval 32
Section 4.27 Business Activity Restrictions 32
Section 4.28 Representations Complete 32
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB 32
Section 5.01 Organization and Qualification; Subsidiaries 32
Section 5.02 Authority Relative to this Agreement 33
Section 5.03 No Conflict; Required Filings and Consents 33
Section 5.04 Brokers 33
Section 5.05 Sufficient Funds 34
ARTICLE VI. CONDUCT PRIOR TO CLOSING 34
Section 6.01 Conduct of Business by the Company 34
Section 6.02 Notices of Certain Events 34
Section 6.03 Access to Information; Confidentiality 34
Section 6.04 No Solicitation of Transactions 35
Section 6.05 Further Action; Consents; Filings 35
ARTICLE VII. ADDITIONAL AGREEMENTS 36
Section 7.01 Public Announcements 36
Section 7.02 Shareholder Approval 36
Section 7.03 Employee Matters 36
Section 7.04 Conduct of Business of Surviving Corporation following the Closing 37
ARTICLE VIII. CONDITIONS TO THE MERGER 38
Section 8.01 Conditions to the Obligations of Each Party to Consummate the Merger 38
Section 8.02 Conditions to the Obligations of the Company 38
Section 8.03 Conditions to the Obligations of Parent 39
ARTICLE IX. TERMINATION, AMENDMENT AND WAIVER 40
Section 9.01 Termination 40
Section 9.02 Effect of Termination 41
Section 9.03 Amendment 41
Section 9.04 Waiver 41
Section 9.05 Expenses 41
ARTICLE X. INDEMNIFICATION 42
Section 10.01 Indemnification 42
Section 10.02 Right to Defend; Certain Other Procedures 42
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TABLE OF CONTENTS
(Continued)
Section 10.03 Limitations on Indemnification 44
ARTICLE XI. The Shareholder Representative 44
Section 11.01 Appointment of the Shareholder Representative 44
Section 11.02 Replacement of Shareholder Representative 45
Section 11.03 Communications; Notices 45
Section 11.04 Agent for Service of Process 45
Section 11.05 Power of Attorney 46
Section 11.06 Limitation on the Shareholder Representative's Liability, etc. 46
ARTICLE XII. GENERAL PROVISIONS 47
Section 12.01 Survival 47
Section 12.02 Notices 47
Section 12.03 Severability 49
Section 12.04 Assignment; Binding Effect; Benefit 49
Section 12.05 Incorporation of Schedules and Exhibits 49
Section 12.06 Governing Law 49
Section 12.07 Arbitration 49
Section 12.08 Headings 50
Section 12.09 Counterparts 50
Section 12.10 Entire Agreement 50
Exhibit A - Form of Voting Agreement
Exhibit B - Earn-out Schedule
Exhibit C - Form of Escrow Agreement
Exhibit D - Form of Legal Opinion
Exhibit E - Form of Employment Agreement
Exhibit F - Form of Noncompetition Agreement
Exhibit G - Form of Warrant Termination Agreement
Exhibit H - Form of Certificate of Amendment
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of October 24, 2000, by and among EMBARCADERO TECHNOLOGIES,
INC., a Delaware corporation ("Parent"), AST ACQUISITION CORPORATION, a Colorado
corporation and a wholly-owned subsidiary of Parent ("Merger Sub"), ADVANCED
SOFTWARE TECHNOLOGIES, INCORPORATED, a Colorado corporation (the "Company"), and
R. Gale Daniel, as the representative of the Company's shareholders (the
"Shareholder Representative"), with reference to the following facts:
RECITALS
A. The boards of directors of Parent, Merger Sub, and the Company have
each determined that it is consistent with and in furtherance of their
respective long-term business strategies and fair to and in the best interests
of their respective stockholders and shareholders to combine the respective
businesses of Parent and the Company by means of a merger (the "Merger") of
Merger Sub with and into the Company upon the terms and subject to the
conditions set forth herein and in accordance with the Colorado Business
Corporations Act (the "CBCA");
B. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingess to enter into this Agreement,
certain affiliates of the Company are entering into Voting Agreements in
substantially the form attached hereto as EXHIBIT A ("Voting Agreements");
C. In consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS
Unless the context otherwise requires, the following terms, when used
in this Agreement, shall have the respective meanings specified below (such
meanings to be equally applicable to the singular and plural number of the terms
so defined, unless the context otherwise requires):
"AAA" shall have the meaning set forth in Section 12.07.
"ACCOUNTS RECEIVABLE" shall have the meaning set forth in Section 4.09.
"AFFILIATE" shall have the meaning specified in Rule 144 promulgated
under the Securities Act.
"AGREEMENT" shall have the meaning specified in the preamble to this
Agreement.
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"BUSINESS DAY" shall mean any day on which banks are not required or
authorized by law, regulation or executive order to close in San Francisco,
California.
"CAUSE" shall have the meaning specified in Section 7.03(e).
"CBCA" shall have the meaning specified in the recitals to this
Agreement.
"CERTIFICATES" shall have the meaning specified in Section 3.02(a).
"CERTIFICATE OF AMENDMENT" shall have the meaning specified in Section
8.03(j).
"CLOSING" shall have the meaning specified in Section 2.02.
"CLOSING PAYMENT' shall have the meaning specified in Section 3.01(a).
"CLOSING PAYMENT ALLOCATION SCHEDULE" shall have the meaning specified
in Section 3.02(b).
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
all rules and regulations promulgated thereunder.
"COMMERCIAL PAYABLES" shall have the meaning set forth in Section 8.03.
"COMPANY" shall have the meaning specified in the preamble to this
Agreement.
"COMPANY BENEFIT PLANS" shall have the meaning specified in Section
4.13(a).
"COMPANY CAPITAL STOCK" shall mean the Company Common Stock, the Series
A and the Series B.
"COMPANY COMMON STOCK" shall mean the common stock, $.001 par value per
share, of the Company.
"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by the Company to Parent prior to the execution of this Agreement and
forming a part hereof.
"COMPANY INTELLECTUAL PROPERTY" shall have the meaning specified in
Section 4.19(a).
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in or effect on
the business of the Company that is, or could reasonably be expected to be,
materially adverse to the business, assets (including intangible assets),
liabilities (contingent or otherwise), condition (financial or otherwise) or
results of operations of the Company taken as a whole.
"COMPANY PERMITS" shall have the meaning specified in Section 4.06.
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"COMPANY REPORTS" shall have the meaning specified in Section 4.07.
"COMPANY STOCK OPTIONS" shall have the meaning specified in Section
4.03.
"COMPANY STOCK OPTION PLAN" shall mean the Company's 1997 Stock Option
Plan, as amended.
"CONFIDENTIALITY AGREEMENT" shall mean the Confidentiality Agreement,
dated as of June 30, 2000, between Parent and the Company.
"DISPUTE" shall have the meaning set forth in Section 12.07.
"DISSENTING SHARES" shall have the meaning specified in Section 3.04.
"$" shall mean United States Dollars.
"EARN-OUT ALLOCATION SCHEDULE" shall have the meaning specified in
Section 3.02(c).
"EARN-OUT AMOUNT" shall mean the aggregate amount of additional merger
consideration, if any, set forth on EXHIBIT B attached hereto which shall be
payable by Parent as set forth in Article III upon the achievement by the
Company of revenue milestones for the fiscal year ending December 31, 2000 and
the fiscal quarter ending December 31, 2000 based on the Net Bookings of the
Company for such periods as reflected in the financial statements of the Company
for such periods, which financial statements shall be reviewed by
Pricewaterhouse Coopers LLP, independent accountants to Parent (such audit being
referred to herein as the "Post-closing Statements"). "Net Bookings," for
purposes of determining the Earn-Out Amount, shall mean sales to customers of
products, maintenance and support and training in the ordinary course of
business and within the Company's normal discount terms for which a valid
purchase order has been received, the product has been delivered and for which
customer acceptance has occurred such that the amount of the sale is due from
the customer within the Company's ordinary payment terms.
"EARN-OUT PAYMENT" shall have the meaning specified in Section 3.01(b).
"EFFECTIVE TIME" shall have the meaning specified in Section 2.03.
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
"ENVIRONMENTAL LAW" shall mean any Law and any enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to pollution or protection of the
environment or natural resources,
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including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Material, as in effect as of the date hereof.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval, identification
number, license or other authorization required under or issued pursuant to any
applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" shall have the meaning specified in Section 4.13(a).
"ESCROW AMOUNT" shall have the meaning specified in Section 3.01(a).
"ESCROW AGREEMENT" shall have the meaning specified in Section 3.10.
"ESCROW RELEASE DATE" shall have the meaning specified in Section 3.10.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"EXPENSES" shall mean, with respect to any party hereto, all
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, experts and consultants to a party hereto and its
Affiliates incurred by such party or on its behalf in connection with or related
to the authorization, preparation, negotiation, execution and performance of its
obligations pursuant to this Agreement and the consummation of the Merger except
as otherwise provided herein.
"GOVERNMENTAL ENTITY" shall mean any United States federal, state or
local or any foreign governmental, regulatory or administrative authority,
agency or commission or any court, tribunal or arbitral body.
"GOVERNMENTAL ORDER" shall mean any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Entity.
"HAZARDOUS MATERIAL" shall mean (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
"HEWM" shall have the meaning specified in Section 3.01(a).
"INTELLECTUAL PROPERTY" shall have the meaning specified in Section
4.19.
"IRS" shall mean the United States Internal Revenue Service.
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"LAW" shall mean any federal, state, foreign or local statute, law,
ordinance, regulation, rule, code, order, judgment, decree, other requirement or
rule of law.
"LEASED PROPERTIES" shall have the meaning specified in Section 4.21.
"LOSSES" shall have the meaning specified in Section 10.01.
"MATERIAL CONTRACTS" shall mean the following contracts and agreements
(including, without limitation, oral and informal arrangements) of the Company:
(i) each contract, agreement, invoice, purchase order and other
arrangement, for the purchase of inventory, spare parts, other materials or
personal property with any supplier or for the furnishing of services to the
Company or otherwise related to the business of the Company under the terms of
which the Company (A) is likely to pay or otherwise give consideration of more
than $20,000 in the aggregate during the calendar year ending December 31, 2000,
(B) is likely to pay or otherwise give consideration of more than $20,000 in the
aggregate over the remaining term of such contract, or (C) cannot be cancelled
by the Company without penalty or further payment and without more than 90 days'
notice;
(ii) each contract, agreement, invoice, sales order and other
arrangement, for the sale of inventory or other personal property or for the
furnishing of services by the Company which: (A) is likely to involve
consideration of more than $20,000 in the aggregate during the calendar year
ending December 31, 2000, (B) is likely to involve consideration of more than
$20,000 in the aggregate over the remaining term of the contract, or (C) cannot
be cancelled by the Company without penalty or further payment and without more
than 90 days' notice;
(iii) all broker, distributor, label group, dealer, manufacturer's
representative, franchise, agency, sales promotion, market research, marketing
consulting and advertising contracts and agreements to which the Company is a
party involving the payment of more than $20,000 during the calendar year ending
December 31, 2000 and which are not cancelable without penalty or further
payment and without more than 90 days' notice;
(iv) all management contracts, and contracts with independent
contractors or consultants (or similar arrangements) to which the Company is a
party involving payments in excess of $20,000 per annum and which are not
cancelable without penalty or further payment and without more than 30 days'
notice;
(v) all contracts and agreements relating to indebtedness of the
Company;
(vi) all agreements relating to Intellectual Property, including all
licenses and sublicenses thereof, but excluding shrink wrap and other commodity
type licenses;
(vii) all contracts and agreements with any Government Entity to which
the Company is a party;
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(viii) all contracts and agreements that limit or purport to limit the
ability of the Company to compete in any line of business or with any Person or
in any geographic area or during any period of time;
(ix) all contracts and agreements between or among the Company and any
Affiliate of the Company, including any shareholder agreements;
(x) all contracts and agreements related to employment or
post-employment liabilities or benefits or providing benefits under any Company
Benefit Plan; and
(xi) all other contracts and agreements, whether or not made in the
ordinary course of the business, which are material to the Company or the
conduct of its business, or the absence of which would have a Company Material
Adverse Effect.
"MERGER" shall have the meaning specified in the recitals to this
Agreement.
"MERGER AGREEMENT" shall have the meaning specified in Section 2.03.
"MERGER SUB" shall have the meaning specified in the preamble to this
Agreement.
"NET MERGER CONSIDERATION" shall have the meaning specified in Section
3.01(a).
"OTHER TRANSACTION" shall have the meaning specified in Section 6.04.
"PARENT" shall have the meaning specified in the preamble to this
Agreement.
"PARENT INDEMNITEE" shall have the meaning specified Section 10.01.
"PARENT MATERIAL ADVERSE EFFECT" shall mean any change in or effect on
the business of Parent that is, or could reasonably be expected to be,
materially adverse to the business, prospects, assets (including intangible
assets), liabilities (contingent or otherwise), condition (financial or
otherwise) or results of operations of Parent.
"PAYING AGENT" shall have the meaning specified in Section 3.03
"PERMIT" shall have the meaning specified in Section 4.06.
"PERMITTED ENCUMBRANCES" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) liens for taxes, assessments and governmental charges or
levies not yet due and payable which are not in excess of $20,000 in the
aggregate; (b) Encumbrances imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's liens and other similar liens arising in
the ordinary course of business securing obligations that (i) are not overdue
for a period of more than 30 days and (ii) are not in excess of $20,000 in the
case of a single property or $50,000 in the aggregate at any time; (c) pledges
or deposits to secure obligations under
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workers' compensation laws or similar legislation or to secure public or
statutory obligations; and (d) minor survey exceptions, reciprocal easement
agreements and other customary encumbrances on title to real property that (i)
were not incurred in connection with any indebtedness, (ii) do not render title
to the property encumbered thereby unmarketable and (iii) do not, individually
or in the aggregate, materially adversely affect the value or use of such
property for its current and anticipated purposes.
"PERSON" shall mean an individual, corporation, partnership, limited
partnership, limited liability company, syndicate, person (including, without
limitation, a person as defined in Section 13(d)(3) of the Exchange Act), trust,
association, entity or government or political subdivision, agency or
instrumentality of a government.
"REFERENCE BALANCE SHEET" shall mean the consolidated balance sheet of
the Company for the fiscal quarter ended September 30, 2000.
"REFERENCE BALANCE SHEET DATE" shall mean September 30, 2000.
"REGULATIONS" means the Treasury Regulations (including Temporary
Regulations) promulgated by the United States Department of Treasury with
respect to the Code or other federal tax statutes.
"REPRESENTATIVES" shall have the meaning specified in Section 6.03.
"RULES" shall have the meaning set forth in Section 12.07.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"SERIES A" shall mean the Company's Series A Preferred Stock, $.001 par
value per share, consisting of 1,250,000 authorized shares.
"SERIES B" shall mean the Company's Series B Preferred Stock, $.001 par
value per share, consisting of 2,800,000 authorized shares.
"SHAREHOLDER INDEMNITOR" shall have the meaning specified in Section
10.02(a).
"SHAREHOLDERS MEETING" shall have the meaning specified in Section
7.02.
"SHAREHOLDER REPRESENTATIVE" shall have the meaning specified in the
preamble to this Agreement.
"SIMPLE IRA" shall have the meaning specified in Section 4.13(k).
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"SOFTWARE PROGRAMS" shall have the meaning specified in Section
4.19(h).
"SUBSIDIARY" shall mean, with respect to any person, any
corporation, limited liability company, partnership, joint venture or other
legal entity of which such person (either alone or through or together with
any other subsidiary of such person) owns, directly or indirectly, a majority
of the stock or other equity interests, the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
"SURVIVING CORPORATION" shall have the meaning specified in Section
2.01.
"TAX" or "TAXES," for the purposes of this Agreement, refers to (i) any
and all federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities relating to taxes,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise, stamp and property taxes
and customs duties, (ii) together with all interest, penalties and additions
imposed with respect to such amounts, (iii) and any obligations to any Tax
authority or other governmental entity under Treasury Regulations 1.1502-6 (or
any comparable provision of the laws of any state, local or foreign
jurisdiction), or under any agreements or arrangements with any other Person,
with respect to amounts described in clauses (i) and (ii), including any
liability for Taxes of a predecessor entity.
"TAX RETURN" or "TAX RETURNS," for the purposes of this Agreement,
refers to all federal, state and local and foreign returns, estimates,
information statements and reports relating to Taxes.
"TECHNICAL DOCUMENTATION" shall have the meaning specified in Section
4.19(a).
"TERMINATING PARENT BREACH" shall have the meaning specified in Section
9.01(f).
"TERMINATING COMPANY BREACH" shall have the meaning specified in
Section 9.01(e).
"U.S. GAAP" shall mean United States generally accepted accounting
principles, applied on a consistent basis.
"VOTING AGREEMENTS" shall have the meaning specified in the Preamble to
this Agreement.
"WARRANT" shall have the meaning specified in Section 3.02(a).
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ARTICLE II.
THE MERGER
SECTION 2.01 THE MERGER
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the CBCA, at the Effective Time Merger Sub
shall be merged with and into the Company. As a result of the Merger, the
separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation").
SECTION 2.02 CLOSING
Unless this Agreement shall have been terminated and the Merger shall
have been abandoned pursuant to Section 9.01, and subject to the satisfaction or
written waiver of the conditions set forth in Article VIII, the consummation of
the Merger shall take place as promptly as practicable (and in any event within
three business days) after satisfaction or waiver of the conditions set forth in
Article VIII, at a closing (the "Closing") to be held at the offices of Heller
Ehrman White & McAuliffe LLP, 333 Bush Street, San Francisco, California, unless
another date, time or place is agreed to by the Company and Parent.
SECTION 2.03 EFFECTIVE TIME
At the time of the Closing, the parties shall cause the Merger to be
consummated by filing an agreement of merger (the "Merger Agreement") and all
other documents required by the CBCA with the Secretary of State of Colorado in
such form as required by, and executed in accordance with the relevant
provisions of, the CBCA (the date and time of such filing, or such later time as
may be agreed to by the parties hereto and specified in the Merger Agreement,
being the "Effective Time").
SECTION 2.04 EFFECT OF THE MERGER
At the Effective Time, the effect of the Merger shall be as provided in
the applicable provisions of the CBCA. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, except as otherwise
provided herein, all the property, rights, privileges, powers and franchises of
the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
SECTION 2.05 TAX AND ACCOUNTING TREATMENT
The Merger shall constitute a taxable transaction under the Code, and
will be treated as a "purchase" for financial accounting purposes.
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SECTION 2.06 ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS
OF SURVIVING CORPORATION
Unless otherwise agreed by the Company and Parent prior to the
Effective Time, at the Effective Time the articles of incorporation and bylaws
of the Merger Sub, as in effect immediately prior to the Effective Time, shall
be the articles of incorporation and bylaws of the Surviving Corporation until
thereafter amended as provided by Law and such articles of incorporation or
bylaws. The officers of Merger Sub immediately prior to the Effective Time shall
be the initial officers of the Surviving Corporation until their successors are
elected or appointed and qualified or until their resignation or removal; and
the directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation until their successors are
elected or appointed and qualified or until their resignation or removal.
ARTICLE III.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 CLOSING PAYMENT; EARN-OUT
(a) CLOSING PAYMENT. At or before the Effective Time, Parent shall
transfer in trust by wire transfer of immediately available funds (A) an amount
equal to Eleven Million Seven Hundred Thousand Dollars ($11,700,000) (such
amount being the "Closing Payment"), to the trust account of Heller Ehrman White
& McAuliffe LLP ("HEWM"), San Francisco, California which shall serve as
disbursing agent for the funds to be disbursed at the Closing or as soon as
practicable thereafter in accordance with the provisions of this Section 3.01
and Section 3.02 below, and (B) One Million Three Hundred Thousand Dollars
($1,300,000) (together with the portion of the Earn-out Amount delivered to the
Escrow Agent as set forth in Section 3.01(b), the "Escrow Amount") to the Escrow
Agent (as defined in Section 3.11), which shall hold and disburse the Escrow
Amount in accordance with the terms of the Escrow Agreement. The Closing Payment
and the Escrow Amount shall together constitute the "Net Merger Consideration"
and shall be disbursed as provided in Section 3.02(b). Each of the parties
hereto acknowledges and agrees that the Escrow Amount shall be deducted solely
from the portion of the Net Merger Consideration payable to the holders of
Company Common Stock, Company Stock Options and Series A and that, in accordance
with the Company's Amended and Restated Articles of Incorporation, no portion of
the Escrow Amount shall be withheld from the portion of the Net Merger
Consideration payable to the holders of Series B.
(b) EARN-OUT PAYMENT. Within ten (10) Business Days after the receipt
by Parent of the Post-closing Financial Statements, Parent shall transfer in
trust by wire transfer of immediately available funds (A) an amount equal to
ninety percent (90%) of the Earn-out Amount, if any (such Amount being the
"Earn-out Payment"), to the trust account of HEWM which shall serve as
disbursing agent for the Earn-out Payment and (B) an amount equal to ten percent
(10%) of the Earn-out Amount to the Escrow Agent, which shall hold and disburse
the such amount in accordance with the terms of the Escrow Agreement. Parent
shall cause HEWM to disburse the Earn-out Payment as provided in Section
3.02(c).
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SECTION 3.02 CONVERSION OF SECURITIES AND RELATED MATTERS
At the Effective Time, by virtue of the Merger and without any action
on the part of Merger Sub, the Company or the holders of any securities of the
Company, the following shall take place:
(a) CONSIDERATION FOR PREFERRED STOCK, COMPANY COMMON STOCK, OPTIONS
AND WARRANTS. Upon the terms and subject to the conditions set forth below and
throughout this Agreement, each share of Company Common Stock, Series A and
Series B and each vested Company Stock Option and each warrant to purchase
Company Common Stock, Series A or Series B (each, a "Warrant") issued and
outstanding immediately prior to the Effective Time (other than any Dissenting
Shares and securities of the Company owned by Parent or Merger Sub or held in
the treasury of the Company) will be cancelled and extinguished by operation of
law or otherwise and be converted automatically into the right to receive from
Parent, upon surrender of the certificates representing such shares of Series A,
Series B or Company Common Stock ("Certificates") and surrender of the stock
option agreements and warrant agreements representing the Company Stock Options
and Warrants in the manner provided in Section 3.04, cash in the amount set
forth below in Section 3.02(b) (aggregating an amount equal to the Closing
Payment) and, if applicable, a right to receive a portion of the Earn-out Amount
as set forth below in Section 3.02(c).
(b) CLOSING PAYMENT. Schedule 3.02(b) (the "Closing Payment Allocation
Schedule") (a) identifies the holders of all shares of Company Common Stock,
Series A, Series B and vested Company Stock Options and (b) lists the portion of
the Closing Payment payable to each such holder. The Company represents and
warrants to Parent and Merger Sub that the Closing Payment Allocation Schedule
correctly identifies each Person entitled to receive any portion of the Closing
Payment and the portion of the Closing Payment payable to each such Person and
that the Closing Payment Allocation Schedule has been prepared in accordance
with Colorado law, the Company's Articles of Incorporation and Bylaws, the
agreements evidencing Company Stock Options and any other contract, agreement or
understanding pursuant to which any portion of the Closing Payment may be
payable. Parent shall cause HEWM to disburse the Closing Payment to the
Company's shareholders in accordance with the Closing Payment Allocation
Schedule, subject to applicable withholdings, if any.
(c) EARN-OUT PAYMENT. Schedule 3.02(c) (the "Earn-out Allocation
Schedule") (a) identifies the holders of all shares of Company Common Stock,
Series A, Series B and vested Company Stock Options and (b) lists the portion,
expressed as a percentage of the aggregate Earn-out Payment, of the Earn-out
Payment payable to each such holder. The Company represents and warrants to
Parent and Merger Sub that the Earn-out Allocation Schedule correctly identifies
each Person entitled to receive any portion of the Earn-out Amount and the
portion of the Earn-out Payment payable to each such Person and that the
Earn-out Allocation Schedule has been prepared in accordance with Colorado law,
the Company's Articles of Incorporation and Bylaws, the agreements evidencing
Company Stock Options and any other contract, agreement or understanding
pursuant to which any portion of the Earn-out Amount may be payable.
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SECTION 3.03 CAPITAL STOCK OF MERGER SUB
Each share of Common Stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and exchanged
for one validly issued, fully paid and nonassessable share of Common Stock of
the Surviving Corporation. Each stock certificate of Merger Sub evidencing
ownership of any such shares shall continue to evidence ownership of such shares
of capital stock of the Surviving Corporation.
SECTION 3.04 DISSENTING SHARES
(a) Notwithstanding any provision of this Agreement to the contrary,
any shares of capital stock of the Company held by a holder who has exercised
and perfected appraisal rights for such shares in accordance with the CBCA and
who, as of the Effective Time, has not effectively withdrawn or lost such
appraisal rights ("Dissenting Shares"), shall not be converted into or represent
a right to receive a portion of the Net Merger Consideration and Earn-out Amount
pursuant to Section 3.02, but the holder thereof shall only be entitled to such
rights as are granted by the CBCA.
(b) Notwithstanding the provisions of subsection (a), if any holder of
Dissenting Shares shall effectively withdraw or lose (through failure to perfect
or otherwise) such holder's appraisal rights, then, as of the later of the
Effective Time and the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive a
portion of the Net Merger Consideration and Earn-out Amount as provided in
Section 3.02, without interest thereon (except for interest payable pursuant to
the Escrow Agreement), upon surrender of the Certificate representing such
shares.
(c) The Company shall give Parent (i) prompt notice of any written
demand for appraisal received by the Company pursuant to the applicable
provisions of Colorado law and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, voluntarily make any
payment or offer to make any payment with respect to any such demands or offer
to settle or settle any such demands. To the extent that Parent or the Company
makes any payment or payments to a holder of Dissenting Shares, which amount has
been awarded to the holders of the Dissenting Shares by a final judgment of a
court of competent jurisdiction (and which judgment has not been appealed within
the requisite period for such an appeal), Parent shall be entitled to recover
under the terms of Article X hereof the aggregate amount by which such payment
or payments exceed the aggregate Net Merger Consideration that otherwise would
have been payable in respect of such shares.
SECTION 3.05 SURRENDER OF CERTIFICATES AND AGREEMENTS
The Company will use its best efforts to cause all Certificates or
agreements evidencing securities of the Company, including all shares of Series
A, all shares of Series B, all shares of Company Common Stock, and all options,
warrants or other rights to acquire securities of the Company, to be surrendered
at the Closing for cancellation. Notwithstanding the foregoing, by operation of
law, at the Effective Time, all shares of capital stock of the Company, and all
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options, warrants or other rights to acquire securities of the Company, shall be
automatically converted into, and the holder of such shares and options shall
only be entitled to, the right to receive the applicable portion of the Net
Merger Consideration, irrespective of the surrender of Certificates for such
shares of capital stock or of the surrender of the agreements evidencing such
options, warrants or other rights.
SECTION 3.06 NO FURTHER OWNERSHIP RIGHTS
All amounts paid upon the surrender for exchange or cancellation, as
applicable, of shares of Company Common Stock, Series A, Series B or of
agreements representing Warrants or Company Stock Options in accordance with the
terms hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock, Series A, Series B or
such Warrants or Company Stock Options, and there shall be no further
registration of transfers on the records of the Surviving Corporation of shares
of Company Capital Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates representing Company
Common Stock, Series A, Series B or agreements representing Warrants or Company
Stock Options are presented to the Surviving Corporation for any reason, they
shall be cancelled and Parent shall cause the applicable portion of the Net
Merger Consideration to be delivered to the person entitled thereto (subject to
the provisions of the Escrow Agreement).
SECTION 3.07 LOST, STOLEN OR DESTROYED CERTIFICATES
In the event any Certificates evidencing shares of Company Capital
Stock, shall have been lost, stolen or destroyed, Parent shall make payment of
such amount, if any, as may be required pursuant to Section 3.02 in exchange for
such lost, stolen or destroyed Certificates, upon the making of an affidavit of
that fact by the holder thereof; provided, however, that Parent may, in its sole
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver an agreement (in
form and substance satisfactory to it) to indemnify Parent against any claim
that may be made against Parent with respect to the Certificates alleged to have
been lost, stolen or destroyed.
SECTION 3.08 TAKING OF FURTHER ACTION
If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of the Company and Merger
Sub or to vest Parent with a 100% ownership interest in the Surviving
Corporation, the officers and directors of the Company and Merger Sub are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary and/or desirable action.
SECTION 3.09 FUNDS REMAINING AFTER SIX MONTHS
At any time following the sixth month after the Effective Time with
respect to the Closing Payment and, with respect to Earn-out Payment, the sixth
month after the delivery of the
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Post-closing Financial Statements to Parent, the Surviving Corporation shall be
entitled to require HEWM to deliver to it any funds which had been made
available to HEWM and not disbursed to holders of Company Capital Stock, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat and other similar laws) only as general
creditors thereof with respect to any consideration set forth in Section 3.02
hereof that may be payable upon due surrender of the Certificates or agreements
held by them. Notwithstanding the foregoing, neither the Surviving Corporation
nor HEWM shall be liable to any holder of Company Capital Stock for any
consideration set forth in Section 3.02 hereof delivered in respect of such
Capital Stock to a public official pursuant to any abandoned property, escheat
or other similar law.
SECTION 3.10 ESCROW FUND
At the Effective Time, Parent shall deliver or cause to be delivered,
directly to an escrow agent to be selected prior to the Effective Time (the
"Escrow Agent") the Escrow Amount to be deducted from the Net Merger
Consideration and held in an escrow fund pursuant to the terms set forth herein
and in an escrow agreement to be entered into by and among Parent, the Company,
the Shareholder Representative and the Escrow Agent, substantially in the form
attached hereto as EXHIBIT C (the "Escrow Agreement"). Subject to the terms of
this Agreement and the Escrow Agreement, the Escrow Amount shall be available
for a period beginning on the date of the Closing and ending on the first
anniversary thereof (the "Escrow Release Date") to satisfy any indemnification
obligations of the Company pursuant to Article X for claims made on or prior to
the Escrow Release Date and shall be paid out as provided in the Escrow
Agreement. The adoption of this Agreement and the approval of the Merger by the
Company's shareholders will constitute the approval of the Company shareholders'
of the Escrow Agreement and of all the arrangements relating thereto, including
the placement of the Escrow Amount in escrow, the appointment of R. Gale Daniel
as the Shareholder Representative in Article XI and any obligations of, or
payments due by, such shareholders under this Agreement or the Escrow Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub
that:
SECTION 4.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
(a) The Company has been duly organized and is validly existing and in
good standing under the laws of Colorado, and has the requisite corporate power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals is not reasonably expected to
have, individually or in the aggregate, a Company Material Adverse Effect. The
Company is duly qualified or licensed to do business, and is in good standing
(to the extent applicable) in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary except for such
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failures to be so qualified, licensed or in good standing that are not
reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect. The Company has no Subsidiaries.
SECTION 4.02 ARTICLES OF INCORPORATION AND BYLAWS; CORPORATE BOOKS AND
RECORDS
The Company has provided to Parent true, correct and complete copies of
the Company's articles of incorporation and bylaws. Such articles of
incorporation and bylaws are in full force and effect. The Company is not in
violation of any of the provisions of its articles of incorporation or any
material bylaw. The minute books of the Company through the date of this
Agreement contain, in all material respects, accurate records of all actions
taken by the shareholders and the Board of Directors of the Company and all
committees of the Board of Directors of the Company since the inceptions of the
Company. Complete and accurate copies of all of the Company's minute books and
of the stock register of the Company have been provided by the Company to
Parent.
SECTION 4.03 CAPITALIZATION
The authorized capital stock of the Company consists of 11,050,000
shares of Company Common Stock and 7,050,000 shares of preferred stock. As of
the date of this Agreement, (i) 1,993,913 shares of Company Common Stock are
issued and outstanding, (ii) 1,186,950 shares of Series A are issued and
outstanding, (iii) 2,105,189 shares of Series B are issued and outstanding, (iv)
1,600,000 shares of Company Common Stock are reserved for future issuance
pursuant to the Company Stock Option Plan (each, a "Company Stock Option").
Except for shares of Company Common Stock issuable pursuant to the Company Stock
Option Plan, to be issued upon conversion of the Series A and Series B, Warrants
that will be terminated prior to the Closing, or as set forth in Section 4.03 of
the Company Disclosure Schedule, there are no options, warrants or other rights,
agreements, or commitments of any character to which the Company is a party or
by which the Company is bound relating to the issued or unissued capital stock
of the Company or obligating the Company to issue or sell any shares of capital
stock of, or other equity interests in, the Company. Section 4.03 of the Company
Disclosure Schedule sets forth a complete and correct list as of the date of
this Agreement of (w) the number of Company Stock Options outstanding and the
number of shares of Company Common Stock issuable thereunder (x) the exercise
price of each such outstanding Company Stock Option, (y) the vesting schedule of
each such outstanding Company Stock Option and (z) the grantee or holder of each
such option. All shares of Company Common Stock subject to issuance as
aforesaid, upon issuance prior to the Effective Time on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. Section 4.03 of the
Company Disclosure Schedule sets forth a true and complete list of all
shareholders of the Company and their respective shareholdings. Except as
disclosed in Section 4.03 of the Company Disclosure Schedule, there are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of Company Capital Stock. Section 4.03 of the
Company Disclosure Schedule sets forth a list of all shareholder or similar
agreements to which the Company is a party or is bound. Except as set forth in
Section 4.03 of the Company Disclosure Schedule, there are no outstanding
contractual
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obligations of the Company to provide, or make any material investment (in the
form of a loan, capital contribution or otherwise funds to) in, any other
Person.
SECTION 4.04 AUTHORITY RELATIVE TO THIS AGREEMENT
The Company has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company are necessary to authorize this agreement or to consummate such
transactions except the approval of the Merger Agreement and amendment to the
Company's Articles of Incorporation described in Section 4.08(xx) of the Company
Disclosure Schedule by the shareholders of the Company, and the filing and
recordation of the Merger Agreement as required by the CBCA. This Agreement has
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
SECTION 4.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS
(a) The execution and delivery of this Agreement by the Company do not,
and the performance by the Company of its obligations hereunder and the
consummation of the Merger will not, (i) conflict with or violate any provision
of the articles of incorporation or bylaws of the Company, (ii) assuming that
all consents, approvals, authorizations and permits described in Section 4.05 of
the Company Disclosure Schedule have been obtained and all filings and
notifications described in Section 4.05(b) of the Company Disclosure Schedule
have been made, conflict with or violate any Law applicable to the Company or
which any property or asset of the Company is bound or affected, or (iii) except
as set forth in Section 4.05(a) of the Company Disclosure Schedule, and except
as would not give rise, individually or in the aggregate, to a Company Material
Adverse Effect, result in any breach of or constitute a default (or an event
which, with the giving of notice or lapse of time or both, could reasonably be
expected to become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of the Company pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation.
(b) Except as described in Section 4.05(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company do not,
and the performance by the Company of its obligations hereunder and the
consummation of the Merger will not, require any consent, approval,
authorization or permit of, or filing by the Company with or notification by the
Company to, any Governmental Entity, except the filing and recordation of the
Merger Agreement as required by the CBCA.
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SECTION 4.06 PERMITS; COMPLIANCE WITH LAWS
The Company is in possession of (i) franchises, grants, authorizations,
licenses, establishment registrations, product listings, permits, easements,
variances, exceptions, consents, certificates, identification and registration
numbers, approvals and orders of any Governmental Entity (collectively
"Permits") necessary for the Company to own, lease and operate its properties or
to produce, store, distribute and market its products or otherwise to carry on
its business as it is now being conducted and (ii) agreements from all
Governmental Entities having jurisdiction over such facility or facilities that
are required to operate the facility or facilities in the manner in which it or
they are currently operated (collectively, the "Company Permits"), and, as of
the date of this Agreement, no suspension or cancellation of any of the Company
Permits is pending or, to the knowledge of the Company, threatened. The Company
is not in conflict with, or in default or violation of, except as would not give
rise, individually or in the aggregate, to a Company Material Adverse Effect,
(i) any Law applicable to the Company or by which any property or asset of the
Company is bound or affected or (ii) any Company Permits. The Company has not
received notice from any regulatory authority that enforces the statutory or
regulatory provisions of any pending or threatened investigations or surveys,
and no such investigations or surveys are pending or, to the knowledge of the
Company, threatened or imminent. There are no actions, proceedings,
investigations or surveys pending or, to the knowledge of the Company,
threatened against the Company that could reasonably be expected to result in
(i) the loss or revocation of a Company Permit or (ii) the suspension or
cancellation of any other Company Permit. Except as set forth in Section 4.06 of
the Company Disclosure Schedule, the Company has not received from any
Governmental Entity any written notification with respect to possible conflicts,
defaults or violations of Laws.
SECTION 4.07 FINANCIAL STATEMENTS
(a) The Company has provided to Parent (i) unaudited consolidated
financial statements for the fiscal years ended December 31, 1999 and December
31, 1998, and (ii) unaudited consolidated financial statements for the
nine-month period ended September 30, 2000 (collectively, the "Company
Reports").
(b) Each of the consolidated financial statements (including, in each
any notes thereto) contained in the Company Reports was prepared in accordance
with U.S. GAAP applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each presented fairly, in
all material respects, the consolidated financial position of the Company as at
the respective dates thereof and for the respective periods indicated therein,
except as otherwise noted therein (subject, in the case of unaudited statements,
to normal and recurring year-end adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of the Company as reported in the Company Reports,
including the notes thereto, the Company has no liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet or in notes thereto prepared in
accordance with U.S. GAAP, except for liabilities or obligations incurred in the
ordinary course of business consistent with past practice since September 30,
2000.
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SECTION 4.08 ABSENCE OF CERTAIN CHANGES OR EVENTS
Since the Reference Balance Sheet Date, except (i) as disclosed in
Section 4.08 of the Company Disclosure Schedule, or (ii) provided for in or
disclosed pursuant to subsections (i) - (xxvi) below, the business of the
Company has been conducted in the ordinary course and consistent with past
practice. As amplification and not limitation of the foregoing, except as
disclosed in Section 4.08 of the Company Disclosure Schedule, since the
Reference Balance Sheet Date, the Company has not:
(i) transferred to any person or entity any rights to its
Intellectual Property other than transfers necessary to sell products in the
ordinary course of business consistent with past practice;
(ii) permitted or allowed any of the assets or properties
(whether tangible or intangible) of the Company to be subjected to any
Encumbrance, other than Permitted Encumbrances and Encumbrances that will be
released at or prior to the Closing;
(iii) except in the ordinary course of business consistent
with past practice, discharged or otherwise obtained the release of any or paid
or otherwise discharged any liability, other than current liabilities reflected
on the Reference Balance Sheet and current liabilities incurred in the ordinary
course of business consistent with past practice since the Reference Balance
Sheet Date;
(iv) made any loan to, guaranteed any indebtedness for
borrowed money of, or otherwise incurred any liability for borrowed money on
behalf of any Person other than payroll, travel guaranties and other advances
made in the ordinary course of business;
(v) failed to pay any creditor any material amount owed to
such creditor when due;
(vi) redeemed any of the capital stock or declared, made or
paid any dividends or distributions (whether in cash, securities or other
property) to the holders of capital stock of the Company or otherwise;
(vii) made any material changes in the customary methods of
operations of the Company, including, without limitation, practices and policies
relating to manufacturing, purchasing, inventories, marketing, selling and
pricing;
(viii) merged with, entered into a consolidation with or
acquired an equity interest in any Person or acquired a substantial portion of
the assets or business of any Person or any division or line of business
thereof, or otherwise acquired any material assets other than in the ordinary
course of business consistent with past practice;
(ix) made any capital expenditure or commitment of any capital
expenditure in excess of $20,000 individually or $50,000 in the aggregate;
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(x) issued any sales orders or otherwise agreed to make any
purchases involving exchanges in value in excess of $20,000 individually or
$50,000 in the aggregate;
(xi) sold, transferred, leased, subleased, licensed or
otherwise disposed of any material properties or assets, real, personal or mixed
(including, without limitation, leasehold interests and intangible assets),
other than the sale of inventories in the ordinary course of business consistent
with past practice;
(xii) issued or sold any capital stock, notes, bonds or other
securities, or any option, warrant or other right to acquire the same, of
Company Stock, or any other interest in, the Company;
(xiii) entered into any agreement, arrangement or transaction
with any of its directors, officers, employees or shareholders (or with any
relative, beneficiary, spouse or Affiliate of such Person);
(xiv) (A) granted any increase, or announced any increase, in
the wages, salaries, compensation, bonuses, incentives, pension or other
benefits payable by the Company to any of its employees, including, without
limitation, any increase or change pursuant to any Plan or (B) established or
increased or promised to increase any benefits under any Plan;
(xv) written down or written up (or failed to write down or
write up in accordance with and consistent with past practice) the value of any
inventories or receivables or revalued any assets of the Company other than in
the ordinary course of business consistent with past practice, and in accordance
with U.S. GAAP;
(xvi) amended, terminated, cancelled or compromised any
material claims of the Company or waived any other rights of substantial value
to the Company;
(xvii) made any change in any method of accounting or
accounting practice or policy used by the Company, other than such changes
required by U.S. GAAP;
(xviii) allowed any Permit or Environmental Permit that
relates to the Company or otherwise relates to any asset to lapse or terminate
or failed to renew any such Permit or Environmental Permit or any insurance
policy that is scheduled to terminate or expire within 45 calendar days of the
date of the Closing;
(xix) amended or modified in any material respect, or
consented to the termination of, any Material Contract or the Company's rights
thereunder,
(xx) amended or restated the articles of incorporation or the
bylaws (or other organizational documents) of the Company;
(xxi) terminated, discontinued, closed or disposed of any
plant, facility or other business operation, or laid off any employees or
implemented any early retirement, separation or program providing early
retirement window benefits within the meaning of
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Section 1.401(a)-4 of the Regulations or announced or planned any such action or
program for the future;
(xxii) knowingly disclosed any secret or confidential
Intellectual Property (except by way of issuance of a patent) or permitted to
lapse or go abandoned any Intellectual Property (or any registration or grant
thereof or any application relating thereto) to which, or under which, the
Company has any right, title, interest or license;
(xxiii) made any express or deemed election or settled or
compromised any material liability, with respect to Taxes of the Company;
(xxiv) suffered any casualty loss or damage with respect to
any of the assets of the Company which in the aggregate have a replacement cost
of more than $20,000, and which is not covered by insurance;
(xxv) suffered any Company Material Adverse Effect; or
(xxvi) agreed, whether in writing or otherwise, to take any of
the actions specified in this Section 4.08 or granted any options to purchase,
rights of first refusal, rights of first offer or any other similar rights or
commitments with respect to any of the actions specified in this Section 4.08,
except as expressly contemplated by this Agreement.
SECTION 4.09 ACCOUNTS RECEIVABLE
Except as set forth in Section 4.09 of the Company Disclosure Schedule,
(a) each account receivable of the Company (collectively, the "Accounts
Receivable") represents a sale made in the ordinary course of business and which
arose pursuant to an enforceable contract for a bona fide sale of goods or for
services performed, and, except for open sales and purchase orders described in
Section 4.11, the Company has performed all of its obligations to produce the
goods or perform the services to which such Accounts Receivable relates, other
than amounts recorded as deferred revenue, and (b) no Account Receivable is
subject to any claim for reduction, counterclaim, set-off, recoupment or other
claim for credit, allowances or adjustments by the obligor thereof, in an amount
individually or in the aggregate that would exceed $50,000.
SECTION 4.10 CUSTOMERS; SUPPLIERS
(a) Listed in Section 4.10(a) of the Company Disclosure Schedule are
the names and addresses of all the customers of the Company which ordered goods
or merchandise from the Company with an aggregate value of $50,000 or more
during the nine-month period ended September 30, 2000, and the amount for which
each such customer was invoiced during such period. Except as noted in Section
4.10(a) of the Company Disclosure Schedule, the Company has not received any
notice or has any reason to believe (other than by reason of non-payment of
recurring maintenance fees) that any customer therein listed has ceased, or will
cease, to use the products, equipment, goods or services of the Company, or has
substantially reduced, or will substantially reduce, the use of such products,
equipment, goods or services at any time.
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(b) Listed in Section 4.10(b) of the Company Disclosure Schedule are
the names 9and addresses of all the suppliers from which the Company ordered raw
materials, supplies, merchandise and other goods for the Company (but not
including services or advertising) with an aggregate purchase price of $20,000
or more during the nine-month period ended September 30, 2000 and the amount for
which each such supplier invoiced the Company during such period.
SECTION 4.11 SALES AND PURCHASE ORDER BACKLOG
(a) As of the Reference Balance Sheet Date, open sales orders accepted
by the Company totaled $191,607, and, as of October 20, 2000, open sales orders
accepted by the Company totaled $354,025. Section 4.11 (a) of the Company
Disclosure Schedule lists all sales orders which have been accepted by the
Company, and which were open either as of the Reference Balance Sheet Date or as
of the date hereof.
(b) As of the Reference Balance Sheet Date, open purchase orders issued
by the Company totaled $107,391, and, as of October 20, 2000, open purchase
orders issued by the Company totaled $144,542. Section 4.11(b) of the Company
Disclosure Schedule lists all purchase orders exceeding $5,000 per order, which
have been issued by the Company, and which were open either as of the Reference
Balance Sheet Date or as of the date hereof.
SECTION 4.12 PRODUCT AND SERVICE WARRANTIES
Set forth in Section 4.12 of the Company Disclosure Schedule are the
standard written forms of product and service warranties and guarantees utilized
by the Company as of the date of this Agreement. Neither the Company nor any of
its Affiliates has made any other written material warranties (which remain in
effect) with regard to products and/or services supplied by the Company.
SECTION 4.13 EMPLOYEE BENEFIT PLANS; LABOR MATTERS
(a) Section 4.13(a) of the Company Disclosure Schedule lists (i) all
"employee benefit plans" (as defined in Section 3(3) of ERISA) and all bonus,
stock option, stock purchase, stock appreciation rights, restricted stock,
phantom stock, incentive, deferred compensation, retiree medical or life
insurance, supplemental retirement, severance or other benefit plans, programs
or arrangements, employee relocation programs, cafeteria benefit (Code Section
125) and dependent care (Code Section 129) plan, and all employment,
termination, severance or other contracts or agreements, whether legally
enforceable or not, to which the Company or other trade or business (whether or
not incorporated), which is treated as a single employer with the Company (an
"ERISA Affiliate") pursuant to Code Section 414(b), (c), (m) or (o) is a party,
or with respect to which the Company or any ERISA Affiliate has any obligation,
or which are maintained, contributed to or sponsored by the Company or any ERISA
Affiliate for the benefit of any current or former employee, officer or director
of the Company or any ERISA Affiliate, (ii) each employee benefit plan for which
the Company or any ERISA Affiliate could incur liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated, (iii) any plan
in respect of which the Company or any ERISA Affiliate could incur liability
under Section 4212(c) of ERISA and (iv) any contracts, arrangements or
understandings between the
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Company or any of its affiliates and any employee of the Company or of any ERISA
Affiliate, including, without limitation, any contracts, arrangements or
understandings relating to the sale of the Company (collectively, the "Company
Benefit Plans"). With respect to each Company Benefit Plan, the Company has
delivered or made available to Parent a true, complete and correct copy of (i)
such Company Benefit Plan and the most recent summary plan description related
to such Company Benefit Plan, if a summary plan description is required
therefor, (ii) each trust agreement or other funding arrangement relating to
such Company Benefit Plan, (iii) the annual reports (Form 5500) for such Company
Benefit Plan filed with the IRS for the last three (3) plan years, (iv) the most
recent actuarial report or financial statement relating to such Company Benefit
Plan and (v) the most recent determination letter issued by the IRS with respect
to such Company Benefit Plan, if it is qualified under Section 401(a) of the
Code. Except as disclosed on Section 4.13 (a) of the Company Disclosure
Schedule, there are no other employee benefit plans, programs, arrangements or
agreements, whether formal or informal, whether in writing or not, to which the
Company or any ERISA Affiliate is a party, with respect to which the Company or
any ERISA Affiliate has any obligation or which are maintained, contributed to
or sponsored by the Company or any ERISA Affiliate for the benefit of any
current or former employee, officer or director of the Company or any ERISA
Affiliate. Neither the Company nor any ERISA Affiliate has any express or
implied commitment, whether legally enforceable or not, (i) to create and incur
liability with respect to or cause to exist any other employee benefit plan,
program or arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Company Benefit Plan, other than with respect to a modification,
change or termination required by ERISA or the Code.
(b) None of the Company Benefit Plans is a multiemployer plan (within
the meaning of Section 3(37) or 4001(a)(3) of ERISA) or a single employer
pension plan (within the meaning of Section 4001(a)(15) of ERISA) for which the
Company or any ERISA Affiliate could incur liability under Section 4063 or 4064
of ERISA. None of the Company Benefit Plans provide for or promise retiree
medical, disability or life insurance benefits to any current or former
employee, officer or director of the Company or any ERISA Affiliate.
(c) Each Company Benefit Plan has been administered in all material
respects in accordance with its terms, and all contributions required to be made
under the terms of any of the Company Benefit Plans as of the date of this
Agreement have been timely made or have been reflected on the most recent
consolidated balance sheet filed or incorporated by reference in the Company
Reports prior to the date of this Agreement. Except as set forth in Section
4.13(c) of the Company Disclosure Schedule, with respect to the Company Benefit
Plans, no event has occurred and, to the knowledge of the Company, there exists
no condition or set of circumstances in connection with which the Company or any
ERISA Affiliate could be subject to any liability under the terms of such
Company Benefit Plans, ERISA, the Code or any other applicable Law which could
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(d) The Company on behalf of itself and all of the ERISA Affiliates
hereby represents that, the Company does not sponsor or maintain, nor has it
ever sponsored or maintained, a Company Benefit Plan which is or was intended to
be qualified under Section 401(a) of the Code or Section 401(k) of the Code, a
trust established in connection with any
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Company Benefit Plan which is or was intended to be exempt from federal income
taxation under Section 501(a) of the Code, or a trust which is or was intended
to be qualified as a voluntary employees' beneficiary association and to be
exempt from federal income taxation under Section 501(c)(9) of the Code.
(e) The Company on behalf of itself and all of the ERISA Affiliates
hereby represents that, other than as disclosed in Section 4.13(e) of the
Company Disclosure Schedule: (i) to the Company's knowledge, there has been no
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Company Benefit Plan; (ii) neither the
Company nor any ERISA Affiliate has incurred any liability for any penalty or
tax arising under Section 4980, 4980B or 6652 of the Code, and, to the Company's
knowledge, no fact or event exists which could give rise to any such liability;
(iii) neither the Company nor any ERISA Affiliate has incurred any liability
under Section 502 of ERISA, and, to the Company's knowledge, no fact or event
exists which could give rise to any such liability; (iv) all contributions,
premiums or payments required to be made with respect to any Company Benefit
Plan have been made on or before their due dates; (v) all such contributions
have been fully deducted for income tax purposes and no such deduction has been
challenged or disallowed by any government entity and, to the Company's
knowledge, no fact or event exists which could give rise to any such challenge
or disallowance; and (vi) each Company Benefit Plan can be amended, terminated
or otherwise discontinued after the Effective Time in accordance with its terms,
without liability to Parent (other than ordinary administrative expenses
typically incurred in a termination event). With respect to each Company Benefit
Plan subject to ERISA as either an employee pension plan within the meaning of
Section 3(2) of ERISA or an employee welfare benefit plan within the meaning of
Section 3(l) of ERISA, the Company on behalf of itself and all of the ERISA
Affiliates hereby represents that all requisite governmental reports (which were
true and correct as of the date filed) have been prepared in good faith and
timely filed and all notices and reports to employees required to be filed,
distributed or posted with respect to each such Company Benefit Plan have been
properly and timely filed and distributed or posted. No suit, administrative
proceeding, action or other litigation has been brought, or to the knowledge of
the Company is threatened, against or with respect to any such Company Benefit
Plan, including any audit or inquiry by the Internal Revenue Service or United
States Department of Labor (other than routine benefits claims).
(f) To the Company's knowledge, the Company is in compliance with the
requirements of (i) the Americans With Disabilities Act, (ii) the applicable
health care continuation and notice provisions of the Consolidated Omnibus
Budget Reconciliation Act of 1985 and the regulations (including proposed
regulations) thereunder, (iii) the applicable requirements of the Health
Insurance Portability and Accountability Act of 1996 and the regulations
(including the proposed regulations) thereunder, and (iv) the applicable
requirements of the Family Medical and Leave Act of 1993 and the regulations
thereunder, except to the extent that such non-compliance would not reasonably
be expected to have, either individually or in the aggregate, a Company Material
Adverse Effect.
(g) Except as set forth in Section 4.13(g) of the Company Disclosure
Schedule, the Company is not a party to any collective bargaining or other labor
union contract applicable to persons employed by the Company and no collective
bargaining agreement is being negotiated
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by the Company. As of the date of this Agreement, there is no labor dispute,
strike or work stoppage against the Company pending or, to the knowledge of the
Company, threatened which may interfere with the business activities of the
Company. As of the date of this Agreement, to the knowledge of the Company,
neither the Company, nor any of its representatives or employees has committed
any unfair labor practice in connection with the operation of the business of
the Company, and there is no charge or complaint against the Company by the
National Labor Relations Board or any comparable Governmental Entity pending or
threatened in writing.
(h) The Company has made available to Parent true, complete and correct
copies of (i) all employment agreements with officers and all consulting
agreements of the Company and each ERISA Affiliate, (ii) all severance plans,
agreements, programs and policies of the Company and each ERISA Affiliate with
or relating to their respective employees or consultants, and (iii) all plans,
programs, agreements and other arrangements of the Company and each ERISA
Affiliate with or relating to their respective employees or consultants which
contain "change of control" provisions. Except as set forth in Section 4.13(h)
of the Company Disclosure Schedule, no payment or benefit which will be made by
the Company or any ERISA Affiliate under any Company Benefit Plan or other
arrangement will constitute an excess parachute payment under Code Section
280(G)(1). Except as set forth in Section 4.13(h) of the Company Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee or other service provider of
the Company or any ERISA Affiliate to severance benefits or any other payment,
except as expressly provided by this Agreement, or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such employee
or service provider.
(i) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any ERISA Affiliate
relating to, or change in participation or coverage under, any Company Benefit
Plan which would materially increase the expense of maintaining such Plan above
the level of expense incurred with respect to that Plan for the most recent
fiscal year included in the Company Reports.
(j) The Company maintains satisfactory employer-employee relations. The
Company is not delinquent in payments to any of its employees or consultants for
any wages, salaries, commissions, bonuses or other direct compensation for any
services performed by them to the date hereof or amounts required to be
reimbursed to such employees.
(k) Upon termination of the employment of any employees, neither the
Company nor Parent or the Surviving Corporation will by reason of the Merger or
anything done prior to the Effective Time be liable to any of such employees for
severance pay or any other payments (other than accrued salary, vacation, sick
pay or any payments in accordance with the Company's normal policies or
agreements as provided in Section 7.03(b)).
SECTION 4.14 EMPLOYEES
(a) Section 4.14 of the Company Disclosure Schedule lists the name,
place of employment, the current annual salary rates, bonuses, deferred or
contingent compensation,
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pension, accrued vacation, "golden parachute" and other like benefits paid or
payable (in cash or otherwise) in 1999 and 2000, the date of employment and job
title of each current salaried employee, officer, director, consultant or agent
of the Company.
(b) All officers, management employees, and technical and professional
employees of the Company are under written obligation to the Company to maintain
in confidence all confidential or proprietary information acquired by them in
the course of their employment and to assign to the Company all inventions made
by them within the scope of their employment during such employment pursuant to
an agreement in substantially the form set forth in the Company Disclosure
Schedule.
SECTION 4.15 MATERIAL CONTRACTS
(a) Except as disclosed in Section 4.15(a) of the Company Disclosure
Schedule, each Material Contract: (i) is legal, valid and binding on the Company
and, to the Company's knowledge, the other parties thereto and is in full force
and effect, and (ii) upon consummation of the transactions contemplated by this
Agreement, except to the extent that any consents set forth in Section 4.15(a)
of the Company Disclosure Schedule are not obtained, shall continue in full
force and effect without penalty or other adverse consequence. The Company is
not in breach of, or default under, any Material Contract, except as would not
give rise, individually or in the aggregate, to a Company Material Adverse
Effect.
(b) Except as disclosed in Section 4.15(b) of the Company Disclosure
Schedule, to the knowledge of the Company, no other party to any Material
Contract is in material breach thereof or default thereunder.
SECTION 4.16 GUARANTIES
Except as set forth in Schedule 4.16 of the Company Disclosure
Schedule, the Company is not a party to any guaranty, and no Person is a party
to any guaranty for the benefit of the Company.
SECTION 4.17 LITIGATION
Except as disclosed in Section 4.17 of the Company Disclosure Schedule,
there is no suit, claim, action, proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company. Except as disclosed in
Section 4.17 of the Company Disclosure Schedule, the Company is not subject to
any outstanding order, writ, injunction or decree.
SECTION 4.18 ENVIRONMENTAL MATTERS
Except as disclosed in Section 4.18 of the Company Disclosure Schedule,
to the knowledge of the Company: (i) the Company is in material compliance with
all applicable Environmental Laws; (ii) all past noncompliance, if any, of the
Company with Environmental Laws or Environmental Permits known to the Company
has been resolved without any pending, ongoing or future obligation, cost or
liability; and (iii) the Company has not released a Hazardous Material at, or
transported a Hazardous Material to or from, any real property
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currently or within the two year period preceding the date hereof, owned, leased
or occupied by the Company, in violation of any Environmental Law.
SECTION 4.19 INTELLECTUAL PROPERTY
(a) COMPANY INTELLECTUAL PROPERTY. All patents, trademarks, trade
names, service marks, trade dress, Internet domain names, copyrights and any
renewal rights therefor, technology, supplier lists, trade secrets, know-how,
computer software programs or applications in both source and object code form,
technical documentation of such software programs ("Technical Documentation"),
registrations and applications for any of the foregoing and all other tangible
or intangible proprietary and non-proprietary information or materials that are
or have been used (including without limitation in the development of) in the
Company's business and/or in any product, technology or process (i) currently
being, or within the two year period preceding the date hereof were,
manufactured, published or marketed by the Company or (ii) currently under
development for possible future manufacturing, publication, marketing or other
use by the Company are hereinafter referred to as the "Company Intellectual
Property."
(b) APPLICATIONS AND REGISTRATIONS. Section 4.19(b) of the Company
Disclosure Schedule contains a true and complete list of all of the Company's
patents, pending patent applications, trademarks, pending trademark
applications, trade names, service marks, pending service mark applications,
Internet domain names, pending Internet domain name applications, copyrights and
copyright registrations and pending applications and other filings and formal
actions made or taken pursuant to federal, state, local and foreign laws by the
Company to protect its interests in the Company Intellectual Property.
(c) RIGHTS TO COMPANY INTELLECTUAL PROPERTY. Except as set forth in
Section 4.19(c) of the Company Disclosure Schedule, the Company Intellectual
Property consists solely of items and rights which are: (i) owned by the
Company; (ii) in the public domain; or (iii) rightfully used by the Company
pursuant to a valid license. The Company has all rights in the Company
Intellectual Property necessary to carry out the Company's current activities
(which for the purposes hereof shall include products under development).
(d) THIRD PARTY CLAIMS. No manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in any Company Intellectual
Property, product, work, technology or process as now used or offered or
proposed for use, licensing or sale by the Company infringes on any copyright,
trade secret, trademark, service mark, trade name, trade dress, firm name,
Internet domain name, logo, trade dress, mask work or of any person or the
patent of any person. No claims (i) challenging the validity, effectiveness or
ownership by the Company of any of the Company Intellectual Property, or (ii) to
the effect that the use, distribution, licensing, sublicensing, sale or any
other exercise of rights in any product, work, technology or process as now used
or offered or proposed for use, licensing, sublicensing or sale by the Company
infringes or will infringe on any intellectual property or other proprietary
right of any person have been asserted or, to the knowledge of Company, are
threatened by any person, nor are there, to the Company's knowledge, any valid
grounds for any bona fide claim of any such kind; provided that with respect to
the third-party software listed in Section 4.19(g) of the Company Disclosure
Schedule, the foregoing shall apply only to the Company's knowledge.
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All registered, granted or issued patents, trademarks, Internet domain names and
copyrights held by the Company are enforceable and subsisting. To the Company's
knowledge, there is no unauthorized use, infringement or misappropriation of any
of the Company Intellectual Property by any third party, employee or former
employee.
(e) ROYALTIES. Except as set forth in Section 4.19(e) of the Company
Disclosure Schedule, there are no material royalties, fees, honoraria or other
payments payable by the Company to any person or entity by reason of the
ownership, development, use, license, sale or disposition of the Company
Intellectual Property, other than salaries and sales commissions paid to
employees and sales agents in the ordinary course of business.
(f) PERSONNEL. All personnel, including employees, agents, consultants
and contractors, who have contributed to or participated in the conception and
development of the Company Intellectual Property on behalf of the Company, have
executed nondisclosure agreements in the form set forth in the Company
Disclosure Schedule and either (i) have been a party to a "work-for-hire"
arrangement or agreements with the Company in accordance with applicable
national and state law that has accorded the Company full, effective, exclusive
and original ownership of all tangible and intangible property thereby arising,
or (ii) have executed appropriate instruments of assignment in favor or the
Company as assignee that have conveyed to the Company effective and exclusive
ownership of all tangible and intangible property thereby arising.
(g) THIRD PARTY AGREEMENTS. Except as set forth in Section 4.19(g) of
the Company Disclosure Schedule (and except for any consents required in
connection with the Merger), the Company is not, nor as a result of the
execution or delivery of this Agreement, or performance of the Company's
obligations hereunder, will Company be, in violation of any license, sublicense
or other agreement relating to Company Intellectual Property, nor will execution
or delivery of this Agreement, or performance of Company's obligations
hereunder, cause the diminution, termination or forfeiture of any Company
Intellectual Property. Section 4.19(g) sets forth a list of all licenses by the
Company of the Company Intellectual Property, excluding shrink wrap and other
commodity type licenses; except as set forth in Section 4.19(g), the Company has
not licensed, encumbered or otherwise granted any rights in or to the Company
Intellectual Property to any third party.
(h) COMPANY SOFTWARE PROGRAM. Section 4.19(h) of the Company Disclosure
Schedule contains a true and complete list of all of Company's software programs
(the "Software Programs"). Except as set forth in Section 4.19(h) of the Company
Disclosure Schedule, the Company owns full and unencumbered right and good,
valid and marketable title to such Software Programs free and clear of all
mortgages, pledges, liens, security interests, conditional sales agreements,
encumbrances or charges of any kind.
(i) PROTECTION. The source code and system documentation relating to
the Software Programs (i) have at all times been maintained in strict
confidence, (ii) have been disclosed by the Company only to employees,
contractors and consultants who have a "need to know," the contents thereof in
connection with the performance of their duties to the Company and who have
executed the nondisclosure agreements referred to in Section 4.19(f), and
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(iii) except as set forth in Section 4.19(i) of the Company Disclosure Schedule,
have not been disclosed to any third party.
(j) THIRD-PARTY SOFTWARE. Section 4.19(j) of the Company Disclosure
Schedule contains a complete list of software libraries, software systems,
compilers and other third-party software necessary for the development of the
Software Programs and the development or production of Company products. The
Company Disclosure Schedule lists all license agreements for the use of all such
software (excluding shrink wrap and other commodity type licenses and software
within the public domain) and, if any such software is not licensed, the basis
of the use of such software by the Company. All use of each of such software
product by the Company has been in material compliance with the respective
license agreement or other right of use listed on the Company Disclosure
Schedule.
(k) CONTRACT PERFORMANCE. The Company has observed all provisions of,
and performed all of their obligations under, the license agreements to which it
is a party. The Company has not taken any action that could cause, or failed to
take any action (except that Company has not filed any copyright registrations
or patent applications with respect to the Company Intellectual Property), the
failure of which could cause, (i) any source code, trade secret or other Company
Intellectual Property to be released from an escrow or otherwise made available
to any person or entity, dedicated to the public or otherwise placed in the
public domain or (ii) a Company Material Adverse Effect.
SECTION 4.20 TAXES
(a) The Company has timely filed all material Tax Returns required to
be filed by it, which Tax Returns are true, correct, and complete in all
respects, and has paid all Taxes required to be paid as shown on such Tax
Returns. True and correct copies of all such returns have been provided to
Parent.
(b) The Company Reports reflect an adequate reserve (which reserve was
established in accordance with GAAP) for all Taxes payable by the Company,
accrued through the date of such financial statements. The books and records of
the Company reflect an adequate reserve for Taxes not yet due and payable and
properly accrued in accordance with GAAP since the Closing Balance Sheet.
(c) Except as set forth in Schedule 4.20(c) of the Company Disclosure
Schedule, the Company (i) has not received any written notice of deficiency or
assessment from any Tax or other governmental authority with respect to Taxes of
the Company, (ii) is not currently under, or has received notice of commencement
of, any audit by any taxing or other governmental authority concerning any Taxes
of the Company, (iii) has not received any request for a Tax Return or inquiry
as to whether a Tax Return has been filed from any jurisdiction where it does
not or has not filed Tax Returns, or (iv) has neither executed any waiver of the
statute of limitations with respect to any taxable period of the Company or
received any request for such a waiver. With respect to any asserted deficiency
in Taxes not paid by the Company, the Company is contesting such deficiency in
good faith and by appropriate procedures and has established adequate reserves
in accordance with GAAP for such Taxes.
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(d) There is no lien for Taxes on the assets of the Company, except for
inchoate liens for Taxes not yet due and payable.
(e) Except as set forth in Schedule 4.20(e) of the Company Disclosure
Schedule, the Company has not been a member of any affiliated, consolidated,
combined, unitary or similar group for purposes of filing Tax Returns with
respect to Taxes that may be paid, collected or withheld by or with respect to
the Company or paying such Taxes at any time.
(f) Except as set forth in Schedule 4.20(f) of the Company Disclosure
Schedule, there is no contract, agreement or intercompany account system
(including but not limited to Tax sharing, allocation or indemnification
agreements) under which the Company has, or may at any time in the future have,
an obligation to contribute to the payment of any portion of a Tax (or pay any
amount computed by reference to any portion of a Tax).
(g) The Company is not a party to or otherwise subject to any
arrangement entered into in anticipation of the Closing, not in accordance with
past practice and not contemplated hereby, that could reasonably be expected to
have the effect of (i) the recognition of a deduction or loss before the date of
the Closing and a corresponding recognition of taxable income or gain by the
Company after the date of the Closing or (ii) the recognition of taxable income
or gain by the Company after the date of the Closing without the receipt of or
entitlement to a corresponding amount of cash.
(h) Except as set forth in Schedule 4.20(h) of the Company Disclosure
Schedule, (i) no closing agreement, written ruling, or determination letter with
respect to Taxes, or any equivalent written decision from a foreign
jurisdiction, has been received from, and no closing or other similar agreement
has been executed with, any Tax or other governmental authority that will be
binding upon the Company after the Closing and (ii) no power of attorney has
been given by or with respect to the Company to any Person with respect to Taxes
that will be binding upon the Company.
(i) There is no contract, agreement, plan or arrangement, including but
not limited to the provisions of this Agreement, covering any employee or former
employee of the Company that could give rise to the payment of any amount that
would not be deductible pursuant to Sections 280G, 404 or 162 of the Code.
(j) The Company has properly withheld on and all amounts paid to
employees or to Persons located or incorporated outside of the United States and
have paid the appropriate amounts withheld to the proper governmental
authorities.
(k) The Company has not filed any consent agreement under Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the
Code) owned by the Company.
(l) The Company has not been a party to a transaction intended to
qualify under Section 355 of the Code (whether as distributing or distributed
company) within the last five years.
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SECTION 4.21 PROPERTIES AND ASSETS
(a) The Company has good and marketable title to the properties and
assets reflected on the Reference Balance Sheet of the Company other than
nonmaterial properties and assets disposed of in the ordinary course of business
consistent with past practice since the date of the Reference Balance Sheet, and
all such properties and assets are free and clear of claims, except (i) as set
forth in Section 4.2 1(a) of the Company Disclosure Schedule and (ii) Permitted
Encumbrances. Such properties and assets constitute all of the assets necessary
to conduct the Company's business substantially in the same manner as it has
been conducted prior to the date hereof.
(b) The Company does not own any real properties. Section 4.21(b) of
the Company Disclosure Schedule sets forth a complete and accurate list of the
real properties leased by the Company (the "Leased Properties"). The Company has
good and marketable leasehold title to the Leased Properties set forth in
Section 4.21(b) of the Company Disclosure Schedule, free and clear of all
claims, tenants and occupants except for Permitted Encumbrances and as set forth
in Section 4.21(b) of the Company Disclosure Schedule. Complete and accurate
copies of all leases or other agreements relating to the Leased Properties have
been made available to Parent and there have been no material changes or
amendments to such leases or agreements since they were made available. The
Company is the lawful owner of all improvements and fixtures located at the
Leased Properties, free and clear of all Claims except for Permitted
Encumbrances. Each lease or other agreement relating to the Leased Properties is
a valid and subsisting agreement, without any default of the Company thereunder
and, to the Company's knowledge, without any default thereunder of the other
party thereto, and such leases and agreements give the Company the right to use
or occupy, as the case may be, all real properties as are sufficient and
adequate to operate its business as it is currently being conducted. Except as
set forth in Section 4.21(b) of the Company Disclosure Schedule, the possession
of such property by the Company has not been disturbed nor has any claim
relating to the Company's title to or possession of such property been asserted
against the Company.
SECTION 4.22 BROKERS
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger based upon
arrangements made by or on behalf of the Company.
SECTION 4.23 CERTAIN BUSINESS PRACTICES
To the Company's knowledge, none of the Company, or any of its
directors, officers, agents or employees of the Company (in their capacities as
such) has (i) used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, (iii) consummated any
transaction, made any payment, entered into any agreement or arrangement or
taken any other action in violation of
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Section 1128B(b) of the Social Security Act, as amended, or (iv) made any other
unlawful payment.
SECTION 4.24 INTERESTED PARTY TRANSACTIONS
(a) Except as set forth in Section 4.24(a) of the Company Disclosure
Schedule, since January 1, 2000 no executive officer, director or greater than
5% shareholder of the Company has engaged in any business dealings with the
Company.
(b) Except for normal compensation received as employees or directors
and for transactions set forth in the Company Reports, no officer or, to the
knowledge of the Company, director or greater than 5% shareholder of the
Company, and no entity known by the Company to be controlled by any officer or,
to the knowledge of the Company, director or greater than 5% shareholder of the
Company (other than Parent) is directly or indirectly engaged in business as a
competitor, lessor, lessee, customer or supplier of the Company; owns directly
or indirectly any interest (excepting no more than 5% stockholdings for
investment purposes in securities of publicly held companies) in any Person that
is directly or indirectly engaged in business as a competitor, lessor, lessee,
franchisee, customer or supplier of the Company; or is an officer, director,
employee or consultant of any such person.
(c) Except for normal compensation received as employees or directors
and for transactions set forth in the Company Reports, no officer, director or,
to the knowledge of the Company, greater than 5% shareholder of the Company, and
no entity known by the Company to be controlled by any officer, director or, to
the knowledge of the Company, greater than 5% shareholder of the Company:
(i) owns directly or indirectly, in whole or in part, any
material tangible or intangible property that the Company uses;
(ii) has any cause of action or other claim whatsoever
against, or owes any amount to, the Company, except for claims in the ordinary
course of business, such as for accrued vacation pay, and similar matters in
agreements existing on the date hereof; or
(iii) has made any payment or commitment to pay any
commission, fee or other amount to, or purchase or obtain or otherwise contract
to purchase or obtain any goods or services from, any Person of which any
officer or director of the Company is a partner or shareholder (excepting no
more than five percent stockholdings for investment purposes in securities of
publicly-held companies).
SECTION 4.25 VOTE REQUIRED; CONSENTS.
The affirmative vote or consent of the Holders of a majority of each of
(i) the Company Common Stock, voting as a separate voting group and (ii) the
Series A and the Series B, voting together as a separate voting group, are the
only votes of the holders of any of the Company's Capital Stock necessary to
approve this Agreement and the Merger and the transactions contemplated hereby.
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SECTION 4.26 BOARD APPROVAL
The Board of Directors of the Company has (i) approved this Agreement
and the Merger and all transactions contemplated hereby and (ii) determined that
the Merger is in the best interests of the shareholders of the Company and is on
the terms that are fair to such shareholders.
SECTION 4.27 BUSINESS ACTIVITY RESTRICTIONS
Except as set forth in Section 4.27 of the Company Disclosure Schedule,
there is no agreement (noncompetition or otherwise), commitment, judgment,
injunction, order or decree to which the Company or any officer, employee or
consultant of the Company is a party or that otherwise is binding upon the
Company or such officer, employee or consultant that has or reasonably could be
expected to have the effect of materially prohibiting or impairing any business
practice of the Company, any acquisition of property (tangible or intangible) by
the Company, or the conduct of business by the Company. The Company has not
entered into any agreement under which the Company is restricted from selling,
licensing or otherwise distributing any of its technology or products to, or
providing services to, customers or potential customers or any class of
customers, in any geographic area, during any period of time or in any segment
of the market or line of business.
SECTION 4.28 REPRESENTATIONS COMPLETE
None of the representations or warranties made by the Company herein or
in any Schedule hereto, including the Company Disclosure Schedule, or
certificate furnished by the Company pursuant to this Agreement, when all such
documents are read together in their entirety, contains or will contain at the
Effective Time any untrue statement of a material fact, or omits or will omit at
the Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company that:
SECTION 5.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
Each of Parent and Merger Sub has been duly organized and is validly
existing and in good standing (to the extent applicable) under the laws of the
State of Delaware and the State of Colorado, respectively, and has the requisite
corporate power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or good
standing or to have such power, authority and governmental approvals are not
reasonably expected to have, individually or in the aggregate, a Parent Material
Adverse Effect. Each of Parent and Merger
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Sub is duly qualified or licensed to do business, and is in good standing (to
the extent applicable), in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that is not reasonably expected to
have, individually or in the aggregate, a Parent Material Adverse Effect.
SECTION 5.02 AUTHORITY RELATIVE TO THIS AGREEMENT
Parent and Merger Sub have all necessary corporate power and authority
to execute and deliver this Agreement, to perform their respective obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement or to consummate such transactions. This Agreement has been duly
executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution and delivery by the Company, constitutes the legal,
valid and binding obligation of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with its terms.
SECTION 5.03 NO CONFLICT; REQUIRED FILINGS AND CONSENTS
(a) The execution and delivery of this Agreement by Parent and Merger
Sub do not, and the performance by Parent and Merger Sub of their obligations
hereunder and the consummation of the Merger will not, (i) conflict with or
violate any provision of the organizational documents of Parent or Merger Sub,
or (ii) assuming that all consents, approvals, authorizations and permits
described in Section 6.03(b) have been obtained and all filings and
notifications described in Section 6.03(b) have been made, conflict with or
violate any Law applicable to Parent or by which any property or asset of Parent
or Merger Sub is bound or affected.
(b) The execution and delivery of this Agreement by Parent and Merger
Sub do not, and the performance by Parent and Merger Sub of their respective
obligations hereunder and the consummation of the Merger will not, require any
consent, approval, authorization or permit of, or filing by Parent or Merger Sub
with or notification by Parent or Merger Sub to, any Governmental Entity, except
the filing and recordation of the Merger Agreement as required by the CBCA.
SECTION 5.04 BROKERS
Except for a fee payable to Wit SoundView Corporation, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger based upon arrangements made by or
on behalf of Parent.
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SECTION 5.05 SUFFICIENT FUNDS
Parent has sufficient funds available to purchase all the Company
Capital Stock, to pay the Net Merger Consideration, to pay the Earn-out Amount
and to pay all fees and expenses related to the transactions contemplated by
this Agreement.
ARTICLE VI.
CONDUCT PRIOR TO CLOSING
SECTION 6.01 CONDUCT OF BUSINESS BY THE COMPANY
(a) The Company agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 6.01 of the Company Disclosure
Schedule or as expressly contemplated by any other provision of this Agreement,
unless Parent shall otherwise agree in writing, (x) the business of the Company
shall be conducted only in, and the Company shall not take any action except in,
the ordinary course of business consistent with past practice and (y) the
Company shall use all reasonable efforts to keep available the services of such
of the current officers, significant employees and consultants of the Company
and to preserve the current relationships of the Company with such of the
corporate partners, customers, suppliers and other persons with which the
Company has significant business relations in order to preserve substantially
intact its business organization.
(b) Except as described in Section 6.01(b) of the Company Disclosure
Schedule, the Company covenants and agrees that, prior to the Closing, without
the prior written consent of Parent (which will not be unreasonably withheld or
delayed), the Company will not do any of the things enumerated in Section
4.08(i)-(xxvi).
SECTION 6.02 NOTICES OF CERTAIN EVENTS
The Company agrees to give prompt notice to Parent, but in any event
within two Business Days, of (i) any notice or other communication from any
person alleging that the consent of such person is or may be required in
connection with the Merger, (ii) any notice or other communication from any
Governmental Entity in connection with the Merger, (iii) any actions, suits,
claims, investigations or proceedings commenced or, to its knowledge, threatened
against, relating to or involving or otherwise affecting the Company that relate
to the consummation of the Merger, (iv) the occurrence of a default or event
that, with the giving of notice or lapse of time or both, will become a material
default under any Company Material Contract, and (v) any change that could
reasonably be expected to have a Company Material Adverse Effect or to delay or
impede the ability of the Company to perform its obligations pursuant to this
Agreement and to effect the consummation of the Merger.
SECTION 6.03 ACCESS TO INFORMATION; CONFIDENTIALITY
(a) From the date of this Agreement to the Effective time, the Company
shall (i) provide to Parent (and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other representatives
(collectively, "Representatives")) access at reasonable
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times upon reasonable prior notice to its and its Subsidiaries' officers,
employees, agents, properties, offices and other facilities and to the books and
records thereof, and (ii) furnish promptly such information concerning its and
its Subsidiaries' business, properties, contracts, assets, liabilities and
personnel as the other party or its Representatives may reasonably request. No
investigation conducted pursuant to this Section 6.03 shall affect or be deemed
to modify any representation or warranty made in this Agreement.
(b) The parties hereto shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Confidentiality Agreement with respect to the information disclosed
pursuant to this Section 6.03.
SECTION 6.04 NO SOLICITATION OF TRANSACTIONS
The Company shall not directly or indirectly, and shall instruct its
officers, directors, employees, subsidiaries, agents or advisors or other
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it), not to, directly or indirectly, solicit, initiate
or knowingly encourage (including by way of furnishing nonpublic information),
or take any other action knowingly to facilitate, any inquiries or the making of
any proposal or offer (including, without limitation, any proposal or offer to
its shareholders) that constitutes, or may reasonably be expected to lead to, a
transaction involving a change of control of the Company, the sale of any of the
Company's assets, a merger, consolidation or reorganization of or with the
Company or any other party, the sale of any of the Company's stock or other
similar transaction (collectively, "Other Transaction"), or enter into or
maintain or continue discussions or negotiate with any person in furtherance of
such inquiries or to obtain an Other Transaction, or agree to or endorse any
Other Transaction, or authorize or permit any of the officers, directors or
employees of the Company, or any investment banker, financial advisor, attorney,
accountant or other representative retained by the Company, to take any such
action. The Company shall notify Parent promptly, and in no event later than two
Business Days after receipt, if any proposal or offer, or any inquiry or contact
with any person with respect thereto, regarding an Other Transaction is made.
The Company immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to an Other Transaction. The Company shall not release any third party from, or
waive any provision of, any confidentiality or standstill agreement to which it
is a party. The Company shall use all commercially reasonable efforts to ensure
that its officers, directors, employees, subsidiaries, agents and advisors or
other representatives (including, without limitation, any investment banker,
attorney or accountant by it) are aware of the restrictions described in this
Section 6.04.
SECTION 6.05 FURTHER ACTION; CONSENTS; FILINGS
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use all reasonable efforts to (i) take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable law or otherwise to consummate
and make effective the Merger, (ii) obtain from Governmental Entities any
consents, licenses, permits, waivers, approvals, authorizations or orders
required to be obtained or made by Parent, Merger Sub, the Company or the
Surviving Corporation in connection with
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the authorization, execution and delivery of this Agreement and the consummation
of the Merger and (iii) make all necessary filings, and thereafter make any
other required or appropriate submissions, with respect to this Agreement and
the Merger required under any applicable Law. The parties hereto shall cooperate
and consult with each other in connection with the making of all such filings,
including by providing copies of all such documents to the nonfiling parties and
their advisors prior to filing, and none of the parties shall file any such
document if any of the other parties shall have reasonably objected to the
filing of such document.
(b) Each of the parties hereto shall promptly give (or cause their
respective Subsidiaries to give) any notices regarding the Merger, this
Agreement or the transactions contemplated hereby or thereby to third parties
required under applicable law or by any contract, license, lease or other
agreement to which it or any of its subsidiaries is bound, and use, and cause
its subsidiaries to use, all reasonable efforts to obtain any third party
consents required under any such contract, license, lease or other agreement in
connection with the consummation of the Merger or the other transactions
contemplated by this Agreement.
ARTICLE VII.
ADDITIONAL AGREEMENTS
SECTION 7.01 PUBLIC ANNOUNCEMENTS
Parent and the Company shall consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement or the Merger and shall not issue any such press release or make any
such public statement without the prior written approval of the other (which
will not be unreasonably withheld or delayed), except to the extent required by
applicable law or any listing agreement with a national securities exchange or
national securities system in which case the issuing party shall use all
reasonable efforts to consult with the other parties before issuing any such
release or making any such public statement.
SECTION 7.02 SHAREHOLDER APPROVAL
Promptly after the date of this Agreement, the Company shall take all
action necessary in accordance with Colorado law and its Articles of
Incorporation and Bylaws to call, give notice of, convene and hold a meeting of
its shareholders to approve this Agreement and the Merger (the "Shareholders
Meeting"), which Shareholders Meeting shall take place no later than November 8,
2000. The Company shall not postpone or adjourn (other than for the absence of a
quorum) the Shareholders Meeting without the consent of Parent. The Company
shall use its reasonable best efforts to solicit from the Company's shareholders
proxies or consents in favor of the Merger and shall take all other action
necessary or advisable to secure the vote or consent of the Company's
Shareholders required to effect the Merger.
SECTION 7.03 EMPLOYEE MATTERS
(a) The eligibility of each employee of the Company (and his or her spouse and
dependents) to participate in the welfare and/or benefit plans of Parent or the
Surviving
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Corporation after the Effective Time shall be determined without regard to any
preexisting condition, waiting period, actively-at-work, or similar exclusion or
condition except for any such condition or exclusion to which the employee is
subject under the applicable welfare plan of the Company as of the Effective
Time. Employees of the Company shall receive credit under the welfare and/or
benefit plans of Parent or the Surviving Corporation in which they participate
after the Effective Time toward coinsurance and deductibles for any payments
made by them during the calendar year in which the Effective Time occurs under
the applicable welfare plans of the Company. Parent shall cause the Surviving
Corporation to maintain in effect the welfare and/or benefit plans of the
Surviving Corporation until such time as the employees of the Surviving
Corporation are enrolled in the welfare and/or benefit plans of Parent. In
addition, employees of the Surviving Corporation shall receive credit, for
purposes of its retirement, welfare, vacation and similar plans or policies, for
service with the Company prior to the Effective Time.
(b) Parent shall cause the Surviving Corporation to comply with its
compensation and severance obligations under any employment agreement between
the Company and any of its employees in effect on the date hereof; provided that
each such agreement has been provided to Parent prior to the date hereof.
(c) Parent or the Surviving Corporation shall provide health care
continuation coverage, pursuant to and in accordance with the applicable health
care continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 and the regulations (including proposed regulations),
to any former employees of the Company and their spouses, former spouses and
dependents who either have elected such continuation coverage or who may be
eligible to elect such continuation coverage as of the Closing.
(d) Parent shall cause the Surving Corporation to maintain in effect
the Advanced Software Technologies, Incorporated Simple IRA (the "SIMPLE IRA")
until the end of the calendar month in which the Closing occurs.
SECTION 7.04 CONDUCT OF BUSINESS OF SURVIVING CORPORATION FOLLOWING THE
CLOSING
Each of the parties hereto acknowledges that, following the Closing,
Parent may cause the Surviving Corporation to implement changes to its business;
PROVIDED, HOWEVER, that Parent agrees that, during the period beginning on the
date of the Closing and ending on January 1, 2001, Parent will not cause the
Surviving Corporation to conduct its business in a manner which is intended to,
or could reasonably be expected to, materially and adversely affect the ability
of the Surviving Corporation to meet the revenue targets specified on Exhibit B.
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ARTICLE VIII.
CONDITIONS TO THE MERGER
SECTION 8.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO CONSUMMATE
THE MERGER
The obligations of the parties hereto to consummate the Merger, or to
permit the consummation of the Merger, are subject to the satisfaction or, if
permitted by applicable Law, waiver of the following conditions:
(a) no court of competent jurisdiction shall have issued or entered any
order, writ, injunction or decree, and no other Governmental Entity shall have
issued any order, which is then in effect and has the effect of making the
Merger illegal or otherwise prohibiting its consummation; and
(b) any waiting period (and any extension thereof) applicable to the
consummation of the Merger under any applicable competition, merger control or
similar Law shall have expired or been terminated.
SECTION 8.02 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the Merger, or to permit
the consummation of the Merger, are subject to the satisfaction or, if permitted
by applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of Parent contained in
this Agreement that is qualified by materiality shall be true, complete and
correct on and as of the Effective Time as if made at and as of the Effective
Time (other than representations and warranties which address matters only as of
a certain date which shall be true, complete and correct as of such certain
date) and each of the representations and warranties that is not so qualified
shall be true, complete and correct in all material respects on and as of the
Effective Time as if made at and as of the Effective Time (other than
representations and warranties which address matters only as of a certain date
which shall be true, complete and correct in all material respects as of such
certain date), in each case except as contemplated or permitted by this
Agreement, and the Company shall have received a certificate of an authorized
officer of Parent to such effect;
(b) Parent shall have performed or complied in all material respects
with all material agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time and the
Company shall have received a certificate of an authorized officer of Parent to
that effect;
(c) The Company shall have obtained the requisite consent of its
shareholders; and
(d) Parent and the Escrow Agent shall have executed and delivered the
Escrow Agreement.
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SECTION 8.03 CONDITIONS TO THE OBLIGATIONS OF PARENT
The obligations of Parent to consummate the Merger, or to permit the
consummation of the Merger, are subject to the satisfaction or, if permitted by
applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of the Company contained
in this Agreement that is qualified by materiality shall be true, complete and
correct on and as of the Effective Time as if made at and as of the Effective
Time (other than representations and warranties which address matters only as of
a certain date which shall be true, complete and correct as of such certain
date) and each of the representations and warranties that is not so qualified
shall be true, complete and correct in all material respects on and as of the
Effective Time as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date which shall be true,
complete and correct in all material respects as of such certain date), in each
case except as contemplated or permitted by this Agreement, and Parent shall
have received a certificate of an authorized officer of the Company to such
effect;
(b) the Company shall have performed or complied in all material
respects with all material agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Effective Time and
Parent shall have received a certificate of an authorized officer of the Company
to that effect;
(c) the Company and Escrow Agent shall have executed and delivered the
Escrow Agreement;
(d) there shall not be pending any action, proceeding, claim or
counterclaim which seeks to or would, or any order, decree or injunction
(whether preliminary, final or appealable) which would, require Parent to hold
separate or dispose of any of the stock or assets of the Company or impose
material limitations on the ability of Parent to control in any material respect
the business, assets or operations of either Parent or the Company;
(e) the directors and officers of the Company in office immediately
prior to the Effective Time shall have resigned as directors and officers of the
Company effective as of the Effective Time;
(f) the Company shall have obtained all consents, approvals,
authorizations and permits described in Section 8.03(f) of the Company
Disclosure Schedule;
(g) Parent shall have received the legal opinion of Holland & Hart LLP,
legal counsel to the Company, in substantially the form attached hereto as
EXHIBIT D;
(h) each of the individuals listed on Schedule 8.03(h) shall have
executed and delivered to Parent an employment agreement in substantially the
form attached hereto as EXHIBIT E;
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(i) each of the individuals listed on Schedule 8.03(i) shall have
executed and delivered to Parent a noncompetition agreement in substantially the
form attached hereto as EXHIBIT F;
(j) the Company and each holder of Warrants shall have executed and
delivered a warrant termination agreement in substantially the form attached
hereto as EXHIBIT G; and
(k) the Company shall have obtained the consent of its shareholders to
amend its Articles of Incorporation as set forth in the Certificate of Amendment
to Articles of Incorporation attached hereto as EXHIBIT H hereto (the
"Certificate of Amendment") and shall have filed the Certificate of Amendment
with the Secretary of State of the State of Colorado.
ARTICLE IX.
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 TERMINATION
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time, notwithstanding any requisite adoption and
approval of this Agreement, as follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Parent and the Company;
(b) by either Parent or the Company, if the Effective Time shall not
have occurred on or before December 31, 2000; provided, however, that the right
to terminate this Agreement under this Section 9.01(b) shall not be available to
any party whose failure to fulfill an obligation under this Agreement has been
the cause of the failure of the Merger to occur on or before such date;
(c) by either Parent or the Company, if any Governmental order, writ,
injunction or decree preventing the consummation of the Merger shall have been
entered by any court of competent jurisdiction and shall have become final and
nonappealable;
(d) by Parent, upon a breach of any representation, warranty, covenant
or agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue, incomplete
or incorrect, in either case such that the conditions set forth in Section 8.03
would not be satisfied (a "Terminating Company Breach"); provided, however, that
if such Terminating Company Breach is curable by the Company through the
exercise of its reasonable efforts within 15 days and for so long as the Company
continues to exercise such reasonable efforts during such period, Parent may not
terminate this Agreement under this Section 9.01(e); and provided further that
the preceding proviso shall not in any event be deemed to extend any date set
forth in paragraph (b) of this Section 9.01; and
(e) by the Company, upon breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or if
any representation or warranty
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of Parent shall have become untrue, incomplete or incorrect, in either case such
that the conditions set forth in Section 8.02 would not be satisfied (a
"Terminating Parent Breach"); provided, however, that if such Terminating Parent
Breach is curable by Parent through the exercise of its reasonable efforts
within 15 days and for so long as Parent continues to exercise such reasonable
efforts during such period, the Company may not terminate this Agreement under
this Section 9.01(f); and provided further that the preceding proviso shall not
in any event be deemed to extend any date set forth in paragraph (b) of this
Section 9.01.
SECTION 9.02 EFFECT OF TERMINATION
In the event of termination of this Agreement pursuant to Section 9.01,
this Agreement shall forthwith become void, there shall be no liability under
this Agreement on the part of any party hereto or any of its Affiliates or any
of its or their officers or directors, and all rights and obligations of each
party hereto shall cease, provided, however, that nothing herein shall relieve
any party hereto from liability for the willful or intentional breach of any of
its representations and warranties or the willful or intentional breach of any
of its covenants or agreements set forth this Agreement.
SECTION 9.03 AMENDMENT
This Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective boards of directors at any time prior to the
Effective Time; provided, however, after the approval of this Agreement by the
shareholders of the Company, no amendment may be made, except such amendments
that have received the requisite shareholder approval and such amendments as are
permitted to be made without shareholder approval under the CBCA. This Agreement
may not be amended except by instrument in writing signed by the parties hereto.
SECTION 9.04 WAIVER
At any time prior to the Effective Time, any party hereto may (a)
extend the time for or waive compliance with the performance of any obligation
or other act of any other party hereto or (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party or parties to be bound thereby.
SECTION 9.05 EXPENSES
All Expenses incurred by the Company in connection with this Agreement
and the Merger shall be paid by the Company, and all Expenses incurred by Parent
or Merger Sub in connection with this Agreement and the Merger shall be paid by
Parent, in each case whether or not the Merger is consummated.
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ARTICLE X.
INDEMNIFICATION
SECTION 10.01 INDEMNIFICATION
Subject to the limitations set forth in Section 10.03, Parent, Merger
Sub, the Surviving Corporation and their Affiliates, officers, directors,
shareholders, agents, representatives, advisors, successors and assigns
(collectively, "Parent Indemnitees") will be indemnified for and held harmless
against and in respect of any and all claims, losses, damages (including
incidental and consequential damages), expenses (including court costs, the
costs of any investigation, expert witnesses and preparation, and reasonable
attorneys' fees), obligations and liabilities, whether or not involving third
party claims (collectively, "Losses"), which, directly or indirectly, arise or
result from or are incident or related to (i) the inaccuracy of any
representation or breach of any warranty of the Company under this Agreement or
the other agreements to be entered into by the Company in connection with this
Agreement; or (ii) any default or failure of the Company's commitments or
obligations under this Agreement or such other agreements; or (iii) any act or
omission of the Company which otherwise constitutes a breach of this Agreement
or such other agreements; or (iv) any failure by the Company to comply with the
federal securities laws or the securities or blue sky laws of any other
applicable jurisdiction prior to the Closing; or (v) any indemnification
agreement between the Company and any of its directors or officers; or (vi)
state and local sales and use taxes paid by Parent or the Surviving Corporation
following the Closing in respect of sales made by the Company prior to the
Closing; or (vii) the failure of the Company to make required filings with the
United States Department of Labor or the IRS in respect of the Advanced Software
Technologies Premium Only Plan; or (viii) monthly premiums due under the
Advanced Software Technologies, Incorporated Medical Plan, to the extent such
premiums exceed $9,200.00. The Escrow Amount will be the sole source of
indemnification available to Parent Indemnitees during the term of the Escrow
Agreement. Consummation of the merger will not be deemed or construed to be a
waiver of any right or remedy of Parent Indemnitees, nor will this Section or
any other provision of this Agreement be deemed or construed to be a waiver of
any ground of defense by the Company's shareholders. Any amounts, excluding any
award of interest, to which a Parent Indemnitee may be entitled under this
Article X will bear interest at an annual rate of the lesser of 12% or the
maximum legal rate permitted under applicable law from the later of the Closing
and the date on which the Losses giving rise to such Parent Indemnitees'
indemnification rights are determined to have been incurred through the date on
which such amounts are paid. For purposes of this Article X, any Losses suffered
or sustained by the Company or the Surviving Corporation or to which the Company
or the Surviving Corporation may be subject will be deemed to be suffered or
sustained by Parent Indemnitees. The Company's shareholders will not be entitled
to contribution from, or recovery against, the Surviving Corporation with
respect to any liability of the Company's shareholders for Losses under this
Agreement.
SECTION 10.02 RIGHT TO DEFEND; CERTAIN OTHER PROCEDURES
(a) The Parent Indemnitees will promptly notify the Shareholder
Representative, on behalf of the Company's shareholders (collectively, the
"Shareholder Indemnitors"), of the existence of any claim, demand, cause of
action or other matter (collectively, a "Claim")
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involving Losses, or potential Losses, for which the Parent Indemnitees may be
entitled to indemnification. The Shareholder Indemnitors shall be entitled to
assume the defense of any such Claim with counsel reasonably satisfactory to the
Parent Indemnitees. If the Shareholder Indemnitors do not assume the defense of
any Claim, the Parent Indemnitees shall be entitled to defend the same with
counsel of the Parent Indemnitees' selection, and the Shareholder Indemnitors
will provide reasonable cooperation to the Parent Indemnitees in the defense of
such Claim. In either case, the Shareholder Indemnitors shall bear the
reasonable expense of such counsel; provided, however, that if, within 30 days
following notice of a Claim, the Parent Indemnitees fail to defend such Claim,
or if, at any time after assuming defense of such Claim, the Parent Indemnitees
fail to continue to defend it vigorously and in good faith, then the Shareholder
Representative, on behalf of the Shareholder Indemnitors, shall have the right,
but not the obligation, to undertake the defense of, and to compromise or settle
(exercising reasonable business judgment) such Claim on behalf, for the account,
and at the risk and expense of the Shareholder Indemnitors. The Parent
Indemnitees will use all commercially reasonable efforts to notify the
Shareholder Representative, on behalf of all Shareholder Indemnitors, within 30
days of the date that Parent's senior management receives actual notice of a
Claim; provided, however, that the failure to give timely notice required by
this Section 10.02(a) will not relieve the Shareholder Indemnitors of their
obligations under this Agreement, unless such failure resulted in actual,
material and irreparable detriment to the Shareholder Indemnitors with respect
to the Claim (and then such relief will only apply to that portion of the Claim
that was actually, materially and irreparably lost).
(b) Notwithstanding anything in Section 10.02(a) to the contrary, if
Parent Indemnitees have any Claim involving Losses, or potential Losses, for
which the Parent Indemnitees may be entitled to indemnification that does not
involve liability or potential liability to any third party, the Shareholder
Representative has 30 days, after having been given written notice from Parent
Indemnitees describing the existence and general nature of such Claim to dispute
such. If the Shareholder Representative does not send written notice to Parent
Indemnitees within such 30-day period that disputes such Claim, the amount of
such Claim will be conclusively deemed a liability of the Shareholder
Indemnitors.
(c) Nothing in this Agreement will prevent a Parent Indemnitee from
making a claim under this Agreement or the Escrow Agreement for any potential or
contingent Claim, provided that it notifies the Shareholder Representative,
setting forth the general basis for any such potential or contingent Claim and
the estimated amount thereof to the extent then feasible, and provided further
that, if a potential or contingent Claim involves potential liability to a third
party, such Parent Indemnitee has reasonable grounds to believe that such Claim
will be made.
(d) In the event that the Shareholder Representative objects to any
Claim made by a Parent Indemnitee, the Shareholder Representative and Parent
Indemnitee will attempt, in good faith, to agree on the rights of the
Shareholder Indemnitors and Parent Indemnitee with respect to each such Claim.
If the Shareholder Representative and Parent Indemnitee do so agree, and such
agreement includes the release of some or all of the Escrow Amount to a Parent
Indemnitee, then the Shareholder Representative and Parent Indemnitee will each
sign joint written instructions to the Escrow Agent so instructing the Escrow
Agent, and the Escrow Agent will be entitled to rely on such written
instructions and distribute such Escrow Amount in accordance with the terms of
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such instructions. Subject to Section 10.03, and after the Escrow Release Date,
if such agreement includes any payment to be made by the Shareholder Indemnitors
to Parent Indemnitee, such Shareholder Indemnitors will immediately reimburse
Parent Indemnitee for the full amount of the agreed upon payment. If no
agreement can be reached after good faith negotiation, or in any event at any
time fourteen days after the Shareholder Representative notifies the Parent
Indemnitee of the dispute, either Parent Indemnitee or the Shareholder
Representative may initiate arbitration with respect to such Claim pursuant to
Section 12.07.
(e) Except as set forth in Section 10.03 and as otherwise set forth in
this Section 10.02, the provisions of this Agreement, and the Escrow Agreement
will not restrict or impair in any respect the rights or remedies otherwise
available to Parent Indemnitees against the Company's shareholders at law or in
equity, which rights and remedies will be cumulative and in addition to any
other available remedies.
SECTION 10.03 LIMITATIONS ON INDEMNIFICATION
(a) Neither the Company nor any of its shareholders shall have any
liability under this Agreement, including but not limited to under Section
10.01, unless the aggregate amount of Losses otherwise subject to the
indemnification obligations thereunder exceeds $50,000, in which case Parent
shall be entitled to indemnification for the entire amount of any such Losses,
except as may be limited by this Section 10.03.
(b) Neither the Company nor any of its shareholders shall have any
liability under this Agreement, including but not limited to under Section
10.01, to the extent that the aggregate amount of Losses otherwise subject to
the indemnification obligations thereunder exceeds the sum of $1,300,000 and ten
percent (10%) of the Earn-out Amount or, with respect only to liability in
respect of the representations and warranties made by the Company in Sections
3.02(b) and 3.02(c), the sum of $13,000,000 and the Earn-out Amount.
(c) The indemnification obligations and remedies set forth in this
Article X are intended to be the sole and exclusive remedy of the parties with
respect to the matters for which indemnification may be sought pursuant to
Section 10.01.
ARTICLE XI.
THE SHAREHOLDER REPRESENTATIVE
SECTION 11.01 APPOINTMENT OF THE SHAREHOLDER REPRESENTATIVE
(a) The adoption of this Agreement and the approval of the Merger by
the Company's shareholders will constitute the approval of the Company's
shareholders of the designation and irrevocable appointment of R. Gale Daniel as
the agent and representative (i.e., the Shareholder Representative) of all the
Company's shareholders, for purposes of this Agreement and the Escrow Agreement,
and through whom all actions on behalf of the Company's shareholders relating to
this Agreement and the Escrow Agreement (including those actions as are
required, authorized or contemplated by the foregoing Article X with respect to
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indemnification and escrow) will be made or directed, and that the Shareholder
Representative will be the only person authorized to take any action so required
on behalf of the Company's shareholders. The Company's shareholders will be
bound by any and all actions taken on their behalf by the Shareholder
Representative.
(b) By signing this Agreement, R. Gale Daniel hereby accepts and
acknowledges his appointment as the Shareholder Representative and agrees to
perform the duties required of the Shareholder Representative under this
Agreement and the Escrow Agreement.
SECTION 11.02 REPLACEMENT OF SHAREHOLDER REPRESENTATIVE
The appointment of the Shareholder Representative is irrevocable by the
Company's shareholders, except that a successor to the Shareholder
Representative may be appointed by a written instrument signed by a majority in
percentage interest of the Company's shareholders. Upon such appointment of any
such successor, such successor will immediately give written notice of his or
her appointment to Parent and the Escrow Agent (along with a certified copy of
the written instrument showing such successor's appointment) and thereafter (i)
such successor will be deemed to be the Shareholder Representative for purposes
of this Agreement and the Escrow Agreement; and (ii) all of the terms,
provisions and obligations of this Agreement and the Escrow Agreement will
automatically (without any action on the part of such successor or further
notice to any party) be binding upon and inure to the benefit of such successor.
The choice of a successor Shareholder Representative appointed in any manner
permitted above is final and binding upon all of the Company's shareholders.
SECTION 11.03 COMMUNICATIONS; NOTICES
Parent and the Escrow Agent are entitled to rely upon any communication
or writings given or executed by the Shareholder Representative as binding all
of the Company's shareholders and their successors, assigns, heirs, legal
representatives, affiliates and spouses, and Parent and the Escrow Agent will
not be bound or put on notice by any communications from any Company shareholder
or other person (other than the Shareholder Representative acting as such). All
notices to be sent to the Company's shareholders pursuant to this Agreement or
the Escrow Agreement will be addressed to the Shareholder Representative. Any
notice so sent will be deemed notice to all of the Company's shareholders. The
adoption of this Agreement and the approval of the merger by the Company's
shareholders will constitute the authorization of the Company's shareholders to
the Shareholder Representative accepting notice on behalf of the Company's
shareholders pursuant to this Section 11.03.
SECTION 11.04 AGENT FOR SERVICE OF PROCESS
The Shareholder Representative is hereby irrevocably appointed as the
lawful agent of the Company's shareholder and their successors, assigns, heirs,
legal representatives, affiliates and spouses to receive and forward on their
behalf service of all necessary processes in any action, suit, or proceeding
arising under or in any way relating to this Agreement, the Escrow Agreement or
any related document, any of the transactions contemplated hereby or thereby or
any of the subject matter hereof and that may be brought against any of the
Company's
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shareholder or any of their successors, assigns, heirs, legal representatives,
affiliates or spouses in any court. Such service of process or notice received
by the Shareholder Representative will have the same force and effect as if
served upon the Company's shareholders or their respective successors, assigns,
heirs, legal representative, affiliates or spouses.
SECTION 11.05 POWER OF ATTORNEY
The adoption of this Agreement and the approval of the merger by the
Company's shareholders will constitute the approval of the Company's
shareholders of the appointment of the Shareholder Representative as the true
and lawful attorney-in-fact of the Company's shareholders and their successors,
assigns, heirs, legal representatives, affiliates or spouses, with full power in
such shareholders' (or successors', assigns', heirs', legal representatives',
Affiliates' or spouses') names and on such shareholders' (or the successors',
assigns', heirs', legal representatives', Affiliates' or spouses') behalf to act
according to the terms of this Agreement and the Escrow Agreement in the
absolute discretion of the Shareholder Representative, and in general to do all
things and to perform all acts, including executing and delivering the Escrow
Agreement and all other agreements, certificates, receipts, instructions and
other instruments contemplated by or deemed advisable in connection with this
Agreement or the Escrow Agreement. This power of attorney and all authority
hereby conferred is granted subject to the interest of the other shareholders of
the Company and in consideration of the mutual covenants and agreements made
herein, and is irrevocable and will not be terminated by any act of any Company
shareholder or by operation of law, whether by death or any other event.
SECTION 11.06 LIMITATION ON THE SHAREHOLDER REPRESENTATIVE'S LIABILITY,
ETC.
The Shareholder Representative will not be liable to the other
shareholders of the Company for any action taken, suffered or omitted by the
Shareholder Representative in good faith and reasonably believed by the
Shareholder Representative to be authorized or within the discretion of the
rights or powers conferred upon the Shareholder Representative by this
Agreement, or the Escrow Agreement, except to the extent of the Shareholder
Representative's own gross negligence, recklessness or willful misconduct. The
Shareholder Representative may consult with competent and responsible legal
counsel selected by him, and he will not be liable for any action taken or
omitted by him in good faith in accordance with the advice of such counsel. The
adoption of this Agreement and the approval of the Merger by the Company's
shareholders will constitute the agreement of the Company's shareholders (and
such shareholders' successors, assigns, heirs, legal representatives, affiliates
or spouses) to severally and not jointly indemnify, defend and hold the
Shareholder Representative harmless as to any and all liability incurred and
amounts paid by the Shareholder Representative to the Escrow Agent under clause
(ii) of Section 6(a) of the Escrow Agreement as a result of any action taken by
a shareholder of the Company against the Escrow Agent.
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ARTICLE XII.
GENERAL PROVISIONS
SECTION 12.01 SURVIVAL
The representations, warranties, covenants and agreements of the
parties contained in or made pursuant to this Agreement (including the Schedules
and Exhibits incorporated into this Agreement) will survive the consummation of
the transactions contemplated by this Agreement (subject, in the case of such
representation and warranties of the Company, to the time limits set forth in
the following sentence), and will in no way be affected by any investigation of
the subject matter thereof made by or on behalf of any Parent Indemnitees (as
defined in Section 10.01). Claims for indemnification by Parent Indemnitees with
respect to (i) all of the representations and warranties of the Company, other
than all of the representations and warranties contained in Section 3.02 and
Section 4.03 and all of the representations and warranties as to environmental
matters, taxes and tax matters (including all of the representations and
warranties contained in Section 4.20), may be made at any time on or prior to
the first anniversary of the Closing; (ii) all of the representations and
warranties of the Company contained in Sections 3.02 and 4.03 may be made at any
time, without limitation; and (iii) all of the representations and warranties of
the Company as to environmental matters, taxes and tax matters (including all
the representations and warranties contained in Section 4.18 and Section 4.20,
respectively) may be made at any time prior to 60 days after the expiration of
the statute of limitation that applies or would apply to the subject matter of
any claim by a third person for which indemnification is sought. The waiver of
any condition to the consummation of this Agreement by Parent or Merger Sub will
not affect the Parent Indemnitees' rights to indemnification, payment of Losses
or other remedies based on such representations, warranties, covenants and
agreements; PROVIDED, HOWEVER, that (A) if the Company is unable to deliver the
certificate required under Section 8.03(a), without any scheduled exceptions to
the Company's representations and warranties contained in this Agreement, and
the Company instead delivers a certificate with certain exceptions scheduled and
Parent accepts such certificate (and schedule) and waives the condition set
forth in Section 8.03(a), then the Company's representations and warranties
contained in this Agreement will be modified as shown on the schedule to the
certificate so accepted by Parent, and (B) if the Company is unable to deliver
the certificate required under Section 8.03(b), without any scheduled exceptions
to the Company's covenants and agreements contained in this Agreement, and the
Company instead delivers a certificate with certain exceptions scheduled and
Parent accepts such certificate (and schedule) and waives the condition set
forth in Section 8.03(b), then the Company's covenants and agreements contained
in this Agreement will be modified as shown on the schedule to the certificate
so accepted by Parent. Nothing in this Section 12.01 will affect the obligations
and indemnities of the parties with respect to the covenants and agreements that
are contained in this Agreement (including the Schedules and Exhibits that are
incorporated into this Agreement) that are permitted or required to be
performed, in whole or in part, after the Closing.
SECTION 12.02 NOTICES
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by
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delivery in person, by telecopy or facsimile, by registered or certified mail
(postage prepaid, return receipt requested) or by a nationally recognized
courier service to the respective parties at following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 12.02).
(a) If to Parent, Merger Sub or, after the Effective Time, the Company
Embarcadero Technologies, Inc.
425 Market Street
San Francisco, CA 94105
Telephone: (415) 834-3131
Telecopy: (415) 393-0164
Attention: Stephen Wong, President and Chief
Executive Officer
with a copy (which shall not constitute notice) to:
Heller Ehrman White & McAuliffe LLP
4250 Executive Square
La Jolla, CA 92037
Telephone: (858) 450-8400
Telecopy: (858) 450-8499
Attention: Stephen Ferruolo
(b) If to the Company:
Advanced Software Technologies, Incorporated
7851 South Elati Street, Suite 102
Littleton, CO 80120
Telephone: (303) 730-7981
Telecopy: (303) 730-1756
Attention: Gregory Schottland
with a copy (which shall not constitute notice) to:
Holland & Hart LLP
555 17th Street, Ste. 2700
Denver, CO 80202
Telephone: (303) 295-8000
Telecopy: (303) 295-8261
Attention: Christina Groll
(c) If to the Shareholder Representative:
Mr. R. Gale Daniel
P.O. Box 3366
Littleton, Colorado 80161-3366
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Telephone: (303) 589-4949
Telecopy: (303) 721-7240
SECTION 12.03 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long, as the economic or legal substance of the Merger is
not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner to the fullest extent permitted by
applicable Law in order that the Merger may be consummated as originally
contemplated to the fullest extent possible.
SECTION 12.04 ASSIGNMENT; BINDING EFFECT; BENEFIT
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of Law or otherwise) without the prior written consent of the other parties
hereto; provided, however, that Parent may assign its rights, interests and
obligations hereunder to any subsidiary of Parent (which assignment shall not
relieve Parent of any of its obligations hereunder). Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, expressed or implied, is intended to confer on any person other
than the parties hereto or their respective successors and permitted assigns any
rights or remedies under or by reason of this Agreement.
SECTION 12.05 INCORPORATION OF SCHEDULES AND EXHIBITS
The Company Disclosure Schedule and all Schedules and Exhibits attached
hereto and referred to herein are hereby incorporated herein and made a part of
this Agreement for all purposes as if fully set forth herein.
SECTION 12.06 GOVERNING LAW
Except to the extent mandatorily governed by Colorado corporate law,
this agreement shall be governed by, and construed and enforced in accordance
with, the laws of the state of California (without reference to conflicts of law
principles other than those directing application of Colorado corporate law).
SECTION 12.07 ARBITRATION
Any claim, dispute or controversy of any nature arising out of or in
connection with this Agreement, or the negotiation, execution, delivery,
performance, nonperformance or breach
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thereof (collectively, a "Dispute") shall be resolved by arbitration before a
single arbitrator administered by the American Arbitration Association (the
"AAA") in accordance with its then applicable Commercial Arbitration Rules (the
"Rules"), and judgment on the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. The arbitrator shall be selected by the
parties from a list provided by the AAA in accordance with the Rules. If an
arbitration is initiated by Parent, it shall be held in Denver, Colorado, and if
an arbitration is initiated by the Company, it shall be held in San Francisco,
California.
SECTION 12.08 HEADINGS
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 12.09 COUNTERPARTS
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
SECTION 12.10 ENTIRE AGREEMENT
This Agreement (including the Company Disclosure Schedule and other
Schedules) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto unless made
in writing and signed by all parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
PARENT
Embarcadero Technologies, Inc.
By: /s/ Raj P. Sabhlok
----------------------------------------
Name: Raj P. Sabhlok
----------------------------------------
Title: Senior Vice President of Finance and
Corporate Development and Chief
Financial Officer
MERGER SUB
AST Acquisition Corporation
By: /s/ Raj P. Sabhlok
----------------------------------------
Name: Raj P. Sabhlok
----------------------------------------
Title: Secretary
----------------------------------------
COMPANY
Advanced Software Technologies, Incorporated
By: /s/ Greg Schottland
----------------------------------------
Name: Greg Schottland
----------------------------------------
Title: President
----------------------------------------
SHAREHOLDER REPRESENTATIVE
/s/ R. Gale Daniel
----------------------------------------
R. Gale Daniel
Exhibit 2.1 to Embarcadero Technologies Form 8-K
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