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EXHIBIT 2.1
DELANO TECHNOLOGY CORPORATION
DELANO/DA ACQUISITION CORP.
DIGITAL ARCHAEOLOGY CORPORATION
AGREEMENT AND PLAN OF MERGER
Dated as of October 13, 2000
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TABLE OF CONTENTS
ARTICLE I. THE MERGER........................................................1
1.1 The Merger..............................................................1
1.2 Effects of the Merger...................................................1
1.3 Closing.................................................................1
1.4 Approval by the Stockholders of DA......................................2
ARTICLE II. CONVERSION AND EXCHANGE OF SHARES; DISSENTING SHARES.............2
2.1 Conversion of Shares of DA Common Stock and Preferred Stock.............2
2.2 Escrow Fund.............................................................3
2.3 Dissenting Shares.......................................................3
2.4 Delivery of Evidence of Ownership.......................................4
2.5 No Further Ownership Rights in DA Common Stock..........................4
2.6 No Fractional Shares....................................................4
2.7 Assumption of Outstanding DA Employee Stock Options.....................5
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF DA AND THE STOCKHOLDERS.......5
3.1 Organization, Standing and Power; Subsidiaries..........................5
3.2 Capital Structure.......................................................6
3.3 Authority...............................................................7
3.4 Compliance with Laws and Other Instruments; Non-Contravention...........7
3.5 Technology and Intellectual Property Rights.............................8
3.6 Financial Statements; Business Information.............................10
3.7 Taxes..................................................................11
3.8 Absence of Certain Changes and Events..................................12
3.9 Leases in Effect.......................................................14
3.10 Personal Property; Real Estate.........................................14
3.11 Certain Transactions...................................................15
3.12 Litigation and Other Proceedings.......................................15
3.13 No Defaults............................................................15
3.14 Major Contracts........................................................15
3.15 Material Reductions....................................................17
3.16 Insurance and Banking Facilities.......................................17
3.17 Employees..............................................................17
3.18 Employee Benefit Plans.................................................17
3.19 Certain Agreements.....................................................18
3.20 Guarantees and Suretyships.............................................18
3.21 Brokers and Finders....................................................19
3.22 Certain Payments.......................................................19
3.23 Environmental Matters..................................................19
3.24 Enforceability of Contracts, etc.......................................19
3.25 Information Statement..................................................20
3.26 Disclosure.............................................................20
3.27 Reliance...............................................................20
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS..............20
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF DELANO AND MERGER SUB..........21
5.1 Organization and Qualification.........................................21
5.2 Capitalization.........................................................22
5.3 Authority Relative to this Agreement...................................22
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5.4 Non-Contravention......................................................22
5.5 Reports and Financial Statements.......................................23
5.6 Validity of Delano Merger Shares.......................................23
5.7 Consents and Approvals of Governmental Authorities.....................23
5.8 Absence of Certain Changes or Events...................................23
5.9 Information Statement..................................................24
5.10 Disclosure.............................................................24
5.11 Reliance...............................................................24
ARTICLE VI. COVENANTS OF DA.................................................24
6.1 Conduct of Business in Ordinary Course.................................24
6.2 Dividends, Issuance of, or Changes in Securities.......................25
6.3 Governing Documents....................................................26
6.4 No Acquisitions........................................................26
6.5 No Dispositions........................................................26
6.6 Indebtedness...........................................................26
6.7 Compensation...........................................................26
6.8 Claims.................................................................26
6.9 Access to Properties and Records.......................................26
6.10 Breach of Representations and Warranties...............................26
6.11 Consents...............................................................27
6.12 Tax Returns............................................................27
6.13 Stockholder Approval...................................................27
6.14 Preparation of Disclosure and Solicitation Materials...................27
6.15 Exclusivity; Acquisition Proposals.....................................27
6.16 Notice of Events.......................................................28
6.17 Reasonable Best Efforts................................................28
6.18 Insurance..............................................................28
6.19 Stock Option Plan......................................................28
ARTICLE VII. COVENANTS OF DELANO............................................28
7.1 Breach of Representations and Warranties...............................28
7.2 Additional Information; Access.........................................28
7.3 Consents...............................................................29
7.4 Reasonable Best Efforts................................................29
7.5 Officers and Directors.................................................29
7.6 Nasdaq National Market Listing.........................................29
7.7 Notice of Events.......................................................29
7.8 Third Party Beneficiaries..............................................29
ARTICLE VIII. ADDITIONAL AGREEMENTS.........................................29
8.1 Investment Agreements..................................................29
8.2 Legal Conditions to the Merger.........................................30
8.3 Employee Benefits......................................................30
8.4 Expenses...............................................................30
8.5 Additional Agreements..................................................30
8.6 Public Announcements...................................................31
8.7 Confidentiality........................................................31
8.8 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing...............................................31
ARTICLE IX. CONDITIONS PRECEDENT............................................31
9.1 Conditions to Each Party's Obligation to Effect the Merger.............31
9.2 Conditions of Obligations of Delano and Merger Sub.....................32
9.3 Conditions of Obligation of DA.........................................33
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ARTICLE X. INDEMNIFICATION..................................................34
10.1 Indemnification Relating to Agreement..................................34
10.2 Third Party Claims.....................................................35
10.3 Tax Contests...........................................................35
10.4 Limitations............................................................36
10.5 Binding Effect.........................................................36
10.6 Time Limit.............................................................36
10.7 Updating of Disclosure Schedule........................................36
10.8 Sole Remedy............................................................37
ARTICLE XI. TERMINATION.....................................................37
11.1 Mutual Agreement.......................................................37
11.2 Termination by Delano..................................................37
11.3 Termination by DA......................................................37
11.4 Outside Date...........................................................37
11.5 Effect of Termination..................................................37
ARTICLE XII. MISCELLANEOUS..................................................38
12.1 Entire Agreement.......................................................38
12.2 Governing Law; Consent to Jurisdiction.................................38
12.3 Notices................................................................38
12.4 Severability...........................................................39
12.5 Survival of Representations and Warranties.............................39
12.6 Assignment.............................................................39
12.7 Counterparts...........................................................40
12.8 Amendment..............................................................40
12.9 Extension, Waiver......................................................40
12.10 Interpretation.........................................................40
12.11 Knowledge..............................................................40
12.12 Transfer, Sales, Documentary, Stamp and Other Similar Taxes............40
12.13 Costs..................................................................40
12.14 Costs..................................................................41
EXHIBITS
EXHIBIT 1.1 -- Merger Documents
EXHIBIT 2.1 -- DA Deemed Common Stock Outstanding
EXHIBIT 2.2 -- Escrow Agreement
EXHIBIT 8.1 -- Investment Agreement
EXHIBIT 8.2 -- Registration Rights Agreement
EXHIBIT 9.2 -- Opinion of ▇▇▇▇▇ ▇▇▇▇ LLP
EXHIBIT 9.3 -- Opinion of ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
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INDEX OF DEFINED TERMS
A
Acquisition Transaction................................26
Agreement...............................................2
Audited Balance Sheet Date.............................10
Audited Balance Sheets.................................10
B
Business Condition......................................5
C
Charter Documents.......................................6
Closing.................................................2
Closing Date............................................2
Commission.............................................22
Consent.................................................8
Conversion Ratio........................................3
D
DA......................................................2
DA Capital Stock........................................2
DA Common Stock.........................................2
DA Disclosure Schedule..................................5
DA Employee Stock Options...............................2
DA Intellectual Property................................8
DA Option...............................................6
DA Preferred Stock......................................2
DA Transaction Expenses................................29
DA Voting Debt..........................................7
Deemed Outstanding DA Shares............................2
Delano..................................................2
Delano Average Closing Price............................4
Delano Common Stock.....................................2
Delano Disclosure Schedule.............................20
Delano Merger Cash......................................2
Delano Merger Shares....................................2
Dissenting Shares.......................................3
E
Effective Time..........................................2
Environmental Laws.....................................18
Environmental Liabilities..............................18
ERISA..................................................17
Escrow Agent............................................3
Escrow Agreement........................................3
Escrow Fund.............................................3
Exchange Act...........................................22
Excluded Shares.........................................2
F
Financial Statements...................................10
G
Governmental Entity.....................................8
H
Hazardous Materials....................................18
H-S-R Act..............................................30
I
Indemnifiable Amounts..................................33
Information Statement..................................19
Investment Agreements..................................28
K
Kansas GCC..............................................2
Key Employees..........................................31
L
Lease..................................................14
Leases.................................................14
Liens...................................................6
M
Merger..................................................2
Merger Consideration....................................2
Merger Documents........................................2
Merger Sub..............................................2
N
New Delano Stockholders................................28
O
ordinary course of business............................12
P
Person..................................................6
Plan...................................................17
prospects...............................................5
R
Recent 10-Q............................................22
Registration Rights Agreement......................28, 39
Reports................................................22
S
Securities Act.........................................13
Shareholder Agreement..................................39
Stockholders............................................2
Subsidiary..............................................5
Surviving Corporation...................................2
T
Tax....................................................11
Tax Return.............................................11
Tax Returns............................................11
Taxes..................................................11
Threshold Amount.......................................34
U
Unaudited Balance Sheet................................10
Unaudited Balance Sheet Date...........................10
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AGREEMENT AND PLAN OF MERGER, dated as of October 13, 2000 (this
"AGREEMENT"), by and among DELANO TECHNOLOGY Corporation, an Ontario corporation
("DELANO"); DELANO/DA ACQUISITION CORP., a Kansas corporation and a wholly-owned
subsidiary of Delano ("MERGER SUB"); DIGITAL ARCHAEOLOGY CORPORATION, a Kansas
corporation ("DA"); and the undersigned stockholders of DA (the "STOCKHOLDERS")
Intending to be legally bound, and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, Delano,
Merger Sub, DA and the Stockholders agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions hereof, and in
accordance with the Kansas general corporation code (the "KANSAS GCC"), Merger
Sub will be merged with and into DA (the "MERGER"). A Certificate of Merger and
any other required documents (collectively, the "MERGER DOCUMENTS"),
substantially in the form attached as EXHIBIT 1.1, will be duly prepared,
executed and acknowledged by DA and Merger Sub and thereafter delivered to the
Secretary of State of Kansas for filing in accordance with the Kansas GCC
contemporaneously with the Closing (as defined in Section 1.3). The Merger will
become effective at such time as the Merger Documents have been filed with the
Secretary of State of Kansas (the "EFFECTIVE TIME"). Following the Merger, DA
will continue as the surviving corporation of the Merger (the "SURVIVING
CORPORATION") under the laws of the State of Kansas, and the separate corporate
existence of Merger Sub will cease.
1.2 EFFECTS OF THE MERGER. At and after the Effective Time, (i) the Merger
will have all of the effects provided by the Certificate of Merger and
applicable law, (ii) the Articles of Incorporation of DA will be amended in the
form attached as APPENDIX A to EXHIBIT 1.1 until duly further amended, (iii) the
bylaws of Merger Sub will be the bylaws of the Surviving Corporation until duly
amended, (iv) the directors of Merger Sub will be the directors of the Surviving
Corporation, to hold office in accordance with the bylaws of the Surviving
Corporation, (v) the officers of DA will be the officers of the Surviving
Corporation, to hold office in accordance with the bylaws of the Surviving
Corporation and (vi) the issued and outstanding certificates for the capital
stock of Merger Sub will be the issued and outstanding certificates initially
representing all of the issued and outstanding capital stock of the Surviving
Corporation.
1.3 CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") will take place as soon as practicable (but no more
than three (3) business days) after satisfaction or waiver of the last to be
fulfilled of the conditions set forth in Article IX that by their terms are not
to occur at the Closing (the "CLOSING DATE"), but in no event later than
November 15, 2000, at the offices of ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, Boston,
Massachusetts, unless another date or place is agreed to in writing by Delano
and DA. If all of conditions set forth in Article IX hereof are determined to be
satisfied (or duly waived) at the Closing, concurrently with the Closing the
parties hereto will cause the Merger to be consummated by the filing of the
Merger Documents with the Secretary of State of Kansas. The Closing will be
deemed to have concluded at the Effective Time.
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1.4 APPROVAL BY THE STOCKHOLDERS OF DA. DA will take all action reasonably
necessary in accordance with applicable law, its Charter Documents (as defined
below) and any agreements to which it is a party to solicit the approval of this
Agreement, the Merger and all of the transactions contemplated hereby by all
stockholders of DA by means of a unanimous written consent of stockholders in
accordance with the Kansas GCC, or if it is unable to obtain such written
consent, by a duly convened meeting of stockholders. DA will use its reasonable
best efforts to obtain such stockholder approval. DA represents and warrants
that its Board of Directors has duly (i) approved the Merger in accordance with
the Kansas GCC and (ii) resolved to recommend to the stockholders of DA that
they approve this Agreement, the Merger and all of the transactions contemplated
hereby.
ARTICLE II
CONVERSION AND EXCHANGE OF SHARES; DISSENTING SHARES
2.1 CONVERSION OF SHARES OF DA COMMON STOCK AND PREFERRED STOCK.
(a) Subject, without limitation, to the provisions of Section 2.3
hereof, at the Effective Time, all of the shares of common stock, $.01 par
value, of DA ("DA COMMON STOCK") and all of the shares of Series A Preferred
Stock, $.01 par value, Series B Preferred Stock, $.01 par value, Series C
Preferred Stock, $.01 par value, and Series D Preferred Stock, $.01 par value,
of DA (collectively, the "DA PREFERRED STOCK") (collectively, the DA Common
Stock and the DA Preferred Stock are referred to as the "DA CAPITAL STOCK")
issued and outstanding immediately prior to the Effective Time (excluding any DA
Capital Stock held by Delano or Merger Sub or any other subsidiary of Delano, or
by DA or any subsidiary of DA, which shares ("EXCLUDED SHARES") will be
automatically canceled in the Merger without payment of any consideration
therefor, and excluding Dissenting Shares (as defined in Section 2.3 hereof)),
will automatically, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into shares of common stock, without par
value, of Delano ("DELANO COMMON STOCK") and cash in accordance with Section
2.1(c), and cash (rounded down to the nearest whole cent) in lieu of fractional
shares, if any, pursuant to Section 2.6 below. The shares of DA Common Stock
that are actually issued and outstanding immediately prior to the Effective
Time, combined with the incremental number of shares of DA Common Stock that
would be held by the holders of DA's Series A, B, C, and D Preferred Stock if
they were to convert their DA Preferred Stock into DA Common Stock immediately
prior to the Effective Time, in accordance with DA's Charter Documents, are
referred to herein as the "DEEMED OUTSTANDING DA SHARES." DA will cause all
rights, warrants and options to acquire DA Common Stock (other than DA Employee
Stock Options, as defined below) and securities convertible into DA Common Stock
(other than DA Preferred Stock) to be exercised, converted or cancelled prior to
the Closing. "DA EMPLOYEE STOCK OPTIONS" means those stock options designated as
such and identified in Section 3.2 of the DA Disclosure Schedule.
(b) The aggregate number of shares of Delano Common Stock to be
issued in exchange for the acquisition of all Deemed Outstanding DA Shares will
be equal to 4,630,462 shares of Delano Common Stock. Such shares are herein
referred to as the "DELANO MERGER SHARES". The aggregate cash to be paid in
exchange for the acquisition of all Outstanding DA Shares (other than cash in
lieu of fractional shares) will be equal to $17,364,233 reduced by the aggregate
amount of fees owed to Broadview International LLC and DA's Transaction
Expenses. Such cash is herein referred to as the "DELANO MERGER CASH". The
Delano Merger Shares and the Delano Merger Cash are herein referred to together
as the "MERGER CONSIDERATION".
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(c) The ratio at which one Deemed Outstanding DA Share will be
converted into shares of Delano Common Stock and cash at the Effective Time is
herein called the "CONVERSION RATIO" and will be calculated as set forth in this
Section 2.2(c). Subject to Section 2.3, at the Effective Time, each Deemed
Outstanding DA Share will be converted into the right to receive (A) that number
(which may be a fraction) of shares of Delano Common Stock that equals the
quotient obtained by DIVIDING the number of Delano Merger Shares by the sum of
the number of Deemed Outstanding DA Shares and (B) that amount of cash that
equals the quotient obtained by DIVIDING the Delano Merger Cash by the sum of
the number of Deemed Outstanding DA Shares. Each holder of Outstanding DA Shares
will be entitled to receive that aggregate number of shares of Delano Common
Stock and cash (other than cash in lieu of fractional shares) equal to the
Conversion Ratio multiplied by the number of Deemed Outstanding DA Shares held
by or attributed to such holder immediately prior to the Effective Time, subject
to Section 2.3 herein. The Merger Consideration to be received by each of the
Stockholders is shown on EXHIBIT 2.1.
(d) At the Effective Time, each share of common stock, $.01 par
value, of Merger Sub issued and outstanding immediately prior to the Effective
Time will, by virtue of the Merger and without any action on the part of the
holder hereof, be converted into one share of common stock, $.01 par value, of
the Surviving Corporation.
2.2 ESCROW FUND. Fifteen percent (15%) of the Merger Consideration (the
"ESCROW FUND") will be deposited and held in escrow in accordance with the
Escrow Agreement attached as EXHIBIT 2.2 (the "ESCROW AGREEMENT") as the source
of indemnification payments that may become due to Delano pursuant to Article X.
The Escrow Fund will be withheld on a pro rata basis among the holders of the
Deemed Outstanding DA Shares. The exact amount of the Escrow Fund held for the
account of each DA stockholder will be determined at the Closing by the
agreement in writing of Delano and DA. The delivery of the Escrow Fund will be
made on behalf of the holders of the Deemed Outstanding DA Shares in accordance
with the provisions hereof, with the same force and effect as if such shares had
been delivered by Delano directly to such holders and subsequently delivered by
such holders to the escrow agent under the Escrow Agreement (the "ESCROW
AGENT"). The adoption of this Agreement by stockholders of DA will also
constitute their approval of the terms and provisions of the Escrow Agreement,
which is an integral term of the Merger.
2.3 DISSENTING SHARES. Any holder of shares of DA Capital Stock that are
outstanding on the record date for the determination of which holders will be
entitled to vote for or against the Merger who did not vote such shares in favor
of the Merger or sign and deliver a written consent thereto with respect to such
shares (the shares of DA Capital Stock then outstanding that are not thus voted
or as to which such consents are not signed and delivered are referred to as
"DISSENTING SHARES") will be entitled to exercise dissenters' rights pursuant to
Section 17-6712 of the Kansas GCC with respect to such Dissenting Shares
provided that such holder meets all of the requirements of the Kansas GCC with
respect to such Dissenting Shares, and will not be entitled to receive any
Merger Consideration, unless otherwise provided by the Kansas GCC or agreed in
writing by Delano. DA will, after consultation with Delano, give such notices
with respect to dissenters' rights as may be required by the Kansas GCC as soon
as practicable.
2.4 DELIVERY OF EVIDENCE OF OWNERSHIP. At the Closing, each holder of a
certificate or other documentation representing Deemed Outstanding DA Shares,
other than Dissenting Shares, will
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surrender such certificates or other documentation to Delano, and, if not
previously delivered, duly executed counterparts of this Agreement, the Escrow
Agreement, the Investment Agreement (as defined below) and the Registration
Rights Agreement (as defined below) and such other duly executed documentation
as may be reasonably required by Delano to effect a transfer of such shares, and
upon such surrender and after the Effective Time each such holder will be
entitled to receive promptly from Delano or its transfer agent certificates
registered in the name of such holder representing the applicable number of
Delano Merger Shares and the applicable amount of the Delano Merger Cash, and
the cash in lieu of fractional shares (calculated pursuant to Section 2.6), to
which such holder is entitled pursuant to the provisions of this Agreement, with
a portion of such shares and cash to be deposited in escrow pursuant to the
Escrow Agreement, as provided in Section 2.2.
2.5 NO FURTHER OWNERSHIP RIGHTS IN DA COMMON STOCK. The Merger and its
approval by the stockholders of DA and the execution of this Agreement will be
deemed, at the Effective Time, to constitute full satisfaction and termination
of all rights and agreements pertaining to DA Common Stock pursuant to the
Kansas GCC, by contract or otherwise. After the Effective Time, there will be no
transfers on the stock transfer books of DA of DA Common Stock or exercises of
any options, warrants or other rights to acquire DA Common Stock. Until
surrendered to Delano, each certificate for DA Common Stock will, after the
Effective Time, represent only the right to receive shares of Delano Common
Stock and the right to receive cash into which the shares of DA Common Stock
formerly represented thereby will have been converted pursuant to this
Agreement. Any dividends or other distribution declared after the Effective Time
with respect to Delano Common Stock will be paid to the holder of any
certificate for shares of DA Common Stock when the holder thereof is entitled to
receive a certificate for such ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇ Merger Shares in accordance with
this Agreement.
2.6 NO FRACTIONAL SHARES. No certificates or scrip for fractional shares
of Delano Common Stock will be issued, no Delano stock split or dividend will be
paid in respect of any fractional share interest, and no such fractional share
interest will entitle the owner thereof to vote or to any rights of or as a
stockholder of Delano. In lieu of such fractional shares, any holder of Deemed
Outstanding DA Shares who would otherwise be entitled to a fraction of a share
of Delano Common Stock (after aggregating all fractional shares of Delano Common
Stock to be received by such holder) will be paid the cash value of such
fraction, which will be equal to such fraction MULTIPLIED BY the Delano Average
Closing Price. "DELANO AVERAGE CLOSING PRICE" will be the average closing price
of the Delano Common Stock as publicly reported by the Nasdaq National Market
over the ten trading days ending two trading days prior to the Closing Date.
2.7 ASSUMPTION OF OUTSTANDING DA EMPLOYEE STOCK OPTIONS. At the Effective
Time, Delano shall assume each DA Employee Stock Option then outstanding and
each holder thereof shall thereby be entitled to acquire, by virtue of the
Merger and without any further action on the part of such holder, on
substantially the same terms (including the dates and extent of exercisability)
and subject to the same conditions, including vesting, as such DA Employee Stock
Option, the number of shares of Delano Common Stock determined by MULTIPLYING
the number of shares of DA Common Stock for which such DA Employee Stock Option
is then exercisable in accordance with its terms immediately prior to the
Effective Time by 0.53, at an exercise price per share of Delano Common Stock
determined by dividing the exercise price per share of DA Common Stock of such
outstanding DA Employee Stock Option immediately prior to the Effective Time by
0.53; provided, however, that if any such DA Employee Stock Option is exercised
on or before the tenth day after the Closing, the option holder may elect to
receive the Merger Consideration (subject to the above-described escrow)
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that such holder would have been entitled to receive as if such option had been
exercised prior to the Closing. It is the intent of DA and Delano that the
substitution of Delano Common Stock for DA Common Stock in the assumption of the
outstanding DA Employee Stock Options will not cause any DA Employee Stock
Option that is an "incentive stock option" under the Code to lose its status as
such.
2.8 LOCK-UP. All Delano Merger Shares and all shares of Delano Common
Stock issued after the Closing upon exercise of a DA Employee Stock Option shall
be subject to the following restrictions. None of such shares, without the prior
written consent of Delano, may be, directly or indirectly, sold, contracted or
offered for sale, sold short, pledged, transferred or otherwise disposed of for
a period of one year after the Closing Date. Each of the Stockholders and the
holders of any DA Employee Stock Options, as an integral term of the Merger, who
accept the Delano Merger Shares or such shares issued upon exercise of DA
Employee Stock Options shall be deemed to have agreed to the foregoing
restrictions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DA
AND THE STOCKHOLDERS
Except as set forth in the disclosure schedule of DA dated as of the date
hereof and delivered herewith to Delano (the "DA DISCLOSURE SCHEDULE") which
identifies the section and subsection to which each disclosure therein relates
(provided, however, that DA will be deemed to have adequately disclosed with
respect to any section or subsection any matters that are clearly described
elsewhere in such document if the applicability of such disclosure to such
non-referenced sections or subsections is clearly apparent and DA has not
intentionally omitted any required cross-references), and whether or not the DA
Disclosure Schedule is referred to in a specific section or subsection, DA and
each of the Stockholders jointly and severally represent and warrant to Delano
and Merger Sub as follows:
3.1 ORGANIZATION, STANDING AND POWER; SUBSIDIARIES.
(a) DA is a corporation duly organized, validly existing and in good
standing under the laws of the State of Kansas, has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
businesses as now being conducted, and is duly qualified and in good standing to
do business in each jurisdiction in which a failure to so qualify would have a
material adverse effect on the Business Condition (as hereinafter defined) of
DA.
As used in this Agreement, "BUSINESS CONDITION" with respect to any
Person (as defined below) means the business, financial condition, results of
operations, assets or prospects (as defined below) (without giving effect to the
consequences of the transactions contemplated by this Agreement, and other than
changes in general economic conditions) of such Person or Persons including its
Subsidiaries taken as a whole. In this Agreement, a "SUBSIDIARY" of any Person
means a corporation, partnership, limited liability company, joint venture or
other entity of which such Person directly or indirectly owns or controls a
majority of the equity interests or voting securities or other interests that
are sufficient to elect a majority of the Board of Directors or other managers
of such corporation, partnership, limited liability company, joint venture or
other entity, and "PROSPECTS" means events, conditions, facts or developments
that are known to DA and that in the reasonable course of events are expected to
have an effect on future operations of the business as presently conducted by
DA, but will
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exclude the results of any changes that are made at the specific written
direction of Delano, that are specifically contemplated herein, or that directly
result from this transaction. References to DA in this Agreement shall be deemed
to include all Subsidiaries of DA, if any, unless the context specifically
requires otherwise. In this Agreement, "PERSON" means any natural person,
corporation, partnership, limited liability company, joint venture or other
entity.
All Subsidiaries of DA and their jurisdiction of incorporation are
completely and correctly listed in Section 3.1 of the DA Disclosure Schedule. DA
has delivered to Delano complete and correct copies of the articles or
certificate of incorporation, bylaws and/or other primary charter and
organizational documents ("CHARTER DOCUMENTS") of DA, in each case, as amended
to the date hereof. The minute books and stock records of DA, complete and
correct copies of which have been delivered to Delano, contain correct and
complete records of all material proceedings and actions taken at all meetings
of, or effected by written consent of, the stockholders of DA and its Board of
Directors, and all original issuances and subsequent transfers, repurchases and
cancellations of DA's capital stock. Section 3.1 of the DA Disclosure Schedule
contains a complete and correct list of the officers and directors of DA.
(b) DA has never owned, nor does it currently own, directly or
indirectly, any capital stock or other equity securities of any corporation or
have direct or indirect equity or ownership interest in any partnership, limited
liability company, joint venture or other entity. All of the outstanding shares
of capital stock of each Subsidiary of DA are owned beneficially and of record
by DA, one of its other Subsidiaries, or any combination thereof, in each case
free and clear of any security interests, liens, charges, restrictions, claims,
encumbrances or assessments of any nature whatsoever ("LIENS"); and there are no
outstanding subscriptions, warrants, options, convertible securities, or other
rights (contingent or other) pursuant to which any of the Subsidiaries is or may
become obligated to issue any shares of its capital stock to any Person other
than DA or one of the other Subsidiaries.
3.2 CAPITAL STRUCTURE.
(a) The authorized capital stock of DA consists of (i) 33,000,000
shares of DA Common Stock, of which 526,776 shares are issued and outstanding as
of the date of this Agreement and (ii) 5,000,000 shares of DA Preferred Stock,
of which the following shares are issued and outstanding as of the date of this
Agreement in the following proportions: Series A Preferred Stock - 1,000,000
shares; Series B Preferred Stock - 2,238,537 shares; Series C Preferred Stock -
833,334 shares and Series D Preferred Stock - 13,190 shares. In addition, 989.25
shares of Series D Preferred have been issued as payment of dividends and
584.153 shares of Series D Preferred have been issued upon the exercise of
warrants on a cashless exercise basis. No shares of DA Capital Stock are held as
treasury shares by DA. The DA Disclosure Schedule sets forth all holders of DA
Common Stock and the number of shares owned. The DA Disclosure Schedule also
sets forth any options, warrants, calls, conversion rights, commitments,
agreements, contracts, understandings, restrictions, arrangements or rights of
any character (each, an "DA OPTION") to which DA is a party or by which DA may
be bound obligating DA to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of DA, or obligating
DA to grant, extend, or enter into any such option, warrant, call, conversion
right, conversion payment, commitment, agreement, contract, understanding,
restriction, arrangement or right.
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(b) All outstanding shares of DA Capital Stock are, and any shares of
DA Capital Stock issued upon exercise of any outstanding DA Options will be,
validly issued, fully paid, nonassessable and not subject to any preemptive
rights (other than those which have been duly waived), or to any agreement to
which DA is a party or by which DA may be bound. DA does not have outstanding
any bonds, debentures, notes or other indebtedness the holders of which (i) have
the right to vote (or convertible or exercisable into securities having the
right to vote) with holders of shares of DA Common Stock on any matter ("DA
VOTING DEBT") or (ii) are or will become entitled to receive any payment as a
result of the execution of this Agreement or the completion of the transactions
contemplated hereby.
3.3 AUTHORITY. The execution, delivery and performance of this Agreement
and all other agreements contemplated hereby by DA have been duly authorized by
all necessary action of the Board of Directors of DA, and if the Closing shall
occur, shall have been duly authorized by all necessary action of the
stockholders of DA. Certified copies of the resolutions adopted by the Board of
Directors of DA and its stockholders approving this Agreement, all other
agreements contemplated hereby and the Merger have been or will be provided to
Delano prior to the Closing. DA has duly and validly executed and delivered this
Agreement and has, or prior to Closing, will have duly and validly executed and
delivered all other agreements contemplated hereby, and each of this Agreement
and such other agreements constitutes a valid, binding and enforceable
obligation of DA in accordance with its terms.
3.4 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS; NON-CONTRAVENTION. DA
holds, and at all times has held, all licenses, permits and authorizations from
all Governmental Entities (as defined below) necessary for the lawful conduct of
its business pursuant to all applicable statutes, laws, ordinances, rules and
regulations of all such Governmental Entities having jurisdiction over it or any
part of its operations, excepting, however, when such failure to hold would not
have a material adverse effect on DA's Business Condition. There are no material
violations or claimed violations known by DA of any such license, permit or
authorization or any such statute, law, ordinance, rule or regulation. Assuming
the receipt of all Consents (as defined below), neither the execution, delivery
or performance of this Agreement and all other agreements contemplated hereby by
DA and the Stockholders, nor the consummation of the Merger or any other
transaction described herein, does or will, after the giving of notice, or the
lapse of time, or otherwise, conflict with, result in a breach of, or constitute
a default under, the Charter Documents of DA or any federal, foreign, state or
local court or administrative order or process, statute, law, ordinance, rule or
regulation, or any contract, agreement or commitment to which DA is a party, or
under which DA is obligated, or by which DA or any of the rights, properties or
assets of DA are subject or bound; result in the creation of any Lien upon, or
otherwise adversely affect, any of the rights, properties or assets of DA;
terminate, amend or modify, or give any party the right to terminate, amend,
modify, abandon or refuse to perform or comply with, any contract, agreement or
commitment to which DA is a party, or under which DA is obligated, or by which
DA or any of the rights, properties or assets of DA are subject or bound; or
accelerate, postpone or modify, or give any party the right to accelerate,
postpone or modify, the time within which, or the terms and conditions under
which, any liabilities, duties or obligations are to be satisfied or performed,
or any rights or benefits are to be received, under any contract, agreement or
commitment to which DA is a party, or under which DA may be obligated, or by
which DA or any of the rights, properties or assets of DA are subject or bound.
Section 3.4 of the DA Disclosure Schedule sets forth each agreement, contract or
other instrument binding upon DA requiring a notice or consent (by its terms or
as a result of any conflict or other contravention required to be disclosed in
the DA Disclosure Schedule pursuant
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to the preceding provisions of this Section 3.4) as a result of the execution,
delivery or performance of this Agreement and all other agreements contemplated
hereby by DA and the Stockholders or the consummation of the Merger or any other
transaction described herein (each such notice or consent, a "CONSENT"). No
consent, approval, order, or authorization of or registration, declaration, or
filing with or exemption (also a "CONSENT") by, any court, administrative agency
or commission or other governmental authority or instrumentality, whether
domestic or foreign (each a "GOVERNMENTAL ENTITY") is required by or with
respect to DA in connection with the execution, delivery or performance of this
Agreement and all other agreements contemplated hereby by DA and the
Stockholders or the consummation of the Merger or any other transaction
described herein, except for the filing by DA and Merger Sub of the appropriate
Merger Documents with the Secretary of State of Kansas.
3.5 TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS.
(a) For the purposes of this Agreement, "DA INTELLECTUAL PROPERTY"
consists of the following intellectual property:
(i) all patents, trademarks, trade names, domain names, service
marks, trade dress, copyrights and any renewal rights therefor, mask works,
schematics, software, firmware, technology, manufacturing processes,
supplier lists, customer lists, trade secrets, know-how, moral rights and
applications and registrations for any of the foregoing;
(ii) all documents, records and files relating to design, end user
documentation, manufacturing, quality control, sales, marketing or customer
support for all intellectual property described herein;
(iii) all other tangible or intangible proprietary information and
materials; and
(iv) all license and other rights in any third party product or any
third party intellectual property described in (i) through (iii) above;
that are owned or held by or on behalf of DA or that are being, and/or have
been, used, or are currently under development for use, in the business of DA as
it has been, is currently or is currently planned to be conducted; provided,
however, that DA Intellectual Property will not include any commercially
available third party software or related intellectual property.
(b) Section 3.5 of the DA Disclosure Schedule lists: (i) all patents,
copyright registrations, mask works, registered trademarks, registered service
marks, domain names, trade dress, any renewal rights for any of the foregoing,
and any applications and registrations for any of the foregoing, that are
included in DA Intellectual Property and owned by or on behalf of DA; (ii) all
hardware products and tools, software products and tools and services that are
currently published, offered, or under development by DA; and (iii) all
licenses, sublicenses and other agreements to which DA is a party and pursuant
to which DA or any other person is authorized to use any DA Intellectual
Property or exercise any other right with regard thereto. The disclosures
described in (iii) hereof include the identities of the parties to the relevant
agreements, a description of the nature and subject matter thereof, the term
thereof and the applicable royalty or summary of any formula or procedure for
determining such royalty.
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(c) DA Intellectual Property consists solely of items and rights that
are either: (i) owned solely by DA; (ii) in the public domain; or (iii)
rightfully used and authorized for use by DA and its successors pursuant to a
valid license. All DA Intellectual Property that consists of license or other
rights to third party property is separately set forth in Section 3.5 of the DA
Disclosure Schedule. DA has all rights in DA Intellectual Property necessary to
carry out DA's current, former and planned future activities, including without
limitation rights to make, use, exclude others from using, reproduce, modify,
adapt, create derivative works based on, translate, distribute (directly and
indirectly), transmit, display and perform publicly, license, rent, lease,
assign and sell DA Intellectual Property in all geographic locations and fields
of use, and to sublicense any or all such rights to third parties, including the
right to grant further sublicenses.
(d) DA is not, nor as a result of the execution or delivery of this
Agreement and all other agreements contemplated hereby, or performance of DA's
obligations hereunder or the consummation of the Merger, will DA be, in
violation of any license, sublicense or other agreement relating to any DA
Intellectual Property to which DA is a party or otherwise bound. DA is not
obligated to provide any consideration (whether financial or otherwise) to any
third party, nor is any third party otherwise entitled to any consideration,
with respect to any exercise of rights by DA or Delano, as successor to DA, in
DA Intellectual Property.
(e) To the knowledge of DA, the use, reproduction, modification,
distribution, licensing, sublicensing, sale, or any other exercise of rights in
any product, work, technology, service or process as used, provided, or offered
at any time, or as proposed for use, reproduction, modification, distribution,
licensing, sublicensing, sale, or any other exercise of rights, by DA does not
infringe any copyright, patent, trade secret, trademark, service ▇▇▇▇, trade
name, domain name, firm name, logo, trade dress, mask work, moral right, other
intellectual property right, right of privacy, or right in personal data of any
Person. No claims (i) challenging the validity, effectiveness, or ownership by
DA of any DA Intellectual Property, or (ii) to the effect that the use,
reproduction, modification, manufacturing, distribution, licensing,
sublicensing, sale, or any other exercise of rights in any product, work,
technology, service, or process as used, provided or offered at any time, or as
proposed for use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights, by DA infringes or will
infringe on any intellectual property or other proprietary or personal right of
any Person have been asserted to DA or, to the knowledge of DA (as defined
below), are threatened by any Person nor are there any valid grounds for any
bona fide claim of any such kind. There are no legal or governmental
proceedings, including interference, re-examination, reissue, opposition,
nullity, or cancellation proceedings pending that relate to any DA Intellectual
Property, other than review of pending applications for patent, and DA is not
aware of any information indicating that such proceedings are threatened or
contemplated by any Governmental Entity or any other Person. All granted or
issued patents and mask works and all registered trademarks and copyright
registrations owned by DA are valid, enforceable and subsisting. To the
knowledge of DA, there is no unauthorized use, infringement, or misappropriation
of any DA Intellectual Property by any third party, employee or former employee.
(f) Section 3.5 of the DA Disclosure Schedule separately lists all
parties (other than employees) who have created any portion of, or otherwise
have any rights in or to, DA Intellectual Property. DA has secured from all
parties who have created any portion of, or otherwise have any rights in or to,
DA Intellectual Property valid and enforceable written assignments of any such
work or other rights to DA and has provided true and complete copies of such
assignments to ▇▇▇▇▇▇.
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(▇) ▇▇ has obtained written agreements from all employees and from
third parties with whom DA, to its knowledge, has shared confidential
proprietary information (i) of DA or (ii) received from others that DA is
obligated to treat as confidential and to obtain the written agreement of
employees and others to keep confidential, which agreements require such
employees and third parties to keep such information confidential in accordance
with the terms thereof. DA has made available copies of such written agreements,
as executed, to Delano.
3.6 FINANCIAL STATEMENTS; BUSINESS INFORMATION.
(a) DA has delivered to Delano an unaudited balance sheet (the
"UNAUDITED BALANCE SHEET") as of August 31, 2000 (the "UNAUDITED BALANCE SHEET
DATE") and audited balance sheets (the "AUDITED BALANCE SHEETS") as of December
31, 1999 (the "AUDITED BALANCE SHEET DATE") and December 31, 1998, unaudited
statements of income and cash flows for the eight-month period ended August 31,
2000 and audited statements of income and cash flows for its 1999 and 1998
fiscal years (all of such balance sheets and statements of income and cash flows
are collectively referred to as the "FINANCIAL STATEMENTS"). The Financial
Statements: (i) are in accordance with the books and records of DA; (ii) present
fairly, in all material respects, the financial position of DA as of the date
indicated and the results of its operations and cash flows for such periods; and
(iii) have been prepared in accordance with generally accepted accounting
principles consistently applied (subject, in the case of unaudited statements,
to the absence of footnote disclosure and in the case of unaudited interim
statements to year-end adjustments, which will not be material either
individually or in the aggregate and except as described in Section 3.6 of the
DA Disclosure Schedule). As of the Unaudited Balance Sheet Date, there were no
material liabilities, claims or obligations of any nature, whether accrued,
absolute, contingent, anticipated or otherwise, whether due or to become due,
that are not shown or provided for either in the Unaudited Balance Sheet or
Section 3.6 of the DA Disclosure Schedule, and since the Unaudited Balance Sheet
Date, DA has incurred no liabilities, claims or obligations of any nature,
whether accrued, absolute, contingent, anticipated or otherwise, other than in
the ordinary course of business and except for liabilities incurred by DA in
connection with the preparation and execution of this Agreement and the
consummation of the transactions contemplated herein.
(b) All of the accounts, notes and other receivables which are
reflected in the Unaudited Balance Sheet were acquired in the ordinary course of
business; and, except to the extent reserved against in the Unaudited Balance
Sheet, all of the accounts, notes and other receivables which are reflected
therein have been collected in full, or are good and collectible, in the
ordinary course of business; and all of the accounts, notes and other
receivables which have been acquired by DA since the Unaudited Balance Sheet
Date were acquired in the ordinary course of business and have been collected in
full, or are good and collectible, subject to an appropriate reserve determined
in a manner consistent with past practices of DA, in the ordinary course of
business. No accounts, notes or other receivables are contingent upon the
performance by DA of any obligation or contract. No Person has any Lien on any
of such receivables and no agreement for deduction or discount has been made
with respect thereto.
(c) The business information previously prepared by DA and delivered
to Delano was prepared in good faith, based on assumptions DA deems reasonable,
was prepared for planning purposes, although no assurances are given that DA
will engage in the activities described therein or achieve the results projected
therein.
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3.7 TAXES.
(a) The term "TAXES" as used herein means all federal, state, local
and foreign income tax, alternative or add-on minimum tax, estimated, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, capital profits, lease, service, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit taxes, customs, duties and other taxes,
governmental fees and other like assessments and charges of any kind whatsoever,
together with all interest, penalties, additions to tax and additional amounts
with respect thereto, and the term "TAX" means any one of the foregoing Taxes.
The term "TAX RETURNS" as used herein means all returns, declarations, reports,
claims for refund, information statements and other documents relating to Taxes,
including all schedules and attachments thereto, and including all amendments
thereof, and the term "TAX RETURN" means any one of the foregoing Tax Returns.
(b) DA has timely filed all Tax Returns required to be filed and has
paid all Taxes owed (whether or not shown as due on such Tax Returns),
including, without limitation, all Taxes which DA is obligated to withhold for
amounts owing to employees, creditors and third parties. All Tax Returns filed
by DA were complete and correct in all material respects, and such Tax Returns
correctly reflected the facts regarding the income, business, assets,
operations, activities, status and other matters of DA and any other information
required to be shown thereon in all material respects. None of the Tax Returns
filed by DA or Taxes payable by DA have been the subject of an audit, action,
suit, proceeding, claim, examination, deficiency or assessment by any
Governmental Entity, and no such audit, action, suit, proceeding, claim,
examination, deficiency or assessment is currently pending or, to the knowledge
of DA, threatened. DA is not currently the beneficiary of any extension of time
within which to file any Tax Return, and DA has not waived any statute of
limitation with respect to any Tax or agreed to any extension of time with
respect to a Tax assessment or deficiency. All material elections with respect
to Taxes affecting DA, as of the date hereof, are set forth in the Financial
Statements or in Section 3.7 of the DA Disclosure Schedule. None of the Tax
Returns filed by DA contain a disclosure statement under former Section 6661 of
the Code or Section 6662 of the Code (or any similar provision of state, local
or foreign Tax law). DA is not a party to any Tax sharing agreement or similar
arrangement. DA has never been a member of a group filing a consolidated federal
income Tax Return (other than a group the common parent of which was DA), and DA
does not have any liability for the Taxes of any Person (other than DA) under
Treasury Regulation Section 1.1502-6 (or any corresponding provision of state,
local or foreign Tax law), as a transferee or successor, by contract, or
otherwise.
(c) DA is not a party to any agreement, contract, arrangement or plan
that has resulted or would result, separately or in the aggregate, in the
payment of (i) any "excess parachute payments" within the meaning of Section
280G of the Code (without regard to the exceptions set forth in Sections
280G(b)(4) and 280G(b)(5) of the Code) or (ii) any amount for which a deduction
would be disallowed or deferred under Section 162 or Section 404 of the Code. DA
has not agreed to make any adjustment under Section 481(a) of the Code (or any
corresponding provision of state, local or foreign law) by reason of a change in
accounting method or otherwise, and DA will not be required to make any such
adjustment as a result of the transactions set forth in this Agreement. DA does
not have and has not had a permanent establishment in any foreign country, as
defined in any applicable Tax treaty or convention between the United States and
such foreign country. No portion of the Delano Merger
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Shares is subject to the Tax withholding provisions of Section 3406 of the Code,
or of Subchapter A of Chapter 3 of the Code or of any other provision of law.
None of the assets of DA is property which is required to be treated as being
owned by any other Person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Code. None of the assets of DA
directly or indirectly secures any debt, the interest on which is tax exempt
under Section 103(a) of the Code. None of the assets of DA is "tax-exempt use
property" within the meaning of Section 168(h) of the Code. No claim has ever
been made by any Governmental Entity in a jurisdiction where DA does not file
Tax Returns that it is or may be subject to Tax in that jurisdiction.
(d) There are no liens for Taxes (other than for ad valorem Taxes not
yet due and payable) upon the assets of DA. The unpaid Taxes of DA did not, as
of the Balance Sheet Date, exceed the reserve for actual Taxes (as opposed to
any reserve for deferred Taxes established to reflect timing differences between
book and Tax income) as shown on the Unaudited Balance Sheet, and will not
exceed such reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of DA in filing their Tax
Returns (taking into account any Taxes incurred as a result of the transactions
contemplated by this Agreement). Section 3.7 of the DA Disclosure Schedule sets
forth DA's Tax basis in each of its assets. DA is not a party to any joint
venture, partnership, limited liability company or other arrangement or contract
which could be treated as a partnership for federal income tax purposes.
3.8 ABSENCE OF CERTAIN CHANGES AND EVENTS. From the Audited Balance Sheet
Date, there has not been:
(a) Any transaction involving more than $100,000 entered into by DA
other than in the ordinary course of business and consistent with past practice
("ORDINARY COURSE OF BUSINESS"); any change (or any development or combination
of developments of which DA has knowledge which is reasonably likely to result
in such a change) in DA's Business Condition, other than changes in the ordinary
course of business which in the aggregate have not been and are not expected to
be materially adverse to DA's Business Condition; or, without limiting the
foregoing, any loss of or damage to any of the properties of DA due to fire or
other casualty or other loss, whether or not insured, amounting to more than
$50,000 in the aggregate;
(b) Except for the dividend described in Section 3.2(a), any
declaration, setting aside or payment of any dividend or other distribution with
respect to any shares of capital stock of DA, or any repurchase, redemption,
retirement or other acquisition by DA of any outstanding shares of capital
stock, any DA Option, or other securities of, or other equity or ownership
interests in, DA;
(c) Any discharge or satisfaction of any Lien or payment or
satisfaction of any obligation or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due) other than current
liabilities shown on the Unaudited Balance Sheet and current liabilities
incurred since the Unaudited Balance Sheet Date in the ordinary course of
business and consistent with past practice ("ORDINARY COURSE OF BUSINESS");
(d) Any change in the Charter Documents of DA or any amendment of any
term of any outstanding security of DA;
(e) Any incurrence, assumption or guarantee by DA of any indebtedness
for borrowed money other than in the ordinary course of business and in an
aggregate amount exceeding $50,000;
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(f) Any creation or assumption by DA of any Lien on any asset;
(g) Any making of any loan, advance or capital contributions to, or
investment in, any Person;
(h) Any sale, lease, pledge, transfer or other disposition of any
material capital asset;
(i) Any material transaction or commitment made, or any material
contract or agreement entered into, by DA relating to its assets or business
(including the acquisition or disposition of any assets) or any relinquishment
by DA of any contract or other right;
(j) Any (A) grant of any severance or termination pay to any
director, officer or employee of DA, (B) entering into of any employment,
severance, management, consulting, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of DA, (C) change in benefits payable under existing
severance or termination pay policies or employment, severance, management,
consulting or other similar agreements, (D) change in compensation, bonus or
other benefits payable to directors, officers or employees of DA or (E) change
in the payment or accrual policy with respect to any of the foregoing;
(k) Any labor dispute or any activity or proceeding by a labor union
or representative thereof to organize any employees of DA, or any lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to any
employees of DA;
(l) Any notes or accounts receivable or portions thereof written off
by DA as uncollectible in an aggregate amount exceeding $50,000;
(m) Any issuance or sale of any stock, bonds, phantom stock interest
or other securities of which DA is the issuer, or the grant, issuance or change
of any stock options, warrants, or other rights to purchase securities of DA or
phantom stock interest in DA;
(n) Any cancellation of any debts or claims or waiver of any rights
of substantial value in an aggregate amount exceeding $50,000;
(o) Any sale, assignment or transfer of any DA Intellectual Property
or other similar assets, including licenses therefor, except licenses entered
into in the ordinary course of business;
(p) Any capital expenditures, or commitment to make any capital
expenditures, for additions to property, plant or equipment in an aggregate
amount exceeding $50,000;
(q) Payment of any amounts to, or liability incurred to or in respect
of, or sale of any properties or assets (real, personal or mixed, tangible or
intangible) to, or any transaction or any agreement or arrangement with, any
corporation or business in which DA or any of its corporate officers or
directors, or any "affiliate" or "associate" (as such terms are defined in the
rules and regulations promulgated under the Securities Act of 1933, as amended
(the "SECURITIES ACT") of any such Person, has any direct or indirect ownership
interests; or
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(r) Any agreement undertaking or commitment to do any of the
foregoing.
3.9 LEASES IN EFFECT. All real property leases and subleases as to which
DA is a party and any amendments or modifications thereof are listed in Section
3.9 of the DA Disclosure Schedule (each a "LEASE" and collectively, the
"LEASES") are valid, in full force and effect and enforceable, and there are no
existing defaults on the part of DA, and DA has not received or given notice of
default or claimed default with respect to any Lease, nor is there any event
that with notice or lapse of time, or both, would constitute a default on the
part of DA thereunder. True and complete copies of each lease have been provided
to Delano, and such leases constitute the entire understanding relating to DA's
use and occupancy of the leased premises.
3.10 PERSONAL PROPERTY; REAL ESTATE. (a) DA has good and indefeasible
title, free and clear of all title defects and Liens (including, without
limitation, leases, chattel mortgages, conditional sale contracts, purchase
money security interests, collateral security arrangements and other title or
interest-retaining agreements) to all inventory, receivables, furniture,
machinery, equipment and other personal property, tangible or otherwise,
reflected on the Unaudited Balance Sheet or used in DA's business, except for
acquisitions and dispositions since the Unaudited Balance Sheet Date in the
ordinary course of business. The DA Disclosure Schedule lists (i) all computer
equipment and (ii) all other personal property, in each case having a
depreciated book value of $10,000 or more, which are used by DA in the conduct
of its business, and all such equipment and property, in the aggregate, is in
good operating condition and repair, reasonable wear and tear excepted. There is
no asset used or required by DA in the conduct of its business as presently
operated which is not either owned by it or licensed or leased to it.
(b) Section 3.10 of the DA Disclosure Schedule contains a schedule
setting forth and describing all real property which is leased by DA, or in
which DA has any other right, title or interest. DA does not own any real
property.
(c) To the knowledge of DA, the improvements located on the real
property described in Section 3.10 of the DA Disclosure Schedule are not the
subject of any official complaint or notice of violation of any applicable
zoning ordinance or building code and there is no use or occupancy restriction
or condemnation proceeding pending or threatened against DA.
3.11 CERTAIN TRANSACTIONS. Except for (a) relationships with DA as an
officer, director, or employee thereof (and compensation by DA in consideration
of such services) and (b) relationships with DA as stockholders or option
holders therein, none of the directors, officers, or Stockholders of DA, or any
member of any of their families, is presently a party to, or was a party to
during the year preceding the date of this Agreement, any transaction, or series
of similar transactions, with DA, in which the amount involved exceeds $60,000,
including, without limitation, any contract, agreement, or other arrangement (i)
providing for the furnishing of services to or by, (ii) providing for rental of
real or personal property to or from, or (iii) otherwise requiring payments to
or from, any such Person or any other Person in which any such Person has or had
a 5%-or-more interest (as a stockholder, partner, beneficiary, or otherwise) or
is or was a director, officer, employee, or trustee. None of DA's officers or
directors has any interest in any property, real or personal, tangible or
intangible, including inventions, copyrights, trademarks, or trade names, used
in or pertaining to the business of DA, or any supplier, distributor, or
customer of DA, except for the normal rights of a stockholder, and except for
rights under existing employee benefit plans.
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3.12 LITIGATION AND OTHER PROCEEDINGS. There is no action, suit, claim,
investigation or proceeding (or any basis therefor known to DA) pending against
or, to the knowledge of DA, threatened against DA or its properties and assets
before any court or arbitrator or any Governmental Entity. DA is not subject to
any order, writ, judgment, decree, or injunction that has a material adverse
effect on DA's Business Condition.
3.13 NO DEFAULTS. DA is not, nor has DA received notice that it would be
with the passage of time, in default or violation of any term, condition, or
provision of (i) the Charter Documents; (ii) any judgment, decree, or order
applicable to DA; or (iii) any loan or credit agreement, note, bond, mortgage,
indenture, contract, agreement, lease, license, or other instrument to which DA
is now a party or by which it or any of its properties or assets may be bound,
except for defaults and violations which, individually or in the aggregate,
would not have a material adverse effect on the Business Condition of DA.
3.14 MAJOR CONTRACTS. DA is not a party to or subject to:
(a) Any union contract, or any employment contract or arrangement
(other than "at-will" employment arrangements) providing for future
compensation, written or oral, with any officer, consultant, director, or
employee;
(b) Any plan or contract or arrangement, written or oral, providing
for bonuses, pensions, deferred compensation, retirement payments,
profit-sharing or the like;
(c) Any joint venture contract or arrangement or any other agreement
which has involved or is expected to involve a sharing of profits;
(d) Any OEM agreement, reseller or distribution agreement, volume
purchase agreement, corporate end user sales or service agreement, reproduction
or replication agreement or manufacturing agreement in which the amount involved
exceeds annually, or is expected to exceed in the aggregate over the life of the
contract, $50,000 or pursuant to which DA has granted or received manufacturing
rights, most favored nation pricing provisions, or exclusive marketing,
production, publishing or distribution rights related to any product, group of
products or territory;
(e) Any lease for real property, and any lease for personal property
in which the amount of payments which DA is required to make on an annual basis
exceeds $50,000;
(f) Any agreement, license, franchise, permit, indenture, or
authorization which has not been terminated or performed in its entirety and not
renewed which may be, by its terms, terminated, impaired, or adversely affected
by reason of the execution of this Agreement and all other agreements
contemplated hereby, the consummation of the Merger, or the consummation of the
transactions contemplated hereby or thereby;
(g) Except for trade indebtedness incurred in the ordinary course of
business, any instrument evidencing or related in any way to indebtedness
incurred in the acquisition of companies or other entities or indebtedness for
borrowed money by way of direct loan, sale of debt securities,
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purchase money obligation, conditional sale, guarantee, or otherwise which
individually is in the amount of $50,000 or more;
(h) Any license agreement, either as licensor or licensee (excluding
nonexclusive hardware and software licenses granted to distributors or end-users
and commercially available in-licensed software applications);
(i) Any contract or agreement containing covenants purporting to
limit DA's freedom to compete in any line of business in any geographic area; or
(j) Any contract or agreement, not elsewhere specifically disclosed
pursuant to this Agreement, involving the payment or receipt by DA of more than
$50,000 in the aggregate.
All contracts, arrangements, plans, agreements, leases, licenses,
franchises, permits, indentures, authorizations, instruments and other
commitments which are listed in the DA Disclosure Schedule pursuant to this
Section 3.14 are valid and in full force and effect and DA has not, nor, to the
knowledge of DA, has any other party thereto, breached any material provisions
of, or entered into default in any material respect under the terms thereof.
Since the Audited Balance Sheet Date, DA has not amended, modified or terminated
the terms of the contracts or agreements referred to in this Section 3.14 unless
such amendment, modification or termination was in the ordinary course of
business and DA has provided Delano with written notification of such.
3.15 MATERIAL REDUCTIONS. To DA's knowledge, none of the parties to any of
the contracts identified in the DA Disclosure Schedule pursuant to Section 3.14
have terminated, or, to the knowledge of DA, in any way expressed to DA an
intent to reduce or terminate the amount of its business with DA in the future.
3.16 INSURANCE AND BANKING FACILITIES. Section 3.16 of the DA Disclosure
Schedule contains a complete and correct list of (i) all contracts of insurance
or indemnity of DA in force at the date of this Agreement (including name of
insurer or indemnitor, agent, annual premium, coverage, deductible amounts and
expiration date) and (ii) the names and locations of all banks in which DA has
accounts or safe deposit boxes, the designation of each such account and safe
deposit box, and the names of all persons authorized to draw on or have access
to each such account and safe deposit box. All premiums and other payments due
from DA with respect to any such contracts of insurance or indemnity have been
paid, and DA does not know of any fact, act, or failure to act which has or
might cause any such contract to be canceled or terminated. All known claims for
insurance or indemnity have been presented.
3.17 EMPLOYEES. The DA Disclosure Schedule sets forth a list of (a) the
names, titles, salaries and all other compensation of all salaried DA employees
(such term meaning permanent and temporary, full-time and part-time employees)
and (b) the wage rates for non-salaried DA employees (by classification). Any
persons engaged by DA as independent contractors, rather than employees, have
been properly classified as such and have been so engaged in accordance with all
applicable federal, foreign, state or local laws. No senior management or
technical employee has stated to DA that such employee intends to resign or
retire as a result of the transactions contemplated by this Agreement or
otherwise within six months after the Closing Date. Hours worked by and payments
made to employees of DA have not been in violation of the Fair Labor Standards
Act or any other applicable
- ▇▇ -
▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ or local laws dealing with such matters. DA is not and
never has been engaged in any dispute or litigation with an employee or former
employee regarding matters pertaining to intellectual property or assignment of
inventions. DA has never been and, to the knowledge of DA, is not now subject to
a union organizing effort. DA does not have any written contract of employment
or other employment, severance or similar agreement with any of its employees or
any established policy or practice relating thereto, and all of its employees
are employees-at-will. DA is not a party to any pending, or to DA's knowledge,
threatened, labor dispute. DA has complied in all material respects with all
applicable federal, state and local laws, ordinances, rules and regulations and
requirements relating to the employment of labor, including but not limited to
the provisions thereof relating to wages, hours, collective bargaining and
ensuring equality of opportunity for employment and advancement of minorities
and women. There are no claims pending, or, to the knowledge of DA, threatened
to be brought, in any court or administrative agency by any former or current DA
employees for compensation, pending severance benefits, vacation time, vacation
pay or pension benefits, or any other claim threatened or pending in any court
or administrative agency from any current or former employee or any other Person
arising out of DA's status as employer, whether in the form of claims for
employment discrimination, harassment, unfair labor practices, grievances,
wrongful discharge, or otherwise.
3.18 EMPLOYEE BENEFIT PLANS. Each Plan (as defined below) covering active,
former, or retired employees of DA is listed in Section 3.18 of the DA
Disclosure Schedule. "PLAN" means any employee benefit plan as defined in ERISA
(as defined below) and will also include any employment, severance or similar
contract, arrangement or policy and each plan or arrangement providing for
insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, phantom stock, stock options, stock appreciation rights
or other forms of incentive compensation or post-retirement insurance,
compensation or benefits. DA has made available to Delano a copy of each Plan,
and where applicable, any related trust agreement, annuity, or insurance
contract. All annual reports (Form 5500) required to be filed with the Internal
Revenue Service have been properly filed on a timely basis, and DA has provided
copies of the three most recently filed Forms 5500 for each applicable Plan. Any
Plan intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified and has remained
tax-qualified to this date and its related trust is tax-exempt and has been so
since its creation. No Plan is covered by Title IV of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 412 of the Code.
No "prohibited transaction," as defined in ERISA Section 406 or Code Section
4975 has occurred with respect to any Plan, unless such a transaction was exempt
from such rules. Each Plan has been maintained and administered in material
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations, including but not limited to ERISA and
the Code, which are applicable to such Plans. There are no pending or
anticipated claims against or otherwise involving any of the Plans and no suit,
action, or other litigation (excluding claims for benefits incurred in the
ordinary course of Plan activities) has been brought against or with respect to
any Plan. All contributions, reserves, or premium payments to the Plan, accrued
to the date hereof have been made or provided for. Neither DA nor any entity
which is considered one employer with DA under Section 414 of the Code or
Section 4001 of ERISA has ever maintained or contributed to or incurred or
expects to incur liability with respect to any Plan subject to Title IV of ERISA
or any "multi-employer plan" within the meaning of Section 4001(a)(3) of ERISA.
There are no restrictions on the rights of DA to amend or terminate any Plan
without incurring any liability thereunder. DA has not engaged in or is a
successor or parent corporation to an entity that has
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engaged in a transaction described in ERISA Section 4069. There have been no
amendments to, written interpretation of, or announcement (whether or not
written) by DA relating to, or change in employee participation or coverage
under, any Plan. Neither DA nor any of its ERISA affiliates have any current or
projected liability in respect of post-employment or post-retirement welfare
benefits for retired or former employees of DA other than health care
continuation benefits required to be provided under applicable law. No tax under
Section 4980B or 4980D of the Code has been incurred in respect of any Plan that
is a group health plan, as defined in Section 5000(b)(1) of the Code.
3.19 CERTAIN AGREEMENTS. Except as contemplated by this Agreement, neither
the execution and delivery of this Agreement and all other agreements
contemplated hereby, nor the consummation of the transactions contemplated
hereby will: (i) result in any payment by DA (including, without limitation,
severance, unemployment compensation, parachute payment, bonus or otherwise)
becoming due to any director, employee, or independent contractor of DA under
any Plan, agreement, or otherwise, (ii) increase any benefits otherwise payable
under any Plan or agreement or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
3.20 GUARANTEES AND SURETYSHIPS. DA has no powers of attorney outstanding
(other than those issued in the ordinary course of business with respect to Tax
matters), and DA has no material obligations or liabilities (absolute or
contingent) as guarantor, surety, cosigner, endorser, co-maker, indemnitor, or
otherwise respecting the obligations or liabilities of any Person.
3.21 BROKERS AND FINDERS. Neither DA nor any of the Stockholders has
retained any broker, finder, or investment banker in connection with this
Agreement or any of the transactions contemplated by this Agreement, nor does or
will DA owe any fee or other amount to any broker, finder, or investment banker
in connection with this Agreement or the transactions contemplated by this
Agreement.
3.22 CERTAIN PAYMENTS. Neither DA, nor to the knowledge of DA, any Person
acting on behalf of DA has, directly or indirectly, on behalf of or with respect
to DA: (i) made an unreported political contribution, (ii) made or received any
payment which was not legal to make or receive, (iii) engaged in any material
transaction or made or received any material payment which was not properly
recorded on the books of DA, (iv) created or used any "off-book" bank or cash
account or "slush fund," or (v) engaged in any conduct constituting a violation
of the Foreign Corrupt Practices Act of 1977.
3.23 ENVIRONMENTAL MATTERS. DA has complied, in all material respects, with
all federal, state and local laws (including, without limitation, case law,
rules, regulations, orders, judgments, decrees, permits, licenses and
governmental approvals) which are intended to protect the environment and/or
human health or safety (collectively, "ENVIRONMENTAL LAWS"); DA has not handled,
generated, used, stored, transported or disposed of any material, substance or
waste which is regulated by Environmental Laws ("HAZARDOUS MATERIALS"), except
for reasonable amounts of ordinary office and/or office-cleaning supplies which
have been used in compliance with Environmental Laws; (iii) there is not now any
underground storage tank or asbestos on any real property owned, operated or
leased by DA; (iv) DA has not conducted, nor is it aware of, any environmental
investigations, studies, audits, tests, reviews or analyses, the purpose of
which was to discover, identify, or otherwise characterize the condition of the
soil, groundwater, air or the presence of Hazardous Materials at any real
property owned, operated or leased by DA; and (v) there are no "Environmental
Liabilities". For purposes of this Agreement, "ENVIRONMENTAL LIABILITIES" are
any claims, demands, or liabilities under
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Environmental Laws which (i) arise out of or in any way relate to DA's
operations or activities, or any real property at any time owned, operated or
leased by DA, or any stockholder's use or ownership thereof, whether vested or
unvested, contingent or fixed, actual or potential, and (ii) arise from or
relate to actions occurring (including any failure to act) or conditions
existing on or before the Closing Date.
3.24 ENFORCEABILITY OF CONTRACTS, ETC.
(a) No Person that is a party to any material contract, agreement,
commitment or plan to which DA is a party has a valid defense, on account of
non-performance or malfeasance by DA, which would make any such contracts,
agreement, commitment or plan not valid and binding upon or enforceable against
such parties in accordance with their terms, except to the extent such
enforceability may be subject to or limited by bankruptcy, insolvency,
reorganization, arrangement or similar laws affecting the rights of creditors
generally and usual equity principles.
(b) Neither DA, nor, to the knowledge of DA, any other Person, is in
breach or violation of, or default under, any material contract, agreement,
arrangement, commitment or plan to which DA is a party, and no event or action
has occurred, is pending, or, to the knowledge of DA, is threatened, which,
after the giving of notice, or the lapse of time, or otherwise, would constitute
a breach or a default by DA or, to the knowledge of DA, any other Person, under
any material contract, agreement, arrangement, commitment or plan to which DA is
a party.
3.25 INFORMATION STATEMENT. The information regarding DA (including, for
purposes of this Section 3.25, information regarding DA's officers, directors
and stockholders) included in the information to be sent to the stockholders of
DA in connection with the consideration and approval of the Merger and the other
transactions contemplated by this Agreement (such information statement as
amended or supplemented is referred to herein as the "INFORMATION STATEMENT")
will not, on the date the Information Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of DA, at the time of
the execution and delivery of any written consent of the stockholders of DA or
the time of any stockholders meeting of DA to approve the Merger, and at the
Effective Time, contain any statement regarding DA that, at such time and in
light of the circumstances under which it will be made, is false or misleading
in any material respect, or will omit to state any material fact regarding DA
necessary in order to make the statements made therein regarding DA not false or
misleading in any material respect; or omit to state any material fact regarding
DA necessary to correct any statement regarding DA in any earlier communication
with respect to the solicitation of the stockholders of DA that has become false
or misleading in any material respect. If at any time prior to the Effective
Time any event relating to DA should be discovered by DA which should be set
forth in an amendment or a supplement to the Information Statement, DA will
promptly inform Delano. Notwithstanding the foregoing, DA makes no
representation or warranty with respect to any information regarding Delano or
Merger Sub which is contained in any of the foregoing documents.
3.26 DISCLOSURE. Neither the representations or warranties made by DA or
the Stockholders in this Agreement, nor the DA Disclosure Schedule or any other
certificate executed and delivered by DA or the Stockholders pursuant to this
Agreement, when taken together, contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements or
facts contained herein or therein not misleading in light of the circumstances
under which they were furnished.
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3.27 RELIANCE. The foregoing representations and warranties are made by DA
and the Stockholders with the knowledge and expectation that Delano and Merger
Sub are placing reliance thereon.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Each Stockholder severally represents and warrants to Delano and Merger Sub
as follows:
(a) Subject to applicable community property laws, such DA
Stockholder is the lawful owner of the shares of DA Common Stock to be exchanged
for the Delano Merger Shares pursuant to this Agreement and has, and on the
Closing Date will have, good and clear title to such shares of DA Capital Stock,
free of all Liens. Such DA Stockholder is the owner of the number of shares of
Deemed Outstanding DA Shares set forth on EXHIBIT 2.1.
(b) Such Stockholder has, and on the Closing Date will have,
full legal right, power and authority to enter into this Agreement and to sell
and deliver the shares of DA Common Stock owned by him, her or it in the manner
provided herein. Such Stockholder has duly and validly executed this Agreement
and has, or prior to the Closing, will have duly and validly executed and
delivered all other agreements contemplated hereby, and each of this Agreement
and such other agreements constitutes a valid, binding and enforceable
obligation of such Stockholder in accordance with its terms.
(c) The execution, delivery and performance of this Agreement and the
other agreements contemplated hereby by such Stockholder, and the consummation
of the transactions contemplated hereby or thereby, will not require, on the
part of such Stockholder, any consent, approval, authorization or other order
of, or any filing with, any Governmental Entity, or under any contract,
agreement or commitment to which such Stockholder is a party or by which such
Stockholder or property of such Stockholder is bound, and will not constitute a
violation on the part of such Stockholder of any law, administrative regulation
or ruling or court decree, or any contract, agreement or commitment, applicable
to such Stockholder or property of such Stockholder.
(d) Such Stockholder is an "accredited investor" as defined in the
rules and regulations under the Securities Act (except as otherwise shown on
such Stockholder's Investment Agreement).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF DELANO AND MERGER SUB
Except as set forth in the disclosure schedule of Delano dated as of the
date hereof and delivered herewith to DA (the "DELANO DISCLOSURE SCHEDULE")
which identifies the section and subsection to which each disclosure therein
relates (provided, however, that Delano will be deemed to have adequately
disclosed with respect to any section or subsection any matters that are clearly
described elsewhere in such document if the applicability of such disclosure to
such non-referenced sections or subsections is clearly apparent and Delano has
not intentionally omitted any required cross-
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references), and whether or not the Delano Disclosure Schedule is referred to in
a specific section or subsection, Delano and Merger Sub jointly and severally
represent and warrant to DA as follows:
5.1 ORGANIZATION AND QUALIFICATION. Delano is a corporation duly
organized, validly existing and in good standing under the laws of Ontario, has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its businesses as now being conducted, and is duly
qualified and in good standing to do business in each jurisdiction in which a
failure to so qualify would have a material adverse effect on the Business
Condition of Delano. Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, is recently organized and has conducted no business activities,
other than as contemplated by this Agreement.
5.2 CAPITALIZATION. The authorized capital stock of Delano consists of an
unlimited number of shares of Class A Special Shares, without par value of which
no shares are issued and outstanding, an unlimited number of shares of Class B
Special Shares of which no shares are issued and outstanding, an unlimited
number of shares of Class C Special Shares of which no shares are issued and
outstanding and an unlimited number of shares of Delano Common Stock, of which,
as of August 31, 2000: (a) 30,328,198 shares were validly issued and
outstanding, fully paid and nonassessable and (b) 8,080,000 shares were reserved
for issuance pursuant to Delano's stock option and stock purchase plans for its
employees and directors. Except for options and rights relating to shares
described in clause (b) of the preceding sentence, and except as set forth in
Section 5.2 of the Delano Disclosure Schedule or the Reports (as defined in
Section 5.5), there are no options, warrants or other rights, agreements or
commitments (contingent or otherwise) obligating Delano to issue shares of its
capital stock or any other securities convertible into or evidencing the right
to subscribe to shares of its capital stock.
5.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The execution, delivery and
performance of this Agreement and all other agreements contemplated hereby by
Delano and Merger Sub have been duly authorized by all necessary action of the
Boards of Directors and stockholders of Delano and Merger Sub. Certified copies
of the resolutions adopted by the Boards of Directors of Delano and Merger Sub
and Delano as sole stockholder of Merger Sub approving this Agreement, all other
agreements contemplated hereby and the Merger have been or will be provided to
DA. Each of Delano and Merger Sub has duly and validly executed and delivered
this Agreement and has, or prior to Closing, will have duly and validly executed
and delivered all other agreements contemplated hereby to be executed by it, and
each of this Agreement and such other agreements constitutes a valid, binding
and enforceable obligation of each of Delano and Merger Sub in accordance with
its terms.
5.4 NON-CONTRAVENTION. Assuming the accuracy of the representations and
warranties of DA and the Stockholders contained in the Agreement and the other
agreements contemplated hereby, neither the execution, delivery or performance
of this Agreement and all other agreements contemplated hereby by Delano and
Merger Sub, nor the consummation of the Merger or any other transaction
described herein, does or will, after the giving of notice, or the lapse of
time, or otherwise, conflict with, result in a breach of, or constitute a
default under, the Charter Documents of Delano or Merger Sub or any federal,
foreign, state or local court or administrative order or process, statute, law,
ordinance, rule or regulation, or any contract, agreement or commitment to which
Delano is a party, or under which Delano is obligated, or by which Delano or any
of the rights, properties or assets of Delano are subject or bound; result in
the creation of any Lien upon, or otherwise adversely affect, any
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of the rights, properties or assets of Delano; terminate, amend or modify, or
give any party the right to terminate, amend, modify, abandon or refuse to
perform or comply with, any contract, agreement or commitment to which Delano is
a party, or under which Delano is obligated, or by which Delano or any of the
rights, properties or assets of Delano are subject or bound; or accelerate,
postpone or modify, or give any party the right to accelerate, postpone or
modify, the time within which, or the terms and conditions under which, any
liabilities, duties or obligations are to be satisfied or performed, or any
rights or benefits are to be received, under any contract, agreement or
commitment to which Delano is a party, or under which Delano may be obligated,
or by which Delano or any of the rights, properties or assets of Delano are
subject or bound, other than any of the foregoing which would not have,
individually or in the aggregate, a material adverse effect on Business
Condition of Delano.
5.5 REPORTS AND FINANCIAL STATEMENTS. Delano has previously furnished to
DA true and correct copies of its (i) Form 10-K for the period ended ▇▇▇▇▇ ▇▇,
▇▇▇▇, (▇▇) its Quarterly Report on Form 10-Q for the period ended June 30, 2000
(the "RECENT 10-Q"), (iii) all other reports filed by it with the Securities and
Exchange Commission (the "COMMISSION") under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") since February 9, 2000 and (iv) Delano
hereby agrees to furnish to DA true and correct copies of all reports filed by
it with the Commission after the date hereof prior to the Closing all in the
form (including exhibits) so filed (collectively, the "REPORTS"). As of their
respective dates, the Reports complied or will comply in all material respects
with the then applicable published rules and regulations of the Commission with
respect thereto at the date of their issuance and did not or will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. As of the
date hereof, no additional filings or amendments to previously filed Reports are
required pursuant to such rules and regulations. Each of the audited
consolidated financial statements and unaudited interim financial statements
included in Delano's Reports has been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly presents the financial
position of the entity or entities to which it relates as at its date or the
results of operations, stockholders' equity or cash flows of such entity or
entities (subject, in the case of unaudited statements, to the absence of
footnote disclosure and in the case of unaudited interim statements to year-end
adjustments, which will not be material either individually or in the aggregate,
and except as described in Section 5.5 of the Delano Disclosure Schedule).
5.6 VALIDITY OF DELANO MERGER SHARES. The Delano Merger Shares to be
issued in the Merger will, when issued, be, validly issued, fully paid and
nonassessable.
5.7 CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. Assuming the
accuracy of the representations and warranties of DA and the Stockholders
contained in the Agreement and the other agreements contemplated hereby, except
for (a) the requirements of state securities (or "Blue Sky") laws, (b) the
filing and recording of the Merger Documents as provided by the Kansas GCC, (c)
the filing of appropriate documents with the Nasdaq Stock Market and (d) the
filing of a Form D and a Form 8-K with the Commission, if applicable, no
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Entity is required to be made or obtained by Delano or
Merger Sub in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby.
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5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 2000, there has
not been any material adverse change in the Business Condition of Delano.
5.9 INFORMATION STATEMENT. The information regarding Delano (including,
for purposes of this Section 5.9, information regarding Delano's officers,
directors and stockholders) included in the Information Statement will not, on
the date the Information Statement (or any amendment thereof or supplement
thereto) is first mailed to the stockholders of DA, at the time of the execution
and delivery of any written consent of the stockholders of DA or the time of any
stockholders meeting of DA to approve the Merger, and at the Effective Time,
contain any statement regarding Delano that, at such time and in light of the
circumstances under which it will be made, is false or misleading in any
material respect, or will omit to state any material fact regarding Delano
necessary in order to make the statements made therein regarding Delano not
false or misleading in any material respect; or omit to state any material fact
regarding Delano necessary to correct any statement regarding Delano in any
earlier communication with respect to the solicitation of the stockholders of
Delano that has become false or misleading in any material respect. If at any
time prior to the Effective Time any event relating to Delano should be
discovered by Delano which should be set forth in an amendment or a supplement
to the Information Statement, Delano will promptly inform DA. Notwithstanding
the foregoing, Delano makes no representation or warranty with respect to any
information regarding DA which is contained in any of the foregoing documents.
5.10 DISCLOSURE. Neither the representations or warranties made by Delano
in this Agreement, nor the Delano Disclosure Schedule or any other certificate
executed and delivered by Delano pursuant to this Agreement, when taken together
and with knowledge of the contents of the Reports, contains any untrue statement
of a material fact, or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the
circumstances under which they were furnished.
5.11 RELIANCE. The foregoing representations and warranties are made by
Delano with the knowledge and expectation that DA and the Stockholders are
placing reliance thereon.
ARTICLE VI
COVENANTS OF DA
During the period from the date of this Agreement (except as otherwise
indicated) and continuing until the earlier of the termination of this Agreement
or the Effective Time, each of DA and the Stockholders agree (except as
expressly contemplated by this Agreement or otherwise permitted with Delano's
prior written consent):
6.1 CONDUCT OF BUSINESS IN ORDINARY COURSE. DA will carry on its business
in the ordinary course in substantially the same manner as heretofore conducted
and, to the extent consistent with such business, use all reasonable best
efforts consistent with past practice and policies to preserve intact its
present business organization, keep available the services of its present
officers, consultants and employees and preserve its relationships with
customers, suppliers and distributors and others having business dealings with
it. DA will confer on a regular and frequent basis with representatives of
Delano to report operational matters of a material nature and to report the
general status of the ongoing operations of the business of DA. The foregoing
notwithstanding, DA will not:
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(a) other than in the ordinary course of business consistent with
prior practice, enter into any material commitment or transaction, including but
not limited to any purchase of assets (other than raw materials, supplies or
cash equivalents) for a purchase price in excess of $50,000;
(b) grant any bonus, severance or termination pay to any officer,
director, independent contractor or employee of DA;
(c) enter into or amend any agreements pursuant to which any other
party is granted support, service, marketing or publishing rights, other than in
the ordinary course of business consistent with prior practice, or is granted
distribution rights of any type or scope with respect to any products of DA;
(d) other than in the ordinary course of business consistent with
prior practice, enter into or terminate any contracts, arrangements, plans,
agreements, leases, licenses, franchises, permits, indentures, authorizations,
instruments, or commitments, or amend or otherwise change in any material
respect the terms thereof in a manner materially adverse to DA;
(e) commence a lawsuit other than: (i) for the routine collection of
bills, (ii) in such cases where DA in good faith determines that failure to
commence suit would result in a material impairment of a valuable aspect of DA's
business provided that DA consults with Delano prior to filing such suit, or
(iii) for a breach of this Agreement or any agreement related hereto;
(f) modify in any material respect existing discounts or other terms
and conditions with dealers, distributors and other resellers of DA's products
or services in a manner adverse to DA;
(g) accelerate the vesting or otherwise modify any DA Option,
restricted stock or other outstanding rights or other securities, except as
otherwise provided in the Digital Archaeology Corporation 1998 Stock Option Plan
(the "Stock Option Plan");
(h) take any action which would make any representation or warranty
in this Agreement untrue or incorrect in any material respect, as if made as of
such time; or
(i) agree in writing or otherwise to take any of the foregoing
actions.
6.2 DIVIDENDS, ISSUANCE OF, OR CHANGES IN SECURITIES. Except for the
dividend previously paid and described in Section 3.2(a), DA will not: (i)
declare or pay any dividends on or make other distributions to its stockholders
(whether in cash, shares or property), (ii) issue, deliver, sell, or authorize,
propose, or agree to, or commit to the issuance, delivery, or sale of any shares
of its capital stock of any class, any Company Voting Debt or any securities
convertible into its capital stock, any options, warrants, calls, conversion
rights, commitments, agreements, contracts, understandings, restrictions,
arrangements or rights of any character obligating DA to issue any such shares,
Company Voting Debt or other convertible securities except as any of the
foregoing is required by Outstanding DA Options; (iii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
capital stock of DA, (iv) repurchase or otherwise acquire, directly or
indirectly, any shares of its capital stock or options or warrants related
thereto, or (v) propose any of the foregoing.
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6.3 GOVERNING DOCUMENTS. DA will not amend its Charter Documents.
6.4 NO ACQUISITIONS. DA will not authorize, recommend, propose or announce
an intention to authorize, recommend or propose, or enter into a letter of
intent (whether or not binding), an agreement in principle or an agreement with
respect to any merger, consolidation or business combination (other than the
Merger), or any acquisition of assets or securities.
6.5 NO DISPOSITIONS. DA will not sell, lease, license, transfer, mortgage,
encumber or otherwise dispose of any of its material assets or cancel, release,
or assign any material indebtedness or claim, except in the ordinary course of
business.
6.6 INDEBTEDNESS. DA will not incur any indebtedness for borrowed money by
way of direct loan, sale of debt securities, purchase money obligation,
conditional sale, guarantee or otherwise.
6.7 COMPENSATION. DA will not adopt or amend, or modify in any material
respect, any Plan or pay any pension or retirement allowance not required by any
existing Plan. DA will not enter into or modify any employment or severance
contracts, increase the salaries, wage rates or fringe benefits of its officers,
directors or employees or pay bonuses or other remuneration except for current
salaries, severance and other remuneration for which DA is obligated under
arrangements existing prior to the Unaudited Balance Sheet Date to which DA is a
party and which have been disclosed in the DA Disclosure Schedule.
6.8 CLAIMS. DA will not settle any claim, action or proceeding, except in
the ordinary course of business.
6.9 ACCESS TO PROPERTIES AND RECORDS. Subject to contractual and other
obligations, DA will give Delano and its representatives full access, at a place
reasonably acceptable to DA, during reasonable business hours and following
reasonable notice but in such a manner as not unduly to disrupt the business of
DA, to its senior management, senior technical personnel, premises, properties,
contracts, commitments, books, records and affairs, and will provide Delano with
such financial, technical and operating data and other information pertaining to
its business as Delano may request. With DA's prior consent, which will not be
unreasonably withheld, Delano will be entitled in conjunction with DA personnel
to make appropriate inquiries of third parties in the course of its
investigation.
6.10 BREACH OF REPRESENTATIONS AND WARRANTIES. DA will not take any action
that would cause or constitute a breach of any of the representations and
warranties set forth in Article III or that would cause any of such
representations and warranties to be inaccurate in any material respect or that
would constitute a breach of any of its other obligations under this Agreement.
In the event of, and promptly after becoming aware of, the occurrence of or the
pending or threatened occurrence of any event that would cause or constitute
such a breach or inaccuracy, DA will give detailed notice thereof to Delano and
will use its reasonable best efforts to prevent or remedy promptly such breach
or inaccuracy.
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6.11 CONSENTS. DA will promptly apply for or otherwise seek and use
reasonable best efforts to obtain, all Consents, and make all filings with
Governmental Entities, required with respect to the consummation of the Merger.
6.12 TAX RETURNS. DA will promptly provide or make available to Delano
copies of all tax returns, reports and information statements that have been
filed or are filed prior to the Closing Date.
6.13 STOCKHOLDER APPROVAL. Each of the Stockholders agrees to vote all of
such Stockholder's shares of DA Common Stock for the approval of this Agreement
and the appropriate Merger Documents as required by the Kansas GCC.
6.14 PREPARATION OF DISCLOSURE AND SOLICITATION MATERIALS. As promptly as
practicable after the execution of this Agreement, DA will promptly submit to
its stockholders, information and documents relating to DA, its business or
operations, Delano, its business or operations, the terms of the Merger and this
Agreement as reasonably agreed by counsel to Delano and DA and intended to
comply in all material respects with Regulation D under the Securities Act and
the material facts concerning all payments which in the absence of stockholder
approval would be "Parachute Payments" as defined in Code Section 280G(b)(2), in
form and substance satisfactory to Delano and its counsel, to satisfy all
requirements applicable to DA of applicable state and federal securities laws,
the Kansas GCC and Code Section 280G(b)(5)(B) and the regulations thereunder. DA
will promptly set a record date, give notice of a special meeting, solicit
consents and/or give notices to holders of Dissenting Shares so as to facilitate
the Closing of the Merger as of the earliest practicable date.
6.15 EXCLUSIVITY; ACQUISITION PROPOSALS. Unless and until this Agreement
will have been terminated by either party pursuant to Article XI hereof and
thereafter subject to Section 11.5, neither DA nor any of the Stockholders will
(and each will use its reasonable best efforts to ensure that none of its
officers, directors, agents, representatives or affiliates) take or cause or
permit any Person to take, directly or indirectly, any of the following actions
with any party other than Delano and its designees: (i) solicit, encourage,
initiate or participate in any negotiations, inquiries, or discussions with
respect to any offer or proposal to acquire all or any significant part of DA's
business, assets or capital stock, whether by merger, consolidation, other
business combination, purchase of assets, tender or exchange offer or otherwise
(each of the foregoing, excluding, however, the Merger, an "ACQUISITION
TRANSACTION"), (ii) disclose, in connection with an Acquisition Transaction, any
information not customarily disclosed to any Person other than Delano or its
representatives concerning DA's business or properties or afford to any Person
other than Delano or its representatives access to its properties, books, or
records, except in the ordinary course of business and as required by law or
pursuant to a governmental request for information, (iii) enter into or execute
any agreement relating to an Acquisition Transaction, or (iv) make or authorize
any public statement, recommendation or solicitation in support of any
Acquisition Transaction or any offer or proposal relating to an Acquisition
Transaction other than with respect to the Merger. In the event that DA is
contacted by any third party expressing an interest in discussing an Acquisition
Transaction, DA will promptly notify Delano of such contact and the identity of
the party so contacting DA.
6.16 NOTICE OF EVENTS. Throughout the period between the date of this
Agreement and the Closing, DA will promptly advise and consult with Delano
regarding any and all material events and developments concerning its financial
position, results of operations, assets, liabilities or business or
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any of the items or matters concerning DA covered by the representations,
warranties and covenants of DA and the Stockholders contained in this Agreement.
6.17 REASONABLE BEST EFFORTS. DA and each of the Stockholders will use
their reasonable best efforts to effectuate the transactions contemplated hereby
and to fulfill and cause to be fulfilled the conditions to Closing under this
Agreement. Each of the Stockholders agrees to vote, as stockholders of DA, for
the Merger and to approve all of the transactions contemplated by this
Agreement.
6.18 INSURANCE. DA will use its reasonable best efforts to maintain in
force at the Effective Time policies of insurance of the same character and
coverage as those described in the DA Disclosure Schedule, and DA will promptly
notify Delano in writing of any changes in such insurance coverage occurring
prior to the Effective Time.
6.19 STOCK OPTION PLAN. DA and Stockholders will resolve to and increase,
by 2,000,000, the number of shares of DA Common Stock that is set aside for the
exercise of options issued pursuant to the Stock Option Plan.
ARTICLE VII
COVENANTS OF DELANO
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time (or later
where so indicated), Delano and Merger Sub agree (except as expressly
contemplated by this Agreement or with DA's prior written consent):
7.1 BREACH OF REPRESENTATIONS AND WARRANTIES. Neither Delano nor Merger
Sub will take any action which would cause or constitute a breach of any of the
representations and warranties set forth in Article V or which would cause any
of such representations and warranties to be inaccurate in any material respect.
In the event of, and promptly after becoming aware of, the occurrence of or the
pending or threatened occurrence of any event which would cause or constitute
such a breach or inaccuracy, Delano will give detailed notice thereof to DA and
will use its reasonable best efforts to prevent or remedy promptly such breach
or inaccuracy.
7.2 ADDITIONAL INFORMATION; ACCESS. Delano will provide DA and its
stockholders with the information relating to Delano referred to in Section 5.5
and the information relating to Delano to be included in the Information
Statement. In addition, Delano will afford to DA and to its counsel and to the
persons expected to become stockholders of Delano pursuant to the Merger access
throughout the period prior to the Effective Time to its senior management and
all other information concerning Delano as DA or such stockholder may reasonably
request. Such stockholders will also be afforded the opportunity to ask
questions and to receive accurate and complete answers from Delano concerning
the terms and conditions of the Merger and the issuance of the Delano Merger
Shares pursuant thereto.
7.3 CONSENTS. Delano will promptly apply for or otherwise seek, and use
its reasonable best efforts to obtain, all consents and approvals, and make
filings, required with respect to the consummation of the Merger.
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7.4 REASONABLE BEST EFFORTS. Each of Delano and Merger Sub will use its
reasonable best efforts to effectuate the transactions contemplated hereby and
to fulfill and cause to be fulfilled the conditions to Closing under this
Agreement.
7.5 OFFICERS AND DIRECTORS. Delano agrees that all rights to
indemnification existing on the date hereof in favor of the present or former
officers and directors of DA with respect to actions taken in their capacities
as directors or officers of DA prior to the Effective Time as provided in the
Charter Documents of DA and any applicable indemnification agreements (copies of
which have been provided to Delano) will survive the Merger and continue in full
force and effect following the Effective Time and the obligations related
thereto will be assumed by Delano. Notwithstanding the foregoing the provisions
of such Charter Documents or agreements will have no effect on the obligations
of any stockholders of DA pursuant to Article X of this Agreement or the Escrow
Agreement.
7.6 NASDAQ NATIONAL MARKET LISTING. Delano will use its reasonable best
efforts to cause the Delano Merger Shares to be authorized for trading on the
Nasdaq National Market as soon as practicable.
7.7 NOTICE OF EVENTS. Throughout the period between the date of this
Agreement and the Closing, Delano will promptly advise and consult with DA
regarding any and all material adverse change to the representations, warranties
and covenants of Delano and Merger Sub contained in this Agreement.
7.8 THIRD PARTY BENEFICIARIES. Sections 7.5 and 7.6 will survive the
consummation of the Merger, are intended to benefit the stockholders of DA that
receive Delano Merger Shares (the "NEW DELANO STOCKHOLDERS"), will be binding on
Delano and its successors and assigns, and will be enforceable by the officers
and directors of DA and the New Delano Stockholders.
ARTICLE VIII
ADDITIONAL AGREEMENTS
In addition to the foregoing, Delano, Merger Sub, DA and the Stockholders
each agree to take the following actions after the execution of this Agreement.
8.1 INVESTMENT AGREEMENTS. All resales of Delano Common Shares by the New
Delano Stockholders will be subject to the restrictions imposed by the
investment agreements (the "INVESTMENT AGREEMENTS") in the form attached as
EXHIBIT 8.1 and the registration rights agreement (the "REGISTRATION RIGHTS
AGREEMENT") in the form attached as EXHIBIT 8.2, each of which will be entered
into by each New Delano Stockholder and Delano. Delano will be entitled to place
the legends as referred to in the form of Investment Agreements on each
certificate evidencing any Delano Common Shares to be received by the applicable
holders thereof pursuant to the terms of this Agreement and to issue appropriate
stop transfer instructions to the transfer agent for Delano Common Shares
consistent with the terms of the Investment Agreements.
8.2 LEGAL CONDITIONS TO THE MERGER. Each of Delano, Merger Sub, DA and the
Stockholders will use all reasonable best efforts to take actions necessary to
comply promptly with all legal requirements which may be imposed on it with
respect to the Merger. Each of Delano, Merger Sub,
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DA and the Stockholders will use all reasonable best efforts to take all actions
to obtain (and to cooperate with the other parties in obtaining) any consent
required to be obtained or made by DA, Merger Sub, or Delano in connection with
the Merger, or the taking of any action contemplated thereby or by this
Agreement.
8.3 EMPLOYEE BENEFITS. Nothing contained herein will be considered as
requiring DA or Delano to continue any specific plan or benefit, or to confer
upon any employee, beneficiary, dependent, legal representative or collective
bargaining agent of such employee any right or remedy of any nature or kind
whatsoever under or by reason of this Agreement, including without limitation
any right to employment or to continued employment for any specified period, at
any specified location or under any specified job category, except as
specifically provided for in an offer letter or other agreement of employment.
It is specifically understood that continued employment with DA or employment
with Delano is not offered or implied for any other employees of DA and any
continuation of employment with DA after the Closing will be at will except as
specifically provided otherwise in an offer letter or other agreement of
employment. Notwithstanding the foregoing, Delano shall be responsible for all
liabilities (including any obligations pursuant to the so-called WARN Act) with
respect to any termination of employees or reduction of benefits after the
Effective Time.
8.4 EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby, including legal and accounting expenses will be
paid by the party incurring such cost or expense; provided, however, that any
such costs or expenses incurred by DA (the "DA TRANSACTION EXPENSES") shall be
paid from the Delano Merger Cash; provided, further, that DA will estimate and
itemize any such investment banking, consulting, legal and accounting expenses
of DA prior to Closing and provide Delano with a copy of such estimate at the
Closing; and provided, further, that the provisions of this Section 8.4 shall
not be construed to relieve a party from liability resulting from such party's
breach of this Agreement. The parties acknowledge that DA may repay DA's debt to
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ without deduction from the Merger Consideration.
8.5 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time
any further action is reasonably necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of DA,
the proper officers and directors of each corporation which is a party to this
Agreement will take all such necessary action. Without limiting the foregoing,
on or prior to the Closing Date, DA will deliver to Delano a properly executed
statement satisfying the requirements of Treasury Regulation Sections 1.897-2(h)
and 1.1445-2(c)(3) in a form reasonably acceptable to Delano.
8.6 PUBLIC ANNOUNCEMENTS. Neither Delano, DA nor any of the Stockholders
will disseminate any press release or other announcement concerning this
Agreement or the transactions contemplated herein to any third party (except to
the directors, officers and employees of the parties to this Agreement whose
direct involvement is necessary for the consummation of the transactions
contemplated under this Agreement, to the attorneys, advisors and accountants of
the parties hereto, or except as Delano determines in good faith to be required
by applicable law after consultation with DA) without the prior written
agreement of Delano and DA.
8.7 CONFIDENTIALITY. DA and Delano have entered into a Confidentiality and
Nondisclosure Agreement dated September 14, 2000 concerning each party's
obligations to protect the confidential
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information of the other party. DA and Delano each hereby affirm each of their
obligations under such agreement. If this Agreement is terminated in accordance
with Article XI hereof, Delano will, and will cause its accountants, counsel and
other representatives to deliver to DA all documents and other material, and all
copies thereof, obtained by Delano or on its behalf from DA in connection with
this Agreement, whether so obtained before or after the execution hereof, and
will not disclose any such information or documents to any third parties or make
any use of such. If this Agreement is terminated in accordance with Article XI
hereof, DA will, and will cause its accountants, counsel and other
representatives to, deliver to Delano all documents and other material, and all
copies thereof, obtained by DA or on its behalf or by a Stockholder from Delano
in connection with this Agreement, whether so obtained before or after the
execution hereof, and will not disclose any such information or documents to any
third parties or make any use of such.
8.8 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ FILING. If and to the extent applicable, Delano, DA
and each Stockholder agree to file, and to cause any other Person obligated to
do so as a result of such person's stock holdings in Delano or DA, a
Notification and Report Form in accordance with the notification requirements of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 and the rules and
regulations thereunder (collectively, the "H-S-R ACT") with the Antitrust
Division of the United States Department of Justice and the Federal Trade
Commission and to use its and their reasonable best efforts to achieve the
prompt termination or expiration of the waiting period or any extension thereof
provided for under the H-S-R Act as a prerequisite to the consummation of the
transactions provided for herein.
ARTICLE IX
CONDITIONS PRECEDENT
9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger will be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) GOVERNMENTAL APPROVALS. Other than the filing of the Merger
Documents with the Secretary of State of Kansas, all statutory requirements and
all Consents of Governmental Entities legally required for the consummation of
the Merger and the transactions contemplated by this Agreement will have been
filed, occurred, or been obtained, other than such Consents for which the
failure to obtain would not have a material adverse effect on the consummation
of the Merger or the other transactions contemplated hereby or on the Business
Condition of Delano or DA. If and to the extent applicable, the filing and
waiting period requirements under the H-S-R Act will have been complied with and
will have expired or terminated.
(b) NO RESTRAINTS. No statute, rule or regulation, and no final and
nonappealable order, decree or injunction will have been enacted, entered,
promulgated or enforced by any court or Governmental Entity of competent
jurisdiction which enjoins or prohibits the consummation of the Merger.
9.2 CONDITIONS OF OBLIGATIONS OF DELANO AND MERGER SUB. The obligations of
Delano and Merger Sub to effect the Merger are subject to the satisfaction of
the following conditions unless waived by Delano and Merger Sub:
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(a) REPRESENTATIONS AND WARRANTIES OF DA AND THE STOCKHOLDERS. The
representations and warranties of DA and the Stockholders set forth in this
Agreement will be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except (i) as otherwise contemplated by this Agreement, (ii) as a
result of actions taken or not taken at the direction of or after consultation
with and written concurrence of Delano and (iii) for representations and
warranties specifically limited to an earlier date(s). Delano will have received
a certificate signed by the chief executive officer and the chief financial
officer of DA to such effect with respect to the Company on the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS OF DA AND THE STOCKHOLDERS. DA and the
Stockholders will have performed in all material respects all agreements and
covenants required to be performed by them under this Agreement prior to the
Closing Date except (i) as otherwise contemplated or permitted by this Agreement
and (ii) as a result of actions taken or not taken at the direction of or after
consultation with and written concurrence of Delano, and Delano will have
received a certificate signed by the chief executive officer and the chief
financial officer of DA to such effect with respect to the Company on the
Closing Date.
(c) INVESTMENT AND ESCROW AGREEMENTS. Delano will have received from
stockholders of DA constituting at least 95% of the Deemed Outstanding DA Shares
duly executed Investment Agreements and Escrow Agreements.
(d) EMPLOYMENT AND NONCOMPETITION AGREEMENTS. The following
individuals will have executed employment and/or non-competition agreements in
the form previously provided by Delano to DA: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇ (the "KEY EMPLOYEES"). All
employees of DA shall have executed confidentiality and assignment of inventions
agreements in form acceptable to Delano.
(e) LEGAL ACTION. There will not be overtly threatened or pending any
action, proceeding or other application before any court or Governmental Entity
brought by any Person or Governmental Entity: (i) challenging or seeking to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement, or seeking to obtain any material damages from Delano, Merger Sub or
DA as a result of such transactions; or (ii) seeking to prohibit or impose any
limitations on Delano's ownership or operation of all or any portion of DA's
business or assets, or to compel Delano to dispose of or hold separate all or
any portion of its or DA's business or assets as a result of the transactions
contemplated by the Agreement which if successful would have a material adverse
effect on Delano's ability to receive the anticipated benefits of the Merger and
the employment of the individuals referenced in Section 9.2(d).
(f) OPINION OF COUNSEL. Delano will have received an opinion dated as
of the Closing Date of ▇▇▇▇▇ ▇▇▇▇ LLP, counsel to DA, substantially in the form
attached as EXHIBIT 9.2.
(g) CONSENTS. Delano will have received duly executed copies of all
Consents specified in the DA Disclosure Schedule, and there will not be any
material Consents which have not been received and are required to be disclosed
in DA Disclosure Schedule which have not been so disclosed, in each case except
for such thereof as Delano and DA will have agreed in writing will not be
obtained.
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(h) TERMINATION OF RIGHTS AND CERTAIN SECURITIES. Any registration
rights, rights of refusal, voting rights, rights to any liquidation preference
or redemption rights relating to any security of DA will have been terminated or
waived or satisfied as of the Closing.
(i) STOCKHOLDER APPROVALS. This Agreement and the Merger will have
been approved by stockholders of DA holding at least ninety-five percent (95%)
of the voting power of the Deemed Outstanding DA Shares. Any Parachute Payments
will have been approved by the percentage of holders of the Deemed Outstanding
DA Shares as required by law (as reasonably interpreted by counsel for Delano).
(j) CORPORATE PROCEEDINGS SATISFACTORY. All corporate and other
proceedings to be taken by DA in connection with the transactions contemplated
hereby and all documents incident thereto will be satisfactory in form and
substance to Delano and its counsel, and Delano and its counsel will have
received all such counterpart originals or certified or other copies of such
documents as they reasonably may request.
(k) SECURITIES LAW COMPLIANCE. Delano will be satisfied, in its sole
discretion, that the approval of the Merger, this Agreement and all associated
transactions by the stockholders of DA and the issuance of Delano Merger Shares
hereunder will have been conducted in compliance with Regulation D under the
Securities Act.
9.3 CONDITIONS OF OBLIGATION OF DA. The obligation of DA and the
Stockholders to effect the Merger is subject to the satisfaction of the
following conditions unless waived by DA and the Stockholders:
(a) REPRESENTATIONS AND WARRANTIES OF DELANO AND MERGER SUB. The
representations and warranties of Delano and Merger Sub set forth in this
Agreement will be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement, and DA will
have received a certificate signed on behalf of Delano by a duly authorized
officer of Delano to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF DELANO AND MERGER SUB. Delano and
Merger Sub will have performed in all material respects all agreements and
covenants required to be performed by them under this Agreement prior to the
Closing Date, and DA will have received a certificate signed on behalf of Delano
by officers of Delano to such effect.
(c) OPINION OF DELANO'S COUNSEL. DA and the Stockholders have
received an opinions dated the Closing Date of Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP (as
to Canadian law) and ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP (as to United States and
Delaware law), substantially in the forms attached as EXHIBIT 9.3.
(d) STOCKHOLDER APPROVAL. This Agreement and the Merger will have
been approved and adopted by the requisite vote of the stockholders of DA, as
required by the Kansas GCC and DA's Charter Documents; provided, however, that
the inclusion of this condition will not be construed in any way as excusing any
of the Stockholders from fulfilling their covenant in Section 6.13.
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(e) ESCROW AND REGISTRATION RIGHTS AGREEMENTS. Delano shall have duly
executed and delivered the Escrow Agreement and the Registration Rights
Agreement.
(f) LEGAL ACTION. There will not be overtly threatened or pending any
action, proceeding or other application before any court or Governmental Entity
brought by any Person or Governmental Entity: (i) challenging or seeking to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement, or seeking to obtain any material damages from DA or the Stockholders
as a result of the transactions contemplated by this Agreement or (ii)
restricting in any way the receipt, ownership, or ability to dispose of the
consideration to be received by any stockholder of DA in the transactions
contemplated by this Agreement; provided, however, that DA and the Stockholders
will automatically be deemed to waive this condition if Delano agrees to
indemnify, defend and hold any such named party harmless against any such
action.
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION RELATING TO AGREEMENT. Subject to Sections 10.4 and
10.6, the Stockholders and, as an integral term of the Merger, all other
stockholders of DA who accept the Delano Merger Shares and execute the Escrow
Agreement (which is a condition to receiving such consideration), hereby agree
to defend, indemnify and hold Delano harmless from and against, and to reimburse
Delano with respect to, any and all losses, damages, liabilities, claims,
judgments, settlements, fines, costs and expenses (including reasonable
attorneys' fees), determined as provided in Section 10.4 ("INDEMNIFIABLE
AMOUNTS"), of every nature whatsoever incurred by Delano (which will be deemed
to include any of the foregoing incurred by the Surviving Corporation) by reason
of or arising out of or in connection with (i) any breach, or any claim
(including claims by parties other than Delano) that constitutes a breach, by DA
or any of the Stockholders of any representation or warranty of DA or the
Stockholders contained in this Agreement or in any certificate or other document
delivered to Delano pursuant to this Agreement, other than any breach or related
claim taken or not taken at the written direction of or after consultation with
and written concurrence of Delano and any breach or related claim as to which
the Stockholders can demonstrate that Delano had actual knowledge as of the
Effective Time and (ii) the failure, partial or total, of DA or any of the
Stockholders to perform any agreement or covenant required by this Agreement to
be performed by it or them other than any breach or related claim taken or not
taken at the written direction of or after consultation with and written
concurrence of Delano. The foregoing obligations to indemnify Delano will be
determined without regard to any right to indemnification to which any Person
may have in his or her capacity as an officer, director, employee, agent or any
other capacity of DA, and no stockholder of DA will be entitled to any
indemnification from DA or the Surviving Corporation for amounts paid hereunder.
There will be no right of contribution or subrogation from Delano or the
Surviving Corporation for indemnification payments made by or for the account of
the Stockholders.
10.2 THIRD PARTY CLAIMS. With respect to any claims or demands by third
parties as to which Delano may seek indemnification hereunder, other than claims
or demands covered by Section 10.3, whenever Delano will have received a written
notice that such a claim or demand has been asserted or threatened, Delano will
promptly notify the "Indemnification Representative" (as designated in the
Escrow Agreement) of such claim or demand and of the facts within Delano's
knowledge that relate
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thereto within a reasonable time after receiving such written notice. The
Indemnification Representative will then have the right to defend, contest,
negotiate or settle any such claim or demand through counsel of his own
selection, satisfactory to Delano, and solely at the Stockholders' own cost and
expense, which costs and expenses will be payable out of the property being held
pursuant to the Escrow Agreement. Notwithstanding the preceding sentence, the
Indemnification Representative will not settle, compromise, or offer to settle
or compromise any such claim or demand without the prior written consent of
Delano, which consent will not be unreasonably withheld or delayed. Without
limiting Delano's rights to object for other reasons, Delano may object to a
settlement or compromise which includes any provision which in its reasonable
judgment may have an adverse impact on or establish an adverse precedent for the
Business Condition of Delano or any of its Subsidiaries. If the Indemnification
Representative gives notice to Delano within twenty (20) calendar days after
Delano has notified the Indemnification Representative that any such claim or
demand has been made in writing, that the Indemnification Representative elects
to have Delano defend, contest, negotiate, or settle any such claim or demand,
then Delano will have the right to contest and/or settle any such claim or
demand and seek indemnification pursuant to this Article X as to any
Indemnifiable Amounts; provided, however, that Delano will not settle,
compromise, or offer to settle or compromise any such claim or demand without
the prior written consent (which may include a general or limited consent) of
the Indemnification Representative, which consent will not be unreasonably
withheld. If the Indemnification Representative fails to give written notice to
Delano of his intention to contest or settle any such claim or demand within
twenty (20) calendar days after Delano has notified the Indemnification
Representative that any such claim or demand has been made in writing, or if any
such notice is given but any such claim or demand is not contested by the
Indemnification Representative within a reasonable time thereafter, Delano will
have the right to contest and/or settle any such claim or demand in its sole
discretion and seek indemnification pursuant to this Article X as to any
Indemnifiable Amounts. In connection with the matters for which indemnification
is sought hereunder, the indemnified party agrees to give the indemnifying party
and its representatives access to its books, records and employees, to the
extent such reasonably relate to the matters to which the claim relates.
10.3 TAX CONTESTS. Notwithstanding any of the foregoing, Delano will have
the right to conduct any Tax audit or other Tax contest relating to the
Surviving Corporation. Delano will conduct any such Tax audit or other Tax
contest in good faith. With respect to any matters relating to such Tax audits
or other Tax contests as to which Delano may seek indemnification hereunder,
Delano shall consult with the Indemnification Representative and allow him to
comment before taking any position or making any written submission with any
Governmental Entity with regard to any indemnifiable matter.
10.4 LIMITATIONS. Notwithstanding any other provision in this Agreement,
Delano will be entitled to indemnification only to the extent that the aggregate
Indemnifiable Amounts (which shall be determined for all purposes of this
Article X disregarding any qualification in any representation or warranty as to
"materially" or "material") exceed One Hundred Thousand Dollars ($100,000) (the
"THRESHOLD AMOUNT"). Except as provided in the remainder of this Section 10.4,
Delano will be entitled to be indemnified hereunder only from the Escrow Fund.
All Indemnifiable Amounts shall be reduced by any actual tax savings or
insurance payments to which Delano shall be entitled directly or indirectly by
reason of the occurrence of the event giving rise to the indemnification. The
liability of any single Stockholder for indemnification obligations hereunder
shall be limited to such Stockholder's pro rata share of the Escrow Fund based
on the Merger Consideration received by such Stockholder relative to the
aggregate number of Merger Consideration; provided, however, that there will be
no limitation on
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the obligations of any person for Indemnifiable Amounts arising out of criminal
activity or willful misstatements or omissions by such person. For purposes of
removing all doubt except in the case of criminal activity or willful
misstatement or omission by such Stockholder, in no event will a Stockholder's
liability for Indemnifiable Amounts exceed such Stockholder's pro rata share of
the Escrow Fund. Notwithstanding the foregoing, each Stockholder alone shall be
responsible and without limitation of any sort and without regard for the
Threshold Amount for any Indemnifiable Amounts related to that Stockholder's
breach of its representations in Article IV, but not in excess of the Merger
Consideration received by such Stockholder.
10.5 BINDING EFFECT. The indemnification obligations contained in this
Article X are an integral part of this Agreement and the Merger in the absence
of which Delano would not have entered into this Agreement.
10.6 TIME LIMIT. The representations, warranties, covenants and agreements
of DA and the Stockholders set forth in this Agreement will survive the Closing
and the consummation of the transactions contemplated by this Agreement, but any
claims with respect thereto may be made only on or before the first yearly
anniversary of the date of this Agreement; provided, however, that claims
alleging willful misstatements or omissions of the Stockholders may be made only
on or before the third yearly anniversary of the Closing Date and claims
relating to Tax matters may be made only on or before the expiration of the
applicable Tax statute of limitations.
10.7 UPDATING OF DISCLOSURE SCHEDULE. DA will have the right to update the
DA Disclosure Schedule from time to time prior to the Closing to reflect changes
to the DA Disclosure Schedule; provided that any changes to the DA Disclosure
Schedule will have no effect for purposes of determining whether Delano's
closing condition set forth in Section 9.2(a) has been satisfied, but will have
the effect of precluding any indemnity claim pursuant to Article X (or any
reduction in the Threshold Amount) based on any such changes which have been
disclosed in all material respects.
10.8 SOLE REMEDY. Notwithstanding any other provision in this Agreement to
the contrary, the provisions of this Article X and the provisions of the Escrow
Agreement will be the sole and exclusive remedy of (and corresponding liability
of any stockholder of DA, in such stockholder's capacity as such, to) Delano,
Merger Sub and the Surviving Corporation for any damage, claim, cause of action
or right of any nature arising out of or relating to this Agreement, the
certificates or other documents executed or delivered herewith, or the
transactions contemplated hereby; provided, however, that nothing in this
Agreement or the Escrow Agreement will be deemed to limit any right or remedy
for criminal activity or willful misstatements or omissions, or breaches of
covenants or inaccuracies in any representations or warranties set forth in any
other agreement contemplated by this Agreement, including any Investment
Agreement or employment agreement or non-competition agreement or the
Registration Rights Agreement.
ARTICLE XI
TERMINATION
11.1 MUTUAL AGREEMENT. This Agreement may be terminated at any time prior
to the Effective Time by the written consent of Delano and DA.
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11.2 TERMINATION BY DELANO. This Agreement may be terminated by Delano
(provided that it is not then in material breach of any representation,
warranty, covenant or agreement contained in this Agreement) alone, by means of
written notice to DA, if there has been a material breach by DA or a Stockholder
of any representation, warranty, covenant or agreement set forth in this
Agreement or other ancillary agreements, which breach would result in a failure
to satisfy the closing conditions contained in Section 9.2 and has not been
cured within five (5) business days following receipt by DA of notice of such
breach.
11.3 TERMINATION BY DA. This Agreement may be terminated by DA (provided
that it is not then in material breach of any representation, warranty, covenant
or agreement contained in this Agreement) alone, by means of written notice to
Delano, if there has been a material breach by Delano of any representation,
warranty, covenant or agreement set forth in the Agreement or other ancillary
agreements, which breach would result in a failure to satisfy the closing
conditions contained in Section 8.3 and has not been cured within five (5)
business days following receipt by Delano of notice of such breach,
11.4 OUTSIDE DATE. This Agreement may be terminated by Delano alone or by
DA alone by means of written notice if the Effective Time does not occur on or
prior to November 15, 2000; provided, however, that the right to terminate this
Agreement pursuant to the preceding clause will not be available to any party
whose failure to fulfill any obligation under this Agreement has been a
significant cause of, or resulted in, the failure of the Effective Time to occur
on or before such date.
11.5 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either DA or Delano as provided in this Article, this Agreement will
forthwith become void and have no effect, and there will be no liability or
obligation on the part of Delano, DA, Merger Sub, the Stockholders or their
respective officers or directors, except that (i) the provisions of Sections
8.4, 8.6, 8.7 and 12.2 will survive any such termination and abandonment, and
(ii) no party will be released or relieved from any liability arising from the
willful breach by such party prior to termination of any of its representations,
warranties, covenants or agreements as set forth in this Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 ENTIRE AGREEMENT. This Agreement, including the exhibits, schedules
and other agreements delivered pursuant to this Agreement contain all of the
terms and conditions agreed upon by the parties relating to the subject matter
of this Agreement and supersede all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, whether oral or
written, respecting that subject matter.
12.2 GOVERNING LAW; CONSENT TO JURISDICTION. The Merger will be governed by
the Kansas GCC to the extent applicable, and all other aspects of this Agreement
will be governed by the internal laws of the State of Delaware. Legal
proceedings relating to this Agreement, the agreements executed in connection
with this Agreement or the transactions contemplated hereby or thereby that are
commenced against Delano, Merger Sub or the Surviving Corporation may be
commenced only in the state or federal courts in Boston, Massachusetts. Any such
legal proceedings that are commenced against DA or against any Stockholder may
be commenced only in the state or federal courts in
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▇▇▇▇▇▇▇ or Wyandotte County, Kansas. Each of the parties hereby consents to the
exclusive jurisdiction of such courts (and of the appropriate appellate courts)
in any such action or proceeding and waives any objection to venue laid therein.
The foregoing provisions will not be construed to preclude any party from
bringing a counter-claim in any action or proceeding properly commenced in
accordance with the foregoing provisions. Process in any such action or
proceeding may be served on any party anywhere in the world. Notwithstanding the
foregoing, any dispute relating to a claim under the Escrow Agreement will be
resolved in accordance with the arbitration provisions of the Escrow Agreement.
12.3 NOTICES. All notices, requests, demands or other communications which
are required or may be given pursuant to the terms of this Agreement will be in
writing and will be deemed to have been duly given: (i) on the date of delivery
if personally delivered by hand, (ii) upon the third day after such notice is
deposited in the United States mail, if mailed by registered or certified mail,
postage prepaid, return receipt requested, (iii) upon the date scheduled for
delivery after such notice is sent by a nationally recognized overnight express
courier or (iv) by fax upon written confirmation (including the automatic
confirmation that is received from the recipient's fax machine) of receipt by
the recipient of such notice:
IF TO DELANO OR MERGER SUB Delano Technology Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ OE8
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH COPIES TO:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO DA: Digital Archaeology Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇ ▇▇▇▇ LLP
3500 One Kansas City Place
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 12.3.
12.4 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable for any reason, it will be modified rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement will be
deemed valid and enforceable to the full extent.
12.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement, including the exhibits and schedules
delivered pursuant to this Agreement, will survive the Effective Time, but any
claims for breach thereof may only be made within any applicable time limits
specified herein or in the Escrow Agreement.
12.6 ASSIGNMENT. No party to this Agreement may assign, by operation of law
or otherwise, all or any portion of its rights, obligations, or liabilities
under this Agreement without the prior written consent of DA, Merger Sub and
Delano, which consent may be withheld in the absolute discretion of the party
asked to grant such consent; provided however, that no such assignment which
materially adversely reflects the rights of a Stockholder will be made without
the written consent of such Stockholder. Any attempted assignment by Merger Sub
or Delano, on the one hand, or by DA, on the other hand, in violation of this
Section 12.6 will be voidable and will entitle DA or Delano, respectively, to
terminate this Agreement at its option.
12.7 COUNTERPARTS. This Agreement may be executed in two or more partially
or fully executed counterparts each of which will be deemed an original and will
bind the signatory, but all of which together will constitute but one and the
same instrument. The execution and delivery of a Signature Page to Agreement and
Plan of Merger in the form annexed to this Agreement, including a facsimile copy
of the actual signature, by any party hereto who will have been furnished the
final form of this Agreement will constitute the execution and delivery of this
Agreement by such party.
12.8 AMENDMENT. This Agreement may not be amended except by an instrument
in writing executed by DA, Merger Sub and Delano; provided however, that no such
amendment which materially adversely affects the rights or obligations of any
Stockholder will be made without the written consent of such Stockholder.
12.9 EXTENSION, WAIVER. At any time prior to the Effective Time, any party
hereto may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto to
the party extending such time, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements, covenants or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver will be valid only if set forth in an instrument in writing signed on
behalf of such party.
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12.10 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference will be to a Section, Exhibit or
Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes," and "including" when used therein will be deemed in each case to be
followed by the words "without limitation." The table of contents, index to
defined terms, and headings contained in this Agreement are for reference
purposes only and will not affect in any way the meaning or interpretation of
this Agreement.
12.11 KNOWLEDGE. For purposes of this Agreement, the term "KNOWLEDGE
(including any derivation thereof such as "know" or "knowing" and regardless of
whether such word starts with an initial capital) in reference to DA will mean
the knowledge of the directors of DA and the following officers of DA: ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
12.12 TRANSFER, SALES, DOCUMENTARY, STAMP AND OTHER SIMILAR TAXES. Any and
all transfer, sales, documentary, stamp and other similar Taxes imposed in
connection with the transactions contemplated by this Agreement will be paid by
the stockholder of DA with respect to which such Tax relates. At Delano's
discretion, the amount paid to any Person pursuant to this Agreement will be
reduced by the amount of Taxes payable by such Person pursuant to this Section
12.12. Any amounts so withheld will be promptly remitted to the appropriate
taxing authority.
12.13 COSTS. If any legal action or other proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys' fees and all other costs incurred in that action
or proceeding, in addition to any other relief to which it may be entitled.
12.14 WAIVER. Each Stockholder hereby waives any and all rights or benefits
such Stockholder may have under or pursuant to DA's Charter Documents, the
Second Amended and Restated Shareholders' Agreement, dated as of January 14,
2000, as amended (the "SHAREHOLDER AGREEMENT"), or the Registration Rights
Agreement, dated as of January 14, 2000 (the "REGISTRATION RIGHTS AGREEMENT") in
connection with the Merger, the transactions contemplated by this Agreement and
the increase in the Stock Option Plan provided for herein. Effective as of 1
minute before the Effective Time, the Shareholder Agreement and the Registration
Rights Agreement are hereby terminated.
(The remainder of this page has been left blank intentionally.)
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Signature Page to
Agreement and Plan of Merger
IN WITNESS WHEREOF, Delano, Merger Sub, DA and the Stockholders have
executed this Agreement as of the date first written above.
DELANO TECHNOLOGY CORPORATION DIGITAL ARCHAEOLOGY CORPORATION
By: By:
---------------------------------- ------------------------------------
Title: Title:
DELANO/DA ACQUISITION CORP.
By:
----------------------------------
Title:
STOCKHOLDERS:
Name of Stockholder:
----------------------------------
By:
----------------------------------
Title, if any:
Name of Stockholder:
----------------------------------
By:
----------------------------------
Title, if any:
Name of Stockholder:
----------------------------------
By:
----------------------------------
Title, if any:
Name of Stockholder:
----------------------------------
By:
----------------------------------
Title, if any:
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CERTIFICATES OF APPROVAL BY STOCKHOLDERS
The undersigned Secretary of Digital Archaeology Corporation hereby
certifies that holders of all shares of capital stock of Digital Archaeology
Corporation outstanding and entitled to vote approved the foregoing Agreement
and Plan of Merger on October 13, 2000.
DIGITAL ARCHAEOLOGY CORPORATION.
By:
------------------------------------
Secretary
The undersigned Secretary of Delano/DA Acquisition Corp. hereby certifies
that the sole stockholder of Delano/DA Acquisition Corp. approved the foregoing
Agreement and Plan of Merger on October 13, 2000.
DELANO/DA ACQUISITION CORP.
By:
------------------------------------
Secretary
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