EXHIBIT 2.1
================================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SEGUE SOFTWARE, INC.
SSI MERGER CORP.,
EVENTUS SOFTWARE, INC.
AND
THE PRINCIPAL STOCKHOLDERS OF EVENTUS SOFTWARE, INC.
DATED AS OF DECEMBER 3, 1998
================================================================================
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
PAGE
----
ARTICLE I -- THE MERGER..................................................................................... 2
1.1 The Merger.................................................................................... 2
1.1.1 The Merger............................................................................. 2
1.1.2 Effect of the Merger................................................................... 2
1.1.3 Consummation of the Merger............................................................. 2
1.1.4 Articles of Incorporation.............................................................. 2
1.1.5 By-Laws................................................................................ 2
1.1.6 Directors and Officers................................................................. 2
1.1.7 Merger Consideration................................................................... 3
1.2 Exchange Procedures........................................................................... 7
1.3 Fractional Shares............................................................................. 8
1.4 Escrow of Shares; Escrow Agreement............................................................ 8
1.5 Effect of Eventus Stockholder Approval; Representatives....................................... 9
1.6 Closing....................................................................................... 9
ARTICLE II -- REPRESENTATIONS AND WARRANTIES OF EVENTUS..................................................... 10
2.1 Making of Representations and Warranties...................................................... 10
2.2 Organization and Qualifications of Eventus.................................................... 10
2.3 Subsidiaries.................................................................................. 10
2.4 Capital Stock; Beneficial Ownership........................................................... 10
2.5 Authority of Eventus.......................................................................... 11
2.6 Real and Personal Property.................................................................... 12
2.7 Financial Statements.......................................................................... 13
2.8 Taxes......................................................................................... 14
2.9 Accounts Receivable; Accounts Payable......................................................... 15
2.10 Absence of Certain Changes.................................................................... 15
2.11 Ordinary Course............................................................................... 16
2.12 Banking Relations............................................................................. 16
2.13 Intellectual Property......................................................................... 16
2.14 Contracts..................................................................................... 19
2.15 Litigation.................................................................................... 20
2.16 Compliance with Laws.......................................................................... 20
2.17 Insurance..................................................................................... 20
2.18 Warranty or Other Claims...................................................................... 20
2.19 Powers of Attorney............................................................................ 21
2.20 Finder's Fee.................................................................................. 21
2.21 Corporate Records; Copies of Documents........................................................ 21
(i)
PAGE
----
2.22 Employee Benefit Programs; Employees; Labor Relations......................................... 21
2.23 Hazardous Waste, Etc.......................................................................... 21
2.24 Year 2000 Compliance.......................................................................... 22
2.25 List of Certain Employees; Customers, Suppliers and Vendors................................... 22
2.26 Disclosure.................................................................................... 22
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL
STOCKHOLDERS........................................................................................... 22
3.1 Eventus Shares................................................................................ 23
3.2 Authority..................................................................................... 23
3.3 Finder's Fee.................................................................................. 23
3.4 Agreements.................................................................................... 24
3.5 Investment Representation..................................................................... 24
ARTICLE IV -- COVENANTS OF THE SELLERS...................................................................... 25
4.1 Making of Covenants and Agreements............................................................ 25
4.2 Tax Returns................................................................................... 25
4.3 Pooling Accounting............................................................................ 25
4.4 Affiliate Agreements.......................................................................... 25
4.5 Non-competition and Non-solicitation.......................................................... 26
ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF BUYER........................................................ 26
5.1 Making of Representations and Warranties...................................................... 26
5.2 Organization.................................................................................. 26
5.3 Authority..................................................................................... 27
5.4 Capitalization................................................................................ 27
5.5 Litigation.................................................................................... 27
5.6 Finder's Fee.................................................................................. 28
5.7 Buyer's Public Information.................................................................... 28
5.8 Buyer Common Shares........................................................................... 28
5.9 No Undisclosed Liabilities.................................................................... 28
5.10 No Default.................................................................................... 28
ARTICLE VI -- COVENANTS OF BUYER AND MERGER SUB............................................................. 29
6.1 Affiliate Agreements.......................................................................... 29
6.2 Pooling Accounting............................................................................ 29
6.3 Continuity of Business Enterprise............................................................. 29
6.4 Observance of Indemnification Rights.......................................................... 29
ARTICLE VII -- CONDITIONS................................................................................... 29
7.1 Conditions to the Obligations of Buyer and Merger Sub......................................... 29
(ii)
7.2 Conditions to the Obligations of Eventus and the Principal Stockholders....................... 31
ARTICLE VIII -- SURVIVAL; INDEMNIFICATION................................................................... 32
8.1 Survival of Representations, Warranties, Etc.................................................. 32
8.2 Indemnification by the Eventus Stockholders................................................... 32
8.3 Limitations on Indemnification by the Eventus Stockholders.................................... 33
8.3.1 General Threshold...................................................................... 33
8.3.2 General Maximum Indemnification........................................................ 33
8.3.3 Time Limits for Claims................................................................. 34
8.3.4 Dollar-for-Dollar and Fraud Claims..................................................... 34
8.4 Indemnification by Buyer...................................................................... 34
8.5 Notice; Defense of Claims..................................................................... 34
8.6 Escrow Shares................................................................................. 36
8.7 Remedies...................................................................................... 36
8.8 Recoveries.................................................................................... 36
ARTICLE IX -- MISCELLANEOUS................................................................................. 37
9.1 Fees and Expenses............................................................................. 37
9.2 Governing Law................................................................................. 37
9.3 Notices....................................................................................... 37
9.4 Entire Agreement.............................................................................. 38
9.5 Assignability; Binding Effect................................................................. 38
9.6 Captions and Gender........................................................................... 39
9.7 Execution in Counterparts..................................................................... 39
9.8 Amendments.................................................................................... 39
9.9 Publicity and Disclosures..................................................................... 39
(iii)
EXHIBIT 2.1
-----------
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
of December 3, 1998 by and among Segue Software, Inc., a Delaware corporation
("Buyer"), SSI Merger Corp., a Delaware corporation and a wholly owned
subsidiary of Buyer ("Merger Sub"), Eventus Software, Inc., a California
corporation ("Eventus"), with respect to Articles III, IV, VIII and IX hereto,
each management stockholder of Eventus identified as a "Management Stockholder"
on the signature pages hereto (the "Management Stockholders"), and, with respect
to Articles III, VIII and IX hereto, each holder of the capital stock of Eventus
identified as a "Principal Stockholder" on the signature pages hereto (the
"Principal Stockholders" and, together with Eventus and the Management
Stockholders, the "Sellers"). The parties hereto hereby acknowledge that each of
the Management Stockholders is also a Principal Stockholder for purposes of this
Agreement, but that such dual status shall not have the effect of doubling or
otherwise increasing the obligations of any such Management Stockholder with
respect to any provision hereunder.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the stockholders of Eventus own of record and beneficially all
of the issued and outstanding capital stock of Eventus (the "Eventus
Stockholders"), consisting of 9,737,227 shares of Eventus' Common Stock, no par
value per share (the "Eventus Common Stock"), 1,279,070 shares of Eventus'
Series A Preferred Stock, no par value per share, and 1,171,922 shares of
Eventus' Series B Preferred Stock, no par value per share (said shares in the
aggregate being referred to herein as the "Eventus Shares"); and
WHEREAS, Buyer and Eventus desire to effect a combination of their
respective businesses through a merger of Merger Sub, a subsidiary of Buyer,
with and into Eventus in accordance with applicable laws;
WHEREAS, the Boards of Directors of Buyer and Eventus each have
determined that it is in the best interests of their respective stockholders for
Merger Sub to merge with and into Eventus upon the terms in and subject to the
conditions of this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the
Merger (as defined in Section 1.1) shall qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, for accounting purposes, the parties hereto intend to treat
the Merger as a "pooling of interests" transaction in accordance with the
guidelines and prescriptions set forth in Accounting Principles Board Opinion
▇▇. ▇▇ ("▇▇▇ ▇▇").
NOW, THEREFORE, based upon the above premises and in consideration of
the mutual representations, warranties, covenants and agreements set forth
herein, the parties hereby agree as follows:
ARTICLE I -- THE MERGER
1.1 The Merger.
1.1.1 The Merger. On the terms and subject to the conditions
set forth in this Agreement, at the Effective Time (as defined in Section 1.1.3
hereof), in accordance with this Agreement, the Delaware General Corporation Law
(the "Delaware Law") and the General Corporation Law of California (the
"California Law"), Merger Sub shall merge with and into Eventus (the "Merger"),
the separate existence of Merger Sub shall cease and Eventus shall continue, as
a wholly-owned subsidiary of Buyer, as the surviving corporation under the
corporate name Eventus Software, Inc. Eventus, in its capacity as the
corporation surviving the Merger, is sometimes referred to herein as the
"Surviving Corporation," and Merger Sub and Eventus are sometimes referred to
collectively herein as the "Constituent Corporations."
1.1.2 Effect of the Merger. At and after the Effective Time,
the Merger shall have the effects set forth in Sections 259 and 261 of the
Delaware Law and Section 1107 of the California Law, and all other applicable
laws.
1.1.3 Consummation of the Merger. On the Closing Date (as
defined below), the parties hereto shall cause a Certificate of Merger to be
filed with the Secretary of State of the State of California, in such form as
required by, and executed in accordance with, Section 1103 of the California
Law. On the Closing Date, the parties hereto shall also cause a Certificate of
Merger to be filed with the Secretary of State of Delaware, in such form as
required by, and executed in accordance with, Section 252 of the Delaware Law.
The Merger shall be effective as of the date of filing of the Certificate of
Merger (the "Effective Time").
1.1.4 Articles of Incorporation. From and after the Effective
Time, the Articles of Incorporation of Eventus, as in effect immediately prior
to the Effective Time, shall be and become the Articles of Incorporation of the
Surviving Corporation, and shall thereafter continue in effect until amended as
provided therein and in accordance with the California Law.
1.1.5 By-Laws. The By-Laws of Eventus, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation, and shall thereafter continue in effect until amended as provided
therein and in accordance with the California Law.
1.1.6 Directors and Officers. The directors and officers of
Merger Sub holding office immediately prior to the Effective Time shall, from
and after the Effective
2
Time, be the directors and officers of the Surviving Corporation, until their
respective successors shall have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Articles of Incorporation and By-Laws.
1.1.7 Merger Consideration. The manner of converting shares of
Merger Sub in the Merger shall be as follows. As of the Effective Time, each
share of Common Stock, $.01 par value, of Merger Sub which is issued and
outstanding immediately prior to the Effective Time will, by virtue of the
Merger, and without the need for any further action on the part of the holder
thereof, be converted into one (1) share of Eventus Common Stock (such shares of
Eventus Common Stock collectively, the "Buyer Shares"). The manner of converting
or canceling shares, options and warrants of Eventus in the Merger shall be as
follows:
(a) Eventus Common Stock. At the Effective Time,
each share of Eventus Common Stock that is issued and outstanding immediately
prior to the Effective Time (other than any Dissenting Shares as provided in
Section 1.1.7(g)) will, by virtue of the Merger, and without the need for any
further action on the part of the holder thereof, be converted into a number of
shares of Buyer's common stock, par value $.01 per share ("Buyer Common Stock")
that is equal to the Participating Stock Conversion Number, subject to the
provisions of Section 1.3 regarding the elimination of fractional shares.
(b) Eventus Series A Preferred Stock. At the
Effective Time, each share of Eventus Series A Preferred Stock that is issued
and outstanding immediately prior to the Effective Time (other than any
Dissenting Shares as provided in Section 1.1.7(g)) will, by virtue of the
Merger, and without the need for any further action on the part of the holder
thereof, be converted into a number of shares of Buyer Common Stock that is
equal to the sum of (a) the Series A Preferred Conversion Number plus (b) the
product obtained by multiplying (i) the Participating Stock Conversion Number by
(ii) the number of shares of Eventus Common Stock into which one (1) share of
Eventus Series A Preferred Stock is convertible under the terms of Eventus'
Articles of Incorporation immediately prior to the Effective Time of the Merger,
subject to the provisions of Section 1.3 regarding the elimination of fractional
shares.
(c) Eventus Series B Preferred Stock. At the
Effective Time, each share of Eventus Series B Preferred Stock that is issued
and outstanding immediately prior to the Effective Time (other than any
Dissenting Shares as provided in Section 1.1.7(g)) will, by virtue of the
Merger, and without the need for any further action on the part of the holder
thereof, be converted into a number of shares of Buyer Common Stock that is
equal to the Series B Preferred Conversion Number subject to the provisions of
Section 1.3 regarding the elimination of fractional shares.
(d) Eventus Options. At the Effective Time, each
option to purchase shares of Eventus Common Stock (each, an "Option") that is
outstanding immediately prior to the Effective Time will, by virtue of the
Merger and at the Effective Time and without the
3
need for any further action on the part of any holder thereof, be assumed by
Buyer and converted into an option (a "Buyer Option") to purchase that number of
shares of Buyer Common Stock determined by multiplying the number of shares of
Eventus Common Stock that are subject to such Option immediately prior to the
Effective Time by the Participating Stock Conversion Number, at an exercise
price per share of Buyer Common Stock equal to the exercise price per share of
Eventus Common Stock that was in effect for such Option immediately prior to the
Effective Time divided by the Participating Stock Conversion Number; provided,
however, that if the foregoing calculation would result in an assumed and
converted Option being converted into a Buyer Option that, after aggregating all
the shares of Buyer Common Stock issuable upon the exercise of such Buyer
Option, would be exercisable for a fraction of a share of Buyer Common Stock,
then the number of shares of Buyer Common Stock subject to such Buyer Option
will be rounded down to the nearest whole number of shares of Buyer Common
Stock. Except as set forth in Schedule 1.1.7(c), none of the Options that are
unvested as of the Effective Time shall become vested as a result of the
execution and delivery of this Agreement or the consummation of the Merger. The
terms, exercisability, vesting schedule, status as an "incentive stock option"
under Section 422 of the Code (if applicable) or as a nonqualified stock option,
and all other terms and conditions of each Option (including without limitation
the provisions of the Eventus 1996 Equity Incentive Plan that forms part of the
terms and conditions of such Option) that is converted into a Buyer Option in
the Merger will (except as otherwise provided in the terms of such Options), to
the extent permitted by law, be unchanged and continue in effect after the
Effective Time of the Merger. The pre-Merger employment or other service of the
holder of each Option shall be credited to such holder for purposes of applying
any vesting schedule based on the duration of such holder's employment or other
service contained in the Buyer Option issued to such holder upon the conversion
of such Option in the Merger in order to determine the number of shares of Buyer
Common Stock that are exercisable under such Buyer Option at any point in time.
This Section 1.1.7(d) is intended to meet the requirements of Section 424(a) of
the Code and shall be interpreted consistent with such intent.
(e) Eventus Warrants and Other Securities. At the
Effective Time, each of the then outstanding warrants, exchangeable or
convertible securities, to purchase or otherwise acquire, that are exercisable
or convertible, ultimately or potentially, any Eventus Common Stock ("Warrants")
shall by virtue of the Merger, and without any further action on the part of any
holder thereof, be assumed by Buyer and converted into a warrant or like
security ("Buyer Warrants") to purchase that number of shares of Buyer Common
Stock determined by multiplying the number of shares of Eventus Common Warrant
immediately prior to the Effective Time by the Participating Stock Conversion
Number, at an exercise price per share of Buyer Common Stock equal to the
exercise price per share of Eventus Common Stock that was in effect for such
Warrant immediately prior to the Effective Time divided by the Participating
Stock Conversion Number; provided, however, that if the foregoing calculation
would result in an assumed and converted Warrant being converted into an Buyer
Warrant that, after aggregating all the shares of Buyer Common Stock issuable
upon the exercise of such Buyer Warrant, would be exercisable for a fraction of
a share of Buyer Common Stock, then the number of shares of Buyer Common Stock
subject to such Buyer
4
Warrant will be rounded down to the nearest whole number of shares of Buyer
Common Stock. The exercisability period and other terms and conditions of the
Warrants will be unchanged.
(f) Registration. Prior to the Effective Time, Buyer
shall take all corporate action necessary to reserve for issuance a sufficient
number of shares of Buyer Common Stock for delivery upon exercise of the Options
assumed in accordance with Section 1.1.7(d). As soon as practicable after the
Effective Time, but in no event later than 14 days after the Effective Time,
Buyer will cause the shares of Buyer Common Stock that are subject to issuance
upon exercise of the Buyer Options and that are issued upon the conversion of
Options under Section 1.1.7(d) to be registered on a registration statement (or
to be issued pursuant to a then-effective registration statement) on Form S-8
(or successor form) promulgated by the Securities and Exchange Commission
("SEC") under the Securities Act of 1933 (the "1933 Act"), and will use its best
efforts to maintain the effectiveness of such Form S-8 registration statement or
registration statements for so long as such Buyer Options remain outstanding and
Buyer Common Stock is registered under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), during such time the holders of Buyer Common Stock
that are subject to issuance upon exercise of the Buyer Options registered on
such Form S-8 registration statement shall have the ability to execute same day
sales with respect to such Buyer Options and the shares of Buyer Common Stock
issuable upon exercise thereof. Notwithstanding the foregoing, Buyer shall not
be obligated to register or maintain the registration under the 1933 Act of the
issuance of any shares of Buyer Common Stock that are subject to a Buyer Option
held by a person who is ineligible to have such person's securities registered
on Form S-8 (or successor form).
(g) Eventus Dissenting Shares. Holders of shares of
Eventus Shares Stock who have complied with all requirements for perfecting
shareholder dissenters' rights, as set forth in Chapter 13 of the California Law
shall be entitled to their rights under the California Law with respect to such
shares ("Dissenting Shares"), and Dissenting Shares will not be converted into
shares of Buyer Common Stock in the Merger. Eventus Shares that are outstanding
immediately prior to the Effective Time of the Merger and with respect to which
dissenting stockholders' rights to dissent under the California Law have either
(a) not been properly exercised and perfected or (b) with the consent of Eventus
and Buyer, been withdrawn, will, when such dissenting stockholders' rights can
no longer be legally exercised under the California Law, be converted into Buyer
Common Stock as provided in Section 1.1.7 hereof.
(h) Adjustments for Capital Changes. Notwithstanding
the provisions of Section 1.1.7, if at any time after the date the Agreement is
duly executed by all parties and prior to the Effective Time, Buyer
recapitalizes, either through a subdivision (or stock split) of any of its
outstanding shares of Buyer Common Stock into a greater number of such shares,
or a combination (or reverse stock split) of any of its outstanding shares of
Buyer Common Stock into a lesser number of such shares, or reorganizes,
reclassifies or otherwise changes its outstanding shares of Buyer Common Stock
into the same or a different number of shares of other classes (other than
through a subdivision or combination of shares provided for
5
in the preceding clause), or declares a dividend on its outstanding shares
payable in shares of Buyer Common Stock or in shares or securities convertible
into shares of Buyer Common Stock (each, a "Capital Change"), then the Buyer
Average Price Per Share, the number of shares of Buyer Common Stock constituting
the Buyer Merger Shares, the Buyer Participating Merger Shares, the Buyer
Preferred Merger Shares, the Buyer Series A Preferred Merger Shares, the Buyer
Series B Preferred Merger Shares, the Series A Preferred Conversion Number, the
Series B Preferred Conversion Number, and the Participating Stock Conversion
Number, will each be proportionally and equitably adjusted.
For purposes of this Section 1.1.7 the following definitions apply:
"Participating Stock Conversion Number" means the quotient obtained by
dividing (a) the number of shares of Buyer Common Stock constituting the Buyer
Participating Merger Shares by (b) the number of Fully Diluted Eventus Shares.
"Series A Preferred Conversion Number" means the quotient obtained by
dividing (a) the number of shares of Buyer Common Stock constituting the Buyer
Series A Preferred Merger Shares by (b) the number of shares of Eventus Series A
Preferred Stock that are issued and outstanding immediately prior to the
Effective Time.
"Series B Preferred Conversion Number" means the quotient obtained by
dividing (a) the number of shares of Buyer Common Stock constituting the Buyer
Series B Preferred Merger Shares by (b) the number of shares of Eventus Series B
Preferred Stock that are issued and outstanding immediately prior to the
Effective Time.
"Buyer Average Price Per Share" means $20.00.
"Buyer Series A Preferred Merger Shares" means that number of shares of
Buyer Common Stock, as presently constituted, equal to the quotient obtained by
dividing (a) the Eventus Series A Aggregate Preference Amount by (b) the Buyer
Average Price Per Share, rounded down to the nearest whole number of shares of
Buyer Common Stock.
"Buyer Series B Preferred Merger Shares" means that number of shares of
Buyer Common Stock, as presently constituted, equal to the quotient obtained by
dividing (a) the Eventus Series B Aggregate Preference Amount by (b) the Buyer
Average Price Per Share, rounded down to the nearest whole number of shares of
Buyer Common Stock.
"Eventus Series A Aggregate Preference Amount" means that dollar amount
equal to the sum of (a) $0.43 multiplied by the total number of shares of
Eventus Series A Preferred Stock that are issued and outstanding immediately
prior to the Effective Time plus (b) the aggregate dollar amount of all declared
but unpaid dividends (if any) on all the outstanding shares of Eventus Series A
Preferred Stock as of immediately prior to the Effective Time.
6
"Eventus Series B Aggregate Preference Amount" means that dollar amount
equal to the sum of (a) $0.8533 multiplied by the total number of shares of
Eventus Series B Preferred Stock that are issued and outstanding immediately
prior to the Effective Time plus (b) the aggregate dollar amount of all declared
but unpaid dividends (if any) on all the outstanding shares of Eventus Series B
Preferred Stock as of immediately prior to the Effective Time.
"Buyer Preferred Merger Shares" means the number of shares of Buyer
Common Stock, as presently constituted, equal to the sum of (i) the Buyer Series
A Preferred Merger Shares, plus (ii) the Buyer Series B Preferred Merger Shares;
provided, however, that in no event shall the number of shares of Buyer Common
Stock equal to the Buyer Preferred Merger Shares exceed the number of shares of
Buyer Common Stock equal to the Buyer Merger Shares.
"Buyer Merger Shares" means 345,000 shares of Buyer Common Stock, as
presently constituted.
"Buyer Participating Merger Shares" means the number of shares of Buyer
Common Stock, as presently constituted, equal to the Buyer Merger Shares minus
the Buyer Preferred Merger Shares.
"Fully Diluted Eventus Shares" means that number of shares of Eventus
Common Stock that is equal to the sum of: (a) the total number of shares of
Eventus Common Stock that are issued and outstanding immediately prior to the
Effective Time; plus (b) the total number of shares of Eventus Common Stock that
are issuable upon the conversion in full of all shares of Eventus Series A
Preferred Stock that are issued and outstanding immediately prior to the
Effective Time; plus (c) the total number of shares of Eventus Common Stock that
are subject to or potentially issuable (without regard to vesting) under all
Eventus Options (defined below) that are issued and outstanding immediately
prior to the Effective Time plus (d) the total number of shares of Eventus
Common Stock that, immediately prior to the Effective Time, are, directly or
indirectly, ultimately or potentially issuable by Eventus upon the exercise,
conversion or exchange of all Warrants (except for the Amisil Warrant and Amisil
Convertible Note which shall not be included in such figure) that are issued and
outstanding immediately prior to the Effective Time.
1.2 Exchange Procedures.
(a) At or as soon as practicable after the Effective Time,
Buyer shall make available, and each Eventus Stockholder will be entitled to
receive, upon surrender to Buyer of one or more certificates representing any
Eventus Shares ("Eventus Certificates") for cancellation with a letter of
transmittal in the form attached hereto as Exhibit 1.2, certificates
representing the number of shares of Buyer Common Shares ("Buyer Certificates")
that such Eventus Stockholder is entitled to receive pursuant to Section 1.1.7
hereof; provided, however, that the Buyer Certificates representing the Buyer
Common Shares described in Section 8.6 hereof (the "Escrow Shares") shall be
held in escrow in accordance with Section 1.4 of this
7
Agreement. The Buyer Certificates that each Eventus Stockholder shall be
entitled to receive pursuant to the Merger shall be deemed to have been issued
at the Effective Time. No interest shall accrue on the Merger Consideration. If
the Merger Consideration (or any portion thereof) is to be delivered to any
person other than the person in whose name the Eventus Certificates surrendered
in exchange therefor is registered, it shall be a condition to such exchange
that the person requesting such exchange shall pay to Buyer any transfer or
other taxes required by reason of the payment of the Merger Consideration to a
person other than the registered holder of the Eventus Certificate(s) so
surrendered, or shall establish to the satisfaction of Buyer that such tax has
been paid or is not applicable. Notwithstanding the foregoing, neither Buyer nor
any other party hereto shall be liable to a holder of Eventus Shares for any
Merger Consideration delivered to a public official pursuant to applicable
abandoned property, escheat and similar laws. Any holder of Eventus Shares whose
Eventus Certificate(s) have been lost or stolen shall comply with the
instructions set forth in the letter of transmittal (attached hereto as Exhibit
1.2) in order to receive the Merger Consideration.
(b) After the Effective Time, there shall be no transfers of
any Eventus Shares on the stock transfer books of the Surviving Corporation. If,
after the Effective Time, Eventus Certificates are presented to the Buyer, they
shall be canceled and exchanged in accordance with this Section 1.1.7 hereof,
subject to Section 1.1.7(g) with respect to Dissenting Shares and Section 1.4
with respect to Escrow Shares.
1.3 Fractional Shares. No fractional Buyer Common Shares will be issued
in connection with the Merger, but in lieu thereof, the holder of any Eventus
Shares who would otherwise be entitled to receive a fraction of a Buyer Common
Share will receive from Buyer promptly after the Effective Time, an amount of
cash equal to such fraction multiplied by the per share market value of a Buyer
Common Share which for purposes of this Agreement shall be $20.00.
1.4 Escrow of Shares; Escrow Agreement. At the Effective Time (as that
term is defined in Section 1.1.3) of the Merger, Buyer will withhold from the
shares of Buyer Common Stock to be issued to Eventus Stockholders in the Merger
on conversion of their Eventus Shares pursuant to Section 1.1.7 above a number
of such shares of Buyer Common Stock that is equal to ten percent (10%) of the
total number of shares of Buyer Common Stock issued to the Eventus Stockholders
on account of Eventus Shares, pursuant to Section 1.1.7, rounded up to the
nearest whole number of shares to be issued to each Eventus Stockholder (such
withheld shares of Buyer Common Stock being hereinafter referred to as the
"Escrow Shares") and will deliver certificates representing such Escrow Shares
to State Street Bank and Trust Company or a similar institution, as escrow agent
(the "Escrow Agent"), together with related stock transfer powers, to be held by
the Escrow Agent as security for the Eventus Stockholders' indemnification
obligations Buyer Indemnified Losses under Section 8.2 and pursuant to the
provisions of an escrow agreement in substantially the form of Exhibit 1.4 (the
"Escrow Agreement") to be entered into as soon as possible after the Closing by
Buyer, the Escrow Agent, and the Representatives (as defined below). The Escrow
Shares will be withheld from each Eventus Stockholder pro rata in the same
proportion as the total number of
8
shares of Buyer Common Stock issuable to such Eventus Stockholder under Section
1.1.7 bears to the total number of shares of Buyer Common Stock issued to all
Eventus Stockholders under Section 1.1.7, will be represented by a certificate
or certificates issued in the names of each of the Eventus Stockholders in
proportion to their respective interests therein and will be held by the Escrow
Agent during that time period commencing on the Effective Time and ending on the
first (1st) anniversary of the Effective Time or on such later date as may be
provided in the Escrow Agreement in order to permit the resolution of any claim
made prior to the first (1st) anniversary of the Effective Time (the "Escrow
Period").
1.5 Effect of Eventus Stockholder Approval; Representatives. By their
approval of the Merger, the Eventus Stockholders will be conclusively deemed to
have consented to, approved and agreed to be personally bound by: (i) the Escrow
Agreement; and (ii) the appointment of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
as the representatives of Eventus Stockholders (the "Representatives") under the
Escrow Agreement and as the attorney-in-fact and agent for and on behalf of each
Eventus Stockholder as provided in the Escrow Agreement; and (iii) the taking by
the Representatives of any and all actions and the making of any decisions
required or permitted to be taken by the Representative under this Agreement
and/or the Escrow Agreement, including, without limitation, the exercise of the
power to: (a) authorize delivery to Buyer of Escrow Shares in satisfaction of
indemnity claims by Buyer with respect to Buyer Indemnified Losses pursuant to
Article VIII hereof and/or the Escrow Agreement; (b) agree to, negotiate, enter
into settlements and compromises of, demand arbitration of, and comply with
orders of courts and awards of arbitrators with respect to, such claims; (c)
arbitrate, resolve, settle or compromise any claim for Buyer Indemnified Losses
made pursuant to Article VIII; and (d) take all actions necessary in the
judgment of the Representatives for the accomplishment of the foregoing. The
Representatives will have authority and power to act on behalf of each Eventus
Stockholder with respect to the Escrow Agreement and the disposition, settlement
or other handling of all Buyer Indemnified Losses under Article VIII hereof or
governed by the Escrow Agreement, and all rights or obligations arising under
the Escrow Agreement so long as all Eventus Stockholders are treated in the same
manner. The Eventus Stockholders will be bound by all actions taken and
documents executed by the Representatives in connection with the Escrow
Agreement, and Buyer will be entitled to rely on any action or decision of the
Representative. In performing the functions specified in this Agreement and the
Escrow Agreement, the Representatives will not be liable to any Eventus
Stockholder in the absence of gross negligence or willful misconduct on the part
of the Representative. Any out-of-pocket costs and expenses reasonably incurred
by the Representatives in connection with actions taken pursuant to the terms of
the Escrow Agreement will be paid by the Eventus Stockholders to the
Representatives out of the Escrow Shares pro rata in proportion to their
respective percentage interests in the Escrow Shares, to the extent that any
Escrow Shares continue to be owned by Eventus Stockholders following expiration
of the Escrow Period and satisfaction of all claims made or asserted by Buyer
under the Escrow Agreement.
1.6 Closing. The transactions contemplated by this Agreement shall be
consummated at the closing (the "Closing") which will take place at the offices
of ▇▇▇▇▇▇▇,
9
Procter & ▇▇▇▇ LLP, Exchange Place, Boston, Massachusetts on December 3, 1998,
or at such other place or earlier or later date or time as may be fixed by
mutual agreement of Buyer and the Sellers (the "Closing Date").
ARTICLE II -- REPRESENTATIONS AND WARRANTIES OF EVENTUS
2.1 Making of Representations and Warranties. As a material inducement
to Buyer to enter into this Agreement and consummate the transactions
contemplated hereby, and except as otherwise set forth in the Disclosure Letter
attached hereto as Exhibit 2.1 or in any schedule attached hereto, Eventus
hereby makes to Buyer the representations and warranties contained in this
Section 2.
2.2 Organization and Qualifications of Eventus. Eventus is a
corporation duly organized, validly existing and in good standing under the laws
of the state of California with full corporate power and authority to own or
lease its properties and to conduct its business in the manner and in the places
where such properties are owned or leased or such business is currently
conducted or currently proposed to be conducted. The copies of the Articles of
Incorporation of Eventus as amended to date, certified by the appropriate
governmental officer, and By-laws, as amended to date, certified by the
Secretary of Eventus, and heretofore delivered to Buyer's counsel, are complete
and correct, and no amendments thereto are pending. Eventus is not in violation
of any provision of its Articles of Incorporation or By-laws. Eventus is duly
qualified to do business as a foreign corporation in each jurisdiction set forth
in Schedule 2.2 hereto.
2.3 Subsidiaries. Eventus has no subsidiaries and does not own any
securities issued by any other business organization or governmental authority.
Eventus does not own and does not have any direct or indirect interest in or
control over any corporation, partnership, joint venture or entity of any kind.
2.4 Capital Stock; Beneficial Ownership. The authorized capital stock
of Eventus consists of 27,000,000 shares of Common Stock, no par value, of which
9,737,227 shares are duly and validly issued, outstanding, fully paid and
non-assessable and of which 17,262,773 shares are authorized but unissued,
1,984,070 shares of which are designated as Series A Preferred Stock, no par
value, of which 1,279,070 shares are duly and validly issued, outstanding, fully
paid and non-assessable and of which 705,000 shares are authorized but unissued
and 1,245,922 shares of which are designated as Series B Preferred Stock, no par
value, of which 1,171,922 shares are duly and validly issued, outstanding, fully
paid and non-assessable and of which 74,000 shares are authorized but unissued.
Except as set forth on Schedule 2.4 hereto, there are no outstanding options,
warrants, rights, commitments, preemptive rights or agreements of any kind for
the issuance or sale of, or outstanding securities convertible into, any
additional shares of capital stock of any class of Eventus. None of the capital
stock of Eventus has been issued in violation of any federal or state securities
law. There are no voting agreements, trusts, proxies or other agreements,
instruments or
10
undertakings with respect to the voting of the capital stock of Eventus to which
Eventus or, to the knowledge of Eventus, any Eventus Stockholder is a party. To
the knowledge of Eventus, the Eventus Stockholders own beneficially and of
record all of the outstanding shares of capital stock of Eventus which consists
solely of the Eventus Shares set forth on Schedule 2.4 hereto.
2.5 Authority of Eventus. Eventus has full right, authority and power
to enter into this Agreement and each agreement, document and instrument to be
executed and delivered by Eventus pursuant to this Agreement and to carry out
the transactions contemplated hereby. The execution, delivery and performance by
Eventus of this Agreement and of each such other agreement, document and
instrument have been or will prior to the Closing Date be duly authorized by all
necessary action of Eventus and its stockholders and no other action on the part
of Eventus or its stockholders or otherwise is required in connection therewith.
This Agreement and each agreement, document and instrument executed and
delivered by Eventus pursuant to this Agreement constitutes, or when executed
and delivered will constitute, valid and binding obligations of Eventus
enforceable in accordance with their terms except as to the effect, if any, of
(a) applicable bankruptcy and other similar laws affecting the rights of
creditors generally, (b) rules of law governing specific performance, injunctive
relief and other equitable remedies; and (c) the enforceability of provisions
requiring indemnification in connection with the offering, issuance or sale of
securities; provided, however, that the Certificate of Merger will not be
effective until filed with the Delaware and California Secretaries of State,
respectively. The execution, delivery and performance by Eventus of this
Agreement and of each such agreement, document and instrument:
(i) do not and will not violate any provision of the
Articles of Incorporation or By-laws of Eventus;
(ii) do not and will not violate any laws of the United
States, or any state or other jurisdiction (domestic or foreign) applicable to
Eventus or require Eventus to obtain any approval, consent or waiver of, or make
any filing with, any person or entity (governmental or otherwise) that has not
been obtained or made except for (a) the filing of the Certificate of Merger
with the Delaware and California Secretaries of State, and the filing of
appropriate documents with the relevant authorities of other states in which
Eventus is qualified to do business, if any, (b) such filings as may be required
to comply with federal and state securities laws, (c) filings the failure of
which will not result in a material adverse effect on the business of Eventus,
and (d) the approval of the Eventus Stockholders of the transactions
contemplated hereby (as provided under applicable law and by Eventus' Articles
of Incorporation and By-laws); and
(iii) do not and will not result in a breach of,
constitute a default under, accelerate any obligation under, or give rise to a
right of termination of any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit, authorization,
order, writ, judgment, injunction, decree, determination or arbitration award to
which Eventus is a party or by which the property of Eventus is bound or
affected, or result in the creation or imposition of any mortgage, pledge, lien,
security interest
11
or other charge or encumbrance on any of the assets or property of Eventus or on
the Eventus Shares (other than as created or imposed by this Agreement).
2.6 Real and Personal Property.
(a) Owned Real Property. Eventus does not own any real
property.
(b) Leased Real Property. All of the real property leased by
Eventus, as tenant or lessee, is identified on Schedule 2.6(b) hereto
(collectively referred to herein as the "Leased Real Property"). Eventus hereby
makes the following representations and warranties with respect to the Leased
Real Property:
(i) Eventus holds a good, clear, valid and
enforceable leasehold interest in the Leased Real Property;
(ii) To Eventus' knowledge, there are no material
defects in the physical condition of any improvements constituting a part of the
Leased Real Property, including, without limitation, structural elements,
mechanical systems, roofs or parking and loading areas, and all of such
improvements are in good operating condition and repair (other than normal wear
and tear);
(iii) The copies of the lease (the "Lease") for the
Leased Real Property delivered by Eventus to Buyer are complete, accurate, true
and correct;
(iv) The Lease is in full force and effect and has not
been modified, amended, or altered, in writing or otherwise;
(v) All obligations of the landlord or lessor under
the Lease which have accrued have been performed, and to the best of the
knowledge of Eventus, no landlord or lessor is in default under the Lease;
(vi) All obligations of Eventus under the Lease which
have accrued have been performed, and Eventus is not in default under the Lease,
and, to Eventus' knowledge, no circumstance presently exists which, with notice
or the passage of time, or both, would give rise to a default by Eventus; and
(vii) Eventus has obtained or will obtain prior to the
Closing the consent of the landlord or lessor under the Lease whose consent is
required in connection with the Merger.
(c) Personal Property. A complete description of Eventus'
fixtures, machinery, equipment and other tangible personal property (other than
personal property individually valued at less than $500) is contained in
Schedule 2.6(c) hereto. Eventus has sufficient title to all of its personal
property for the conduct of its business. None of such
12
personal property or assets is subject to any mortgage, pledge, lien,
conditional sale agreement, security agreement, encumbrance or other charge. All
leasehold improvements, furnishings, machinery, equipment and other tangible
personal property of Eventus are in good repair (normal wear and tear excepted),
and substantially comply with all applicable laws, ordinances and regulations,
and such machinery and equipment and other tangible personal property is in good
working order (normal wear and tear excepted).
2.7 Financial Statements.
(a) Eventus has delivered to Buyer the following unaudited
financial statements, copies of which are attached hereto as Schedule 2.7:
(i) Balance sheet of Eventus at December 31, 1997 and
statements of operations and cash flows for the year then ended, certified by
the chief financial officer of Eventus.
(ii) A balance sheet of Eventus at October 31, 1998
(the "Base Balance Sheet") and statements of operations and cash flows for the
ten-month period then ended, certified by the chief financial officer of
Eventus.
Except as set forth on Schedule 2.7 hereto, said financial statements have been
prepared substantially in accordance with generally accepted accounting
principles applied consistently during the periods covered thereby, are complete
and correct in all material respects, and present fairly in all material
respects the financial condition of Eventus at the dates of said statements and
the results of its operations and its cash flows for the periods covered
thereby. Eventus recognized all revenue reflected in such financial statements
relating to its software products in accordance with SOP 97-2.
(b) Except as reflected on the Base Balance Sheet Schedule
2.7 hereto, as of the date of the Base Balance Sheet, Eventus had no liabilities
of any nature, whether accrued, absolute, contingent or otherwise, asserted or
unasserted, known or unknown (including without limitation liabilities as
guarantor with respect to obligations of others, or liabilities for taxes due or
then accrued or to become due or contingent or liabilities relating to
activities of Eventus or the conduct of its business prior to the date of the
Base Balance Sheet regardless of whether claims in respect thereof had been
asserted as of such date).
(c) Except as reflected on the Base Balance Sheet or
Schedule 2.7 hereto, as of the date hereof and as of the Closing, Eventus does
not and will not have liabilities of any nature, whether accrued, absolute,
contingent or otherwise, asserted or unasserted, known or unknown (including
without limitation liabilities as guarantor with respect to obligations or
others, or liabilities for taxes due or then accrued or to become due or
contingent liabilities relating to activities of Eventus or the conduct of its
business prior to the date hereof or the Closing, regardless of whether claims
in respect thereof had been asserted as of such date).
13
2.8 Taxes.
(a) Eventus has paid or caused to be paid all federal,
state, local, foreign and other taxes, including, without limitation, income
taxes, estimated taxes, alternative minimum taxes, excise taxes, sales taxes,
use taxes, value-added taxes, gross receipts taxes, franchise taxes, capital
stock taxes, employment and payroll-related taxes, withholding taxes, stamp
taxes, transfer taxes, windfall profit taxes, environmental taxes and property
taxes, whether or not measured in whole or in part by net income, and all
deficiencies, or other additions to tax, interest, fines and penalties owed by
it (collectively, "Taxes"), required to be paid by Eventus through the date
hereof whether disputed or not.
(b) Eventus has in accordance with applicable law filed all
federal, state, local and foreign tax returns required to be filed by it through
the date hereof, and all such returns correctly and accurately at the time such
returns were filed set forth the amount of any Taxes relating to the applicable
period. A list of all federal, state, local and foreign income tax returns filed
with respect to Eventus for taxable periods since its inception are set forth in
Schedule 2.8 hereto, and said Schedule indicates those returns that have been
audited or currently are the subject of an audit. Eventus has delivered to Buyer
correct and complete copies of all federal, state, local and foreign income tax
returns listed on said Schedule, and of all examination reports and statements
of deficiencies assessed against or agreed to by Eventus with respect to said
returns. Eventus is not required to file a foreign tax return, or to pay any
Eventus Stockholders' foreign taxes, in connection with the current business
conducted by Eventus.
(c) Neither the Internal Revenue Service nor any other
governmental authority is now asserting or, to the knowledge of Eventus,
threatening to assert against Eventus any deficiency or claim for additional
Taxes. No claim has ever been made by an authority in a jurisdiction where
Eventus does not file reports and returns that Eventus is or may be subject to
taxation by that jurisdiction. There are no security interests on any of the
assets of Eventus that arose in connection with any failure (or alleged failure)
to pay any Taxes. Eventus has not entered into a closing agreement pursuant to
Section 7121 of the Internal Revenue Code of 1986, as amended, (the "Code").
(d) There has not been any audit of any tax return filed by
Eventus for any tax period, no audit of any tax return of Eventus is in
progress, and Eventus has not been notified by any tax authority that any such
audit is contemplated or pending. No extension of time with respect to any date
on which a tax return was or is to be filed by Eventus is in force, and no
waiver or agreement by Eventus is in force for the extension of time for the
assessment or payment of any Taxes.
(e) Eventus has not been (and has no liability for unpaid
Taxes because it once was) a member of an "affiliated group" (as defined in
Section 1504(a) of the Code). Eventus has never filed, nor has it been required
to file, a consolidated, combined or
14
unitary tax return with any other entity. Eventus does not own, nor has it ever
owned, a direct or indirect interest in any trust, partnership, corporation or
other entity, nor is any such interest necessary to conduct the business of
Eventus.
(f) Eventus is not a "foreign person" within the meaning of
Section 1445 of the Code and Treasury Regulations Section 1.1445-2.
(g) Eventus is not a party to any contract, agreement, plan
or arrangement that, individually or collectively, could give rise to any
payment that would not be deductible by reason of Section 162 or 280G of the
Code.
(h) For purposes of this Agreement, all references to
Sections of the Code shall include any predecessor provisions to such Sections.
2.9 Accounts Receivable; Accounts Payable. All of the accounts
receivable of Eventus are valid and enforceable claims, are subject to no
set-off or counterclaim, and are fully collectable in the normal course of
business, after deducting the allowance for doubtful accounts stated in the Base
Balance Sheet substantially in accordance with generally accepted accounting
principles. Since the date of the Base Balance Sheet, Eventus has collected its
accounts receivable in the ordinary course and in a manner which is consistent
with past practices and has not accelerated any such collections. Except as set
forth in Schedule 2.9 hereto, Eventus does not have any accounts receivable from
any person, firm or corporation which is affiliated with it or any of its
directors, officers, employees or stockholders. Except as set forth in Schedule
2.9 hereto, all accounts payable and notes payable of Eventus arose in bona fide
arms' length transactions in the ordinary course of business and no such account
payable or note payable is delinquent by more than sixty (60) days in its
payment. Since the date of the Base Balance Sheet, Eventus has paid its accounts
payable in the ordinary course and in a manner which is consistent with its past
practices. Except as set forth in Schedule 2.9 hereto, as of the date hereof,
Eventus has no account payable to any person, firm or corporation which is
affiliated with it or any of its directors, officers, employees or stockholders
except for amounts incurred in the ordinary course of business.
2.10 Absence of Certain Changes. Except for the transactions
contemplated by this Agreement, since the date of the Base Balance Sheet, there
has not been:
(i) any change in the financial condition, properties,
assets, liabilities, business or operations of Eventus which change by
itself or in conjunction with all other such changes, has been
materially adverse with respect to Eventus;
(ii) any contingent liability incurred by Eventus as
guarantor or otherwise with respect to the obligations of others or any
cancellation of any debt or claim owing to, or waiver of any material
right of, Eventus;
15
(iii) any mortgage, encumbrance or lien placed on any
of the assets or properties of Eventus which remain in existence on the
date hereof or will remain on the Closing Date;
(iv) any obligation or liability of any nature
incurred by Eventus whether accrued, absolute, contingent or otherwise,
asserted or unasserted (including without limitation liabilities for
Taxes due or to become due or contingent or potential liabilities
relating to products or services provided by Eventus or the conduct of
Eventus' business since the date of the Base Balance Sheet and prior to
the Closing Date regardless of whether claims in respect thereof have
been asserted), other than obligations and liabilities incurred in the
ordinary course of business (it being understood that product or
service liability claims shall not be deemed to be incurred in the
ordinary course of business);
(v) any purchase, sale or other disposition, or any
agreement or other arrangement for the purchase, sale or other
disposition, of any of the properties or assets of Eventus other than
in the ordinary course of business;
(vi) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the
properties, assets or business of Eventus;
(vii) any other transaction entered into by Eventus
other than transactions in the ordinary course of business; or
(viii) any agreement or understanding whether in writing
or otherwise currently in effect, for Eventus to take any of the
actions specified in paragraphs (i) through (vii) above.
2.11 Ordinary Course. Except with respect to the transactions
contemplated by this Agreement, since the date of the Base Balance Sheet,
Eventus has conducted its business and operations only in the ordinary course
and consistently with its prior practices.
2.12 Banking Relations. All of the arrangements which Eventus has with
any banking institution are completely and accurately described in Schedule 2.12
hereto, indicating with respect to each of such arrangements the type of
arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.) and the person or persons authorized in respect thereof.
2.13 Intellectual Property.
(a) Except as set forth in Schedule 2.13, Eventus owns all
right, title and interest in and to or has the rights to all patents,
copyrights, technology, software, software tools, know-how, processes, trade
secrets, trademarks, service marks, trade names
16
and other proprietary rights used in or necessary for the conduct of Eventus'
business as conducted to the date hereof or currently contemplated, free and
clear of all liens, claims and encumbrances (including without limitation
distribution rights) (all of which are referred to as "Proprietary Rights")
except for claims, liens, encumbrances and limitations of Proprietary Rights
which are licensed by Eventus from third parties and that are reflected in the
applicable agreement or instrument giving Eventus its right to or interest in
such Proprietary Rights. The foregoing representation as it relates to Third
Party Technology (as hereinafter defined) is limited to Eventus' interest
pursuant to the Third Party Licenses (as hereinafter defined), all of which are
valid and enforceable and in full force and effect and which grant Eventus such
right to Third Party Technology as are employed in or necessary to the business
of Eventus as conducted or currently proposed to be conducted prior to the
Closing Date.
(b) Schedule 2.13 hereto contains an accurate and complete
description of (i) all patents, trademarks (with separate listings of registered
and unregistered trademarks), trade names, and registered copyrights in or
related to products currently owned by Eventus (the "Eventus Products"), all
applications and registration statements therefor, and a list of all licenses
and other agreements currently in effect relating thereto, and (ii) a list of
all licenses and other agreements currently in effect with third parties (the
"Third Party Licenses") relating to any software, technology, know-how, or
processes that Eventus is licensed or otherwise authorized by such third parties
to use, market, distribute or incorporate into products distributed by Eventus
(such software, technology, know-how and processes are collectively referred to
as the "Third Party Technology"). All of Eventus' trademark or trade name
registrations related to the Eventus Products and all of Eventus' copyrights in
any of the Eventus Products are valid and in full force and effect according to
their terms; and consummation of the transactions contemplated hereby will not
alter or impair any such rights. There is no material default by any party to
any Third Party License. To the knowledge of Eventus, the licensors under such
Third Party Licenses have and had all requisite power and authority to grant the
rights purported to be conferred thereby. True and complete copies of such Third
Party Licenses, and any amendments thereto, have been provided to Buyer or
Buyer's counsel.
(c) No claims have been asserted against Eventus (and
Eventus is not aware of any claims which are reasonably likely to be asserted
against Eventus) by any person challenging the use or distribution by Eventus of
any patents, trademarks, trade names, copyrights, trade secrets, software,
technology, know-how or processes utilized by it (including, without limitation,
the Third Party Technology) or challenging or questioning the validity or
effectiveness of any license or agreement relating thereto (including, without
limitation, the Third Party Licenses). To the knowledge of Eventus, there is no
valid basis for any claim of the type specified in the immediately preceding
sentence which could reasonably relate to or interfere with the continued
enhancement and exploitation by Eventus of any of the Eventus Products. None of
the Eventus Products nor the use of any patents, trademarks, trade names,
copyrights, software, technology, know-how or processes by Eventus in its
current business infringes on the rights of, constitutes misappropriation of, or
in any way involves unfair competition with respect to, any proprietary
information or intangible property right of
17
any third person or entity, including without limitation any trade secret,
copyright, trademark or trade name or patent.
(d) All licenses or other agreements currently in effect
pursuant to which Eventus has granted rights to others in Proprietary Rights
owned or licensed by Eventus are listed on Schedule 2.13. All of such licenses
or agreements are in full force and effect subject the terms thereof, there is
no default by any party thereto. True and complete copies of all such licenses
or other agreements, and any amendments thereto, have been provided to Buyer or
Buyer's counsel. Except as set forth in Schedule 2.13 hereto, Eventus has not
granted any third party any right to manufacture, reproduce, distribute, market
or exploit any of the Eventus Products or any adaptations, translations or
derivative works based on the Eventus Products or any portion thereof,
including, without limitation, as a value added reseller. Except with respect to
the rights of third parties to the Third Party Technology, no third party has
any right to manufacture, reproduce, distribute, market or exploit any
underlying works or materials of which any of the Eventus Products are a
"derivative work" as that term is defined in the United States Copyright Act,
Title 17, U.S.C. Section 101.
(e) Except as set forth on Schedule 2.13, no designs,
drawings, specifications, source code, object code, documentation, flow charts
or diagrams incorporating, embodying or reflecting any of the Eventus Products
at any stage of their development (the "Eventus Components") were written,
developed and created in whole or in part by any employee of Eventus with the
assistance of any third party or entity who have not assigned ownership of their
rights to the Eventus Components to Eventus. Eventus has at all times used
commercially reasonable efforts to treat the confidential and proprietary
elements of the Eventus Products and the Eventus Components as containing trade
secrets and have not disclosed or otherwise dealt with such items in such a
manner as to cause the loss of such trade secrets by release into the public
domain.
(f) To the knowledge of Eventus, no employee of Eventus is
in violation of any term of any employment contract, patent disclosure agreement
or any other contract or agreement currently in effect relating to the
relationship of any such employee with Eventus or, to the knowledge of Eventus,
any other party, including, without limitation, any previous employer, because
of the nature of the business conducted by Eventus or currently proposed to be
conducted by Eventus.
(g) Each person presently or previously employed by Eventus
(including independent contractors, if any) employed in a research and
development or other technical position has executed a confidentiality and non-
disclosure agreement previously provided to Buyer or its representatives. Such
confidentiality and non-disclosure agreements constitute valid and binding
obligations of Eventus and such person, enforceable in accordance with their
respective terms except as to the effect, if any, of (a) applicable bankruptcy
and other similar laws affecting the rights of creditors generally, (b) rules of
law governing specific performance, injunctive relief and other equitable
remedies; and (c) the enforceability of provisions requiring indemnification in
connection with the offering, issuance or sale of
18
securities. To the knowledge of Eventus, neither the execution or delivery of
such agreements, nor the carrying on of Eventus' business by such persons as
employees, will conflict with or result in a breach of the terms, conditions or
provisions of or constitute a default under any contract, covenant or instrument
currently in effect under which any of such persons is obligated. To its
knowledge, Eventus is not making unauthorized use of any confidential
information or trade secrets of any person, including, without limitation, any
former employer or any past or present employee of Eventus. Neither Eventus nor,
to the knowledge of Eventus, any of Eventus' employees have any agreements or
arrangements currently in effect with any persons other than Eventus related to
confidential information or trade secrets of such persons or restricting any
such employee's ability to engage in business activities of any nature.
(h) No product liability or warranty claims which
individually or in the aggregate could exceed Five Thousand Dollars ($5,000)
have been communicated to or threatened against Eventus nor, to the knowledge of
Eventus, is there any specific situation, set of facts or occurrence that
provides a reasonable basis for such claim. Eventus has provided to Buyer an
accurate list of all known errors or "bugs" in the Eventus Products which are
contained in its software. Such list is set forth as Schedule 2.13(h).
2.14 Contracts. Except for contracts, commitments, plans, agreements
and licenses (true and complete copies of which have been delivered to Buyer or
Buyer's counsel) described in Schedule 2.14 hereto, Eventus is not a party to or
subject to:
(i) any plan or contract currently in effect
providing for bonuses, pensions, options, stock purchases, deferred
compensation, retirement payments, profit sharing, collective bargaining or the
like, or any currently in effect contract or agreement with any labor union;
(ii) any employment contract or contract currently in
effect for personal services;
(iii) any contract or agreement currently in effect
relating to capital expenditures in excess of $10,000 per annum;
(iv) any other contracts or agreements creating any
obligations of Eventus of $25,000 or more per annum with respect to any such
contract or agreement not specifically disclosed elsewhere in this Agreement;
(v) any contract or agreement currently in effect
which by its terms does not terminate or is not terminable without penalty by
such entity or any successor or assignee on or at any time after the Closing
Date;
(vi) any contract currently in effect not made in the
ordinary course of business;
19
(vii) any contract currently in effect containing
covenants limiting the freedom of Eventus to compete in any line of business or
with any person or entity;
(viii) any license agreement (as licensor or licensee);
(ix) any indenture, mortgage, promissory note, loan
agreement, guaranty or other agreement or commitment currently in effect for the
borrowing of money; or
(x) any contract or agreement currently in effect
with any officer, employee, director or stockholder of Eventus or with any
persons or organizations controlled by or affiliated with any of them (other
than confidentiality and stock option agreements entered into in the ordinary
course previously provided to Buyer or Buyer's counsel).
Eventus is not in default under any such contracts, commitments, plans,
agreements or licenses described in said Schedule, and Eventus has no knowledge
of conditions or facts which with notice or passage of time, or both, would
constitute a default.
2.15 Litigation. There is no litigation or governmental or
administrative proceeding or investigation pending or, to the knowledge of
Eventus, threatened against Eventus or any affiliate of Eventus which may have a
material adverse effect on Eventus' properties, assets, financial condition or
business or which would prevent or hinder the consummation of the transactions
contemplated by this Agreement.
2.16 Compliance with Laws. Eventus is in compliance with all applicable
statutes, ordinances, orders, judgments, decrees and rules and regulations
promulgated by any federal, state, municipal or other governmental authority
which apply to Eventus or to the conduct of its business except where the
failure of Eventus to so comply would not have a material adverse effect on
Eventus, and Eventus has not received notice of a violation or alleged violation
of any such statue, ordinance, order, rule or regulation.
2.17 Insurance. The only insurance policies currently maintained by
Eventus are disclosed on Schedule 2.17 hereto, and such insurance policies are
in full force and effect according to their terms, all premiums currently due
with respect thereto are currently paid, and Eventus is in compliance in all
material respects with the terms thereof. Said insurance is reasonable and
customary for the business engaged in by Eventus and is sufficient for
compliance by Eventus with all requirements of law and all agreements and leases
currently in effect to which Eventus is a party.
2.18 Warranty or Other Claims. There are no existing or, to Eventus'
knowledge, threatened product liability, warranty or other similar claims, or,
to Eventus' knowledge, any facts upon which a material claim of such nature
could reasonably be based, against Eventus
20
for products or services which are defective or fail to meet any product or
service warranties. No claim has been asserted against Eventus for renegotiation
or price redetermination of any business transaction, and, to Eventus'
knowledge, there are no facts upon which any such claim could reasonably be
based.
2.19 Powers of Attorney. Eventus has not granted powers of attorney
which are presently outstanding.
2.20 Finder's Fee. Eventus has not incurred or become liable for any
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement except as set forth in Schedule 2.20
hereto or as provided herein.
2.21 Corporate Records; Copies of Documents. The corporate record books
of Eventus accurately record all corporate action taken by its stockholders and
board of directors and committees thereof. The copies of the corporate records
of Eventus, as delivered to Buyer or Buyer's counsel pursuant to this Agreement,
are true and complete copies of the originals of such documents. Eventus has
made available for inspection and copying by Buyer and its counsel complete and
correct copies of all documents referred to in this Section or in the Schedules
delivered to Buyer pursuant to this Agreement.
2.22 Employee Benefit Programs; Employees; Labor Relations.
(a) Eventus does not have, and has not had since its
inception, any employment contract, collective bargaining or other labor
agreement, any agreement containing severance or termination pay arrangements,
deferred compensation agreement, pension or retirement plan, bonus or profit-
sharing plan, stock option or purchase plan, group insurance, group
hospitalization or other employee benefit plan, in each case relating to its
employees, whether subject to the Employee Retirement Income Security Act of
1979, as amended, and the regulations promulgated thereunder or otherwise.
(b) Eventus is responsible for and has paid, or will have
paid, in accordance with all applicable laws and current policies of Eventus all
amounts due to its employees for any salary, bonus, wages, severance or other
accrued obligations due to its employees for service through the Closing Date.
(c) Upon termination of the employment of any of Eventus'
employees, Buyer will not by reason of the transactions contemplated by this
Agreement, or anything done prior to or on the Closing Date, be liable to any of
said employees for so-called "severance payments."
2.23 Hazardous Waste, etc. To Eventus' knowledge, no hazardous wastes,
substances or materials or oil or petroleum products have been generated,
transported, used, disposed, stored or treated by Eventus and no hazardous
wastes, substances or materials, or oil or petroleum products have been
released, discharged, disposed, transported, placed or
21
otherwise caused to enter the soil or water in, under or upon any real property
owned, leased or operated by Eventus.
2.24 Year 2000 Compliance. All computer software products that are
owned by Eventus, exclusively licensed to Eventus, licensed, sold or otherwise
distributed to others by Eventus when operated properly ("Software") are Year
2000 Compliant. As used herein, "Year 2000 Compliant" shall mean with respect to
any such Software, the ability of such Software to perform, when properly
installed and operated (including with hardware and software with which such
Software is compatible) the following date-related functions: (i) consistently
handle date information before, during and after January 1, 2000, including, but
not limited to, accepting date input, providing date output and performing
calculations on dates or portions of dates; (ii) function accurately in
accordance with the documentation relating to the applicable software and
without interruption before, during and after January 1, 2000, without any
change in operations associated with the transition to a new century and the
absence of a leap-year; (iii) respond to two-digit date input in a way that
resolves any ambiguity as to the century; and (iv) store and provide output of
date information in ways that are unambiguous as to century.
2.25 List of Certain Employees; Customers, Suppliers and Vendors.
Schedule 2.25 contains a list of all officers, managers, employees, consultants,
independent contractors, brokers and sales persons of Eventus who, individually,
have received compensation for the fiscal year ended December 31, 1997, or for
the nine month period ended September 30, 1998 in excess of $40,000, including
the current job title and aggregate annual compensation of each such individual.
Schedule 2.25 sets forth a list of all customers, suppliers and vendors of
Eventus with whom during the fiscal year ended December 31, 1997, or during the
nine month period ended September 30, 1998, Eventus received or made payments
aggregating $25,000 or more, showing, with respect to each, the name, address
and dollar volume involved. Since December 31, 1997, no customer, supplier or
vendor listed on Schedule 2.25 has canceled or otherwise terminated or
materially reduced its business with Eventus or materially and adversely
modified its relationship with Eventus nor, to the knowledge of Eventus, does
any such customer, supplier or vendor have any plan or intention to do so.
2.26 Disclosure. The representations, warranties and statements
contained in this Agreement and in the certificates, exhibits and schedules (and
other documents, agreement and materials) delivered to Buyer when taken together
do not contain any untrue statement of a material fact, and, do not omit to
state a material fact required to be stated therein or necessary in order to
make such representations, warranties or statements when taken together not
misleading in light of the circumstances under which they were made.
22
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS
As a material inducement to Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, and except as set forth in the
Disclosure Letter or any schedule attached thereto, each Principal Stockholder
hereby individually and severally makes to Buyer each of the representations and
warranties set forth in this Section 3 with respect to such Principal
Stockholder. No Principal Stockholder shall have any right of indemnity or
contribution from Eventus with respect to the breach of any representation or
warranty under Article III of this Agreement.
3.1 Eventus Shares. Such Principal Stockholder owns of record and
beneficially the number of the Eventus Shares set forth opposite such Principal
Stockholder's name in Schedule 2.4 hereto. To the knowledge of such Principal
Stockholder, such Eventus Shares are duly authorized, validly issued, fully
paid, non-assessable and free and clear of any and all liens, encumbrances,
charges or claims (except as may be created by execution of this Agreement).
3.2 Authority. Such Principal Stockholder has full right, authority,
power and capacity to enter into this Agreement and each agreement, document and
instrument to be executed and delivered by or on behalf of such Principal
Stockholder pursuant to this Agreement and to carry out the transactions
contemplated hereby and thereby. This Agreement and each agreement, document and
instrument executed and delivered by such Principal Stockholder pursuant to this
Agreement constitutes a valid and binding obligation of such Principal
Stockholder, enforceable in accordance with their respective terms except as to
the effect, if any, of (a) applicable bankruptcy and other similar laws
affecting the rights of creditors generally, (b) rules of law governing specific
performance, injunctive relief and other equitable remedies; and (c) the
enforceability of provisions requiring indemnification in connection with the
offering, issuance or sale of securities. The execution, delivery and
performance of this Agreement by such Principal Stockholder and each such
agreement, document and instrument to be executed by such Principal Stockholder:
(a) does not and will not violate any laws of the United States
or any state or other jurisdiction applicable to such Principal Stockholder, or
require such Principal Stockholder to obtain any approval, consent or waiver
from, or make any filing with, any person or entity (governmental or otherwise)
that has not been obtained or made; or
(b) result in the creation or imposition of any mortgage,
pledge, lien, security interest or other charge or encumbrance or on the Eventus
Shares owned by such Principal Stockholder (other than as created or imposed by
this Agreement).
3.3 Finder's Fee. Such Principal Stockholder has not incurred or
become liable for any broker's commission or finder's fee relating to or in
connection with the transactions contemplated by this Agreement.
23
3.4 Agreements. Such Principal Stockholder (if also a Management
Stockholder) is not a party to any non-competition, trade secret or
confidentiality agreement currently in effect with any party other than Eventus.
There are no agreements or arrangements currently in effect not contained herein
or disclosed in a Schedule hereto, to which such Principal Stockholder (if also
a Management Stockholder) is a party relating to the business of Eventus or to
such Principal Stockholder's rights and obligations as a stockholder, director
or officer of Eventus. Such Principal Stockholder (if also a Management
Stockholder) does not own, directly or indirectly, on an individual or joint
basis, any material interest in, or currently serve as an officer or director
of, any customer, competitor or supplier of Eventus, or any organization which
currently has a contract with Eventus. Such Principal Stockholder (if also a
Management Stockholder) has not at any time transferred any of the stock of
Eventus held by or for such holder to any employee of Eventus, which transfer
constituted or could be viewed as compensation for services rendered to Eventus
by said employee. The execution, delivery and performance of this Agreement will
not violate or result in a default or acceleration of any obligation under any
current contract, agreement, indenture or other instrument involving Eventus to
which such Principal Stockholder (if also a Management Stockholder) is a party.
3.5 Investment Representation.
(a) Unless otherwise indicated on the signature page across
from such principal Stockholder's name, such Principal Stockholder is an
"accredited investor" as defined in Regulation D under the Securities Act of
1933 (the "Securities Act"); provided that if such Principal Stockholder is not
an "accredited investor" then such Principal Stockholder hereby appoints and
qualifies ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to act as such Principal Stockholder's "purchaser
representative" pursuant to Rules 501(h) and 506(b)(2)(ii) promulgated under the
Securities Act of 1933 in connection with such Seller's evaluation of the merits
and risks of the proposed investment.
(b) Such Principal Stockholder has read or reviewed and is
familiar with the Buyer SEC Documents.
(c) Such Principal Stockholder has had an opportunity to
ask questions of and receive answers from Buyer, or a person or persons acting
on Buyer's behalf, concerning the terms and conditions of the Buyer Common
Shares.
(d) Such Principal Stockholder understands that the Buyer
Common Shares have not been registered under the Securities Act or under the
securities laws of any state or other jurisdiction and are being offered and
issued in reliance upon exemptions for private offerings, and that, while Buyer
may in the future register the Buyer Common Shares, it is under no obligation to
do so other than as provided in the Registration Rights Agreement (as
hereinafter defined), and such Principal Stockholder further understands that
such Principal Stockholder is acquiring the Buyer Common Shares without being
furnished any offering literature or prospectus other than the Buyer SEC
Documents.
24
(e) Principal Stockholder represents that the Buyer Common
Shares are being acquired solely for such Principal Stockholder's own account,
for investment and not with a view to or for the resale, distribution,
subdivision, or fractionalization thereof; such Principal Stockholder has no
present plans to enter into any contract, undertaking, agreement, or arrangement
relating thereto.
(f) Such Principal Stockholder acknowledges and is aware
that there are substantial restrictions on the transferability of the Buyer
Common Shares; the Buyer Common Shares cannot be resold unless the Buyer Common
Shares are registered under the Securities Act and qualified under any
applicable securities law of any state or other jurisdiction, or an exemption
from such registration or qualification is available.
(g) Such Principal Stockholder has such knowledge and
experience in financial and business matters that they are capable of evaluating
the relative risks and merits of the Buyer Common Shares.
(h) Such Principal Stockholder, if an individual, is a
resident of the State of California or, if other than an individual, may be
deemed to have made such Principal Stockholder's investment decision in the
State of California.
ARTICLE IV -- COVENANTS OF THE SELLERS
4.1 Making of Covenants and Agreements. Eventus and the Management
Stockholders hereby make their separate respective covenants and agreements
(where indicated) and as set forth in this Section 4.
4.2 Tax Returns. Eventus, with the approval of Buyer and in
accordance with applicable law, shall (i) promptly prepare and file on or before
the due date or any extension thereof all federal, state, local and foreign tax
returns required to be filed by Eventus with respect to taxable periods of
Eventus that include any period ending on or before the Closing Date and (ii)
pay all Taxes of Eventus attributable to periods ending on or before the Closing
Date.
4.3 Pooling Accounting. Each of Eventus and the Management
Stockholders agrees not to knowingly take any action that would adversely affect
the ability of Buyer to treat the Merger as a pooling of interests.
4.4 Affiliate Agreements. Eventus shall use reasonable efforts to
obtain prior to Closing an executed Affiliate Agreement in substantially the
form attached hereto as Exhibit 4.4 (an "Affiliate Agreement") from each of its
affiliates with respect to the transfer of Buyer Common Shares. Set forth on
Schedule 4.4 hereto is a list of names of those persons who are, in Eventus'
reasonable judgment after consultation with legal counsel, affiliates of
Eventus. Eventus shall provide Buyer or Buyer's counsel such information and
documents as Buyer
25
shall reasonably request for purposes of reviewing such list. Buyer shall be
entitled to place legends on the certificates evidencing any Buyer Common Shares
to be issued to Eventus' affiliates pursuant to the terms of this Agreement and
the Certificate of Merger, and to issue appropriate stop transfer instructions
to the transfer agent for Buyer, consistent with the terms of such Affiliate
Agreements, whether or not such Affiliate Agreements are actually delivered to
Buyer.
4.5 Non-competition and Non-solicitation. Each Management Stockholder
hereby agrees in consideration of the receipt of the Merger Consideration
hereunder that for a period of three (3) years after the Closing Date except in
connection with such Management Stockholder's duties as an employee or
consultant of Buyer or any of its subsidiaries such Management Stockholder (i)
will not, directly or indirectly, whether as owner, partner, shareholder,
consultant, agent, employee, co-venturer or otherwise, engage, participate,
assist or invest in any Competing Business (as hereinafter defined); (ii) will
refrain from directly or indirectly employing, attempting to employ, recruiting
or otherwise soliciting, inducing any person to leave employment with Buyer or
the Surviving Corporation or each of their respective subsidiaries; and (iii)
will refrain from soliciting or encouraging any customer or supplier to
terminate or otherwise modify, adversely, its business relationship with Buyer
or the Surviving Corporation or each of their respective subsidiaries. Such
Management Stockholder understands that the restrictions set forth in this
Section 4.5 are intended to protect the existing employee, customer and supplier
relationships and goodwill of Buyer and the Surviving Corporation and each of
their respective subsidiaries, and agrees that such restrictions are reasonable
and appropriate for this purpose. For purposes of this Agreement, the term
"Competing Business" shall mean a business which directly competes against the
web content management, publishing or deployment products currently provided by
Eventus, or any of its subsidiaries existing at the Effective Time on a
worldwide basis. Notwithstanding the foregoing, such Management Stockholder may
own or have up to two percent (2%) of the outstanding stock of a publicly held
corporation which constitutes or is affiliated with a Competing Business, and
may work for or otherwise be involved with a company or other entity that has
Competitive Business if such Management Stockholder's involvement or work is
with a part, division or business of such company that does not conduct a
Competing Business.
ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Making of Representations and Warranties. As a material
inducement to the Sellers to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer hereby makes the representations and
warranties to the Sellers contained in this Section 5.
5.2 Organization. Each of Buyer and Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware with full corporate power and authority to own or lease its properties
and to conduct its business in the manner and in the places where such
properties are owned or leased or such business is
26
conducted by it. Each of Buyer and Merger Sub is duly licensed and qualified to
transact business in each jurisdiction in which the property owned, leased or
operated by them or the nature of their businesses make such licensing or
qualification necessary. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
5.3 Authority. Each of Buyer and Merger Sub has full right, authority
and power to enter into this Agreement and each agreement, document and
instrument to be executed and delivered by Buyer or Merger Sub pursuant to this
Agreement and to carry out the transactions contemplated hereby. The execution,
delivery and performance by Buyer and Merger Sub of this Agreement and each such
other agreement, document and instrument have been duly authorized by all
necessary corporate action of Buyer and Merger Sub and no other action on the
part of Buyer or Merger Sub is required in connection therewith. This Agreement
and each other agreement, document and instrument executed and delivered by
Buyer or Merger Sub pursuant to this Agreement constitute, or when executed and
delivered will constitute, valid and binding obligations of Buyer and Merger Sub
(as the case may be) enforceable in accordance with their terms. The execution,
delivery and performance by Buyer and Merger Sub of this Agreement and each such
agreement, document and instrument:
(i) does not and will not violate any provision
of the Certificate of Incorporation or by-laws of Buyer or Merger Sub;
(ii) does not and will not violate any laws of
the United States or of any state or any other jurisdiction applicable to Buyer
or Merger Sub or, assuming no breach in the representations set forth in Section
3.5 hereof, require Buyer or Merger Sub to obtain any approval, consent or
waiver of, or make any filing with, any person or entity (governmental or
otherwise) which has not been obtained or made; and
(iii) does not and will not result in a breach of,
constitute a default under, accelerate any obligation under, or give rise to a
right of termination of any indenture, loan or credit agreement, or any other
agreement, mortgage, lease, permit, order, judgment or decree to which Buyer or
Merger Sub is a party and which is material to the business or financial
condition of Buyer, Merger Sub and affiliated organizations on a consolidated
basis.
5.4 Capitalization. The authorized capital stock of Buyer consists of
30,000,000 shares of common stock, par value $.01 per share, and 5,000,000
shares of preferred stock, par value $.01 per share. The authorized capital
stock of Merger Sub consists of 1,000 shares of common stock, par value $.01 per
share, of which 100 shares are duly and validly issued, outstanding, fully paid
and non-assessable and are held of record by Buyer.
5.5 Litigation. There is no litigation or governmental or
administrative proceeding or investigation pending or, to its knowledge,
threatened against Buyer or Merger Sub which
27
would prevent or hinder the consummation of the transactions contemplated by
this Agreement or which is likely to be material to the business or financial
position of Buyer and Merger Sub and their subsidiaries taken as a whole.
5.6 Finder's Fee. Except as set forth in SCHEDULE 5.5 hereto, neither
Buyer nor Merger Sub has incurred or become liable for any broker's commission
or finder's fee relating to or in connection with the transactions contemplated
by this Agreement.
5.7 Buyer's Public Information. Buyer has heretofore furnished the
Eventus Stockholders with information regarding Buyer, including its Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 and its
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, each as
filed with the Securities and Exchange Commission ("SEC") (as any such documents
have been amended since their original filing, the "Buyer SEC Documents"). As of
their respective filing dates, the Buyer SEC Documents did not contain any
untrue statements of material facts or omit to state material facts 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 their respective
filing dates, the Buyer SEC Documents complied in all material respects with the
applicable requirements of the Securities Act and the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated under such statutes.
5.8 Buyer Common Shares. Buyer has a sufficient number of authorized
but unissued shares of its Common Stock available for issuance to the Eventus
Stockholders and the holders of Options to be assumed and converted in the
merger, upon exercise of Buyer Options in accordance with the provisions of this
Agreement. The Buyer Common Shares to be issued pursuant to this Agreement will,
when so delivered (upon the receipt of any exercise price therefore, if
applicable), be duly and validly issued, fully paid and nonassessable free from
any preemptive or similar rights, and issued in compliance with all applicable
federal and state securities laws.
5.9 No Undisclosed Liabilities. Except as and to the extent set forth
in the Buyer SEC Documents, neither Buyer or any of its subsidiaries had at
September 30, 1998, any liabilities required by general accepted accounting
principles to be reflected on a consolidated balance sheet of Buyer and its
subsidiaries. Except as and to the extent set forth in such Buyer SEC Documents,
since such date neither Buyer nor any of its subsidiaries has incurred any
liabilities material to the business, operations or financial condition of Buyer
and its subsidiaries, except liabilities incurred in the ordinary and usual
course of business and consistent with past practice and liabilities incurred in
connection with this Agreement.
5.10 No Default. Neither Buyer, Merger Sub nor any of their
subsidiaries are in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation) of
any term, condition or provision of (i)their articles of incorporation or bylaws
(or other applicable charter or organizational instrument), (ii)any note, bond,
mortgage, indenture, license, contract, agreement or other instrument or
obligation
28
to which any of them is a party or by which they or any of their properties or
assets may be bound or (iii) any order, writ, injunction, decree, statute, rule
or regulation applicable to Buyer, Merger Sub or any of their subsidiaries,
which defaults or violations would be material to the business, operations or
financial condition of any of them or which would prevent or delay the
consummation of the transactions contemplated hereby.
ARTICLE VI -- COVENANTS OF BUYER AND MERGER SUB
6.1 Affiliate Agreements. Buyer shall each use reasonable efforts to
obtain prior to Closing an executed Affiliate Agreement from each of its
affiliates with respect to the transfer of Buyer Common Shares. Set forth on
Schedule 6.1 hereto is a list of names of those persons who are, in Buyer's
reasonable judgment after consultation with legal counsel, affiliates of Buyer.
Buyer shall provide Eventus such information and documents as Eventus shall
reasonably request for purposes of reviewing such list.
6.2 Pooling Accounting. Buyer will use its best efforts to cause the
business combination to be effected by the Merger to be accounted for as a
pooling of interests. Buyer will use its best efforts to cause its Affiliates
not to take any action that would adversely affect the ability of Buyer to
account for the business combination to be effected by the Merger as a pooling
of interests.
6.3 Continuity of Business Enterprise. Buyer will continue at least one
historic business line of Eventus, or to use at least a significant portion of
Eventus' historic business assets in a business, in each case within the meaning
of Treasury Regulation Section 1.368-1(d). Neither Buyer nor Merger Sub has
taken or agreed to take any action that would prevent the Merger from
constituting a tax-free reorganization qualifying under the provisions of
Section 368(a) of the Code.
6.4 Observance of Indemnification Rights. Buyer will, and will cause
the Surviving Corporation to, observe any indemnification provisions now
existing in the Articles of Incorporation or By-laws of Eventus for the benefit
of any person who served as an director, officer or agent of Eventus at any time
prior to the Effective Time.
ARTICLE VII -- CONDITIONS
7.1 Conditions to the Obligations of Buyer and Merger Sub. The
obligation of Buyer and Merger Sub to consummate this Agreement and the
transactions contemplated hereby are subject to the fulfillment, prior to or at
the Closing, of the following conditions precedent:
(a) Representations; Warranties; Covenants. Each of
the representations and warranties of Eventus contained in Section 2, and the
Principal
29
Stockholders contained in Section 3 shall be true and correct, in all material
respects as though made on and as of the Closing Date; and the Sellers shall, on
or before the Closing, have performed all of their obligations hereunder which
by the terms hereof are to be performed on or before the Closing except where
the failure to so perform would not have a material adverse effect on Eventus.
(b) No Material Change. There shall have been no
material adverse change in the financial condition, prospects, properties,
assets, liabilities, business or operations of Eventus since the date hereof.
(c) Certificate from Officers. Eventus shall have
delivered to Buyer a certificate of the Chief Executive Officer of Eventus dated
as of the Closing Date to the effect that the statements set forth in paragraphs
(a) and (b) above in this Section 7.1 are true and correct.
(d) Opinion of Counsel. At the Closing, Buyer shall
have received from Fenwick & West LLP, counsel for Eventus and the Eventus
Stockholders, an opinion as of said date, substantially in the form attached
hereto as Exhibit 7.1(d).
(e) No Litigation. There shall have been no
determination by Buyer, acting in good faith, that the consummation of the
transactions contemplated by this Agreement has become materially inadvisable or
impracticable by reason of the institution or realistic threat by any person or
any federal, state, foreign or other governmental authority of litigation,
proceedings or other action against Buyer or any Seller.
(f) Consents. Eventus shall have made all filings with
and notifications of governmental authorities, regulatory agencies and other
entities required to be made by such entity in connection with the execution and
delivery of this Agreement, the performance of the transactions contemplated
hereby and the continued operation of the business of Eventus to be acquired by
Buyer subsequent to the Closing; and the Sellers shall have received all
authorizations, waivers, consents and permits, in form and substance reasonably
satisfactory to Buyer, from all third parties, including, without limitation,
applicable governmental authorities, regulatory agencies, lessors, lenders and
contract parties required to permit the continuation of the business of Eventus
by Buyer and the consummation of the transactions contemplated by this
Agreement.
(g) FIRPTA Withholding. At or prior to the Closing,
Buyer shall have received from Eventus, a "transferor's certificate of non-
foreign status" as provided in the Treasury Regulations under Section 1445 of
the Code substantially in the form attached hereto as Exhibit 7.1(g).
(h) Employment Agreement. Each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ shall have executed and delivered
to Buyer an Employment Agreement in substantially the form of Exhibit 7.1(h)
attached hereto.
30
(i) Registration Rights Agreement. The Sellers shall
have executed and delivered to Buyer the Registration Rights Agreement in
substantially the form of Exhibit 7.1(i) attached hereto (the "Registration
Rights Agreement").
(j) Pooling Matters. (i) Each affiliate of Eventus
shall have executed and delivered to Buyer an Affiliate Agreement; and (ii)
Buyer shall have been advised by PricewaterhouseCoopers LLP (or its successor),
its independent auditors, that the Merger will qualify as a "pooling of
interests" under APB 16.
(k) Release. Each of the employees of Eventus who have
had stock options rescinded shall have executed and delivered to Buyer a Release
in substantially the form of Exhibit 7.1(k) attached hereto.
(l) Escrow Agreement. The Buyer, Escrow Agent and the
Representatives shall have executed and delivered to the Buyer, the Escrow
Agreement in substantially the form of Exhibit 1.4 attached hereto.
(m) Dissenting Shares. Of the total Eventus Shares
outstanding immediately prior to the Effective Time of the Merger, no more than
ten percent (10%) will be Dissenting Shares.
7.2 Conditions to the Obligations of Eventus and the Principal
Stockholders. Eventus and the Principal Stockholders' obligation to consummate
this Agreement and the transactions contemplated hereby is subject to the
fulfillment, prior to or at the Closing, of the following conditions precedent:
(a) Representations; Warranties; Covenants. Each of
the representations and warranties of Buyer contained in Section 5 shall be true
and correct as though made on and as of the Closing Date in all material
respects; Buyer shall, on or before the Closing, have performed all of its
obligations hereunder which by the terms hereof are to be performed on or before
the Closing (except where the failure to so perform would not have a material
adverse effect on Buyer or Merger Sub); and Buyer shall have delivered to the
Sellers a certificate of the Chief Executive Officer, President or Treasurer of
Buyer dated as of the Closing Date to such effect.
(b) No Material Change. There shall have been no
material adverse change in the financial condition, prospects, assets,
liabilities, business or operations of Buyer or Merger Sub since the date
hereof.
(c) Opinion of Counsel. At the Closing, Eventus shall
have received from ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP, counsel for Buyer, an opinion as
of said date, in substantially the form attached hereto as Exhibit 7.2(c).
31
(d) No Litigation. There shall have been no determination by
the Sellers, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become materially inadvisable or
impracticable by reason of the institution or realistic threat by any person or
any federal, state, foreign or other governmental authority of litigation,
proceedings or other action against Buyer or any Seller.
(e) Consents. The Buyer shall have made all filings with and
notifications of governmental authorities, regulatory agencies and other
entities required to be made by such entities in connection with the execution
and delivery of this Agreement, the performance of the transactions contemplated
hereby and the continued operation of the business of Eventus to be acquired by
Buyer subsequent to the Closing; and the Buyer shall have received all
authorizations, waivers, consents and permits, in form and substance reasonably
satisfactory to the Sellers, from all third parties, including, without
limitation, applicable governmental authorities, regulatory agencies, lessors,
lenders and contract parties required to permit the continuation of the business
of Eventus by Buyer and the consummation of the transactions contemplated by
this Agreement.
(f) Employment Agreement. The Buyer shall have executed and
delivered to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ an
Employment Agreement in substantially the form of Exhibit 7.1(h) attached
hereto.
(g) Registration Rights Agreement. The Buyer shall have
executed and delivered to Eventus the Registration Rights Agreement.
(h) Escrow Agreement. The Buyer, Escrow Agent and the
Representatives shall have executed and delivered to the Representatives, the
Escrow Agreement in substantially the form of Exhibit 1.4 attached hereto.
ARTICLE VIII -- SURVIVAL; INDEMNIFICATION
8.1 Survival of Representations, Warranties, etc. All representations,
warranties, agreements, covenants and obligations herein or in any schedule or
certificate delivered by any party incident to the transactions contemplated
hereby material and may be relied upon by the party receiving the same and shall
survive the Closing regardless of any investigation by such party and shall not
merge into the performance of any obligation by any party hereto, subject to the
provisions of this Article VIII.
8.2 Indemnification by the Eventus Stockholders.
(a) The Eventus Stockholders jointly and severally, in all cases
subject to the limitations set forth in this Article VIII, agree subsequent to
the Closing Date to indemnify and hold harmless the Buyer (the "Buyer
Indemnified Party") from and against and in respect of all losses, liabilities,
obligations, damages, deficiencies, actions, suits,
32
proceedings, demands, assessments, orders, judgments, fines, penalties, costs
and expenses (including the reasonable fees, disbursements and expenses of
attorneys, accountants and consultants) of any kind or nature whatsoever
(whether or not arising out of third-party claims and including all amounts paid
in investigation, defense or settlement of the foregoing) (a "Loss" or "Losses")
sustained, suffered or incurred by or made against the Buyer Indemnified Party,
arising out of or based upon: any breach or inaccuracy of any representation and
warranty made by Eventus in this Agreement or any Schedule hereto or in any
certificate delivered pursuant to Section 7.1 in connection with the Closing,
any of which are not waived at the Closing ("General Indemnifiable Losses").
(b) Each Principal Stockholder, severally and not jointly, in
all cases subject to the limitations set forth in this Article VIII, agrees
subsequent to the Closing Date to indemnify and hold harmless the Buyer
Indemnified Party from and against and in respect of all Losses sustained
suffered or incurred by or made against the Buyer Indemnified Party, arising out
of or based upon any breach of any representation or warranty made by such
Principal Stockholder in this Agreement or any Schedule hereto or in any
certificate delivered pursuant to Section 7.1 in connection with the Closing,
any of which are not waived at the Closing ("Eventus Stockholder Specific
Indemnifiable Losses," and together with the General Indemnifiable Losses, the
"Buyer Indemnifiable Losses").
8.3 Limitations on Indemnification by the Eventus Stockholders.
8.3.1 General Threshold. Subject to Section 8.3.4, the Eventus
Stockholders shall not be obligated to indemnify the Buyer Indemnified Party in
respect of General Indemnifiable Losses except to the extent the cumulative
amount of all General Indemnifiable Losses exceeds $25,000 (the "Buyer
Deductible"), which excess cumulative amount shall be recoverable in accordance
with the terms hereof. Notwithstanding anything to the contrary in this Article
VIII, no Eventus Stockholder (including any Principal Stockholders) shall be
obligated to indemnify Buyer Indemnified Parties in respect of any General
Indemnifiable Losses for Losses arising out of or related to a breach of any
representation and warranty in Section 2.13 hereof which relates to any patent
claim which is not known by such Eventus Stockholder or any future patent claim.
8.3.2 General Maximum Indemnification. Subject to the exceptions set
forth in Section 8.3.4 and the limitations set forth in Section 8.3.1, no
Eventus Stockholder shall be obligated under any circumstance to indemnify Buyer
Indemnified Parties in respect of General Indemnifiable Losses to the extent the
cumulative amount of all General Indemnifiable Losses exceeds each such Eventus
Stockholder's Escrow Shares; provided, however, in addition to any
indemnification obligation satisfied by Escrow Shares, that each such Eventus
Stockholder who is also a Principal Stockholder shall indemnify the Buyer
Indemnified Parties in respect of General Indemnified Losses which relate to a
breach of the representations and warranties contained in Section 2.13 hereof in
an additional amount not to exceed fifteen percent (15%) of the value of the
Buyer Common Stock received by such Eventus Stockholder. For purposes of
33
determining the value of the Buyer Common Stock under this Section 8.3, the
closing price of the Buyer Common Stock on the date hereof shall be used.
8.3.3 Time Limits for Claims. Subject to the exceptions set
forth in Section 8.3, no claim for indemnification may be made by any Buyer
Indemnified Party in respect of Buyer Indemnifiable Losses unless the written
notice required by Section 8.5 with respect to such Losses shall have been
received by the Representatives on a date prior to the first anniversary of the
Closing Date; provided, however, that if prior to the applicable date of
expiration a specific state of facts shall have become known which may
reasonably constitute or give rise to any Buyer Indemnifiable Loss as to which
indemnity may be payable and the Buyer Indemnified Party shall have given notice
of such facts to the Eventus Stockholders, made a claim for indemnification and,
except with respect to third party claims, pursued such claim within six months
thereafter, then the right to indemnification with respect thereto shall remain
in effect until such matter shall have been finally determined and disposed of,
and any indemnification due in respect thereof shall have been paid.
8.3.4 Dollar-for-Dollar and Fraud Claims. Notwithstanding
anything herein to the contrary, the Buyer Indemnified Party shall not be
subject to any limitation whether pursuant to Section 8.3 or otherwise, and
shall be entitled to dollar-for-dollar recovery, in seeking indemnification from
the Eventus Stockholders with respect to Losses arising from (a) Eventus
incurring legal fees and expenses in excess of $100,000 relating to the
transactions contemplated hereby or (b) Eventus incurring relocation expenses,
real estate commissions, temporary space expenses or legal fees and expenses in
connection with any eviction or attempted eviction from the Lease Real Property
occurring or commencing within ninety (90) days after the Closing Date; provided
that the dollar-for-dollar recovery provided for in Section 8.3.4(b) shall not
exceed $50,000 in the aggregate. Notwithstanding anything herein to the
contrary, nothing in this Agreement shall be intended to limit an Eventus
Stockholder's or Eventus' liability for fraud or an intentional
misrepresentation.
8.4 Indemnification by Buyer. Buyer agrees, in all cases subject to
the limitations set forth in this Article VIII, subsequent to the Closing Date
to indemnify and hold harmless the Eventus Stockholders ("Eventus Indemnified
Parties") from and against and in respect of all Losses sustained, suffered or
incurred by or made against any of them arising out of or based upon (a) any
breach or inaccuracy of any representation or warranty made by Buyer or Merger
Sub in this Agreement or in any Schedule hereto or in any certificate delivered
pursuant to Section 7.2 in connection with the Closing; and (b) any breach of
any covenant or agreement made by Buyer or Merger Sub in this Agreement or in
any Schedule hereto (such claims under clauses (a) and (b) being hereinafter
collectively referred to as "Eventus Indemnifiable Losses").
8.5 Notice; Defense of Claims. Except for Buyer Indemnified Losses
under the Escrow Agreement (which shall be administered exclusively in
accordance with the terms and procedures set forth in the Escrow Agreement),
promptly after receipt by an indemnified party of notice of any claim, liability
or expense to which the indemnification obligations hereunder
34
would apply or the date on which an indemnified party should reasonably become
aware of facts which constitute an indemnifiable claim, the indemnified party
shall give notice thereof in writing to the indemnifying party, but the omission
to so notify the indemnifying party promptly will not relieve the indemnifying
party from any liability except to the extent that the indemnifying party shall
have been prejudiced as a result of the failure or delay in giving such notice.
Such notice shall state the information then available regarding the amount and
nature of such claim, liability or expense and shall specify the provision or
provisions of this Agreement under which the liability or obligation is
asserted. If within 30 days after receiving such notice the indemnifying party
gives written notice to the indemnified party stating that (i) it would be
liable under the provisions hereof for indemnity in the amount of such claim,
liability or expense if such claim were successful and (ii) that it disputes and
intends to defend against such claim, liability or expense at its own cost and
expense, then counsel for the defense shall be selected by the indemnifying
party (subject to the consent of the indemnified party which consent shall not
be unreasonably withheld) and the indemnified party shall not be required to
make any payment with respect to such claim, liability or expense as long as the
indemnifying party is conducting a good faith and diligent defense at its own
expense; provided, however, that the assumption of defense of any such matters
by the indemnifying party shall relate solely to the claim, liability or expense
that is subject or potentially subject to indemnification. The indemnifying
party shall have the right, with the consent of the indemnified party, which
consent shall not be unreasonably withheld, to settle all indemnifiable matters
related to claims by third parties which are susceptible to being settled
provided its obligation to indemnify the indemnifying party therefor will be
fully satisfied. The indemnifying party shall keep the indemnified party
apprised of the status of the claim, liability or expense and any resulting
suit, proceeding or enforcement action, shall furnish the indemnified party with
all documents and information that the indemnified party shall reasonably
request and shall consult with the indemnified party prior to acting on major
matters, including settlement discussions. Notwithstanding anything herein
stated to the contrary, the indemnified party shall at all times have the right
to fully participate in such defense at its own expense directly or through
counsel; provided, however, if the named parties to the action or proceeding
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate under applicable
standards of professional conduct, the indemnified party shall be entitled to
retain separate counsel, the expense of which shall be paid by the indemnifying
party provided that such counsel is selected by the indemnifying party and such
counsel is reasonably acceptable to the indemnified party. If no such notice of
intent to dispute and defend is given by the indemnifying party, or if such
defense is not being or ceases to be conducted, the indemnified party shall, at
the reasonable expense of the indemnifying party, undertake the defense of (with
counsel selected by the indemnified party), and shall have the right to
compromise or settle (exercising reasonable business judgment), such claim,
liability or expense. If such claim, liability or expense is one that by its
nature cannot be defended solely by the indemnifying party, then the indemnified
party shall make available all information and assistance that the indemnifying
party may reasonably request and shall cooperate with the indemnifying party in
such defense. Each Principal Stockholder shall have the right to satisfy any and
all claims of liability of such Principal Stockholder in connection with such
Principal Stockholder's
35
indemnification obligations under this Agreement by either (i) transferring
shares of their Buyer Common Stock (which for purposes of determining valuation
shall be valued at the closing price of the Buyer Common Stock on the date
hereof) to Buyer Indemnified Parties, or (ii) by paying cash to Buyer
Indemnified Parties.
8.6 Escrow Shares. At the Effective Time, the Escrow Shares shall be
deposited in escrow with the Escrow Agent by Buyer as provided in Section 1.4
hereof as a mechanism to satisfy potential claims for indemnification by Buyer
under Sections 8.2 and 8.3 of this Article VIII. Any liability of the Eventus
Stockholders other than the Principal Stockholders for indemnification for
General Indemnifiable Losses under this Section 8.2(a), subject to the
limitations described in Section 8.3 hereof, shall be satisfied exclusively from
Escrow Shares. Any liability of the Principal Stockholders for indemnification
for General Indemnifiable Losses under Section 8.2(a) other than General
Indemnifiable Losses which relate to a breach of the representations and
warranties contained in Section 2.13 hereof, subject to the limitations
described in Section 8.3 hereof, shall be satisfied exclusively from Escrow
Shares, and any liability of the Principal Stockholders for indemnification for
General Indemnifiable Losses under Section 8.2(a) which relate to a breach of
the representations and warranties contained in Section 2.13 hereof, subject to
the limitations described in Section 8.3 hereof, shall be satisfied initially
from Escrow Shares, and thereafter as contemplated by the last sentence of
Section 8.5 hereof.
8.7 Remedies. The indemnification provisions of this Article VIII are
the sole and exclusive remedy from and after the Effective Time of any party to
this Agreement for a breach of any representation, warranty or covenant
contained herein or in the Disclosure Letter or schedules hereto, or any
certification, document or instrument delivered hereunder. Notwithstanding the
preceding sentence, each of the parties acknowledges and agrees that the other
parties hereto would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties hereto agrees the other
parties hereto shall be entitled to an injunction to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof (including the indemnification provisions hereof) in
any competent court having jurisdiction over the parties, in addition to any
other remedy to which they may be entitled at law or in equity.
8.8 Recoveries. The amount of any Losses suffered, sustained,
incurred or required to be paid by any indemnifying party shall be reduced by
the amount of any insurance proceeds paid to the indemnified party, and adjusted
to reflect the net tax effect of any Losses and any resulting payments received
by any party under this Article VIII (including payments made under this Section
8.8).
36
ARTICLE IX -- MISCELLANEOUS
9.1 Fees and Expenses.
(a) Except as set forth herein, each of the parties will
bear its own expenses in connection with the negotiation and the consummation of
the transactions contemplated by this Agreement, except that Buyer agrees to be
responsible for the expenses of Eventus relating to the Merger and the
transactions contemplated hereby, including without limitation, legal,
accounting or other professional expenses of Eventus or the Eventus
Stockholders, and expressly agrees to pay all of the investment banking fees of
Eventus up to an amount not to exceed $500,000.
(b) Except as otherwise provided in this Agreement, the
Registration Rights Agreement and the Escrow Agreement, the Eventus Stockholders
will pay all costs incurred, whether at or subsequent to the Closing, in
connection with the transfer of the Eventus Shares to Buyer as contemplated by
this Agreement, including without limitation, all sales, use, excise, real
property and other transfer taxes and charges applicable to such transfer; all
recording charges and fees applicable to the recordation of deeds and mortgages
and other instruments of transfer; and all costs of obtaining or transferring
permits, registrations, applications and other tangible and intangible
properties.
9.2 Governing Law. This Agreement shall be construed under and
governed by the internal laws of the State of Delaware without regard to its
conflict of laws provisions. The parties hereto hereby irrevocably and
unconditionally consent to the exclusive jurisdiction of the courts of the State
of Delaware and the United States District Court for the District of Delaware
for any action, suit or proceeding arising out of or relating to this Agreement
and the transaction contemplated hereby, and agree not to commence any such
action, suit or proceeding except in such courts. The parties hereto further
hereby irrevocably and unconditionally waive any objection to the laying of
venue of any action, suit or proceeding arising out of or relating to this
Agreement and the transaction contemplated hereby in courts referenced in this
Section 9.2 under the applicable circumstances, and hereby further irrevocably
and unconditionally waive and agree not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum. Each of the parties hereto further agrees that service
of any process, summons, notice or document by U.S. registered mail to its
address set forth herein shall be effective service of process for any action,
suit or proceeding brought against it in any such court.
9.3 Notices. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon receipt, if sent
by overnight courier, upon the day following the day sent, or if sent by
registered or certified mail, upon the sooner of the date on which receipt is
acknowledged or the expiration of three days after deposit in United States Post
Office facilities properly addressed with postage prepaid. All notices to a
party will be
37
sent to the addresses set forth below or to such other address or person as such
party may designate by notice to each other party hereunder:
TO BUYER OR MERGER SUB: Segue Software, Inc.
---------------------- ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
TO EVENTUS OR THE
EVENTUS STOCKHOLDERS: Eventus Software Inc.
-------------------- ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: Fenwick & West LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
9.4 Entire Agreement. This Agreement, including the Schedules and
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such Schedules and Exhibits or in such
other writings; and all inducements to the making of this Agreement relied upon
by either party hereto have been expressed herein or in such Schedules or
Exhibits or in such other writings.
9.5 Assignability; Binding Effect. Prior to the Closing, this
Agreement shall only be assignable by Buyer and Merger Sub to a corporation,
partnership or limited liability company controlling, controlled by or under
common control with Buyer upon written notice to the Sellers. After the Closing,
Buyer's and Merger Sub's rights and obligations hereunder
38
shall be freely assignable. This Agreement may not be assigned by the Sellers
without the prior written consent of Buyer. This Agreement shall be binding upon
and enforceable by, and shall inure to the benefit of, the parties hereto and
their respective successors and permitted assigns.
9.6 Captions and Gender. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
9.7 Execution in Counterparts. For the convenience of the parties and
to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
9.8 Amendments. This Agreement may not be amended or modified, nor
may compliance with any condition or covenant set forth herein be waived, except
by a writing duly and validly executed by each party hereto, or in the case of a
waiver, the party waiving compliance.
9.9 Publicity and Disclosures. No press releases or public
disclosure, either written or oral, of the transactions contemplated by this
Agreement, shall be made by a party to this Agreement without the prior
knowledge and written consent of Buyer, Eventus and the Principal Stockholders.
[SIGNATURE PAGE FOLLOWS]
39
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
BUYER: SEGUE SOFTWARE, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
MERGER SUB: SSI MERGER CORP.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name:
Title:
SELLERS: EVENTUS SOFTWARE INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name:
Title:
MANAGEMENT STOCKHOLDERS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ (not accredited)
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (not accredited)
Each of the undersigned Principal Stockholders hereby joins this
Agreement with respect to Articles III, VIII and IX only.
PRINCIPAL STOCKHOLDERS:
Fenwick & West LLP
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, a partner
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, an individual
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Amisil Holdings Limited
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Sumitronics, Inc.
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President
Sumitomo Corporation
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
General Manager
Information Electronics Dept.
Sumisho Datacom, Inc
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
President
SQRIBE TECHNOLOGIES CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
LIST OF EXHIBITS AND SCHEDULES
SCHEDULES
---------
Schedule 1.1.7(c) Accelerated Options
Schedule 2.2 Foreign Qualification
Schedule 2.4 Capitalization
Schedule 2.6(b) Leased Real Property
Schedule 2.6(c) Personal Property
Schedule 2.7 Financial Statements
Schedule 2.8 Tax Returns
Schedule 2.9 Related Party Transactions/Account Receivable
Schedule 2.12 Banking Relations
Schedule 2.13 Intellectual Property
Schedule 2.14 Contracts
Schedule 2.17 Insurance
Schedule 2.20 Eventus Finder's Fee
Schedule 2.25 Employees, Suppliers and Customers
Schedule 4.4 Eventus Affiliates
Schedule 5.5 Buyer Finder's Fee
Schedule 6.1 Buyer Affiliates
EXHIBITS
--------
Exhibit 1.2 Form of Letter of Transmittal
Exhibit 1.4 Form of Escrow Agreement
Exhibit 2.1 Disclosure Schedule
Exhibit 4.4 Form of Affiliate Agreement
Exhibit 7.1(d) Form of Opinion of Fenwick & West LLP
Exhibit 7.1(g) Form of Transferor's Certificate of Non-Foreign
Status
Exhibit 7.1(h) Form of Employment Agreement
Exhibit 7.1(i) Form of Registration Rights Agreement
Exhibit 7.1(k) Form of Release
Exhibit 7.2(c) Form of Opinion of ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP