AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") dated as of
February 29, 2000, by and between Design Automation Systems, Inc., a Texas
corporation, with its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("DASI"), EACQ, LLC, a Texas limited liability company,
with its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ (the "Sub"), The Growth Strategy Group, Inc., a New York corporation,
having its principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Company"), and its stockholders, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (each, a "Stockholder", and collectively, the
"Stockholders") holding in aggregate 100% of the issued and outstanding shares
of the Company common stock, $.001 par value per share (the "Company Stock").
DASI, the Sub, the Company and the Stockholders are sometimes referred to
collectively herein as the "Parties."
WHEREAS, the respective Boards of Directors of DASI and the Company,
and the Managers of the Sub have approved the acquisition of the Company by
DASI, by means of a merger of the Company with and into the Sub (the "Merger"),
upon the terms and subject to the conditions of this Agreement;
WHEREAS, to complete such acquisition, the respective Boards of
Directors of DASI and the Company, and the Managers of the Sub, have approved
the Agreement upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the parties intend that the Agreement qualify as a tax-free
merger pursuant to Section 368 (a) (1) (A) of the Internal Revenue Code of 1986,
as amended (the "Code");
WHEREAS, DASI, Sub, Company and the Stockholders desire to make
certain representations, warranties, covenants and agreements in connection with
the Agreement and also to prescribe various conditions to consummation thereof;
NOW THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, representations, warranties and agreements herein contained,
the parties, intending to be legally bound hereby, agree as follows:
SECTION I.
THE MERGER AND RELATED MATTERS
1.1 The Merger.
(a) Subject to the terms and conditions of this
Agreement, at the time of the Closing (as defined in Section 1.8 hereof), (i)
articles of merger (the "Texas Certificate of Merger") shall be duly prepared,
executed and acknowledged by the Company and the Sub in accordance with the
Texas Limited Liability Act (the "TLLCA"), and filed by the Sub in the office of
the Secretary of State of the State of Texas, and (ii) certificate of merger
(the "New York Certificate of Merger") shall be duly prepared, executed and
acknowledged by the Company in accordance with the New York Business Corporation
Law (the "NYBCL") and filed by the Company in the Department of State of the
State of New York. The Merger shall become effective upon the filing of the
Texas Certificate of Merger, in accordance with the provisions and requirements
of the TLLCA. The date and time when the Merger shall become effective is
hereinafter referred to as the "Effective Time."
(b) At the Effective Time, the Company shall be merged
with and into the Sub, and the separate corporate existence of Company shall
cease, and the Sub shall survive and continue to exist as a Texas limited
liability company (the "Surviving Company").
(c) From and after the Effective Time the Merger shall
have the effects set forth in the NYBCL and Article 10.04 of the TLLCA.
1.2 Conversion of Stock.
(a) At the Effective Time, each share of Company
common stock issued and outstanding immediately prior to the Effective Time
(other than any shares of Company common stock in the treasury of the Company,
all of which shall be canceled and none of which shall receive any payment with
respect thereto) shall, automatically by virtue of the Merger and without any
action on the part of any Person, be converted into and represent the right to
receive the Per Share Merger Consideration (as defined in paragraph (b) below).
(b) As used herein the term "Per Share Merger
Consideration" shall mean , for each share of the Company Stock, (i) 1,385
(subject to adjustment pursuant to Section 1.4, the "Conversion Number") shares
of common stock, $.01 par value per share, of DASI (the "DASI Common Stock"),
(ii) $1,875 cash (the "Merger Cash"), and (iii) if applicable, the Fractional
Cash (as defined in paragraph (c) below).
(c) Notwithstanding the foregoing, no fractional
shares of DASI Common Stock shall be issued to holders of Company common stock;
instead, Sub shall, at the time of the exchange set forth in Section 1.4 hereof,
pay to each Stockholder who would otherwise be entitled to a fractional share of
DASI Common Stock, an amount of cash (the "Fractional Cash") determined by
multiplying such fraction by the last closing sales price of DASI Common Stock
on the principal securities exchange or trading market where such security is
listed or traded for the trading day immediately preceding the Closing.
(d) Each share of DASI Common Stock issued and
outstanding immediately prior to the Effective Time will remain issued and
outstanding and unaffected by the Merger.
1.3 No Dissenting Stockholders. By a Stockholder's execution of
this Agreement, such Stockholder expressly waives any right under the TLLCA
and NYBCL to dissent from the Merger.
1.4 Exchange Procedures. At the Effective Time, (i) each
Stockholder shall deliver to Sub (A) a stock power in the form attached hereto
as Exhibit 1.4, (B) a letter of Non-distributive Intent (as described in Section
2.15) and (C) any other documents required by this Agreement, (ii) Sub shall
deliver to each Stockholder, by wire transfer of immediately available funds to
an account designated in writing to Sub or DASI at least one business day prior
to the Closing, a cash amount in United States currency equal to the sum of (x)
the Fractional Cash, if any, applicable to such Stockholder, and (y) the product
of (I) the number of shares of Company Stock owned by such Stockholder
immediately prior to the Effective Time, and (II) the Merger Cash, and (iii)
DASI shall issue and deliver to each Stockholder a certificate of DASI Common
Stock for the number of whole shares of DASI Common Stock that comes closest to
but does not exceed the product of (I) the number of shares of Company Stock
owned by such Stockholder immediately prior to the Effective Time, and (II) the
Conversion Number. In the event that DASI changes (or establishes a record date
for changing) the number of shares of DASI Common Stock issued and outstanding
prior to the Effective Time as result of a stock split, stock dividend,
recapitalization or similar transaction with respect to the outstanding DASI
Common Stock and the record date therefore shall be prior to the Effective Time,
the Conversion Number shall be proportionately adjusted.
1.5 Managers of the Surviving Company. At the Effective Time, the
managers of the Surviving Company shall be the managers of Sub immediately prior
to the Effective Time, and each of such managers shall hold office, subject to
the applicable provision of the Articles of Organization and Regulations of the
Surviving Company, until the next annual meeting of members of the Surviving
Company and until their
respective successors shall be duly elected or appointed and qualified. At the
Effective Time, the officers of the Surviving Company shall be the officers of
Sub immediately prior to the Effective Time, all of whom are listed on Exhibit
1.5 attached hereto, and each of such officers shall, subject to the applicable
provisions of the Articles of Organization and Regulations of the Surviving
Company, be the officers of the Surviving Company until their respective
successors shall be duly elected or appointed and qualified.
1.6 Articles of Organization of the Surviving Company. At the
Effective Time, the Articles of Organization of the Surviving
Company shall be the Articles of Organization of the
1.7 Sub as in effect immediately prior to the Effective Time, as set
forth in Exhibit 1.6 hereto.
1.8 Regulations of the Surviving Company. The Regulations of the
Surviving Company shall be as set forth in Exhibit 1.7 hereto, until thereafter
amended as provided by law.
1.9 The Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place on February 29, 2000 unless extended by
mutual agreement of the parties (the "Closing Date").
SECTION II.
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE STOCKHOLDERS
The Company and the Stockholders represent and warrant to DASI as
follows:
2.1 Organization and Qualification. The Company does not own any
interest in any other business enterprise or legal entity, except as disclosed
in Exhibit 2.1. Exhibit 2.1 also correctly sets forth as to the Company its
principal place of business, and jurisdictions in which it is qualified to do
business. The Company is a corporation duly organized, validly existing, and
in good standing under the laws of the State of New York, with all requisite
corporate power and authority to conduct its business and is not in breach of,
or in default with respect to, any term of its Articles of Incorporation, Bylaws
or other organizational documents, except where such breach would not have a
Material Adverse Effect. The Company has obtained all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits of and
from, and declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and other tribunals, to own, lease,
license, and use its properties and assets and to carry on the business in which
it is now engaged and the business in which it contemplates engaging, except
where the failure to do so would not have a Material Adverse Effect. The
Company is duly qualified to transact the business in which it is engaged in
every jurisdiction in which its ownership, leasing, licensing, or use of
property or assets or the conduct of its business makes such qualification
necessary, except where the failure to do so would not have a Material Adverse
Effect.
2.2 Capitalization. As of the date hereof, the total number of
shares of capital stock the Company is authorized to issue is 200 shares of
Company Stock. As of the date hereof, 200 shares of Company Stock are issued
and outstanding, of which the Stockholders own 100%, as set forth on Exhibit
2.2. The Company Stock is not owned or held in violation of any preemptive
right of any other person or entity, is duly authorized, validly issued, fully
paid and non-assessable, and is owned of record and beneficially by the
Stockholders as set forth in Exhibit 2.2. The shares of Company Stock held by
the Stockholders are free and clear of all liens, security interests, pledges,
charges, encumbrances, voting agreements, and voting trusts. Except as set
forth in Exhibit 2.2, there is no commitment, plan, or arrangement to issue, and
no outstanding option, warrant, or other right calling for the issuance of, any
shares of capital stock of the Company or any security or other instrument
convertible into, exercisable for, or exchangeable for capital stock of the
Company. There is outstanding no security or other instrument convertible into
or exchangeable for capital stock of the Company.
2.3 Financial Condition. The Company has delivered to DASI complete
copies of the following which are attached as Exhibit 2.3: an unaudited balance
sheet ("The Company Last Balance Sheet"), and trial balance as of February 3,
2000 ("The Company Last Balance Sheet Date"), which statements have been covered
by the compilation report of the Company's independent accountants. Such
balance sheet presents fairly the financial condition, assets and liabilities of
the Company in all material respects as of its date; such statement of cash
flows presents fairly the information purported to be shown therein in all
material respects, in each case in accordance with generally accepted accounting
principles, and subject to normal year-end audit adjustments in the case of
unaudited statements. The financial statements referred to in this Section 2.3
have been prepared form the books and records of the Company. Except as set
forth in Exhibit 2.3, since February 3, 2000:
(a) There has been no event or condition affecting the
Company which would have a Material Adverse Effect on the Company (provided,
however, that the Company and the Stockholders express no opinion as to
political, business or economic matters of general applicability)and the Company
has operated profitably;
(b) The Company has not authorized, declared, paid or
effected any dividend or liquidation or other distribution in respect of its
Company Stock or other equity interest or any direct or indirect redemption,
purchase or other acquisition of any equity interest of the Company, out of the
ordinary course of business;
(c) The operations of the Company have been conducted in
all respects only in the ordinary course of business;
(d) The Company has not suffered any loss (whether or not
covered by insurance) in excess of $5,000 or waived any material right; and
(e) There has been no accepted purchase order or
quotation, arrangement or understanding for future sale of the products or
services of the Company out of the ordinary course of business which the Company
expects will not be profitable.
2.4 Tax and Other Liabilities. Except as set forth on Exhibit 2.4,
the Company does not have any present liability of any nature, accrued or
contingent, including, without limitation, liabilities for federal, state,
local, or foreign taxes and liabilities to customers or suppliers, which could
have a Material Adverse Effect upon the Company, other than the following:
(a) Liabilities for which full provision has been made on
the Company Last Balance Sheet as of the Company Last Balance Sheet Date; and
(b) Other liabilities arising since the Company Last
Balance Sheet Date and prior to the Closing in the ordinary course of business
which are not inconsistent with the representations and warranties of Company or
any other provision of this Agreement.
Without limiting the generality of the foregoing, the amounts set forth as
provisions for taxes on the Company Last Balance Sheet are sufficient for all
accrued and unpaid taxes of the Company, whether or not due and payable and
whether or not disputed, under tax laws, as in effect on the Company Last
Balance Sheet Date or now in effect, for the period ended on such date and for
all fiscal years prior thereto. The Company has filed all applicable tax
returns required to be filed by it or has obtained applicable extensions and are
not delinquent with respect to such extensions; have paid (or have established
on the Company Last Balance Sheet a reserve for) all taxes, assessments, and
other governmental charges payable or remittable by it or levied upon it or its
properties, assets, income, or franchises, which are due and payable and have
delivered to the Company a true and correct copy of any report as to adjustments
received by the Company from any taxing authority during the past five years and
a statement as to any litigation, governmental or other proceeding (formal or
informal), or investigation pending.
2.5 Litigation and Claims. The Company has not received written
notice of any litigation, arbitration, claim, governmental or other proceeding,
or investigation (each, a "Claim") pending, nor does the Company or any
Stockholder possess Knowledge of any threatened Claim, with respect to the
Company or any Stockholder (as it relates to the business of the Company), or
any of the Company's business, properties, or assets, except as set forth on
Exhibit 2.5 and except as would not have a Material Adverse Effect. The Company
is not affected by any present or threatened strike or other labor disturbance
nor to the Knowledge of the Company or any Stockholder, is any union attempting
to represent any employee of Company as collective bargaining agent. To the
Knowledge of the Company and the Stockholders, the Company is not in material
violation of, or in material default with respect to, any law, rule, regulation,
order, judgment, or decree, nor is the Company or any Stockholder required to
take any action in order to avoid such violation or default.
2.6 Properties. The Company has good and marketable title to all
properties and assets used in its business or owned by it (except such real and
other property and assets as are held pursuant to leases or licenses described
in Exhibit 2.6), free and clear of all liens, mortgages, security interests,
pledges, charges, and encumbrances, (except such as are disclosed in Exhibit 2.7
or disclosed on the Company Last Balance Sheet or are Permitted Liens).
(a) Attached as Exhibit 2.6 is a true and complete list of
all properties and assets owned, leased, or licensed by the Company having an
individual value of $3,000 or more, including with respect to such properties
and assets leased or licensed by the Company, a brief description of such lease
or license. Except for those properties and assets of the Company that were
acquired subsequent to the Company Last Balance Sheet, all such properties and
assets owned by the Company are reflected on the Company Last Balance Sheet. All
properties and assets owned, leased, or licensed by the Company are in good and
usable condition (ordinary wear and tear, which is not such as would have a
Material Adverse Effect on the Company, excepted);
(b) No real property owned, leased or licensed by the
Company lies in an area which, to the Knowledge of the Company or any
Stockholder, is subjected to zoning, use or building code restrictions which
prohibits, and to the Knowledge of the Company and each Stockholder, no stated
facts relating to the actions or inaction of another person or entity of his or
its ownership, licensing, leasing, or use of any real or personal property
exists which prevents, the continued effective ownership, leasing, licensing or
use of such real property in the business in which the Company is now engaged;
and
(c) All accounts and notes receivable reflected on the
Company Last Balance Sheet, and arising since the Last Balance Sheet Date,
represent bona fide claims of the Company against third-party debtors for arms'
length sales made, services performed or other charges for valid consideration
arising to the extent that they have not been collected. To the Knowledge of the
Company and each Stockholder, such accounts and notes receivable are subject to
no right of recourse, defense, deduction, return of goods, counterclaim, offset,
or setoff on the part of the obligor, and, if not collected, can reasonably be
anticipated to be paid within 90 days of the date incurred.
2.7 Contracts, Agreements and Instruments. Exhibit 2.7 accurately
and completely sets forth the information required to be contained therein. The
Company has furnished to DASI:
(a) The Articles of Incorporation, Bylaws and other
organizational documents of the Company and all amendments thereto, as presently
in effect, certified by the president or Stockholders of the Company;
(b) True and correct copies of all material contracts,
agreements and other instruments referred to in Exhibit 2.7;
(c) True and correct copies of all material leases and
licenses referred to in Exhibit 2.6; and
(d) True and correct written descriptions of all service,
material supply, distribution, agency, financing or other arrangements or
understandings referred to in Exhibit 2.7.
Except for matters which, in the aggregate, would not have a Material Adverse
Effect or are otherwise disclosed in this Agreement, to the Knowledge of the
Company or any Stockholder, no other party to any such contract, agreement,
instrument, lease, or license is now in violation or breach of, or in default
with respect to complying with, any material provision thereof, and each such
contract, agreement, instrument, lease, or license contained in the exhibits
hereto is in full force and effect and is the legal, valid, and binding
obligation of the parties thereto and is enforceable as to them in accordance
with its terms. Each such service, supply, distribution, agency, financing, or
other arrangement or understanding contained in the exhibits hereto is a valid
and continuing arrangement or understanding, except for matters which, in the
aggregate, would not have a Material Adverse Effect; neither the Company, nor
any other party to any such arrangement or understanding has given notice of
termination or taken any action inconsistent with the continuance of such
arrangement or understanding, except for matters which, in the aggregate, would
not have a Material Adverse Effect; and the execution, delivery, and performance
of this Agreement will not prejudice any such arrangement or understanding in
any way contained in the exhibits hereto, except for matters which, in the
aggregate, would not have a Material Adverse Effect. The Company has not been a
party to since its formation, nor is it now a party to, any contract, agreement,
lease, license, arrangement, or understanding with any Stockholder or employee
of the Company (except for employment agreements listed in Exhibit 2.7 and
employment and compensation arrangements described in Exhibit 2.8, in each case
with such Stockholder and employees who are not relatives or affiliates
described in the next clause), any relative or affiliate of any Stockholder or
of any employee of the Company, or any other partnership or enterprise in which
any Stockholder or employee of the Company, or any such relative or affiliate
then had or now has a 5% or greater ownership interest or other substantial
interest, other than contracts and agreements listed and so specified in Exhibit
2.7.
2.8 Employees. The Company does not have, or contribute to, any
pension, profit-sharing, option, other incentive plan, or other Employee Benefit
Plan (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974), or has any obligation to or customary arrangement with employees for
bonuses, incentive compensation, vacations, severance pay, insurance, or other
benefits, except as set forth in Exhibit 2.8. Exhibit 2.8 contains a true and
correct statement of the names, relationship with the Company, present rates of
compensation (whether in the form of salary, bonuses, commissions, or other
supplemental compensation now or hereafter payable), and aggregate compensation
for the fiscal year ended December 31, 1999 of the Stockholders and the three
highest paid employees of the Company. Since December 31, 1999, the Company has
not changed the rate of compensation of any of its Stockholders, employees,
agents, dealers or distributors, except as disclosed in Exhibit 2.8.
2.9 Intellectual Property. The Company does not own or have pending,
nor has it licensed, any Intellectual Property, other than (i) as described in
Exhibit 2.9 (the "Company Intellectual Property") and (ii) Intellectual Property
licensed pursuant to a "shrink-wrap" or commercially available agreement, and to
the Knowledge of the Company and each of the Stockholders, the Company
Intellectual Property has not been the subject of any interference, opposition
or cancellation proceedings. None of any Stockholder, any employee of the
Company, any relative or affiliate of any Stockholder or of any such employee,
nor any other partnership or enterprise in which any Stockholder, any such
employee, or any such relative or affiliate had or now has a five percent or
greater ownership interest or other substantial interest, possesses any
Intellectual Property which is used by the Company pursuant to any agreement or
arrangement with such Person. To the Knowledge of Company or any Stockholder,
the Company has not received any written notice or written claim of infringement
by the Company of the intellectual Property of any third party. To the Knowledge
of the Company or any Stockholder, there is no infringement by others of the
Intellectual Property of the Company.
2.10 Questionable Payments. To the Knowledge of the Company or any
Stockholder, neither the Company, nor any of its Stockholders, agents,
employees, or any other persons associated with or acting on behalf of the
Company has, directly or indirectly:
(a) Used any of the Company funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity;
(b) Made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds;
(c) Violated any provision of the Foreign Corrupt
Practices Act of 1977;
(d) Established or maintained any unlawful or unrecorded
fund of corporate monies or other assets;
(e) Made any false or fictitious entry on the books or
records of the Company;
(f) Made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment; or
(g) Made any bribe, kickback, or other payment of a
similar or comparable nature, whether lawful or not, to any person or entity,
private or public, regardless of form, whether in money, property, or services,
to obtain favorable treatment in securing business or to obtain special
concessions, or to pay for favorable treatment for business secured or for
special concessions already obtained.
2.11 Authority to Exchange. The Company has all requisite corporate
power and authority to execute, deliver, and perform this Agreement, and each
Stockholder has all requisite power and authority to execute, deliver, and
perform this Agreement. All necessary corporate proceedings of the Company have
been duly taken to authorize the execution, delivery, and performance of this
Agreement by the Company. A resolution by the board of directors of the Company
authorizing this Agreement is attached hereto as Exhibit 2.11. This Agreement
and all exhibits hereto have been duly authorized, executed, and delivered by
the Company, have been duly executed and delivered by the Stockholders, and is
enforceable as to them in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies and
except as enforceability may be limited by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority or any court or other tribunal or
any third party (each of the foregoing, a "Consent") is required by the Company
or any Stockholder for the execution, delivery, or performance of this Agreement
by the Company or any Stockholder, except (i) where the failure to obtain such
Consent would not have a Material Adverse Effect on the Company, or (ii) such
consents referred to in Exhibit 2.11. Except where such violation, breach,
conflict or entitlement would not have a Material Adverse Effect, the execution,
delivery, and performance of this Agreement will not violate, result in a
breach of, conflict with, or (with or without the giving of notice or the
passage of time or both) entitle any party to terminate or call a default under
any term of any written contract, agreement, instrument, lease, license,
arrangement or understanding to which the Company is a party, or violate or
result in a breach of any term of the Articles of Incorporation, Bylaws or other
organizational documents, as amended, of the Company, or violate, result in a
breach of, or conflict with any material law, rule, regulation, order, judgment,
or decree binding on the Company. Upon the Closing, DASI will have good title to
all of the outstanding capital stock and other ownership interests of the
Company, including but not limited to Intellectual Property, free and clear of
all liens, security interests, pledges, charges, encumbrances, voting
agreements, and voting trusts except for Permitted Liens.
2.12 Environment, Health, and Safety.
(a) The Company has complied with all environmental, health
and safety laws, except where such non-compliance would not have a Material
Adverse Effect, and the Company has not received any written notice with respect
any action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice being filed or commenced against the Company alleging any
failure so to comply Without limiting the generality of the preceding sentence,
to the Knowledge of the Company and its Stockholders, the Company has obtained
and been in compliance with all of the terms and conditions of all permits,
licenses, and other authorizations which are required under, and has complied
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are contained in, all
environmental, health and safety laws, except where such non-compliance would
not have a Material Adverse Effect; and
(b) The Company does not have any material liability for
damage to any site, location or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other individual, or for any
reason under any environmental, health and safety law, except such damage that
would not have a Material Adverse Effect.
2.13 Completeness of Disclosure. No representation or warranty by
the Company, any Stockholder in this Agreement contains or on the date of the
Closing will contain any untrue statement of a material fact or omits or on the
Closing Date will omit to state a material fact necessary to make the statements
made not misleading, except for changes beyond the control of the Company and
the Stockholders or unless disclosed by the Company or the Stockholders prior to
Closing
2.14 Operating Licenses. Set forth on Exhibit 2.14 hereto is a
description of each material operating license or permit required for the
conduct of the business of Company, together with the name of the government
agency or entity issuing such license or permit. Such licenses and permits are
valid and in full force and effect, and to the Knowledge of the Company, will
not be terminated or otherwise adversely affected by the consummation of the
transactions contemplated hereby except where such termination or effect would
not have a Material Adverse Effect.
2.15 Non-distributive Intent. The Stockholders are receiving the
shares of DASI's Common Stock to be issued hereunder to them for their own
account (and not for the account of others) for investment and not with a view
to the distribution thereof. The Stockholders will not sell or otherwise
dispose of such shares without registration under the Securities Act of 1933, as
amended (the "Act"), or an exemption therefrom, and the certificate or
certificates representing such shares will contain a legend to the foregoing
effect. The Stockholders further acknowledge and agree that such shares shall be
restricted from resale for a period of 12 months after the Closing Date, unless
a registration statement registering the resale under the Act is deemed
effective by the SEC at an earlier date. By virtue of their position, the
Stockholders shall have access to the kind of financial and other information
about DASI as would be contained in a registration statement filed under the
Act, including reports filed pursuant to the Securities Exchange Act of 1934.
The Stockholders have acknowledged their understanding of the foregoing in a
Letter of Non-distributive Intent which is attached hereto as Exhibit 2.15 and
incorporated herein by reference.
2.16 Capalino. There is no shared client arrangement between the
Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Associates. ▇▇. ▇▇▇▇▇▇▇▇
has no claim against the Company, or to its assets or the Company Stock. The
Stockholders hereby agree to indemnify and hold harmless DASI and the Sub from
any demand, claim, action, suit, or proceeding of any kind initiated by ▇▇.
▇▇▇▇▇▇▇▇ arising from his association with the Company.
SECTION III.
REPRESENTATIONS AND WARRANTIES OF DASI AND THE SUB
Each of DASI and the Sub represents and warrants to the Company and
the Stockholders as follows:
3.1 DASI Organization and Qualification. DASI does not own any
interest in any other business enterprise or legal entity, except as disclosed
in Exhibit 3.1. Exhibit 3.1 also correctly sets forth as to the Company its
place of formation, principal place of business, and jurisdictions in which it
is qualified to do business. DASI is a corporation duly organized, validly
existing, and in good standing under the laws of Texas, with all requisite power
and authority to conduct its business and is not in breach of, or in default
with respect to, any term of its Articles of Incorporation, Bylaws or other
organizational documents, except where such breach would not have a Material
Adverse Effect. DASI has obtained all necessary consents, authorizations,
approvals, orders, licenses, certificates, and permits of and from, and
declarations and filings with, all federal, state, local, and other governmental
authorities and all courts and other tribunals, to own, lease, license, and use
its properties and assets and to carry on the business in which it is now
engaged and the business in which it contemplates engaging, except where the
failure to do so would not have a Material Adverse Effect. DASI is duly
qualified to transact the business in which it is engaged in every jurisdiction
in which its ownership, leasing, licensing, or use of property or assets or
the conduct of its business makes such qualification necessary, except where the
failure to do so would not have a Material Adverse Effect.
3.2 Financial Condition.
(a) Since January 1, 1999, DASI has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "1934 Act") (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC Documents"). DASI has delivered or made available to the
Company or its representative true and complete copies of the SEC Documents as
the Company or its representative has requested from DASI. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of DASI included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of DASI as of the dates thereof and the results of its operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Any business plan and pro
forma financial statements provided by DASI to the Company do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they are or were made not misleading.
(b) DASI has delivered to the Company true and correct
copies of the following which will be attached as Exhibit 3.2 hereof: an
unaudited balance sheet ("DASI Consolidated Last Balance Sheet"), statement of
income and statement of cash flows for the nine months ended September 30, 1999
("DASI Consolidated Last Balance Sheet Date"), of DASI and its Subsidiaries on a
consolidated basis. Such balance sheet presents fairly the financial condition,
assets and liabilities of DASI and its Subsidiaries on a consolidated basis as
of its date; such statement of income presents fairly the results of operations
of DASI and its Subsidiaries on a consolidated basis for the period indicated;
such statement of cash flows presents fairly the information purported to be
shown therein. The financial statements referred to in this Section 3.2 have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, and to DASI's and each of
its Subsidiaries' Knowledge are correct and complete in all material respects,
and are in accordance with the books and records of DASI and its Subsidiaries.
Since September 30, 1999:
(i) There has been no change which would have a
Material Adverse Effect on DASI and its Subsidiaries
and neither DASI nor any of its Subsidiaries has taken
any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy
law nor does DASI or its Subsidiaries have any
Knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings.
(ii) DASI has not authorized, declared, paid, or
effected any dividend or liquidation or other
distribution in respect of its capital stock or any
direct or indirect redemption, purchase, or other
acquisition of any such stock or any equity interest
of DASI;
(iii) The operations and business of DASI and each of
its Subsidiaries have been conducted in all respects
only in the ordinary course of business;
(iv) There has been no accepted purchase order or
quotation, arrangement, or understanding for future
sale of the products or services of DASI or any of its
Subsidiaries out of the ordinary course of business
which DASI or any of its Subsidiaries expects will not
be profitable; and
(v) Neither DASI nor any of its Subsidiaries has
suffered an extraordinary loss (whether or not covered
by insurance) or waived any right of substantial
value.
There is no fact, circumstance or event known to DASI or any of its Subsidiaries
which could have a Material Adverse Effect or in the future (as far as DASI and
each of its Subsidiaries can foresee) may have a Material Adverse Effect on
DASI or any of its Subsidiaries; provided, however, that DASI expresses no
opinion as to political, business or economic matters of general applicability.
3.3 Tax and Other Liabilities. Neither DASI nor any of its
Subsidiaries has any liability of any nature, accrued or contingent, including,
without limitation, liabilities for federal, state, local, or foreign taxes and
liabilities to customers or suppliers, other than the following:
(a) Liabilities for which full provision has been made on
the DASI Consolidated Last Balance Sheet; and
(b) Other liabilities arising since the DASI Consolidated
Last Balance Sheet Date and prior to the Closing in the ordinary course of
business which are not inconsistent with the representations and warranties of
DASI or any other provision of this Agreement.
Without limiting the generality of the foregoing, the amounts set forth as
provisions for taxes on the DASI Consolidated Last Balance Sheet are sufficient
for all accrued and unpaid taxes of DASI and its Subsidiaries, whether or not
due and payable and whether or not disputed, under tax laws, as in effect on the
DASI Consolidated Last Balance Sheet Date or now in effect, for the period ended
on such date and for all fiscal years prior thereto. Each of DASI and its
Subsidiaries has filed all applicable tax returns required to be filed by it or
has obtained applicable extensions and is not delinquent with respect to such
extensions; has paid (or has established on the DASI Consolidated Last Balance
Sheet a reserve for) all taxes, assessments, and other governmental charges
payable or remittable by it or levied upon it or its properties, assets, income,
or franchises, which are due and payable and has delivered to the Company a true
and correct copy of any report as to adjustments received by DASI or any of its
Subsidiaries from any taxing authority during the past five years and a
statement as to any litigation, governmental or other proceeding (formal or
informal), or investigation pending.
3.4 Litigation and Claims. Other than as set forth in its SEC
Documents filed on or before the date hereof, there is no litigation,
arbitration, claim, governmental or other proceeding (formal or informal), or
investigation pending, or to DASI's or any of its Subsidiaries' Knowledge
threatened (or any basis therefore known to DASI or any of its Subsidiaries)
with respect to DASI, or any of their business, properties or assets, or their
officers and directors as it relates to their business. Neither DASI nor any of
its Subsidiaries is affected by any present or threatened strike or other labor
disturbance nor to the Knowledge of DASI or any of its Subsidiaries is any union
attempting to represent any employee of DASI or any of its Subsidiaries as
collective bargaining agent. To its Knowledge, each of DASI and its Subsidiaries
is not in violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree, which is likely to cause a Material
Adverse Effect, nor is DASI or any of its Subsidiaries required to take any
action in order to avoid such violation or default.
3.5 Authority to Exchange. Each of DASI and the Sub has all
requisite organizational power and authority to execute, deliver, and perform
this Agreement. All necessary organizational proceedings of each of DASI and the
Sub have been duly taken to authorize the execution, delivery, and performance
of this Agreement by each of DASI and the Sub. Resolutions by the board of
directors of DASI and the board of managers of the Sub authorizing this
Agreement are attached hereto as Exhibit 3.5. This Agreement and all exhibits
hereto have been duly authorized, executed, and delivered by DASI and the Sub,
constitute the legal, valid, and binding obligation of each of DASI and the Sub
and are enforceable as to each of them in accordance with its terms. No consent,
authorization, approval, order, license, certificate, or permit of or from, or
declaration or filing with, any federal, state, local, or other governmental
authority or any court or other tribunal is required by DASI or any of its
Subsidiaries for the execution, delivery, or performance of this Agreement and
exhibits by DASI and the Sub. No consent of any party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to which
DASI or any of its Subsidiaries is a party, or to which it or any of its
properties or assets are subject, is required for the execution, delivery or
performance of this Agreement and exhibits; and, except where such breach would
not have a Material Adverse Effect, the execution, delivery, and performance of
this Agreement and exhibits will not violate, result in a breach of, conflict
with, or (with or without the giving of notice or the passage of time or both)
entitle any party to terminate or call a default under any term of any such
contract, agreement, instrument, lease, license, arrangement, or understanding,
or violate or result in a breach of any term of the certificate of incorporation
(or other charter document) or Bylaws or other organizational documents, as
amended, of DASI or any of its Subsidiaries, or violate, result in a breach of,
or conflict with any law, rule, regulation, order, judgment, or decree binding
on DASI or any of its Subsidiaries or to which DASI's or any of its
Subsidiaries' operations, business, properties, or assets are subject.
3.6 Completeness of Disclosure. No representation or warranty by
either DASI or the Sub in this Agreement contains or on the date of the Closing
will contain any untrue statement of a material fact or omits or on the Closing
Date will omit to state a material fact necessary to make the statements made
not misleading, except for changes beyond the control of DASI or unless
disclosed by DASI prior to Closing. No event or circumstance has occurred or
information exists with respect to DASI or any of its Subsidiaries or its or
their business, properties, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by DASI but which has not been so publicly announced or disclosed (assuming for
this purpose that DASI's reports filed under the 1934 Act are being incorporated
into an effective registration statement filed by DASI under the Act).
3.7 General Solicitation.
(a) Neither DASI, nor any of its affiliates, nor any
person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) in connection with the offer or sale of any of the DASI Common Stock to
be issued pursuant to this Agreement (the "DASI Merger Shares").
(b) Neither DASI, nor any of its affiliates, nor any
person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of any of the DASI Merger
Shares, under the Act or cause the offering of any of the DASI Merger Shares to
be integrated with prior offerings by DASI for purposes of the Act or any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of the American Stock Exchange ("AMEX").
3.8 Issuance. The DASI Merger Shares are duly authorized and, upon
issuance in accordance with the terms hereof and the Option, as the case may be,
shall be validly issued, fully paid and non-assessable, free from all taxes,
liens and charges with respect to the issue thereof, and shall not be subject to
preemptive rights or other similar rights of stockholders of DASI.
3.9 Listing. Upon consummation of the transactions set forth in
this Agreement, DASI will not be in violation of the listing requirements of the
AMEX and does not reasonably anticipate that the DASI Common Stock will be
delisted by AMEX in the foreseeable future. Neither DASI nor any of its
Subsidiaries is aware of any facts or circumstances which might give rise to any
of the foregoing.
3.10 DASI Capitalization. As of the date hereof, the total number of
shares of capital stock DASI is authorized to issue is 50,000,000. As of the
date hereof, 25,341,486 are issued and outstanding. The DASI Common Stock is
not owned or held in violation of any preemptive right of any other person or
entity. The DASI Common Stock is held free and clear of all liens, security
interests, pledges, charges, encumbrances, voting agreements, and voting trusts.
Except as set forth in Exhibit 3.10, there is no commitment, plan, or
arrangement to issue, and no outstanding option, warrant, or other right calling
for the issuance of, any shares of capital stock of DASI or any security or
other instrument convertible into, exercisable for, or exchangeable for capital
stock of
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DASI. There is outstanding no right, security or other instrument convertible
into or exchangeable for capital stock of DASI.
SECTION IV.
DEFINITIONS
The following additional definitions shall apply in this Agreement:
4.1 "Intellectual Property" means all (a) patents, patent
applications, patent disclosures, and improvements thereto, (b) trademarks,
service marks, trade dress, logos, trade names, and corporate and company names
and registrations and applications for registration thereof, (c) copyrights and
registrations and applications for registration thereof, (d) computer software,
data, code sources and documentation, and improvements thereto, (e) trade
secrets and confidential business information (including ideas, formulas,
compositions, inventions whether patentable or unpatentable and whether or not
reduced to practice, know-how, processes and techniques, plans, proposals,
technical data, copyrightable works, financial, marketing, and business data,
pricing and cost information, business and marketing plans, and customer and
supplier lists and information), (f) other proprietary rights, and (g) copies
and tangible embodiments thereof (in whatever form or medium).
4.2 "Knowledge" means actual knowledge after reasonable
investigation.
4.3 "Material Adverse Effect" means a material adverse effect on the
business, property, financial condition or results of operations taken as a
whole.
4.4 "Operating Licenses" means those licenses, permits and
registrations issued by the appropriate state and federal agencies which are
necessary to the operation of Company's business. Such Operating Licenses are
more fully described in Exhibit 2.14 hereto.
4.5 "Permitted Liens" means (i) liens, charges or encumbrances
disclosed in the financial statements referred to in Section 2.3 hereof,
including the notes thereto, if any, (ii) liens, charges or encumbrances for
current taxes not yet due and payable or which may hereafter be paid without
penalty, (iii) liens, charges, encumbrances or security interests pursuant to
Exhibit 2.3, (iv) zoning, building and other similar governmental restrictions
and liens, charges or encumbrances imposed by operation of law (including
without limitation mechanics', carriers', workmen's, repairmen's, landlord's or
other similar liens arising from or incurred in the ordinary course of business
and for which the underlying payments are not yet delinquent), and liens arising
under equipment leases with third parties entered into in the ordinary course of
business, (v) easements, covenants, encroachments, rights-of-way or other
similar restrictions and imperfections of title (none of which items referred to
in the foregoing clauses (iv) and (v) materially impairs the use or value of the
property subject thereto in the business of the Company as presently conducted),
and (vi) any other liens, charges or encumbrances that would not have a Material
Adverse Effect on the Company.
4.6 "Person" means any individual, corporation, partnership, limited
liability company or entity of any kind.
4.7 "Subsidiary" means, when used with reference to any entity, any
other entity in which at least fifty percent (50%) of the outstanding voting
securities or interests (including membership interests) are owned directly or
indirectly, but shall specifically exclude Loch Energy, Inc.
SECTION V
CONDITIONS TO OBLIGATIONS OF DASI
The obligations of DASI under this Agreement are subject, at the
option of DASI, to the following conditions:
5.1 Accuracy of Representations and Compliance With Conditions. All
representations and warranties of Company and the Stockholders contained in this
Agreement shall be accurate when made and, in
12
addition, shall be accurate in all material respects as of the Closing as though
such representations and warranties were then made by Company or such
Stockholders , except for representations and warranties that speak as of a
specific date or time other than the date of Closing, (which need only be true
and correct in all material respects as of such date or time). As of the
Closing, the Company and the Stockholders shall have performed and complied
with, in all material respects, all covenants and agreements, and satisfied in
all material respects, all conditions required to be performed and complied with
by any of them at or before such time by this Agreement.
5.2 Other Closing Documents. Company and the Stockholders shall
have delivered to DASI at or prior to the Closing such other documents as DASI
may reasonably request in order to effect the consummation of the transactions
contemplated hereby.
5.3 Legal Action. There shall not have been instituted or
threatened any legal proceeding seeking to prohibit or otherwise challenging the
consummation of, the transactions contemplated by this Agreement , excluding any
such legal proceeding instituted by DASI or any affiliate thereof.
5.4 No Governmental Action. There shall not have been any action
taken, or any law, rule, regulation, order, or decree proposed, promulgated,
enacted, entered, enforced, or deemed applicable to the transactions
contemplated by this Agreement by any federal, state, local, or other
governmental authority or by any court or other tribunal, including the entry of
a preliminary or permanent injunction, which:
(a) Makes any of the transactions contemplated by this
Agreement illegal; or
(b) Otherwise prohibits, restricts, or delays consummation
of any of the transactions contemplated by this Agreement.
5.5 Contractual Consents Needed. The parties to this Agreement shall
have obtained at or prior to the Closing all consents required for the
consummation of the transactions contemplated by this Agreement from any party
to any contract, agreement, instrument, lease, license, arrangement, or
understanding to which any of them or any subsidiary is a party, or to which any
of their respective businesses, properties, or assets are subject, except where
the failure would not have a Material Adverse Effect.
5.6 Other Agreements. Those agreements set forth on Exhibit 5.6 to
this Agreement shall have been duly authorized, executed, and delivered by the
parties thereto at or prior to the Closing, shall be in full force and effect,
valid and binding upon the parties thereto, and enforceable by them in
accordance with their terms at the Closing, and no party thereto at any time
from the execution thereof until immediately after the Closing shall have been
in violation of or in default in complying with any material provision thereof.
5.7 Opinion of Counsel. DASI shall have received the opinion of
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP, special counsel to the Company, dated the Closing Date
and addressed to DASI, in form and substance reasonably satisfactory to DASI and
its counsel.
SECTION VI.
CONDITIONS TO OBLIGATIONS OF
COMPANY AND THE STOCKHOLDERS
The obligations of Company and the Stockholders under this Agreement
are subject, at the option of Company and the Stockholders, to the following
conditions:
6.1 Accuracy of Representations and Compliance With Conditions. All
representations and warranties of DASI contained in this Agreement shall be
accurate when made and shall be accurate as of the Closing as though such
representations and warranties were then made by DASI. As of the Closing, DASI
shall have performed and complied with all covenants and agreements and
satisfied all conditions required to be performed and complied with by any of
them at or before such time by this Agreement.
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6.2 Legal Action. There shall not have been instituted or
threatened any legal proceeding relating to, or seeking to prohibit or otherwise
challenging the consummation of, the transactions contemplated by this Agreement
or related agreements set forth as an exhibit hereto, or to obtain substantial
damages with respect thereto.
6.3 No Governmental Action. There shall not have been any action
taken, or any law, rule, regulation, order, or decree proposed, promulgated,
enacted, entered, enforced, or deemed applicable to the transactions
contemplated by this Agreement by any federal, state, local, or other
governmental authority or by any court or other tribunal, including the entry of
a preliminary or permanent injunction, which, in the reasonable judgment of
Company:
(a) Makes any of the transactions contemplated by this
Agreement illegal;
(b) Requires the divestiture by the Stockholders of a
material portion of the business of Company taken as a whole; or
(c) Otherwise prohibits, restricts, or delays consummation
of any of the transactions contemplated by this Agreement.
6.4 Opinion of Counsel. The Company and the Stockholders shall have
received the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C., special counsel to DASI and
the Sub, dated the Closing Date and addressed to the Company and the
Stockholders, in form and substance reasonably satisfactory to the Company, the
Stockholders and their counsel.
6.5 Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved in the manner required by
applicable law by the stockholders of the Company and the Sub.
6.6 Regulatory Approval. Any waiting period applicable to the
Merger under the HSR Act shall have terminated or expired, and any other United
States or foreign governmental or regulatory notices or approvals which to the
Knowledge of DASI are required with respect to the transactions shall have been
either filed or received.
6.7 Listing. The DASI Common Stock issuable to the Stockholders
pursuant to this Agreement and the Option Shares to be reserved for issuance
upon the exercise of the Options shall have been authorized for listing on AMEX,
subject only to official notice of issuance.
6.8 Non-Competition, Non-Solicitation and Employment Agreement. On
or before Closing, non-competition, non-solicitation and employment agreements
substantially in the form attached hereto as Exhibit 6.8 shall be executed.
6.9 D&O Insurance. DASI/Sub shall have arranged for directors' and
officers' liability insurance to be in place at the Effective Time on terms and
conditions satisfactory to the Company and the Stockholders.
6.10 Other Closing Documents. DASI and the Sub shall have delivered
to the Company and the Stockholders at or prior to the Closing such other
documents as the Company or the Stockholders may reasonably request in order to
effect the consummation of the transactions contemplated hereby.
6.11 Contractual Consents Needed. The parties to this Agreement
shall have obtained at or prior to the Closing all consents required for the
consummation of the transactions contemplated by this Agreement from any party
to any contract, agreement, instrument, lease, license, arrangement, or
understanding to which any of them or any subsidiary is a party, or to which any
of their respective businesses, properties, or assets are subject, except where
the failure would not have a Material Adverse Effect.
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6.12 Other Agreements. Those agreements set forth on Exhibit 6.13 to
this Agreement shall have been duly authorized, executed, and delivered by the
parties thereto at or prior to the Closing, shall be in full force and effect,
valid and binding upon the parties thereto, and enforceable by them in
accordance with their terms at the Closing, and no party thereto at any time
from the execution thereof until immediately after the Closing shall have been
in material violation of or in material default in complying with any material
provision thereof.
SECTION VII.
COVENANTS AND AGREEMENTS OF
COMPANY AND THE STOCKHOLDERS
Company and the Stockholders covenant and agree as follows:
7.1 Public Statements. Before Company or any Stockholders shall
release any information concerning this Agreement or the transactions
contemplated by this Agreement which is intended for or may result in public
dissemination thereof, they shall cooperate with DASI, shall furnish drafts of
all documents or proposed oral statements to DASI for comments, and shall not
release any such information without the written consent of DASI, such consent
not to be reasonably withheld. Nothing contained herein shall prevent Company
or any Stockholders from furnishing any information to any governmental
authority if required to do so by law.
7.2 Consents Without any Condition. Company and the Stockholders
shall not make any agreement or understanding with a third party not in the
ordinary course of business without approval in writing by DASI.
7.3 Access. Upon reasonable written notice to the Company by DASI,
the Company will afford, and the Stockholders will cause Company to afford the
officers, counsel, agents, investment bankers, accountants, and other authorized
representatives of DASI, such access during normal business hours throughout
the period prior to the Effective Time, to the properties, books, and records of
Company. During such period, DASI will be entitled to make extracts from and
copies of such books and records; and the Company will from time to time furnish
DASI with such additional financial and operating data and other information as
to the financial condition, results of operations, business, properties, assets
or liabilities of the Company as DASI from time to time may reasonably request.
Company and the Stockholders will also cause the public accountants of Company
to make available to DASI and its public accountants the work papers relating to
the audits, if any, of Company.
7.4 Conduct of Business. The Company will, and the Stockholders will
cause Company to, conduct its affairs so that at the Closing, no representation
or warranty of Company or any Stockholder will be inaccurate in any material
respect, no covenant or agreement of Company or any Stockholder will be breached
in any material respect, and no condition in this Agreement will remain
materially unfulfilled by reason of the actions or omissions of Company or any
Stockholder.
7.5 Notice of Changes. Until the Closing or the earlier rightful
termination of this Agreement, Company and the Stockholders will immediately
advise DASI in a detailed written notice of any fact or occurrence or any
pending or threatened occurrence of which any of them obtains Knowledge and
which (if existing and known at the date of the execution of this Agreement)
would have been required to be set forth or disclosed in or pursuant to this
Agreement or an exhibit hereto, which (if existing and known at any time prior
to or at the Closing) would make the performance by any party of a covenant
contained in this Agreement impossible or make such performance materially more
difficult than in the absence of such fact or occurrence, or which (if existing
and known at the time of the Closing) would cause a condition to any party's
obligations under this Agreement not to be fully satisfied.
7.6 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, the Company agrees to use its reasonable best efforts in good
faith to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or desirable, or advisable under applicable
laws (including without limitation, obtaining any necessary stockholder,
governmental and third party approval), so as to permit consummation of the
Merger as promptly as practicable and otherwise to enable consummation of the
transactions contemplated hereby and shall cooperate fully with DASI to that
end.
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SECTION VIII.
COVENANTS AND AGREEMENTS OF DASI AND THE SUB
Each of DASI and the Sub covenants and agrees as follows:
8.1 Public Statements. Before DASI or the Sub shall release any
information concerning this Agreement or the transactions contemplated by this
Agreement which is intended for or may result in public dissemination thereof,
it shall cooperate with Company, shall furnish drafts of all documents or
proposed oral statements to Company for comments, and shall not release any such
information without the written consent of Company, such consent not to be
reasonably withheld. Nothing contained herein shall prevent DASI or the Sub
from furnishing any information to any governmental authority if required to do
so by law.
8.2 Consents Without any Condition. Neither DASI nor the Sub shall
make any agreement or understanding with a third party not in the ordinary
course of business not approved in writing by Company as a condition for
obtaining any consent, authorization, approval, order, license, certificate, or
permit required for the consummation of the transactions contemplated by this
Agreement.
8.3 Conduct of Business. Each of DASI and the Sub will conduct its
affairs so that at the Closing no representation or warranty of DASI or the Sub
will be inaccurate in any material respect, no covenant or agreement of DASI or
the Sub will be breached in any material respect, and no condition in this
Agreement will remain materially unfulfilled by reason of the actions or
omissions of DASI or the Sub.
8.4 Notice of Changes. Until the Closing or the earlier rightful
termination of this Agreement, DASI will immediately advise Company in a
detailed written notice of any fact or occurrence or any pending or threatened
occurrence of which it obtains Knowledge and which (if existing and known at the
date of the execution of this Agreement) would have been required to be set
forth or disclosed in or pursuant to this Agreement or an exhibit hereto, which
(if existing and known at any time prior to or at the Closing) would make the
performance by any party of a covenant contained in this Agreement impossible or
make such performance materially more difficult than in the absence of such fact
or occurrence, or which (if existing and known at the time of the Closing) would
cause a condition to any party's obligations under this Agreement not to be
fully satisfied.
8.5 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of DASI and the Sub agree to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws (including without limitation, obtaining any necessary
stockholder, governmental and third party approval), so as to permit
consummation of the Merger as promptly as practicable and otherwise to enable
consummation of the transactions contemplated hereby and shall cooperate fully
with the Company to that end.
8.6 Information. Each of DASI and the Sub agrees that it will not,
and will cause it representatives not to, use any information obtained pursuant
to this Agreement (including without limitation, Section 7.3 hereof), as well as
any other information obtained prior to the date hereof in connection with its
consideration of the transactions contemplated hereby and the entering into of
this Agreement, for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. Each of DASI and the Sub shall keep
confidential, and shall cause it s representatives to keep confidential, all
information and documents obtained pursuant to this Agreement (including without
limitation, Section 7.3 hereof), as well as any other information obtained prior
to the date hereof in connection with its consideration of the transactions
contemplated hereby and the entering into of this Agreement, unless such
information (i) was already known to DASI or the Sub, (ii) is disclosed with the
prior written approval of the party to which such information pertains, (iii) is
already present in the public domain, or (iv) is required to be disclosed by
law. In the event that this Agreement is terminated or the transactions
contemplated hereby shall otherwise fail to be consummated, DASI and the Sub
shall promptly cause all copies of documents or extracts thereof containing
information and data as to the Company to be returned to the Company.
8.7 Filings. DASI agrees to file all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the 1934 Act. The financial statements of DASI
and its Subsidiaries will be prepared in accordance with generally accepted
accounting principles, consistently applied, and will fairly present in all
material respects the consolidated financial position of
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DASI and its Subsidiaries and results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
SECTION IX.
MISCELLANEOUS
9.1 Brokerage and Other Fees. The Parties agree that there are no
brokerage arrangements or fee obligations, in writing or otherwise, with respect
to the transactions set forth in this Agreement. Each party shall be
responsible for the fees of their respective professionals (including, without
limitation, legal and accounting fees) engaged to assist in the preparation,
negotiation and counseling with respect, and relating, to this Agreement and
consummation of the transactions contemplated herein, as well as their
respective out-of-pocket expenses, except DASI agrees to pay for the preparation
of the necessary transfer documents to accomplish the Merger herein.
9.2 Further Actions. At any time and from time to time, Parties
agree, at their expense, to take such actions and to execute and deliver such
documents as may be reasonably necessary to effectuate the purposes of this
Agreement.
9.3 Availability of Equitable Remedies. Since a breach of the
provisions of this Agreement could not adequately be compensated by money
damages, the Parties shall be entitled before, and only before, Closing, in
addition to any other right or remedy available to them, to an injunction
restraining such breach or a threatened breach and to specific performance of
any such provision of this Agreement; and in either case, no bond or other
security shall be required in connection therewith, and Parties hereby consent
to the issuance of such an injunction and to the ordering of specific
performance.
9.4 Survival. All statements contained in any certificate or other
instrument delivered by or on behalf of either Company or the Stockholders
pursuant to this Agreement or in connection with the exchange contemplated
hereby shall be deemed joint and several representations and warranties by
Company and the Stockholders. All covenants, agreements, representations, and
warranties made by Company, the Stockholders and DASI contained in or made
pursuant to this Agreement shall survive until November 30, 2000, irrespective
of any investigation made by or on behalf of any party (the "Survival Date"). No
claim for indemnification may be brought pursuant to this Section 9.4 unless
asserted by written notice provided herein by the party claiming indemnification
on or before the Survival Date.
9.5 Modification. The Agreement and the exhibits hereto set forth
the entire understanding of the parties with respect to the subject matter
hereof supersede all existing agreements among them concerning such subject
matter, and may be modified only by a written instrument duly executed by the
Parties.
9.6 Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
given if personally delivered, or if telecopied, provided that such facsimile
transmission is confirmed within one (1) business day thereafter by U.S. mail in
accordance with this Section 9.6, or if sent by national overnight delivery
service or mailed, first class, registered or certified mail, postage prepaid to
the following:
If to DASI or the Sub
With a copy to:
If to the Company or
a Stockholder to: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
or to such other address as shall be given in writing by any party to the
others. If sent by U.S. mail in accordance with this Section 9.6, such notices
shall be deemed given and received on the earlier to occur of (a) actual
receipt at the above specified address of the mailed addressee, or (b) the third
(3rd) business day after deposit with the U.S. Postal Service in the manner
herein provided or (c) the business day of the successful transmission of such
telecopy or delivery by national overnight service. Notices delivered by any
other means shall be deemed given and received upon actual receipt of the above-
specified address of the addressee.
9.7 Waiver. Any waiver by any party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of that provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term
of this Agreement on one or more occasions will not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing
and, in the case of a corporate party, be authorized by a resolution of the
Board of Directors or by an officer of the waiving party.
9.8 Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of each party's respective successors,
assigns, heirs, and personal representatives.
9.9 No Third-Party Beneficiaries. This Agreement does not create,
and shall not be construed as creating, any rights enforceable by any person not
a party to this Agreement.
9.10 Severability. If any provision of this Agreement is invalid,
illegal, or unenforceable, the balance of this Agreement shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
9.11 Headings. The headings of this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
9.12 Counterparts, Governing Law. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. It shall be
governed by and construed in accordance with the laws of the State of Texas
without giving effect to conflict of laws.
9.13 Indemnification Procedures. Promptly after receipt by DASI, on
the one hand, or Stockholders on the other hand (in any such case, the
"Indemnitee"), of notice of any action, suit, proceeding, audit, claim or
potential claim (any of which is hereinafter individually referred to as a
"Circumstance"), which could give rise to a right to indemnification for damages
pursuant to Section 9.13, the Indemnitee shall give the party who may become
obligated to provide indemnification hereunder (the "Indemnitor") written notice
describing the Circumstance in reasonable detail; provided, that failure of an
Indemnitee to give such notice to the Indemnitor shall not relieve the
Indemnitor from any of its indemnification obligations hereunder unless (and
then only to the extent) that the failure to give such notice prejudices the
defense of the Circumstance by the Indemnitee. Such Indemnitor shall have the
right, at its option and upon its acknowledgment to the Indemnitee of
Indemnitor's liability to indemnify Indemnitee in respect of such asserted
liability, to compromise or defend, at its own expense and by its own counsel,
any such matter involving the asserted liability of the Indemnitee; provided,
that any such compromise (i) shall include as a unconditional term thereof the
giving by the claimant or the plaintiff to such Indemnitee of a release from all
liability in respect of such claim and (ii) shall not result in the imposition
on the Indemnitee of any remedy other than monetary damages to be paid in full
by the Indemnitor pursuant to this Section 9.13. If any Indemnitor shall
undertake to compromise or defend any such asserted liability, it shall promptly
notify the Indemnitee of its intention to do so, and the Indemnitee agrees to,
and to cause its own independent counsel to, cooperate fully with the Indemnitor
and its counsel in the compromise of, or defense against, any such asserted
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liability. All reasonable out-of-pocket costs and expenses incurred by the
Indemnitee in connection with such cooperation (including, without limitation,
the reasonable fees and expenses of the Indemnitee's own independent counsel)
shall be borne by the Indemnitor. In any event, the Indemnitee shall have the
right to participate with its own counsel (the reasonable fees and expenses of
which will be borne by Indemnitor) in the defense of such asserted liability;
provided that if with respect to a Circumstance, Indemnitor shall have
acknowledged Indemnitor's liability to indemnify Indemnitee if and to the extent
of any loss arising out of such Circumstance and Indemnitor shall be diligently
defending such matter, Indemnitor shall not be obligated to indemnify Indemnitee
for the cost of Indemnitee's participation in such defense, including
Indemnitee's attorney's fees. Under no circumstances shall the Indemnitee
compromise any such asserted liability without the written consent of the
Indemnitor (which consent shall not be unreasonably withheld), unless the
Indemnitor shall have failed or refused to undertake the defense of any such
asserted liability after a reasonable period of time has elapsed following the
notice of a Circumstance received by such Indemnitor pursuant to this Section
9.14.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement
effective as of the date written in the preamble of this Agreement.
DESIGN AUTOMATION SYSTEMS, INC.
By:______________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
SUB: EACQ, LLC
By:______________________________________
Name:
Title: President
COMPANY: THE GROWTH STRATEGY GROUP, INC.
By:______________________________________
Name:
Title: President
Address:_________________________________
STOCKHOLDERS:
_________________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇
Address:_________________________________
_________________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
Address:_________________________________
_________________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address:_________________________________
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