AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of June 19,
2000 (the "Agreement"), among SAN Holdings, Inc., a corporation organized and
existing under the laws of the State of Colorado ("Parent"), Value Tech
Acquisition Corporation, a corporation organized and existing under the laws
of the State of Colorado ("Merger Sub") and a direct wholly owned subsidiary
of Parent, and Value Technology, Inc., a corporation organized and existing
under the laws of the State of Colorado (the "Company");
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent, Merger Sub and the Company
have each determined that it is consistent with and in furtherance of their
respective long-term business strategies and fair to and in the best interests
of their respective stockholders to combine the respective businesses of
Parent and the Company by means of a merger (the "Merger") of Merger Sub with
and into the Company upon the terms and subject to the conditions set forth
herein and in accordance with the Colorado Business Corporation Act (the
"Colorado Corporation Law"); and
WHEREAS, for United States Federal income tax purposes, it is intended
that the Merger qualify as a tax-free reorganization under the provisions of
Section 368 of the Internal Revenue Code of 1986, as amended (together with
the rules and regulations promulgated thereunder, the "Code");
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Colorado Corporation Law,
at the Effective Time, Merger Sub shall be merged with and into the Company.
As a result of the Merger, the separate corporate existence of Merger Sub
shall cease and the Company shall continue as the surviving corporation of the
Merger (the "Surviving Corporation").
1.2 Closing. Unless this Agreement shall have been terminated and
the Merger shall have been abandoned pursuant to Section 7.1 and subject to
the satisfaction or waiver of the conditions set forth in Article VI, the
consummation of the Merger shall take place as promptly as practicable (and in
any event within three business days) after satisfaction or waiver of the
conditions set forth in Article VII, at a closing (the "Closing") to be held
at the offices of Xxxx Xxxxx Xxxxxxxx & Xxxxxx, P.C., 000 00xx Xxxxxx, Xxxxx
0000 Xxxxx, Xxxxxx, Xxxxxxxx 00000, unless another date, time or place is
agreed to by the Company and Parent.
1.3 Effective Time. At the time of the Closing, the parties shall
cause the Merger to be consummated by filing articles of merger (the "Articles
of Merger") with the Secretary of State of the State of Colorado in such form
as required by, and executed in accordance with the relevant provisions of,
the Colorado Corporation Law (the date and time of such filing, or such later
time as may be agreed by the parties hereto and specified in the Articles of
Merger, being the "Effective Time").
1.4 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the Colorado
Corporation Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, except as otherwise provided herein, all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation, and the Parent shall own all of the
issued and outstanding stock of the Surviving Corporation and shall have full
legal control over the Surviving Corporation.
1.5 Articles of Incorporation; Bylaws; Directors and Officers of
Surviving Corporation. Unless otherwise agreed by the Company and Parent
prior to the Effective Time, at the Effective Time:
(a) the articles of incorporation and bylaws of the Company,
as in effect immediately prior to the Effective Time, shall be the articles of
incorporation and bylaws of the Surviving Corporation until thereafter amended
as provided by any applicable law, rule or regulation (collectively, "Law")
and such articles of incorporation or bylaws;
(b) the officers of Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation
until their successors are elected or appointed and qualified or until their
resignation or removal; and
(c) the directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation.
ARTICLE II
CONVERSION OF SECURITIES;
EXCHANGE OF CERTIFICATES; CASH PAYMENT
2.1 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Merger Sub, the Company or
the holders of any capital stock of the Company:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any Dissenting Shares) and
all rights in respect thereof shall forthwith cease to exist and shall be
converted into and become exchangeable for 100.05 shares (the "Common Exchange
Ratio") of Parent Common Stock.
(b) Each share of common stock, no par value, of Merger Sub
issued and outstanding immediately prior to the Effective Time and all rights
in respect thereof shall forthwith cease to exist and shall be converted into
and become exchangeable for one newly and validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
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2.2 Exchange of Shares. Subject to the terms and conditions hereof,
at or prior to the Effective Time, Parent shall appoint an exchange agent to
effect the exchange of shares of Company Common Stock (other than Dissenting
Shares) for Parent Common Stock in accordance with the provisions of this
Article II (the "Exchange Agent"). From time to time after the Effective
Time, Parent shall deposit, or cause to be deposited, certificates
representing Parent Common Stock for conversion of shares of Company Common
Stock (other than Dissenting Shares) in accordance with the provisions of
Section 2.1 (such certificates being herein referred to as the "Exchange
Fund"); provided, however, that all certificates representing Parent Common
Stock to be issued pursuant to Section 2.1(a) shall be deposited within ten
(10) Business Days following the Effective Time. Commencing immediately after
the Effective Time and until the appointment of the Exchange Agent shall be
terminated, each holder of a certificate or certificates theretofore
representing shares of Company Common Stock (other than Dissenting Shares) may
surrender the same to the Exchange Agent and, after the appointment of the
Exchange Agent shall be terminated, any such holder may surrender any such
certificate to Parent. Such holder shall be entitled upon such surrender to
receive in exchange therefor a certificate or certificates representing the
number of full shares of Parent Common Stock into which the shares of Company
Common Stock theretofore represented by the certificate or certificates so
surrendered shall have been converted in accordance with the provisions of
Section 2.1, and all such shares of Parent Common Stock shall be deemed to
have been issued at the Effective Time. Until so surrendered and exchanged,
each outstanding certificate which, prior to the Effective Time, represented
issued and outstanding shares of Company Common Stock shall be deemed for all
corporate purposes of Parent to evidence ownership of the number of full
shares of Parent Common Stock into which the shares of Company Common Stock
theretofore represented thereby shall have been converted at the Effective
Time. Notwithstanding the foregoing provisions of this Section 2.2, risk of
loss and title to such certificates representing shares of Company Common
Stock shall pass only upon proper delivery of such certificates to the
Exchange Agent, and neither the Exchange Agent nor any party hereto shall be
liable to a holder of shares of Company Common Stock for any Parent Common
Stock or dividends or distributions thereon delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law or to a
transferee pursuant to Section 2.2.
2.3 Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company with respect to shares of Company Common Stock shall be
closed, and there shall be no further registration of transfers of shares of
Company Common Stock thereafter on the records of any such stock transfer
books. In the event of a transfer of ownership of shares of Company Common
Stock that is not registered in the stock transfer records of the Company, at
the Effective Time, a certificate or certificates representing the number of
full shares of Parent Common Stock into which such shares of Company Common
Stock shall have been converted shall be issued to the transferee in
accordance with Section 2.2, if the certificate or certificates representing
such shares of Company Common Stock is or are surrendered as provided in
Section 2.2, accompanied by all documents required to evidence and effect such
transfer and by evidence of payment of any applicable stock transfer tax.
2.4 No Fractional Share Certificates. Unless Parent otherwise
determines, no scrip or fractional share certificates for Parent Common Stock
shall be issued upon the surrender for exchange of certificates evidencing
shares of Company Common Stock. In lieu of fractional shares, each holder of
shares of Company Common Stock who would be entitled to receive a fractional
share of Parent Common Stock shall, upon surrender of the certificate or
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certificates representing shares of Company Common Stock, be entitled to
receive one full share of Parent Common Stock for any fractional share
interest.
2.5 Dissenting Shares. Notwithstanding any provision of Section 2.1
hereof to the contrary, shares of Company Common Stock which are held by
holders of such shares who have not voted in favor of the Merger, who are
entitled to dissent and who have delivered a written notice of intent to
demand payment for such shares in the manner provided in Section 0-000-000 of
the Colorado Corporation Law ("Dissenting Shares"), shall not be converted
into or exchanged for or represent the right to receive any shares of Parent
Common Stock, unless such holder fails to perfect or effectively withdraws or
loses such rights to payment. If, after the Effective Time, such holder fails
to perfect or effectively withdraws or loses such right to payment, then such
Dissenting Shares shall thereupon be deemed to have been converted into and
exchanged pursuant to Section 2.1 hereof, as of the Effective Time, for the
right to receive shares of Parent Common Stock issued in the Merger to which
the holder of such shares of Company Common Stock is entitled, without any
interest thereon. The Company shall give Parent prompt notice of any notices
and demands received by the Company for payment for shares of Company Common
Stock, and Parent shall have the right to participate in all negotiations and
proceedings with respect to such notices and demands. The Company shall not,
except with the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands. Prior to the Effective
Time, the Company shall establish an escrow account with a financial
institution and the Company shall fund such escrow account with cash or cash
equivalents in an amount sufficient to make all payments to holders of
Dissenting Shares. Such escrow account shall survive the Merger. All payments
to holders of Dissenting Shares shall be made out of such escrow account, and
no such payments shall be made or otherwise funded by Parent.
2.6 Protection Against Dilution as to Common Exchange Ratio. In the
event that Parent subdivides or consolidates the Parent Common Stock or
declares a Common Stock dividend with respect to the Parent Common Stock or
recapitalizes or reclassifies its shares of Common Stock subsequent to the
execution of this Agreement and effective prior to the Closing Date, the
Common Exchange Ratio and type of security shall be proportionately adjusted.
2.7 Cash Payment. At the Closing Parent shall deliver checks
totaling $113,100 to the Company's shareholders with the amounts of the checks
to be pro-rata based on the shareholders percentage ownership of the Company.
2.8 Price Protection. In the event that the average closing bid
price of the Parent's Common Stock is less than $15.00 anytime during the 20
days prior to December 31, 2000, the Parent agrees to issue to the Company's
shareholders a total of 25,015 shares of the Parent's Common Stock and the
Parent shall simultaneously issue 2,875 shares to Xxxx Xxxxxx and 860 shares
to Xxxx Xxxxxxx as additional compensation to them. In the event of a stock
split or other transaction described in Section 2.6 before December 31, 2000,
these numbers shall be adjusted accordingly.
2.9 Further Assurances. Parent agrees that if, at any time after the
Effective Time, the Company considers or is advised that any further deeds,
assignments or assurances are reasonably necessary or desirable to be obtained
from Parent or its officers or directors, to consummate the Merger or to carry
out the purposes of this Agreement at or after the Effective Time, then the
Company, Parent and their respective officers and directors may executed and
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deliver all such proper deeds, assignments and assurances and do all other
things necessary or desirable to consummate the Merger and to carry out the
purposes of this Agreement, in the name of Parent or otherwise.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in Schedule 3 which is attached hereto and
incorporated herein by reference, the Company hereby represents and warrants
to Parent and Merger Sub that:
3.1 Organization. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of Colorado, has all
necessary corporate powers to own its properties and to carry on its business
as now owned and operated by it, and is duly qualified to do business and is
in good standing in each of the jurisdictions where its business makes such
qualification necessary, except for such failures to be so qualified and in
good standing that could not reasonably be expected to have, individually or
in the aggregate, a material adverse effect.
3.2 Capital. The authorized capital stock of the Company consists of
10,000 shares of common stock, no par value, of which 1,000 are currently
issued and outstanding. All of the issued and outstanding shares of common
stock of the Company are duly authorized, validly issued, fully paid, and
nonassessable. There are no outstanding subscriptions, options, rights,
warrants, debentures, instruments, convertible securities, or other agreements
or commitments obligating the Company to issue or to transfer from treasury
any additional shares of its capital stock of any class.
3.3 Subsidiaries. The Company does not have any subsidiaries or own
any interest in any other enterprise (whether or not such enterprise is a
corporation).
3.4 Directors and Officers. Schedule 3 contains the names and titles
of all directors and officers of the Company as of the date of this Agreement.
3.5 Financial Statements. The Company has delivered to Parent
unaudited balance sheets and statements of operations for the year ended
December 31, 1999, and for the three months ended March 31, 2000 (the
"Financial Statements"). The Financial Statements are complete and correct in
all material respects and have been prepared on a consistent basis throughout
the periods indicated. The Financial Statements accurately set out and
describe the financial condition of the Company as of March 31, 2000. The
Company believes that its financial statements will be able to be audited in
accordance with Regulation S-B adopted under the Act.
3.6 Absence of Changes. Since March 31, 2000, except for changes in
the ordinary course of business which have not in the aggregate been
materially adverse, to the best of the Company's knowledge, the Company has
conducted its business only in the ordinary course and has not experienced or
suffered any material adverse change in the condition (financial or
otherwise), results of operations, properties, business or prospects of the
Company or waived or surrendered any claim or right of material value.
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3.7 Absence of Undisclosed Liabilities. Neither the Company nor any
of its properties or assets are subject to any material liabilities or
obligations of any nature, whether absolute, accrued, contingent or otherwise
and whether due or to become due, that are not reflected in the financial
statements presented to Parent.
3.8 Tax Returns. Within the times and in the manner prescribed by
law, the Company has filed all federal, state and local tax returns required
by law, or has filed extensions which have not yet expired, and the Company
believes that it has paid all taxes, assessments and penalties due and
payable.
3.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, Parent
and/or its attorneys shall have the opportunity to meet with accountants and
attorneys to discuss the financial condition of the Company. The Company
shall make available to Parent and/or its attorneys all books and records of
the Company.
3.10 Trade Names and Rights. The Company does not use any trademark,
service xxxx, trade name, or copyright in its business, or own any trademarks,
trademark registrations or applications, trade names, service marks,
copyrights, copyright registrations or applications.
3.11 Compliance with Laws. To the best of the Company's knowledge,
the Company has complied with, and is not in violation of, applicable federal,
state or local statutes, laws and regulations (including, without limitation,
any applicable building, zoning or other law, ordinance or regulation)
affecting its properties or the operation of its business, except for matters
which would not have a material affect on the Company or its properties.
3.12 Litigation. The Company is not a party to any suit, action,
arbitration or legal, administrative or other proceeding, or governmental
investigation pending or, to the best knowledge of the Company, threatened
against or affecting the Company or its business, assets or financial
condition, except for matters which would not have a material affect on the
Company or its properties. The Company is not in default with respect to any
order, writ, injunction or decree of any federal, state, local or foreign
court, department, agency or instrumentality applicable to it.
3.13 Authority. The Company has full corporate power and authority
to enter into this Agreement. The board of directors of the Company has taken
all action required to authorize the execution and delivery of this Agreement
by or on behalf of the Company and the performance of the obligations of the
Company under this Agreement. No other corporate proceedings (other than the
filing and recordation of the Articles of Merger as required by the Colorado
Corporation Law) on the part of the Company are necessary to authorize the
execution and delivery of this Agreement by the Company in the performance of
its obligations under this Agreement. This Agreement is, when executed and
delivered by the Company, and will be a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
as such enforceability may be limited by general principles of equity,
bankruptcy, insolvency, moratorium and similar laws relating to creditors'
rights generally.
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3.14 Ability to Carry Out Obligations. Neither the execution and
delivery of this Agreement, the performance by the Company of its obligations
under this Agreement, nor the consummation of the transactions contemplated
under this Agreement will to the best of the Company's knowledge: (a)
materially violate any provision of the Company's articles of incorporation or
bylaws; (b) with or without the giving of notice or the passage of time, or
both, violate, or be in conflict with, or constitute a material default under,
or cause or permit the termination or the acceleration of the maturity of, any
debt, contract, agreement or obligation of the Company, or require the payment
of any prepayment or other penalties; (c) require notice to, or the consent
of, any party to any agreement or commitment, lease or license, to which the
Company is bound; (d) result in the creation or imposition of any security
interest, lien, or other encumbrance upon any material property or assets of
the Company; or (e) violate any material statute or law or any judgment,
decree, order, regulation or rule of any court or governmental authority to
which the Company is bound or subject.
3.15 Full Disclosure. None of the representations and warranties
made by the Company herein, or in any schedule, exhibit or certificate
furnished or to be furnished in connection with this Agreement by the Company,
or on its behalf, contains or will contain any untrue statement of material
fact or omits or will omit any material fact required to make any
representation or warranty, in light of the circumstances under which they
were made, not misleading.
3.16 Assets. The Company has good and marketable title to all of its
tangible properties and such tangible properties are not subject to any
material liens or encumbrances.
3.17 Material Contracts and Obligations. Attached hereto on Schedule
3 is a list of all agreements, contracts, indebtedness, liabilities and other
obligations to which the Company is a party or by which it is bound that are
material to the conduct and operations of its business and properties, which
provide for payments to or by the Company in excess of $10,000; or which
involve transactions or proposed transactions between the Company and its
officers, directors, affiliates or any affiliate thereof. Copies of such
agreements and contracts and documentation evidencing such liabilities and
other obligations have been made available for inspection by Parent and its
counsel. All of such agreements and contracts are valid, binding and in full
force and effect in all material respects, assuming due execution by the other
parties to such agreements and contracts.
3.18 Consents and Approvals. No consent, approval or authorization
of, or declaration, filing or registration with, any governmental or
regulatory authority is required to be made or obtained by the Company in
connection with: (a) the execution and delivery by the Company of this
Agreement; (b) the performance by the Company of its obligations under this
Agreement; or (c) the consummation by the Company of the transactions
contemplated under this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Except as disclosed in Schedule 4 which is attached hereto and
incorporated herein by reference, Parent and Merger Sub hereby jointly and
severally represent and warrant to the Company that:
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4.1 Organization and Qualification; Subsidiaries.
(a) Each of Parent, Merger Sub and all other subsidiaries of
Parent (the "Parent Subsidiaries") has been duly organized and is validly
existing and in good standing (to the extent applicable) under the laws of the
jurisdiction of its incorporation or organization, as the case may be, and has
the requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power, authority and
governmental approvals could not reasonably be expected to have, individually
or in the aggregate, a material adverse effect. Parent, Merger Sub and each
other Parent Subsidiary is duly qualified or licensed to do business, and is
in good standing (to the extent applicable), in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that could not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect.
(b) Section 4.1 of Schedule 4 sets forth, as of the date of
this Agreement, a true and complete list of each Parent Subsidiary. Except as
set forth in Section 4.1 of Schedule 4, neither Parent nor any Parent
Subsidiary owns an equity interest in any partnership or joint venture
arrangement or other business entity that is material to the financial
condition, results of operations, business or prospects of Parent and the
Parent Subsidiaries, taken as a whole.
4.2 Capitalization. The authorized Common Stock of Parent consists
of 100,000,000 shares of Common Stock of which 8,143,337 are currently issued
and outstanding, all of which are validly issued, fully paid and
nonassessable. Except as set forth in Schedule 4, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character to which Parent is a party or by which Parent is bound relating to
the issued or unissued Common Stock of Parent, Merger Sub or any other Parent
Subsidiary or obligating Parent, Merger Sub or any other Parent Subsidiary to
issue or sell any shares of Common Stock of, or other equity interests in,
Parent, Merger Sub or any other Parent Subsidiary. Each outstanding share of
Common Stock of each Parent Subsidiary is duly authorized, validly issued,
fully paid and nonassessable and each such share owned by Parent or another
Parent Subsidiary is free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on Parent's
or such other Parent Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever, except where the failure to own such
shares free and clear could not reasonably be expected to have, individually
or in the aggregate, a material adverse effect. All outstanding shares of
Merger Sub are owned by Parent.
4.3 Directors and Officers. Schedule 4 contains the names and titles
of all directors and officers of Parent and Merger Sub as of the date of this
Agreement.
4.4 Financial Statements. Parent has delivered to the Company its
audited balance sheet and statements of operations and cash flows as of and
for the year ended December 31, 1999, and its unaudited balance sheet and
statements of operations and cash flows as of and for the period ended March
31, 2000 (collectively the "Financial Statements"). The Financial Statements
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are complete and correct in all material respects and have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated. The Financial Statements
accurately set out and describe the financial condition and operating results
of the Company as of the dates, and for the periods, indicated therein.
4.5 Absence of Changes. Since December 31, 1999, except for changes
in the ordinary course of business which have not in the aggregate been
materially adverse, to the best of Parent's knowledge, Parent has not
experienced or suffered any material adverse change in its condition
(financial or otherwise), results of operations, properties, business or
prospects or waived or surrendered any claim or right of material value.
4.6 Absence of Undisclosed Liabilities. Neither Merger Sub nor
Parent nor any of its properties or assets are subject to any liabilities or
obligations of any nature, whether absolute, accrued, contingent or otherwise
and whether due or to become due, that are not reflected in the financial
statements presented to the Company. Merger Sub has not engaged in any
business activities other than as required to consummate the transactions
contemplated by this Agreement.
4.7 Tax Returns. Within the times and in the manner prescribed by
law, Parent has filed all federal, state and local tax returns required by law
and has paid all taxes, assessments and penalties due and payable.
4.8 Trade Names and Rights. Except as set forth on Schedule 4,
Parent does not use any trademark, service xxxx, trade name, or copyright in
its business, or own any trademarks, trademark registrations or applications,
trade names, service marks, copyrights, copyright registrations or
applications.
4.9 Compliance with Laws. To the best of Parent's knowledge, Parent
has complied with, and is not in violation of, applicable federal, state or
local statutes, laws and regulations (including, without limitation, any
applicable building, zoning, or other law, ordinance, or regulation) affecting
its properties or the operation of its business or with which it is otherwise
required to comply.
4.10 Litigation. There is no legal action, suit, arbitration or
other legal, administrative or other governmental investigation, inquiry or
proceeding (whether federal, state, local or foreign) pending or threatened
against or affecting (i) Parent or any of its subsidiaries or any of their
respective properties, assets or business (existing or contemplated) or (ii)
any employee of Parent or any such subsidiary, before any court or
governmental department, commission, board, bureau, agency or instrumentality
or any arbitrator, except for suits, arbitrations, investigations, inquiries
and proceedings which, if decided adversely to Parent would not a have
material adverse effect on Parent, its operations, assets or prospects. After
reasonable investigation, neither Parent nor any employee or agent of nor
attorney for Parent is aware of any fact that might result in or form the
basis for any such action, suit, arbitration, investigation, inquiry or other
proceeding. Neither Parent nor any employee is in default with respect to any
order, writ, judgment, injunction, decree, determination or award of any court
or of any governmental agency or instrumentality (whether federal, state,
local or foreign).
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4.11 No Pending Investigation. Parent is not aware of any pending
investigations or legal proceedings by the SEC, any state securities
regulatory agency, or any other governmental agency regarding Parent or any
officers or directors of Parent or any shareholders or controlling persons of
such shareholders. There are no outstanding comment letters or other
communications from the Commission (defined below) or from any state
regulatory agency which have requested responses from the Parent or from any
Parent Subsidiary.
4.12 Authority Relative to this Agreement. Parent and Merger Sub
have all necessary corporate power and authority to execute and deliver this
Agreement, to perform their respective obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by Parent and Merger
Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize
this Agreement or to consummate such transactions (other than the filing and
recordation of the Articles of Merger as required by the Colorado Corporation
Law). This Agreement has been duly executed and delivered by Parent and Merger
Sub and, assuming the due authorization, execution and delivery by the
Company, constitutes the legal, valid and binding obligation of Parent and
Merger Sub, enforceable against Parent and Merger Sub in accordance with its
terms.
4.13 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance by Parent and Merger Sub of their
obligations hereunder and the consummation of the Merger will not, (i)
conflict with or violate any provision of the certificate or articles of
incorporation, as the case may be, or bylaws of Parent or Merger Sub or any
equivalent organizational documents of any other Parent Subsidiary, (ii)
assuming that all consents, approvals, authorizations and permits described in
Section 4.14(b) have been obtained and all filings and notifications described
in Section 4.14(b) have been made, conflict with or violate any Law applicable
to Parent or any other Parent Subsidiary or by which any property or asset of
Parent, Merger Sub or any other Parent Subsidiary is bound or affected or
(iii) except as set forth in Section 4.14(a) of the Schedule 4, result in any
breach of or constitute a default (or an event which with the giving of notice
or lapse of time or both could reasonably be expected to become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on
any property or asset of Parent, Merger Sub or any other Parent Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which could not reasonably be
expected, individually or in the aggregate, (A) to have a material adverse
effect or (B) to prevent or materially delay the performance by Parent or
Merger Sub of its obligations pursuant to this Agreement or the consummation
of the Merger.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance by Parent and Merger Sub of their
respective obligations hereunder and the consummation of the Merger will not,
require any consent, approval, authorization or permit of, or filing by Parent
or Merger Sub with or notification by Parent or Merger Sub to, any
Governmental Entity, except (i) pursuant to applicable requirements of the
Exchange Act, the Securities Act, Blue Sky Laws, and the filing and
recordation of the Articles of Merger as required by the Colorado Corporation
Law and (ii) where failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, could not reasonably be
expected, individually or in the aggregate, (A) to have a material adverse
effect or (B) to prevent or materially delay the performance by Parent or
Merger Sub of its obligations pursuant to this Agreement or the consummation
of the Merger.
4.14 Validity of Parent Shares. The shares of Parent Common Stock to
be delivered pursuant to this Agreement, when issued in accordance with the
provisions of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable.
4.15 Full Disclosure. None the representations and warranties made by
Parent in this Agreement, the Schedules and Exhibits to this Agreement
prepared by Parent, any filings made by Parent with the Securities and
Exchange Commission (the "Commission") (including all the exhibits and
appendixes thereto) (the "SEC Documents") contained, contains, or will contain
at the time it was or is so furnished any untrue statement of a material fact
or omitted, omits or will omit at such time to state any material fact
necessary in order to make the statements made herein and therein, in light of
the circumstances under which they were made, not misleading. Except as
disclosed in any SEC Document filed on XXXXX at least five (5) business days
prior to the date hereof, since March 31, 2000, there has been no material
adverse change and no material adverse development in the business,
properties, operations, condition (financial or otherwise), assets,
liabilities or results of operations or, insofar as can reasonably be
foreseen, prospects of Parent or any of its subsidiaries. Parent has not
taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy law nor does Parent or any of its
subsidiaries have any knowledge or reason to believe that their respective
creditors intend to initiate involuntary bankruptcy proceedings. No event,
liability, development or circumstance has occurred or exists, or is
contemplated to occur, with respect to the Parent or its subsidiaries or their
respective businesses, properties, operations, condition (financial or
otherwise), assets, liabilities or results of operations or, insofar as can
reasonably be foreseen, prospects, that would be required to be disclosed by
Parent under applicable securities laws on a periodic report or current report
filed with the Commission or on a registration statement (including by way of
incorporation by reference) filed with the Commission, on the date this
representation is made or deemed to be made, relating to an issuance and sale
by Parent of the Common Stock and which has not been publicly disclosed.
4.16 Assets. Parent has good and marketable title to all of its
tangible properties and such tangible properties are not subject to any liens
or encumbrances except as disclosed in Parent's Financial Statements.
4.17 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, Company
and/or its attorneys shall have the opportunity to meet with accountants and
attorneys to discuss the financial condition of the Parent. The Parent shall
make available to Company and/or its attorneys all books and records of the
Parent.
4.18 Certain Events. No current officer or director of Parent or any
Parent Subsidiary, during the past five year period, has been the subject of:
11
(1) a petition filed under the Federal bankruptcy laws or any
other insolvency law or has a receiver, fiscal agent or similar officer
appointed by a court for the business or property of such person, or any
partnership in which he was a general partner at or within two years before
the time of such filing or appointment, or any corporation or business
association of which he was an executive officer at or within two years before
the time of such filing or appointment;
(2) a conviction in a criminal proceeding or a named subject of
a pending criminal proceeding (excluding traffic violations which do not
relate to driving while intoxicated or driving under the influence);
(3) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining him from, or otherwise limiting, the following
activities:
(i) Acting as a futures commission merchant, introducing
broker, commodity trading advisory, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the United States
Commodity Futures Trading Commission or an associated person of any of the
foregoing, or as an investment advisor, underwriter, broker or dealer in
securities, or as an affiliated person, director or employee of any investment
company, bank, savings and loan association or insurance company, or engaging
in or continuing any conduct or practice in connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of Federal, state or other securities laws or commodities laws;
(4) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal, state or local authority barring,
suspending or otherwise limiting for more than 60 days the right of such
person to engage in any activity described in the preceding sub-paragraph, or
to be associated with persons engaged in such activity;
(5) a finding by a court of competent jurisdiction in a civil
action or by the Securities and Exchange Commission (the "Commission") to have
violated any securities law, regulation or decree and the judgment in such
civil action or finding by the Commission has not been subsequently reversed,
suspected or vacated; or
(6) a finding by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or finding by
the Commodity Futures Trading Commission has not been subsequently reversed,
suspected or vacated.
ARTICLE V
COVENANTS
5.1 Investigative Rights. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's counsels, accountants, auditors, and other authorized representatives,
full access during normal business hours and upon reasonable advance written
12
notice to all of each party's properties, books, contracts, commitments, and
records for the purpose of examining the same. Each party shall furnish the
other party with all information concerning each party's affairs as the other
party may reasonably request. If the transaction contemplated hereby is not
completed, all documents received by each party and/or its attorneys and
accountants, auditors or other authorized representatives shall be returned to
the other party who provided same upon request. The parties hereto, their
directors, employees, agents and representatives shall not disclose any of the
information described above unless such information is already disclosed to
the public or unless as required by legal process, without the prior written
consent of the party to which the confidential information pertains. Each
party shall take such steps as are necessary to prevent disclosure of such
information to unauthorized third parties.
5.2 Conduct of Business. Prior to the Closing, Parent and the
Company shall each conduct its business in the normal course, and shall not
sell, pledge, or assign any assets, without the prior written approval of the
other party, except in the regular course of business or as contemplated in
previously disclosed contractual obligations. Neither Parent nor the Company
shall amend its Articles of Incorporation or Bylaws, declare dividends, redeem
or sell stock or other securities, incur additional or newly-funded
liabilities, acquire or dispose of fixed assets, consolidate or merge with or
convey all or substantially all of its or of any successor corporation's
property and assets to any other corporation or corporations, change
employment terms, enter into any material or long-term contract, guarantee
obligations of any third party, settle or discharge any balance sheet
receivable for less than its stated amount, pay more on any liability than its
stated amount, or enter into any other transaction other than in the regular
course of business except as otherwise contemplated herein.
5.3 Plan of Reorganization. This Agreement is intended to constitute
a "plan of reorganization" within the meaning of Section 1.368-2(g) of the
income tax regulations promulgated under the Code. From and after the date of
this Agreement, each party hereto shall use all reasonable efforts to cause
the Merger to qualify, and shall not, without the prior written consent of the
other parties hereto, knowingly take any actions or cause any actions to be
taken which could reasonably be expected to prevent the Merger from qualifying
as a tax-free reorganization under the provisions of Section 368 of the Code.
In the event that the Merger shall fail to qualify as a tax-free
reorganization under the provisions of Section 368 of the Code, then the
parties hereto agree to negotiate in good faith to restructure the Merger in
order that it shall qualify as tax-free transaction under the Code. Following
the Effective Time, and consistent with any such consent, neither the
Surviving Corporation nor Parent nor any of their respective affiliates
knowingly and voluntarily shall make any elections under the Code or take any
other action or cause any action to be taken which could reasonably be
expected to cause the Merger to fail to qualify as a reorganization under
Section 368 of the Code.
5.4 Company 2000 Tax Return. The parties acknowledge that the
Company's status as a Subchapter S corporation will terminate effective upon
completion of the Closing and that a tax return for the Company's short tax
year, ending with the date of its Subchapter S termination, will be required
to be filed. The parties agree that the Parent will be responsible for filing
the return in a timely manner at its sole expense but that Xxxx Xxxxxxxxx will
cooperate in the preparation of the filing and will be permitted access to all
records relating to the same. Xxxx Xxxxxxxxx, in his capacity as the sole
shareholder of the Company until Closing, will be solely responsible for the
13
amount of income tax owing by him, if any, for all periods preceding the
Closing. The parties agree to make the necessary elections to cause the income
for the Company for the short tax year of the Subchapter S corporation to be
computed by closing its books as of the Closing, i.e., the short tax year
shall reflect only the activity of the Company until the Closing. If at any
time the amount of taxes owed by Xxxx Xxxxxxxxx for any period while the
Company is a Subchapter S corporation is challenged by the Internal Revenue
Service, Xxxx Xxxxxxxxx shall be entitled to direct the response thereto
although he will reasonably cooperate with the Company in that regard.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to the Obligations of Each Party to Consummate the
Merger. The obligations of the parties hereto to consummate the Merger, or to
permit the consummation of the Merger, are subject to the satisfaction or, if
permitted by applicable Law, waiver of the following conditions:
(a) this Agreement and the Merger shall have been duly
approved by the requisite vote of stockholders of the Company and of Merger
Sub in accordance with the Colorado Corporation Law;
(b) no court of competent jurisdiction shall have issued or
entered any order, writ, injunction or decree, and no other governmental
entity shall have issued any order, which is then in effect and has the effect
of making the Merger illegal or otherwise prohibiting its consummation; and
(c) all consents, approvals and authorizations legally
required to be obtained to consummate the Merger shall have been obtained from
all governmental entities, except where the failure to obtain any such
consent, approval or authorization could not reasonably be expected to result
in a change in or have an effect on the business of the Company or Parent that
is materially adverse to the business, assets, liabilities (contingent or
otherwise), condition (financial or otherwise) or results of operations of
Parent and its subsidiaries, taken as a whole.
6.2 Conditions to the Obligations of the Company. The obligations of
the Company to consummate the Merger, or to permit the consummation of the
Merger, are subject to the satisfaction or, if permitted by applicable Law,
waiver of the following further conditions:
(a) each of the representations and warranties of Parent and
Merger Sub contained in this Agreement shall be true, complete and correct on
and as of the Effective Time as if made at and as of the Effective Time and
the Company shall have received a certificate (in the form attached hereto as
Exhibit C) of the President of Parent and Merger Sub to such effect;
(b) Parent and Merger Sub shall have performed or complied in
all material respects with all material agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time and the Company shall have received a certificate (in the form
attached hereto as Exhibit C) of the President of Parent and of Merger Sub to
that effect;
(c) Employment Agreements. Parent and each of Xxxx Xxxxxxxxx
and Xxxx Xxxxxxx shall have entered into an employment agreement substantially
in the forms of Exhibit A and B hereto, respectively.
14
(d) Xxxx Xxxxxxxxx. Effective on the Closing, Parent shall
have caused Xxxx Xxxxxxxxx to be elected as Vice President and a director of
Storage Area Networks, a wholly owned Parent Subsidiary.
(e) Compensation. On or before the completion of the
Closing, Parent shall have delivered to Xxxx Xxxxxx and Xxxx Xxxxxxx, as
compensation to them, the following: to Xxxxxx, 11,500 shares of Parent Common
Stock and $13,000 in cash, and to Xxxxxxx, 3,450 shares of Parent Common
Stock and $3,900 in cash.
6.3 Conditions to the Obligations of Parent. The obligations of
Parent to consummate the Merger, or to permit the consummation of the Merger,
are subject to the satisfaction or, if permitted by applicable Law, waiver of
the following further conditions:
(a) each of the representations and warranties of the Company
contained in this Agreement shall be true, complete and correct on and as of
the Effective Time as if made at and as of the Effective Time and Parent shall
have received a certificate (in the form attached hereto as Exhibit D) of the
Chairman or President and Chief Financial Officer of the Company to such
effect;
(b) the Company shall have performed or complied in all
material respects with all material agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time and Parent shall have received a certificate (in the form attached hereto
as Exhibit D) of the Chairman or President and Chief Financial Officer of the
Company to that effect;
(c) there shall not be pending or threatened any action,
proceeding, claim or counterclaim which seeks to or would, or any order,
decree or injunction (whether preliminary, final or appealable) which would,
require Parent to hold separate or dispose of any of the stock or assets of
the Company or the Company Subsidiaries or imposes material limitations on the
ability of Parent to control in any material respect the business, assets or
operations of either Parent or the Company; and
(d) The Company shall provide a letter from its auditors
stating that its financial statements for the period from inception through
December 31, 1999, can be audited in accordance with SEC rules and that the
audit can be completed within 75 days after the Closing.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, notwithstanding any
requisite adoption and approval of this Agreement, as follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Parent and the Company;
15
(b) by either Parent or the Company, if the Effective Time
shall not have occurred on or before June 9, 2000; provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have caused, or resulted in, the failure of the Effective Time
to occur on or before such date;
(c) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement,
or if any representation or warranty of the Company shall have become untrue,
incomplete or incorrect, in either case such that the conditions set forth in
Section 6.3 would not be satisfied (a "Terminating Company Breach"); provided,
however, that if such Terminating Company Breach is curable by the Company
through the exercise of its reasonable efforts within 30 days and for so long
as the Company continues to exercise such reasonable efforts, Parent may not
terminate this Agreement under this Section 7.1(c); and provided further that
the preceding proviso shall not in any event be deemed to extend any date set
forth in paragraph (b) of this Section 7.1;
(d) by Company, upon a breach of any representation, warranty,
covenant or agreement on the part of the Parent set forth in this Agreement,
or if any representation or warranty of the Parent shall have become untrue,
incomplete or incorrect, in either case such that the conditions set forth in
Section 6.2 would not be satisfied (a "Terminating Parent Breach"); provided,
however, that if such Terminating Parent Breach is curable by the Parent
through the exercise of its reasonable efforts within 30 days and for so long
as the Parent continues to exercise such reasonable efforts, Company may not
terminate this Agreement under this Section 7.1(d); and provided further that
the preceding proviso shall not in any event be deemed to extend any date set
forth in paragraph (b) of this Section 7.1.
7.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 7.1, this Agreement shall forthwith become void,
there shall be no liability under this Agreement on the part of any party
hereto or any of its affiliates or any of its or their officers or directors,
and all rights and obligations of each party hereto shall cease.
7.3 Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective boards of directors at any
time prior to the Effective Time. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
7.4 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for or waive compliance with the performance of
any obligation or other act of any other party hereto or (b) waive any
inaccuracy in the representations and warranties contained herein or in any
document delivered pursuant hereto. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties
to be bound thereby.
7.5 Expenses. All Expenses incurred in connection with this
Agreement and the Merger shall be paid by the party incurring such Expenses,
whether or not the Merger is consummated.
16
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-survival of Representations and Warranties. The
representations and warranties in this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
7.1, as the case may be. Each party agrees that, except for the
representations and warranties contained in this Agreement and the Disclosure
Schedules, no party hereto has made any other representations and warranties,
and each party hereby disclaims any other representations and warranties made
by itself or any of its officers, directors, employees, agents, financial and
legal advisors or other representatives, with respect to the execution and
delivery of this Agreement or the Merger contemplated herein, notwithstanding
the delivery or disclosure to any other party or any party's representatives
of any documentation or other information with respect to any one or more of
the foregoing.
8.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall only be given by
delivery in person, by registered or certified mail (postage prepaid, return
receipt requested) or by a nationally recognized courier service to the
respective parties at their addresses set forth on the signature pages to this
Agreement (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 8.2). Any properly given notice
shall only be deemed given on the date of delivery if delivered in person, two
Business Days after deposit of the notice with the United States Postal
Service if delivered by mail (as used in this Agreement, "Business Day" means
Mondays through Fridays, except for any day on which regularly scheduled
deliveries of first class mail are not made), or one Business Day after
deposit of the notice with the courier with instructions for next Business Day
delivery.
8.3 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner
to the fullest extent permitted by applicable Law in order that the Merger may
be consummated as originally contemplated to the fullest extent possible.
8.4 Assignment; Binding Effect; Benefit. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of Law or otherwise) without the
prior written consent of the other parties hereto. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto or their respective successors and permitted
assigns any rights or remedies under or by reason of this Agreement.
17
8.5 Incorporation of Exhibits. The Disclosure Schedules and all
Exhibits attached hereto and referred to herein are hereby incorporated herein
and made a part of this Agreement for all purposes as if fully set forth
herein.
8.6 Choice of Law. This Agreement shall be construed and governed by
the laws of the State of Colorado without regard to conflicts of interest
principles. The parties hereto consent to the jurisdiction of the federal and
state courts located in Denver, Colorado, for any action or suit arising out
of this Agreement, and waive any defense to such jurisdiction, including,
without limitation, any defense based on venue or inconvenient forum.
8.7 Headings. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
8.8 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
8.9 Entire Agreement. This Agreement (including the Exhibits and the
Disclosure Schedules) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any
party hereto unless made in writing and signed by all parties hereto.
8.10 Further Assurances. Each party shall do and perform or cause to
be done or performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other parties may reasonably request in order to carry out the intent and
accomplish the purpose of this Agreement and the consummation of the
transactions contemplated hereby; provided, however, that no party shall be
obligated in any way to do anything that would conflict with, contradict or
otherwise contravene any term or condition set forth prior to this Section
8.10.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
AGREED TO AND ACCEPTED as of the date first above written.
SAN Holdings, Inc. Value Technology, Inc.
By /s/ X. X. Xxxxxx By /s/ Xxxx Xxxxxxxxx
X. X. Xxxxxx, President Xxxx Xxxxxxxxx, President
Value Tech Acquisition
Corporation
By /s/ X. X. Xxxxxx
X. X. Xxxxxx, President
18
SCHEDULE 3
3.4 Names and Titles of all directors and officers
Xxxx Xxxxxxxxx, President CEO and Secretary
3.17 Material Contracts and Obligations
See attached list.
SCHEDULE 4
SAN Holdings, Inc.
("Parent")
4.1 Subsidiaries:
a) Storage Area Networks - 100% Owned
b) CoComp, Inc. - 100% Owned
4.2 Capitalization:
Schedule of Warrants and Options
Outstanding as of March 31, 2000
Number Date Exercise
Warrantholder of Shares of Issue Price Term
Investors in AAA Offering 500,000 3/1/00 $3.50 120 days
" " " 500,000 3/1/00 $5.00 120 days
CCRI 100,000 3/1/00 $1.50 2 years
Xxxxxx Xxxxxxx 100,000 3/1/00 $1.50 2 years
Xxxxxxxx Xxxxxx 25,000 3/1/00 $1.50 2 years
Xxxxxx Xxxxxxxx 25,000 3/1/00 $1.50 2 years
Xxxxxxxx Xxxxxx 1,000,000 3/22/00 $9.00 9 months to
--------- 21 months
Total Warrants Outstanding 2,250,000
=========
Number Date Exercise
Option Holder of Shares of Issue Price Term
Stock Option Plan 240,000 3/9/00 9-1/8 5 years
---------
Total Options
Outstanding 240,000
=========
Total Options and
Warrants Outstanding 2,490,000
=========
4.4 Directors and Officers of Parent:
Name Position
Xxxxx X. Xxxxxxx Chairman of the Board
X.X. Xxxxxx President, Chief Executive Officer and Director
Xxxxxx Xxxxx Vice President, Chief Operating Officer and
Director
Xxxx X. Xxxxxxx Treasurer, Corporate Secretary and Director
Xxxxxxx X. Xxxx Director
Xxxxxx Xxxxxx Director
Mishari Xxxxxxx Director
4.12 Legal Proceedings:
Refer to Item 3 in Parent's Form 10-KSB for the year ended December
31, 1999.
4.20 Material Contracts of Parent:
Refer to Item 13 in Parent's Form 10-KSB for the year ended December
31, 1999.
EXHIBIT A
Employment Agreement with Xxxx Xxxxxxxxx
EMPLOYMENT AGREEMENT
This Employment Agreement is made by and between Storage Area Networks,
Inc., a Nevada Corporation, ("Company" or "SAN") and Xxxx Xxxxxxxxx,
("Employee" or "Xxxxxxxxx").
WITNESSETH:
Whereas, Xxxxxxxxx has demonstrated special skill, knowledge, ability,
and experience as a data storage solutions provider for businesses with an
emphasis on serving the financial markets, and because of these qualities, SAN
is desirous of entering into an Employment Agreement whereby SAN will employ
the services of Xxxxxxxxx for a future term of service, subject to the terms
and conditions herein set forth.
I. Term. The term of this Agreement shall be for a period of two (2)
years commencing (the "Commencement Date") on the later to occur of the
completion of any sale, merger or dissolution of the Company, or May 31,
2000, and terminating two (2) years thereafter. This agreement shall only be
terminated in accordance with the provisions of Paragraph IV (four) of this
Agreement.
II. Duties. Effective on the Commencement Date and so long as this
Agreement remains in effect, Xxxxxxxxx shall serve as Vice President Sales,
Financial Institutions, and Director of SAN. Xxxxxxxxx agrees to devote his
primary time and attention to his duties of the Company, which duties may be
augmented or restricted in accordance with the directives of the Board of
Directors of SAN, consistent with the position of Vice President Sales,
Financial Institutions. Xxxxxxxxx represents and warrants that he is free to
accept this employment and will exercise his best efforts in good faith with
respect to his employment hereunder.
III. Compensation.
A. Employee shall be paid an annualized base salary of
$130,200 and 5.0 % of the Gross Margin of his division's sales. These amounts
shall be payable bi-weekly. As used in this Agreement, the "division" means
the financial vertical market.
B. In addition, Employee shall be paid commission based on a
percentage of Gross Margin generated by his personal sales. The commission
shall be computed as 17 % of gross margin (Gross Margin means gross revenues
less cost of products, labor purchased from vendor, standard costs of internal
labor applied to sale, and a .005 % marketing allocation.). Should gross
margin from Employee's annual sales on a calendar year basis exceed
$500,000.00, the commission rate for the increment exceeding $500,000.00 will
be increased to 20%. For any partial calendar year during which this
Agreement is in effect, the amount of sales shall be annualized for purposes
of the preceding sentence. Employee shall be given access at all reasonable
times to the records of the Company which form the basis for the calculation
of commission amounts payable to Employee.
C. During the term of this Agreement, the Employee may be
eligible to participate in performance bonuses and any qualified or
non-qualified stock option plans of SAN Holdings, Inc. as established by the
Compensation Committee of the Board of Directors of SAN Holdings, Inc. Stock
Option Incentives authorized for Employee pursuant to this agreement are as
follows:
C-1. Signing Bonus. Pursuant to the terms of SAN
Holdings, Inc. 2000 Stock Option Plan providing stock option incentives to key
employees of the Company and upon signing of this Agreement, Xxxxxxxxx will be
issued 15,000 options for purchase of common shares of SAN Holdings, Inc. at a
price equal to the closing bid price of the stock on the date of closing of
the Agreement and Plan of Merger and Reorganization between SAN and Value
Technology, Inc. One half of these options shall vest at the end of the first
year of this Agreement and the remaining one half shall vest at the end of the
second year of this Agreement.
C-2. Annual Stock Option. In addition to the above,
Xxxxxxxxx shall be eligible to receive an annual stock option for the exercise
of common shares as established by the Compensation Committee of the Board of
Directors of SAN Holdings, Inc. The options shall be exercisable at 100% of
the fair market value of the common stock on the date of grant.
IV. Expenses. Subject to the Company's written employee expense
reimbursement policy, the Employee shall be entitled to reimbursement for all
reasonable expenses necessarily incurred by him in the performance of his
duties upon presentation of a voucher indicating the amount and business
purpose and supported by appropriate documentation. In addition, the Employee
shall receive a monthly car expense of $400.00.
V. Benefits. The Employee shall be eligible to participate in all of
the Company's health and welfare benefit programs. He shall be entitled to
vacation annually according to the Company's vacation policy, the timing of
which shall be agreed upon between the Employee and the Board of Directors of
SAN.
VI. Termination. Notwithstanding any provision of the foregoing
contract, the Employee may be discharged only for Cause by the Board of
Directors of the Company (as described with specificity in writing and
delivered to Employee on or before the time of termination) at any time during
the period of employment provided for in this Agreement.
A. "Cause" shall mean a material breach of the terms of this
Agreement, including: (a) conviction of a felony involving moral turpitude;
(b) theft from the Company or any of its customers; (c) Intentionally left
blank; (d) willful failure or refusal to carry out the policies of the Company
or any order or directive of the Board of Directors of the Company; or (e) the
failure by the Employee to perform all of the material duties and to comply
with the material terms and conditions required of him under this Agreement.
B. If the Employee is discharged for cause, or voluntarily
leaves the employ of the Company during the period of active employment
specified herein, then and in any such event, all subsequent compensation
required to be paid by the Company to the Employee shall be forfeited, and
this contract and the rights of the parties shall terminate.
2
C. In the event the Company otherwise terminates the
Employee's employment, the Company shall be obligated to pay Employee, as a
lump sum severance payment, an amount equal to two times the Employee's annual
salary, payable in cash or, at the Employee's option, in shares, within thirty
(30) days of such termination. As used in this paragraph, the "annual salary"
shall be computed by adding (i) $130,200, as it may be increased from time to
time, to (ii) the total amount of commissions under Sections IIIA and IIIB
payable to Employee for the twelve month period preceding the termination
date. If this Agreement has not been in effect for a full twelve months
preceding the termination date, then the amount of commissions payable to
Employee for the period from the commencement of this Agreement through the
termination date shall be converted into an annualized figure for purposes of
computing the annual salary. If Employee elects to take shares instead of
cash, the number of shares shall be computed by (iii) calculating the price
per share which shall be equal to the average closing bid price during the
twenty trading days immediately preceding the termination date, and (iv)
dividing the amount of the severance payment by the price per share.
Notwithstanding any provision of this paragraph to the contrary, in no event
shall the amount of the severance payment be less than $260,400.
VII. Arbitration. All disputes, differences, or questions arising
between the parties hereto relating to construction, price, meaning, or effect
of any cause or thing contained herein, or the rights or liabilities of the
parties respectively, or their respective successors and assigns, shall be
referred to arbitration between the parties hereto, one arbitrator to be
appointed by each party, and the arbitrators so chosen, if by themselves
unable to agree within ten days after their appointment, choose an additional
arbitrator, without delay, and the decision in writing signed by a majority of
such arbitrators shall be binding upon the parties hereto and may be enforced
by any court of competent jurisdiction. The procedure for the arbitrators
shall conform to the procedures of the American Arbitration Association unless
otherwise agreed to by the parties in writing. The unsuccessful party in the
arbitration shall pay the expenses/costs related thereto
VIII. Notice. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and if sent by certified or
registered mail, return receipt requested
IX. Rules of Construction.
1. Entire Agreement. This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter hereof and
supercedes all negotiations, prior agreements and contemporaneous agreements,
discussions and understandings of the parties in connection with the subject
matter hereof.
2. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado. Venue and
Jurisdiction shall be in Denver County, Colorado.
3. Amendments. No change, modification or termination of any
of the terms, provisions or conditions of this Agreement shall be effective
unless made in writing and signed by all parties hereto, their successors or
assigns.
4. Binding Effect on Successors and Assigns. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors, personal representatives, heirs and assigns.
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5. Disclosure. Employee agrees not to disclose the terms of
this Agreement to anyone during the term of this agreement except as required
by law without the express written consent of SAN.
6. Severability. If any Article, or other provision of this
Agreement, or the application thereof, is held to be invalid, illegal, or
unenforceable in any respect or for any reason, the remainder of this
Agreement, and the application of the Article, Section or Provision to a
person or circumstance with respect to which it is valid, legal or
enforceable, shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement below, as of this 20th day of June, 2000.
THE COMPANY: THE EMPLOYEE:
STORAGE AREA NETWORKS XXXX XXXXXXXXX
By:/s/ X. X. Xxxxxx By: /s/ Xxxx Xxxxxxxxx
X.X. "Xxxx" Xxxxxx, President Xxxx Xxxxxxxxx
and CEO
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EXHIBIT B
Employment Agreement with Xxxx Xxxxxxx
EXHIBIT C
Certificate from Parent and Merger Sub
CERTIFICATE OF OFFICERS
The undersigned hereby certifies that:
1. He is the duly elected President of SAN Holdings, Inc., a Colorado
corporation (the "Parent"), and Value Tech Acquisition Corporation, a Colorado
corporation ("Merger Sub").
2. The representations and warranties of the Parent and Merger Sub
under the Agreement and Plan of Merger and Reorganization dated as of June 19,
2000, by and among the Parent, Merger Sub and Value Technology, Inc. (the
"Agreement"), are true and correct in all material respects as of the date
hereof as if made on the date hereof; and
3. The Parent and Merger Sub have performed and complied in all
material respects with all agreements and conditions required by the Agreement
to be performed or complied with by them on or prior to the date hereof.
IN WITNESS WHEREOF, the undersigned have executed this Certificate this
19th day of June 2000.
SAN Holdings, Inc.
By:/s/ X. X. Xxxxxx
X.X. Xxxxxx, President
VALUE TECH ACQUISITION CORPORATION
By:/s/ X.X. Xxxxxx
X. X. Xxxxxx, President
EXHIBIT D
Certificate from Company
CERTIFICATE OF OFFICER
The undersigned hereby certifies that:
1. He is the duly elected President and CEO of Value Technology,
Inc., a Colorado corporation (the "Company").
2. The representations and warranties of the Company under the
Agreement and Plan of Merger and Reorganization dated as of June 19, 2000, by
and among the SAN Holdings, Inc., Value Tech Acquisition Corporation and the
Company (the "Agreement"), are true and correct in all material respects as of
the date hereof as if made on the date hereof; and
3. The Company has performed and complied in all material respects
with all agreements and conditions required by the Agreement to be performed
or complied with by it on or prior to the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
19th day of June 2000.
Value Technology, Inc.
By:/s/ Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxx, President
