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EXHIBIT 2.3
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
VENTURE CATALYST INCORPORATED,
VENTURE ACQUISITION CORPORATION,
CTINTERACTIVE, INC.
AND
XXXXXX XXXXX XXXXXXXX
DATED AS OF MARCH 23, 2000
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TABLE OF CONTENTS
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ARTICLE 1 PLAN OF REORGANIZATION................................................ 1
1.1 The Merger............................................................ 1
1.2 Conversion of CTInteractive Shares.................................... 2
1.3 Conversion of Acquisition Corp. Shares................................ 2
1.4 Effects of the Merger................................................. 3
1.5 Bylaws of CTInteractive............................................... 3
1.6 Directors and Officers................................................ 3
1.7 Further Assurances.................................................... 3
1.8 Securities Law Issues................................................. 3
1.9 Tax-Free Reorganization............................................... 3
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDER........................................................... 4
2.1 Due Execution......................................................... 4
2.2 The CTInteractive Common.............................................. 4
2.3 No Conflict........................................................... 4
2.4 Consents.............................................................. 5
2.5 Actions and Proceedings, etc.......................................... 5
2.6 Investment Representations and Warranties............................. 5
2.7 Gaming Restrictions................................................... 8
2.8 Stop Transfer Instructions; No Requirements to Transfer............... 8
2.9 Accuracy of Documents and Information................................. 8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
AND CTINTERACTIVE..................................................... 9
3.1 Organization, Good Standing and Qualification......................... 9
3.2 Authority............................................................. 9
3.3 Consents.............................................................. 9
3.4 Capitalization........................................................ 10
3.5 Subsidiaries.......................................................... 10
3.6 No Conflict........................................................... 10
3.7 Financial Statements.................................................. 11
3.8 Absence of Undisclosed Liabilities.................................... 12
3.9 Tax Returns and Payments.............................................. 12
3.10 Absence of Certain Changes or Events.................................. 13
3.11 Accounts Receivable................................................... 14
3.12 Interests in Real Property............................................ 14
3.13 Personal Property..................................................... 15
3.14 Intangible Property Rights............................................ 15
3.15 Title to Assets....................................................... 16
3.16 Litigation............................................................ 16
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3.17 Contracts and Permits................................................. 17
3.18 Existing Employment Contracts......................................... 18
3.19 Interest in Customers, Suppliers and Competitors...................... 18
3.20 Personnel Identification and Compensation............................. 19
3.21 Powers of Attorney and Suretyships.................................... 19
3.22 Employees............................................................. 19
3.23 Labor Relations....................................................... 20
3.24 Insurance............................................................. 20
3.25 Compliance with Laws.................................................. 20
3.26 Corporate Documents................................................... 21
3.27 Credit Cards.......................................................... 21
3.28 Bank Accounts......................................................... 21
3.29 Environmental Matters................................................. 21
3.30 Customers and Suppliers............................................... 21
3.31 Unlawful Payment...................................................... 22
3.32 Restrictive Covenants................................................. 22
3.33 Insolvency............................................................ 22
3.34 Books and Records..................................................... 22
3.35 Accuracy of Documents and Information................................. 23
3.36 Disclosure............................................................ 23
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF VCAT................................ 23
4.1 Corporate Existence and Authority..................................... 23
4.2 No Conflict........................................................... 24
4.3 Consents.............................................................. 24
4.4 Binding Obligations................................................... 24
4.5 Representations....................................................... 24
4.6 Capital Stock......................................................... 24
4.7 Corporate Documents................................................... 25
4.8 Financial Statements.................................................. 25
4.9 Absence of Undisclosed Liabilities.................................... 26
4.10 Status of VCAT's Shares of Common Stock............................. 26
4.11 Governmental Proceedings.............................................. 26
4.12 Intellectual Property................................................. 26
4.13 Absence of Certain Changes or Events.................................. 27
4.14 Compliance with Laws.................................................. 27
4.15 Accuracy of Documents and Information................................. 27
ARTICLE 5 CTINTERACTIVE PRECLOSING COVENANTS ................................... 28
5.1 Advice of Changes..................................................... 28
5.2 Maintenance of Business............................................... 28
5.3 Conduct of Business................................................... 28
5.4 Certain Agreements.................................................... 30
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5.5 Regulatory Approvals.................................................. 30
5.6 Necessary Consents.................................................... 30
5.7 Litigation............................................................ 31
5.8 No Other Negotiations................................................. 31
5.9 Access to Information................................................. 31
5.10 Satisfaction of Conditions Precedent.................................. 31
5.11 Blue Sky Laws......................................................... 31
5.12 Notification of Employee Problems..................................... 32
ARTICLE 6 VCAT PRECLOSING COVENANTS............................................. 32
6.1 Regulatory Approvals.................................................. 32
6.2 Satisfaction of Conditions Precedent.................................. 32
6.3 Blue Sky Laws......................................................... 32
6.4 Advice of Changes..................................................... 32
6.5 Litigation............................................................ 32
ARTICLE 7 CLOSING MATTERS ...................................................... 33
7.1 The Closing........................................................... 33
7.2 Exchange of Certificates.............................................. 33
7.3 Delivery of Cash Consideration........................................ 34
ARTICLE 8 CONDITIONS TO OBLIGATIONS OF CTINTERACTIVE............................ 34
8.1 Accuracy of Representations and Warranties............................ 34
8.2 Covenants............................................................. 34
8.3 Compliance with Law................................................... 34
8.4 Government Consents................................................... 34
8.5 Documents............................................................. 34
8.6 No Litigation......................................................... 34
8.7 Satisfactory Form of Legal and Accounting Matters..................... 35
8.8 Employment Agreements................................................. 35
8.9 Requisite Approvals................................................... 35
ARTICLE 9 CONDITIONS TO OBLIGATIONS OF VCAT..................................... 35
9.1 Accuracy of Representations and Warranties............................ 35
9.2 Covenants............................................................. 35
9.3 Absence of Material Adverse Change.................................... 35
9.4 Compliance with Law................................................... 36
9.5 Government Consents................................................... 36
9.6 Documents............................................................. 36
9.7 No Litigation......................................................... 36
9.8 Requisite Approvals................................................... 36
9.9 Employment and Noncompetition Agreements.............................. 36
9.10 Termination of Rights................................................. 36
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9.11 Resignation of Directors.............................................. 36
9.12 Satisfactory Form of Legal and Accounting Matters..................... 36
9.13 CTInteractive Options................................................. 37
ARTICLE 10 TERMINATION OF AGREEMENT.............................................. 37
10.1 Termination........................................................... 37
10.2 Certain Continuing Obligations........................................ 37
ARTICLE 11 INDEMNIFICATION....................................................... 38
11.1 Indemnification by CTInteractive and the Shareholder.................. 38
11.2 Indemnification by VCAT............................................... 38
11.3 Notice of Claim....................................................... 38
11.4 Defense............................................................... 39
11.5 Duration of the Parties Obligations................................... 39
11.6 Limitations on Amount -- CTInteractive and the Shareholder............ 40
ARTICLE 12 DEFINITIONS AND ACCOUNTING ........................................... 40
12.1 Certain Defined Terms................................................. 40
12.2 Accounting Terms...................................................... 41
ARTICLE 13 MISCELLANEOUS......................................................... 42
13.1 Governing Law; Venue.................................................. 42
13.2 Assignment; Binding Upon Successors and Assigns....................... 42
13.3 Severability.......................................................... 42
13.4 Counterparts.......................................................... 42
13.5 Other Remedies........................................................ 43
13.6 Amendment and Waivers................................................. 43
13.7 No Waiver............................................................. 43
13.8 Expenses.............................................................. 43
13.9 Finder's or Broker's Fees............................................. 43
13.10 Notices............................................................... 43
13.11 Construction of Agreement............................................. 44
13.12 No Joint Venture...................................................... 44
13.13 Further Assurances.................................................... 45
13.14 Absence of Third Party Beneficiary Rights............................. 45
13.15 Public Announcement................................................... 45
13.16 Confidentiality....................................................... 45
13.17 Entire Agreement...................................................... 46
INDEX TO SCHEDULES AND EXHIBITS...................................................... 48
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is entered
into as of March 23, 2000, by and among Venture Catalyst Incorporated, a Utah
corporation ("VCAT"), Venture Acquisition Corporation, a Utah corporation and a
wholly-owned subsidiary of VCAT ("Acquisition Corp."), CTInteractive, Inc., a
California corporation ("CTInteractive"), and Xxxxxx Xxxxx Xxxxxxxx, the sole
shareholder of CTInteractive (the "Shareholder").
RECITALS
A. The parties intend that, subject to the terms and conditions
hereinafter set forth, Acquisition Corp. will merge with and into CTInteractive
in a reverse triangular merger (the "Merger"), with CTInteractive to be the
surviving corporation of the Merger, all pursuant to the terms and conditions of
this Agreement, the Articles of Merger substantially in the form of Exhibit A
(the "Articles of Merger"), the Agreement of Merger substantially in the form of
Exhibit B (the "Agreement of Merger") and the applicable provisions of the laws
of the states of Utah and California. Upon the effectiveness of the Merger, all
the outstanding common stock, no par value per share, of CTInteractive
("CTInteractive Common") will be converted into common stock, par value $.001
per share, of VCAT ("VCAT Common"), and the right to receive cash in the manner
and on the basis determined herein and as provided in the Articles of Merger and
the Agreement of Merger.
B. It is intended by the parties hereto that the Merger shall constitute
a reorganization within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code"), by virtue of the provisions of
Section 368(a)(2)(E) of the Code.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
PLAN OF REORGANIZATION
1.1 The Merger. The Agreement of Merger and the Articles of Merger will
be filed with the Secretary of State of the State of California and the State of
Utah's Division of Corporations and Commercial Code, on the Closing Date (as
defined in Section 7.1 below). The effective date of the Merger as specified in
the Articles of Merger and the Agreement of Merger (the "Effective Date") will
occur on or before March __, 2000, or on such other date as the parties hereto
may mutually agree upon. Subject to the terms and conditions of this Agreement,
the Articles of Merger and the Agreement of Merger, Acquisition Corp. will be
merged with and into CTInteractive in a statutory merger pursuant to the
Articles of Merger and the Agreement of Merger and in accordance with applicable
provisions of Utah and California laws.
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1.2 Conversion of CTInteractive Shares. At the Effective Date, by virtue
of the Merger and without any action on the part of VCAT, Acquisition Corp.,
CTInteractive or any holder of CTInteractive Common:
(a) each share of CTInteractive Common outstanding immediately
prior to the Effective Date, shall automatically be converted into and become a
right to receive a pro rata portion of:
(i) cash in the amount of Three Hundred Thousand Dollars
($300,000) ("Cash Consideration");
(ii) that number of shares of VCAT Common equal to Two
Million Dollars ($2,000,000) less the value of the Restricted Shares (as defined
below), divided by the VCAT Stock Value ("Stock Consideration").
(the Cash Consideration and Stock Consideration are collectively referred to as
the "Merger Consideration"); and
(b) all shares of CTInteractive Common held at the Effective Date
as treasury shares or by a subsidiary of CTInteractive shall be canceled and no
payment shall be made with respect thereto.
As used herein, "VCAT Stock Value" means the average of the closing
prices of shares of VCAT Common as reported on The Nasdaq Stock Market, Inc. for
the five (5) trading days immediately preceding the Closing Date. As used
herein, "Restricted Shares" means shares of VCAT Common received by the
following employees of CTInteractive (collectively, "Key Employees") at the
Closing Date as follows: (i) Xxxxxxx X. Xxxxx, 6,250 Restricted Shares, (ii)
Xxxxx X.X. Xxxxxx, 4,166 Restricted Shares, (iii) Xxxx X. Xxxxxx, 4,166
Restricted Shares, (iv) Xxxxx Xxxxxxxxxx, 4,166 Restricted Shares, (v) Xxx X.
XxXxxx, 2,084 Restricted Shares, (vi) Xxxxx Xxxx, 2,084 Restricted Shares, and
(vii) Xxxx Xxxxxxx Xxxxxx, 2,084 Restricted Shares; provided, however, that to
the extent the issuance of the Restricted Shares requires the approval of VCAT's
shareholders under the Rules of The Nasdaq Stock Market, Inc., (x) such shares
shall be proportionately decreased or not issued, and (y) the cash component of
the Merger Consideration shall accordingly be increased by the value of the
Restricted Shares decreased or eliminated. The total Merger Consideration
detailed in this Section 1.2 shall not be reduced as a result of such a
proportionate decrease or non-issuance.
1.3 Conversion of Acquisition Corp. Shares. Each share of Acquisition
Corp. common stock, $.001 par value ("Acquisition Corp. Common"), that is issued
and outstanding immediately prior to the Effective Date will, by virtue of the
Merger and without further action on the part of the sole shareholder of
Acquisition Corp., be converted into and become one (1) share of CTInteractive
Common that is issued and outstanding immediately after the Effective Date, and
the shares of CTInteractive Common into which the shares of Acquisition Corp.
Common are so converted shall be the only shares of CTInteractive Common that
are issued and outstanding immediately after the Effective Date.
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1.4 Effects of the Merger. At the Effective Date: (a) the separate
existence of Acquisition Corp. will cease and Acquisition Corp. will be merged
with and into CTInteractive and CTInteractive will be the surviving corporation
pursuant to the terms of the Articles of Merger and the Agreement of Merger; (b)
the Articles of Incorporation of CTInteractive will be amended to read as set
forth in Exhibit F as the Articles of Incorporation of the surviving
corporation; (c) each share of CTInteractive Common outstanding immediately
prior to the Effective Date will be converted as provided in this Article 1; (d)
each share of Acquisition Corp. Common outstanding immediately prior to the
Effective Date will be converted as provided in this Article 1; and (e) the
Merger will, at and after the Effective Date, have all of the effects provided
by applicable law.
1.5 Bylaws of CTInteractive. At the Effective Date, the Bylaws of
CTInteractive will be amended and restated in their entirety to read as set
forth on Exhibit G as the Bylaws of the surviving corporation.
1.6 Directors and Officers. At the Effective Date: (a) the directors of
CTInteractive as the surviving corporation shall be: L Xxxxxx Xxxxx, XX, Xxxxxx
Xxxxxxx and the Shareholder; and (b) the officers of CTInteractive as the
surviving corporation shall be: Xxxxxx Xxxxxxx, Chairman and Chief Executive
Officer, the Shareholder, President and Chief Operating Officer, Xxxxxx X. Xxxx,
Chief Financial Officer, and Xxxxxxxxxxx Xx. Voisin, Secretary.
1.7 Further Assurances. CTInteractive agrees that if, at any time after
the Effective Date, VCAT considers or is advised that any further deeds,
assignments or assurances are reasonably necessary or desirable to vest, perfect
or confirm in VCAT title to any property or rights of CTInteractive as provided
herein, VCAT and any of its officers are hereby authorized by CTInteractive to
execute and deliver all such proper deeds, assignments and assurances and do all
other things necessary or desirable to vest, perfect or confirm title to such
property or rights in VCAT and otherwise to carry out the purposes of this
Agreement, in the name of CTInteractive or otherwise.
1.8 Securities Law Issues. Based in part on the representations of the
Shareholder made in Section 2.6 below, the VCAT Common to be issued in the
Merger will be issued pursuant to an exemption from registration under Section
4(2) of the Securities Act of 1933, as amended (the "Securities Act") and/or
Regulation D promulgated under the Securities Act and applicable state
securities laws.
1.9 Tax-Free Reorganization. It is intended by the parties hereto that
the Merger shall constitute a reorganization within the meaning of Section
368(a)(1)(A) of the Code, by virtue of the provisions of Section 368(a)(2)(E) of
the Code.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER
In order to induce VCAT and Acquisition Corp. to enter into this
Agreement, the Shareholder hereby makes the representations and warranties set
forth below, which representations and warranties shall be deemed to continue in
full force and effect until the time of the Closing and thereafter as set forth
herein.
2.1 Due Execution. This Agreement has been duly executed and delivered
by the Shareholder and this Agreement constitutes a legal, valid and binding
obligation of the Shareholder, enforceable against the Shareholder in accordance
with its terms, except as such enforceability may be subject to or limited by
(a) bankruptcy, insolvency, moratorium, fraudulent conveyance or other similar
laws relating to the rights of creditors generally, (b) limitations imposed by
law or equitable principles upon the availability of specific performance,
injunctive relief or other equitable remedies, and (c) concepts of materiality.
2.2 The CTInteractive Common. The Shareholder has good and valid title
to the CTInteractive Common being sold hereunder, free and clear of any liens,
claims, encumbrances, security interests, options, charges and restrictions of
any kind. Upon delivery to VCAT at the Closing of certificates representing the
CTInteractive Common being sold hereunder by the Shareholder duly endorsed by
the Shareholder for transfer to VCAT, and upon the Shareholder's receipt of the
Merger Consideration, good and valid title to such CTInteractive Common will
pass to VCAT, free and clear of any liens, claims, encumbrances, security
interests, options, pledges, equities, rights of first refusal, charges, claims
and restrictions of any kind. Other than this Agreement, the CTInteractive
Common being sold by the Shareholder hereunder is not subject to any other
contract, agreement, arrangement, commitment or understanding, including any
such agreement, arrangement, commitment or understanding restricting or
otherwise relating to the voting, dividend rights or disposition of the
CTInteractive Common.
2.3 No Conflict. Except as stated in Schedule 2.3, the execution and
delivery of this Agreement does not, and the performance of this Agreement and
the consummation of the transactions contemplated hereby in accordance with the
terms, conditions and provisions hereof will not result in a material breach or
violation of, or be in conflict with, or constitute (with or without the giving
of notice or the passage of time or both) a default under (a) to the best of the
Shareholder's Knowledge, any statute, law, ordinance, rule or regulation
(including, without limitation, all laws regulating franchises) applicable to
the Shareholder; (b) to the best of the Shareholder's Knowledge, the terms,
conditions or provisions of any lease, license, promissory note, conditional
sales contract, commitment, indenture, mortgage, deed of trust, partnership
agreement, contract, instrument, or arrangement (whether or not in writing) to
which the Shareholder is a party or by which the Shareholder is bound; or (c)
any permit, license, order, judgment or decree of any court, arbitrator or
governmental authority by which the Shareholder is bound.
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2.4 Consents. To the best of the Shareholder's Knowledge, no consent,
permit, approval, order, authorization of, or filing with or notice to, any
federal, state, local, or foreign governmental department, commission, board,
bureau, agency, instrumentality or authority or any person (whether or not
governmental in character) has been or is required to be obtained, made or given
by the Shareholder in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby or the
fulfillment of or the compliance with the terms, conditions and provisions
hereof, except as set forth in Schedule 2.4 to this Agreement.
2.5 Actions and Proceedings, etc. There are no (a) outstanding
judgments, orders, writs, preliminary or permanent injunctions or other decrees
of any court, administrative agency, governmental authority or instrumentality
or arbitration tribunal against the Shareholder which have or could reasonably
have a Material Adverse Effect on the ability of the Shareholder to consummate
the transactions contemplated hereby or (b) actions, suits, claims or legal,
administrative or arbitration proceedings or investigations pending or
threatened against the Shareholder, which have or could reasonably have a
Material Adverse Effect on the ability of the Shareholder to consummate the
transactions contemplated hereby.
2.6 Investment Representations and Warranties. The Shareholder
understands and represents and warrants to, and agrees with, VCAT that:
(a) The Shareholder understands that the terms of the Merger have
not been reviewed by the U.S. Securities and Exchange Commission (the "SEC") or
state securities authorities nor has such federal or state securities agencies
passed on, or made any recommendation or endorsement of the VCAT Common.
(b) The Shareholder acknowledges that, in making the decision to
accept the VCAT Common as part of the Merger Consideration, he has relied solely
upon independent investigations made by him and not upon any representations
made by VCAT with respect to VCAT or the VCAT Common, except for the
representations and warranties in this Agreement, except that the Shareholder
has received, reviewed and relied upon (a) VCAT's Annual Report to Stockholders
for the year ended June 30, 1999, (b) copies of VCAT's report on Form 10-KSB for
the year ended June 30, 1999, VCAT's reports on Form 10-QSB for the quarters
ended September 30, 1999 and December 31, 1999, and VCAT's definitive Proxy
Statement dated October 28, 1999, each filed by VCAT pursuant to the Exchange
Act, and all other filings, including filings on Form 8-K, by VCAT under the
Exchange Act since September 30, 1999, which, together with any filings by VCAT
under the Exchange Act after the date hereof and prior to the Closing, are
defined as "Exchange Act Reports", and (c) any unaudited financial statements of
VCAT provided to the Shareholder.
(c) The Shareholder acknowledges and understands that the VCAT
Common received by the Shareholder pursuant to the Merger has not been
registered under the Securities Act and constitutes "restricted securities"
under Rule 144(d) of the Securities Act, and will be issued in reliance on the
exemptions for non-public offerings provided by Section 4(2) of the Securities
Act, which exemption depends upon, among other things, the representations made
and information furnished by the Shareholder, including the bona fide nature of
the Shareholder's investment intent as expressed herein. The Shareholder also
understands that VCAT is relying upon the truth and accuracy of the
representations,
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warranties, agreements, acknowledgments and understandings of the Shareholder
set forth herein in order to determine the applicability of such exemptions and
the suitability of the Shareholder to acquire the VCAT Common.
(d) The Shareholder acknowledges that the shares of VCAT Common
issued in connection with the Merger may not be resold publicly for a period of
one year under Rule 144 unless the shares are registered with the SEC. The
Shareholder accepts the risks of holding such shares indefinitely and the other
risks set forth in the Exchange Act Reports. The Shareholder, together with his
advisors, is capable of assessing the risks of an investment in VCAT Common and
is fully aware of the economic risks thereof. The Shareholder acknowledges that
VCAT's operating results have in the past and may in the current period and in
future periods not meet the expectations of securities analysts and that failure
to meet such expectations would be likely to have a Material Adverse Effect on
the trading price of VCAT Common.
(e) The Shareholder is receiving the shares of VCAT Common in the
Merger for investment for such Shareholder's own account only, not as a nominee
or agent, and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act, and the
Shareholder has no present intention of selling, granting any participation in,
or otherwise distributing the same within the meaning of the Securities Act. By
executing this Agreement, the Shareholder further represents that it does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third person with
respect to any of the shares of the VCAT Common. The Shareholder has no current
plan or intention to engage in a sale, exchange, transfer, distribution,
redemption or reduction in any way of the Shareholder's risk of ownership by
short sale or otherwise, or other disposition, directly or indirectly, of any of
the VCAT Common to be received by Shareholder in the Merger.
(f) The Shareholder recognizes that VCAT has made available to
him the opportunity to examine such additional documents from VCAT and to ask
questions of, and receive full answers from, VCAT concerning, among other
things, VCAT, its financial condition, its management, its prior activities and
any other information which the Shareholder considers relevant or appropriate in
connection with entering into this Agreement. The Shareholder further represents
that the oral information provided by VCAT's management, if any, has been
consistent with the information set forth in the Exchange Act Reports. The
Shareholder represents that it has had an opportunity to ask questions and
receive answers from VCAT regarding the terms of the Merger in which the VCAT
Common will be issued and that he has received the information he requested
regarding the business and affairs of VCAT.
(g) The Shareholder acknowledges that he (1) is able to bear the
economic risk of his investment in the VCAT Common, (2) is able to hold the VCAT
Common for an indefinite period of time, (3) can afford a complete loss of his
investment in the VCAT Common; (4) has adequate means of providing for his
current needs and possible personal contingencies and has no need for liquidity
in this investment, and (e) has such knowledge and experience in financial or
business matters that he is capable of evaluating the merits and risks of the
investment in the VCAT Common.
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(h) Without in any way limiting the representations set forth
above, the Shareholder further agrees not to make any disposition of all or any
portion of the VCAT Common or unless and until:
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(ii) (a) The Shareholder shall have notified VCAT of the
proposed disposition and shall have furnished VCAT with a detailed statement of
the circumstances surrounding the proposed disposition, and (b) if requested by
VCAT, the Shareholder shall have furnished VCAT with an opinion of counsel, at
VCAT's reasonable expense and reasonably satisfactory to VCAT, that such
disposition will not require registration of such shares under the Securities
Act.
(i) The Shareholder represents that at no time was he presented
with or solicited by any general mailing, leaflet, public promotional meeting,
newspaper or magazine article, radio or television advertisement, or any other
form of general advertising or general solicitation in connection with the
Merger.
(j) The Shareholder acknowledges that the certificates
representing the VCAT Common shall contain the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
REGISTERED OR QUALIFIED UNDER ANY OTHER SECURITIES LAW; THEY HAVE
BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE
PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED UNDER SUCH ACT AND ANY APPLICABLE SECURITIES
LAWS, OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE
AND VCAT CATALYST INCORPORATED ("VCAT") SHALL HAVE RECEIVED, AT
THE EXPENSE OF THE HOLDER HEREOF, EVIDENCE OF THE EXEMPTION
REASONABLY SATISFACTORY TO VCAT (WHICH MAY INCLUDE, AMONG OTHER
THINGS, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO VCAT)."
(k) All information that Shareholder provides to VCAT hereunder
concerning such Shareholder's financial position and knowledge of financial and
business matters is correct and complete as of the date set forth above.
2.7 Gaming Restrictions. The Shareholder acknowledges that he has read
and understands Article X of VCAT's Amended and Restated Articles of
Incorporation, as
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amended ("Article X"), relating to the additional requirements imposed upon
certain persons, including the Shareholder, who are or will be significant
shareholders of VCAT. A copy of Article X is attached hereto as Schedule 2.7.
The Shareholder hereby agrees that his signature on this Agreement also shall
constitute his written agreement to be bound by the provisions of Article X.
2.8 Stop Transfer Instructions; No Requirements to Transfer. The
Shareholder agrees that, in order to ensure compliance with the restrictions
referred to herein, VCAT may issue appropriate "stop transfer" instructions to
its transfer agent. VCAT shall not be required (a) to transfer or have
transferred on its books any VCAT Common that has been sold or otherwise
transferred in violation of any of the provisions of this Agreement or (b) to
treat as owner of such VCAT Common or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such VCAT Common shall
have been so transferred in violation of any provision of this Agreement. VCAT
agrees that such stop transfer instructions and legends will be promptly removed
if the provisions of the Securities Act and VCAT's charter documents are
complied with.
2.9 Accuracy of Documents and Information. The copies of all
instruments, agreements, other documents and written information delivered to
VCAT by or on behalf of the Shareholder, pursuant to this Article 2, are and
will be complete and correct in all material respects as of the date hereof and
as of the Closing Date. The representations and warranties made by the
Shareholder in this Article 2, or in other written materials furnished to VCAT
pursuant to the representations and warranties in this Article 2 or in
connection with the transactions contemplated by this Article 2, taken as a
whole, do not, to the best of the Shareholder's Knowledge, contain any untrue
statement of material fact and do not omit any material fact necessary to make
the statements or facts contained herein or therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDER AND CTINTERACTIVE
In order to induce VCAT and Acquisition Corp. to enter into this
Agreement, the Shareholder and CTInteractive hereby, jointly and severally, each
make the representations and warranties set forth below, which representations
and warranties shall be deemed to continue in full force and effect until the
time of the Closing and thereafter as set forth herein.
3.1 Organization, Good Standing and Qualification. CTInteractive is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all necessary power and authority to own and
lease its properties and assets and to conduct its businesses as now owned and
presently operated by it. To the best of the Shareholder's Knowledge, neither
the nature of its business, nor the character or location of properties or
assets owned or leased by CTInteractive, has made or makes necessary licensing
or qualification by CTInteractive in any jurisdiction other than its respective
jurisdiction of organization.
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3.2 Authority. CTInteractive has full corporate power, authority and
legal right to enter into and perform its obligations under this Agreement and
all agreements to which CTInteractive is or will be a party that are required to
be executed pursuant to this Agreement (the "CTInteractive Ancillary
Agreements"), and to consummate the transactions contemplated hereby and
thereby. This Agreement and the CTInteractive Ancillary Agreements have been
duly and validly approved by the CTInteractive Board of Directors and
shareholders, as required by applicable law. This Agreement and the
CTInteractive Ancillary Agreements constitute legal, valid and binding
obligations of CTInteractive enforceable against CTInteractive; provided,
however, that the CTInteractive Ancillary Agreements will not be effective until
the earlier of the Effective Date or the date provided for therein in accordance
with their respective terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws, or by equitable principles, relating to or limiting the
rights of creditors generally, (b) limitations imposed by law or equitable
principles upon the availability of specific performance, injunctive relief or
other equitable remedies, and (c) concepts of materiality.
3.3 Consents. To the best of the Shareholder's Knowledge, no filing,
authorization or approval, governmental or otherwise, is necessary to enable
CTInteractive to enter into, and to perform its obligations under, this
Agreement and the CTInteractive Ancillary Agreements, except for (a) the filing
of the Articles of Merger and the Agreement of Merger with the Secretaries of
State of the States of Utah and California, respectively, the filing of such
officers' certificates and other documents as are required to effectuate the
Merger under Utah and California law and the filing of appropriate documents
with the relevant authorities of the states other than California in which
CTInteractive is qualified to do business, if any, (b) such filings as may be
required to comply with federal and state securities laws, (c) consents required
under contracts disclosed in Schedule 3.3 and (d) the approval of the
Shareholder.
3.4 Capitalization.
(a) Authorized/Outstanding Capital Stock. The authorized capital
stock of CTInteractive consists of 100,000 shares of CTInteractive Common. 1,000
shares of CTInteractive Common are issued and outstanding as of this date and as
of the Closing Date, of which the Shareholder holds of record and beneficially
all 1,000 shares of CTInteractive Common. The Shareholder holds good and
marketable title to such CTInteractive shares, free and clear of all liens,
agreements, voting trusts, proxies and other arrangements or restrictions of any
kind whatsoever. No shares of Preferred Stock are authorized, issued or
outstanding. All issued and outstanding shares of CTInteractive Common have been
duly authorized and validly issued, are fully paid and nonassessable, are not
subject to any right of rescission and have been offered, issued, sold and
delivered by CTInteractive in compliance with all registration or qualification
requirements (or applicable exemptions therefrom) of applicable federal and
state securities laws.
(b) Options/Rights. There are no stock appreciation rights,
options, warrants, calls, rights, commitments, conversion privileges or
preemptive or other rights or agreements outstanding to purchase or otherwise
acquire any of CTInteractive's authorized
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but unissued capital stock or any securities or debt convertible into or
exchangeable for shares of CTInteractive Common or obligating CTInteractive to
grant, extend or enter into such option, warrant, call, commitment, conversion
privileges or preemptive or other right or agreement. There is no liability for
dividends accrued but unpaid. There are no voting agreements, registration
rights, rights of first refusal or other restrictions (other than normal
restrictions on transfer under applicable federal and state securities laws)
applicable to any of CTInteractive' outstanding securities.
3.5 Subsidiaries. CTInteractive does not have any subsidiaries or any
equity interest, direct or indirect, in any corporation, partnership, joint
venture or other business entity.
3.6 No Conflict. Except as stated in Schedule 3.6, the execution and
delivery of this Agreement or any of the CTInteractive Ancillary Agreements do
not, and the performance of this Agreement or any of the CTInteractive Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby in accordance with their respective terms, conditions and provisions
will not (a) to the best of the Shareholder's Knowledge, accelerate the maturity
of, or give any person any rights under, or the right to rescind, or otherwise
modify, any obligation, indebtedness, license, agreement or instrument to which
CTInteractive is a party or by which CTInteractive or any of its properties or
assets is bound, (b) to the best of the Shareholder's Knowledge, result in the
creation of any lien, encumbrance or charge upon any of the properties or assets
of CTInteractive or (c) result in a breach or violation of, or be in conflict
with, or constitute (with or without the giving of notice or the passage of time
or both) a default under (i) to the best of the Shareholder's Knowledge, any
statute, law, ordinance, rule or regulation (including, without limitation, all
laws regulating franchises) applicable to CTInteractive or any of its properties
or assets; (ii) the terms, conditions or provisions of the articles of
incorporation or any other charter documents of CTInteractive, or, to the best
of the Shareholder's Knowledge, any lease, license, promissory note, conditional
sales contract, commitment, indenture, mortgage, deed of trust, partnership
agreement or other agreement, contract, instrument or arrangement or other
undertaking (whether or not in writing) to which CTInteractive is a party or by
which CTInteractive, or any of its properties or assets, is bound; or (iii) any
permit, license, order, judgment or decree of any court, arbitrator or
governmental authority by which CTInteractive, or any of its properties or
assets, is bound.
3.7 Financial Statements.
(a) The Shareholder and CTInteractive have caused to be delivered
to VCAT true and complete copies of the financial statements of CTInteractive
for the years ending December 31, 1997, December 31, 1998 and December 31, 1999,
prepared in accordance with IRS record keeping requirements (together the
"CTInteractive Financial Statements"). The CTInteractive Financial Statements:
(i) are in agreement with the books and records of CTInteractive; and (ii)
present fairly and accurately the assets, liabilities and financial position of
CTInteractive at the respective dates of the balance sheets included in the
financial statements, and the results of operations and changes in financial
position and shareholders' equity thereof for the respective periods covered
thereby. The Shareholder and CTInteractive have made available to VCAT and its
agents and representatives for inspection
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true and correct copies of the accountants' working papers and other materials
utilized in preparing the financial statements.
(b) The accounting and other books and records of CTInteractive
have been properly prepared and accurately present and reflect in accordance
with IRS record keeping requirements all the transactions entered into by
CTInteractive or to which it has been a party and there are at the date hereof
no material inaccuracies or discrepancies contained or reflected in any of the
said books and records, and as of the dates thereof they respectively give and
reflect a fair view of the financial position of CTInteractive and of its
respective fixed, current and contingent assets and liabilities, and debtors and
creditors.
(c) Except as set forth on Schedule 3.7, in relation to all
debentures, acceptance credits, overdrafts, loans or other financial facilities
outstanding or available to CTInteractive (referred to in this clause as
"facilities"): material details of all facilities have been disclosed and there
have been delivered to VCAT accurate copies of all material documents, if any,
relating to the facilities; there has been no material contravention of, or
non-compliance with, any material provision of any of such documents; no steps
for the early repayment of any indebtedness relating to the facilities have been
taken or, to the best of the Shareholder's Knowledge, threatened; there are no
circumstances whereby the continuation of any of the facilities are likely to be
prejudiced, or which may give rise to any alteration in the material terms and
conditions of any of the facilities; to the best of the Shareholder's Knowledge,
none of the facilities is dependent on the guarantee or indemnity of, or any
security provided by, a third party other than the Shareholder, and the
Shareholder has no reason to anticipate that as a result of anything
contemplated in this Agreement or any of the CTInteractive Ancillary Agreements,
any of the facilities might be terminated or mature prior to its stated
maturity.
3.8 Absence of Undisclosed Liabilities. To the best of the Shareholder's
Knowledge, as of December 31, 1999 (the "Balance Sheet Date"), CTInteractive did
not have and was not subject to any material liability, indebtedness, claim,
obligation or responsibility, fixed or contingent, liquidated or unliquidated,
secured or unsecured, or otherwise, which was not either:
(a) specifically included in the full amount as a liability or
adequately and specifically reserved for or against in the full amount
in the CTInteractive Financial Statements; or
(b) fully and specifically set forth in Schedule 3.8.
To the best of the Shareholder's Knowledge, since the Balance Sheet
Date, CTInteractive has not incurred or become subject to any material
liability, indebtedness, claim, obligation or responsibility, fixed or
contingent, liquidated or unliquidated, secured or unsecured, or otherwise,
other than those incurred since the Balance Sheet Date in the ordinary course of
business consistent with past practice.
3.9 Tax Returns and Payments. To the best of the Shareholder's and
CTInteractive's Knowledge, CTInteractive has filed all federal, state, local and
foreign tax and material information returns required to be filed prior to the
date hereof, has paid all
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taxes required to be paid in respect of all periods prior to the date hereof for
which returns have been filed, has made all necessary estimated tax payments,
and has no liability for taxes in excess of the amount so paid, except to the
extent adequate reserves have been established in the CTInteractive Financial
Statements, and true, correct and complete copies of all such tax and
information returns have been provided or made available by CTInteractive to
VCAT. CTInteractive is not delinquent in the payment of any tax or in the filing
of any tax returns, and no deficiencies for any tax have been threatened,
claimed, proposed or assessed which have not been settled or paid. No tax return
of CTInteractive has ever been audited by the Internal Revenue Service or any
state taxing agency or authority. For the purposes of this Section 3.9, the
terms "tax" and "taxes" include all federal, state, local and foreign income,
gains, franchise, excise, property, sales, use, employment, license, payroll,
occupation, recording, value added or transfer taxes, governmental charges,
fees, levies or assessments (whether payable directly or by withholding), and,
with respect to such taxes, any estimated tax, interest and penalties or
additions to tax and interest on such penalties and additions to tax. Since its
inception, CTInteractive has made an election under the Code and state income
tax laws to be treated as an S Corporation. Such election will remain valid
through the Closing Date. All taxes arising by reason of such election
(including, but not limited to, the corporate level built in gain and capital
gain taxes described in Section 1374 of the Code or a predecessor section of the
Code) have been or will be paid by the Shareholder no matter when assessed.
CTInteractive has no current or deferred federal income tax liabilities, save
for those which are necessary for a tax clearance certificate from the State of
California necessary to obtain a California Certificate of Merger, and will not
as a result of the Merger become liable for any income tax not adequately
reserved against on the CTInteractive' Financial Statements. CTInteractive has
not filed a consent pursuant to Section 341(f) of the Code. If CTInteractive
were to become subject to an audit by the Internal Revenue Service or any state
taxing agency or authority for tax years or periods prior to the Effective Date
(including, but not limited to, any short tax year resulting from the Merger),
the Shareholder will use all reasonable efforts to resolve all such audits in a
manner consistent with the intentions of CTInteractive and VCAT as expressed in
this Agreement.
3.10 Absence of Certain Changes or Events. Since the Balance Sheet Date
and except as specifically authorized hereunder or as set forth in Schedule
3.10:
(a) CTInteractive has not entered into any transaction other
than in the ordinary course of business, consistent with past practice;
(b) there have been no changes in the financial condition,
results of operations, assets, liabilities, prospects or CTInteractive
other than changes in the ordinary course of business, consistent with
past practice which in the aggregate have not had a Material Adverse
Effect, nor any event or circumstance which could reasonably be expected
to result in any such changes and, without limiting the foregoing, there
has not been any damage, destruction or loss, whether or not covered by
insurance, affecting any of the assets or properties of CTInteractive
amounting to more than $10,000 in the aggregate;
(c) CTInteractive has not (i) increased or decreased any of the
rates of compensation payable or to become payable to any employee,
agent or consultant,
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or granted, made or accrued any bonus, percentage compensation, service
award or other like benefit to or to the credit of any such employee,
agent or consultant; (ii) entered into or amended any bonus, incentive
compensation, deferred compensation, profit sharing, retirement,
pension, group insurance or other benefit plan or any employment or
consulting agreement; (iii) created or otherwise become liable with
respect to any indebtedness for money borrowed or purchase money
indebtedness, except in the ordinary course of businesses consistent
with past practice; (iv) amended its Articles of Incorporation or any
other charter documents; (v) issued, purchased or disposed of or
contracted to issue, purchase, or dispose of any of its capital stock or
any options, warrants or rights with respect thereto or interests
therein; (vi) entered into, assumed, modified or terminated any
contract, liability or obligation, except in the ordinary course of
business, consistent with past practice or settled, discharged or waived
any right or claim without adequate consideration; (vii) sold, leased or
otherwise disposed of or encumbered in any way any assets, except for
sales in the ordinary course of business, consistent with past practice;
(viii) acquired any property or asset, except in the ordinary course of
business, consistent with past practice; (ix) directly or indirectly
declared or paid any non-cash dividend or distribution with respect to
its capital stock, (x) entered into any transaction with the Shareholder
or any Affiliate of the Shareholder, except in the ordinary course of
business consistent with past practice; or (xi) agreed to take any
action specified in (i)-(x) hereof.
3.11 Accounts Receivable. The accounts receivable and other receivables
of CTInteractive shown on the CTInteractive Financial Statements, and the
accounts receivable and other receivables arising since the Balance Sheet Date,
are valid and binding obligations of the debtors requiring no further
performance by CTInteractive, and, subject to such reserves as have been
disclosed in writing to VCAT, the Shareholder believes that as of the date of
this Agreement they are collectible in the ordinary course of business in
amounts not materially less than the aggregate amount thereof carried on the
books of CTInteractive.
3.12 Interests in Real Property. CTInteractive does not own any real
property. Schedule 3.12 sets forth a true and complete list of each parcel of
real property leased by CTInteractive. A true and complete copy of each lease
listed on Schedule 3.12 has been provided to VCAT. All of such leases are valid
and enforceable, and there does not exist any default under any of such leases,
or any event which, with the giving of notice or passage of time, or both, would
constitute a default under any of such leases. There are no circumstances known
to the Shareholder or CTInteractive which are likely to give rise to any dispute
in relation to any of such real properties with any governmental or local
authority, superior lessor, tenant or licensee or with the owner or occupier of
any adjoining or neighboring property or any other party. CTInteractive has
complied in all material respects with all legislation, statutory requirements,
governmental or other orders, rules, directives or instruments affecting or
pertaining to the use, occupation or enjoyment of such properties. Neither the
Shareholder nor CTInteractive have received any notice or are aware of any
breach of any covenants, restrictions, stipulations, conditions and other terms
affecting such real properties or are aware of any circumstances which would
entitle or require any person to exercise any powers of entry and taking
possession or which would otherwise terminate
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or restrict the continued possession or occupation of such real properties. Such
real properties:
(a) are not subject to any covenants, obligations, restrictions
or conditions which are of any unusual or onerous nature or which would
affect the use or continued use of the properties by the relevant owners
for the purpose or to the extent or in the manner now used;
(b) do not enjoy any right, easement or privilege, the
withdrawal or cessation of which would adversely affect the use or
continued use of any of such real properties by the relevant owners for
the purpose for or to the extent to or in the manner in which it is now
used;
(c) are not affected by any of the following matters: (i) any
closing order, demolition order or clearance order; (ii) any order or
proposal publicly advertised or of which written notice has been
received for the compulsory acquisition or requisition of the whole or
any part thereof or the discontinuance of any use or the removal of any
building; or (iii) any agreement with any public body or authority
regulating the use or development thereof except as stated in the lease
agreement;
and neither the Shareholder nor CTInteractive are aware of any intention on the
part of the relevant authorities to issue any such order or notice, or any
matter which gives rise to the issue of any such order or notice. As at the date
hereof, there is no agreement to sell or part with the possession of or let or
license or grant any option over or otherwise dispose of any interest in such
properties or any part thereof. All of such real property interests and
improvements, the furniture, fixtures and equipment relating thereto, and the
operation of the businesses of CTInteractive thereon, conform to any and all
applicable health, fire, safety, zoning and building laws, ordinances and
regulations. Except as set forth on Schedule 3.12, all buildings, structures and
fixtures used by CTInteractive in the conduct of its business are located on the
parcels of real property listed in Schedule 3.12 and are in good operating
condition and repair, ordinary wear and tear excepted.
3.13 Personal Property. All assets used in the conduct of the business
of CTInteractive are either owned by CTInteractive, or leased or rented by
CTInteractive, (a) in transactions with non-Affiliates of the Shareholder, or
(b) on terms no more or less favorable than would have been obtained in arms
length transactions. Schedule 3.13 sets forth, current as of the date hereof, a
true, complete and correct list of each of the assets (other than real property)
having a book value of $25,000 or more included in the CTInteractive Financial
Statements or otherwise used in the conduct of the business of CTInteractive.
The book value of any assets that are not included on such list does not, in the
aggregate, exceed $25,000, as of the date hereof. Except as set forth on
Schedule 3.13, CTInteractive has good title, free and clear of all title defects
and objections, security interests, liens and encumbrances, including, without
limitation, leases, chattel mortgages, conditional sales contracts, collateral
security arrangements and other title or interest retaining arrangements, to any
inventory, furniture, machinery, equipment, and other personal property
reflected on the CTInteractive Financial Statements, except for acquisitions,
sales and dispositions in the normal course of business since the Balance Sheet
Date as
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contemplated by this Agreement. All material personal property of CTInteractive
is in good operating condition and repair, ordinary wear and tear excepted.
3.14 Intangible Property Rights. Schedule 3.14 is a true and complete
list of all licenses, patents, copyrights, trademarks, service marks, service
names, trade names, trade secrets or other proprietary information
(collectively, the "Intellectual Property") owned by CTInteractive or in which
they have rights. CTInteractive owns or possesses such rights in all
Intellectual Property as are necessary or adequate for the conduct of its
businesses. To the best of the Shareholder's Knowledge, CTInteractive is not
infringing and has not infringed upon any patent, trademark, trademark right,
service xxxx, service name, trade name, trade secret or proprietary information
owned or held by any other person or entity, and, except as set forth in
Schedule 3.14, there is no material claim or action by any other person or
entity pending or threatened alleging that CTInteractive is infringing upon any
patent, trademark, trademark right, service xxxx, service name, trade name,
trade secret or proprietary information owned or held by any other person or
entity, nor is there any reasonable basis for any such claim or action by any
person. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not constitute a
material breach of any instrument or agreement governing any Intellectual
Property (the "CTInteractive IP Rights Agreements"), will not cause the
forfeiture or termination or give rise to a right of forfeiture or termination
of any Intellectual Property or materially impair the right of CTInteractive to
use, sell or license any Intellectual Property or portion thereof. There are no
royalties, honoraria, fees or other payments payable by CTInteractive to any
person by reason of the ownership, use, license, sale or disposition of the
Intellectual Property (other than as set forth in the CTInteractive IP Rights
Agreements listed in Schedule 3.14). To the best of the Shareholder's Knowledge,
neither the manufacture, marketing, license, sale or intended use of any product
currently licensed or sold by CTInteractive or currently under development by
CTInteractive violates any license or agreement between CTInteractive and any
third party. CTInteractive has taken reasonable and practicable steps designed
to safeguard and maintain the secrecy and confidentiality of, and its
proprietary rights in, all material Intellectual Property. All officers,
employees and consultants of CTInteractive have executed and delivered to
CTInteractive an agreement regarding the protection of proprietary information
and the assignment to CTInteractive of all intellectual property rights arising
from the services performed for CTInteractive by such persons.
3.15 Title to Assets. Except as set forth in Schedule 3.12 or 3.13,
CTInteractive is the owner and has good and marketable title to all its assets
and interests in assets, whether real, personal, mixed, tangible or intangible,
which constitute all the material assets and interests in assets that are used
in its business and that are necessary for the conduct and operation of its
business as presently conducted. Except as set forth in Schedule 3.12 or 3.13,
all these assets are free and clear of mortgages, liens, pledges, charges,
encumbrances, equities, claims, easements, rights of way, covenants, conditions
or restrictions, except for: (i) those reflected on the CTInteractive Financial
Statements; and (ii) liens for current taxes not yet due and payable.
CTInteractive is in possession of all premises leased to it from others. Except
as set forth on Schedule 3.15, neither any officer, director, employee or
Affiliate of CTInteractive, nor any spouse or child of any of these persons,
owns, or has any
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interest, directly or indirectly, in any of the real or personal property owned
by or leased to CTInteractive.
3.16 Litigation. Schedule 3.16 identifies all claims, suits, litigation,
actions, arbitrations, governmental investigations and legal, administrative or
other proceedings or controversies, at law or in equity or otherwise, to which
CTInteractive, or any of its officers, directors, employees, stockholders or
agents or assets, is a party or which is threatened against any such persons or
assets which affects or may reasonably be expected to affect the financial
condition, liabilities, Permits or Contracts (as defined in Section 3.17),
assets, shareholders' equity, properties (including the value or usefulness
thereof), sales, net income, operations, prospects or businesses of
CTInteractive. The matters set forth in Schedule 3.16, if decided adversely,
will not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect. To the best of the Shareholder's Knowledge,
CTInteractive is not subject to any order, judgment, decree or governmental
restriction which adversely affects its financial condition, liabilities,
Permits or Contracts, assets, shareholders' equity, properties, sales, net
income, operations, prospects or businesses or which would prevent the
transactions contemplated by this Agreement. To the best of the Shareholder's
Knowledge, and except as disclosed in Schedule 3.16, CTInteractive has not been
and is not in violation of, and has not received any formal or informal notice
of violation of, any law or order, writ, injunction or decree of any U.S.
federal, state, municipal, or local court or other governmental department,
commission, board, bureau, agency or instrumentality which would, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect. There is no basis for any Person, firm, corporation or entity to assert
a claim against CTInteractive or VCAT as successor in intent to CTInteractive
based upon: (a) ownership or rights to ownership of any shares of CTInteractive
Common, (b) any rights as a CTInteractive securities holder, including, without
limitation, any option or other right to acquire any CTInteractive securities,
any preemptive rights or any rights to notice or to vote, or (c) any rights
under any agreement between CTInteractive and the Shareholder or former
CTInteractive securities holder, if any, in such holder's capacity as such.
3.17 Contracts and Permits. Schedule 3.17 describes all (a) currently
effective or applied for (as designated in Schedule 3.17) licenses, franchises,
permits, easements, certificates, consents, rights, privileges, and
authorizations necessary or advisable to the conduct of the business of
CTInteractive (collectively, the "Permits"), and (b) currently effective
contracts, instruments, arrangements or agreements, oral or written (other than
leases disclosed on other schedules delivered pursuant to this Agreement), to
which CTInteractive is a party or by which its properties are bound which: (i)
involve the payment by CTInteractive of more than $25,000 per annum; (ii) have a
duration of more than one year; (iii) are not terminable at the option of
CTInteractive by less than 30 days' notice, without the payment of any penalty;
(iv) is with any officer, director, shareholder, Affiliate or other employee of
CTInteractive; (v) are with a bank or other lender; (vi) grant exclusive sales,
purchase or distribution rights to any person; or (vii) have been entered into
other than in the ordinary course of business (collectively, the "Contracts").
The Shareholder and CTInteractive have provided to VCAT true copies, or
summaries, of each Permit and Contract. Unless so stated on Schedule 3.17,
CTInteractive has not been and is not in material breach or default of any
Permit or Contract and no event exists which, with the giving of notice or
passage of time, or both, would constitute a material breach or default of
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any of the Permits or Contracts. All of the Permits and Contracts are in full
force and effect and are not subject to cancellation, termination, or
modification for any reason related to the consummation of the transactions
contemplated in this Agreement or otherwise. To the best of the Shareholder's
Knowledge, no other party to any Permit or Contract intends to revoke, alter, or
not to perform its obligations under such Permit or Contract. Except as set
forth on Schedule 3.17, CTInteractive is not a party to any agreement in which
any of the directors or Affiliates of CTInteractive has a material interest
(directly or indirectly). Except as set forth on Schedule 3.17, there is no
contract which is likely or estimated to give rise to a loss to CTInteractive
exceeding in the aggregate $25,000. Except as set forth on Schedule 3.17, there
is no contract involving or which may involve obligations on CTInteractive or
the need for expenditure by CTInteractive of a nature or magnitude which cannot
be fulfilled, or performed without undue or unusual expenditure of money or
effort.
3.18 Existing Employment Contracts. Schedule 3.18 sets forth a list and
full description of all employment contracts and collective bargaining
agreements, and all pension, bonus, retirement, profit-sharing, stock option, or
other agreements or arrangements, oral or written, providing for employee
remuneration or benefits (including, without limitation, all vacation,
termination, severance and leave policies and obligations) to which
CTInteractive is a party or by which CTInteractive is bound (collectively,
"Employee Plans"). Except as disclosed in Schedule 3.18, for each Employee Plan
which is not fully funded, CTInteractive has established reserves on its books
to provide for the benefits earned and other liabilities accrued under each such
Employee Plan through the Closing Date in amounts sufficient to fully provide
for such benefits and liabilities; these reserves have been determined in the
same manner as such reserves have been determined for the prior year. True and
correct copies of all Employee Plans and records disclosing the costs of
providing benefits under, and paying liabilities of, each Employee Plan for the
past three years have been provided to VCAT. No employee of CTInteractive is in
material violation of any term of any employment contract, patent disclosure
agreement or noncompetition agreement or any other contract or agreement, or any
restrictive covenant, relating to the right of any such employee to be employed
by CTInteractive or to use trade secrets or proprietary information of others,
and the employment of any employee of CTInteractive does not subject
CTInteractive to any liability to any third party.
Except as set forth in Schedule 3.18, CTInteractive is not a
party to any (a) agreement with any executive officer or other key employee of
CTInteractive (i) the benefits of which are contingent, or the terms of which
are materially altered, upon the occurrence of a transaction involving
CTInteractive in the nature of any of the transactions contemplated by this
Agreement, the Articles of Merger and the Agreement of Merger, (ii) providing
any term of employment or compensation guarantee or (iii) providing severance
benefits or other benefits after the termination of employment of such employee
regardless of the reason for such termination of employment, or (b) agreement or
plan, including, without limitation, any stock option plan, stock appreciation
rights plan or stock purchase plan, any of the benefits of which will be
materially increased, or the vesting of benefits of which will be materially
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement, the Articles of Merger and the Agreement of Merger or the value of
any of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement, the Articles of Merger and the
Agreement of Merger. CTInteractive is not
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obligated to make any excess parachute payment, as defined in Section 280G(b)(1)
of the Code, nor will any excess parachute payment be deemed to have occurred as
a result of or arising out of the Merger to the extent Section 280G of the Code
is applicable to CTInteractive.
3.19 Interest in Customers, Suppliers and Competitors. Except as
disclosed and described in Schedule 3.19 (and including direct employee
compensation disclosed to VCAT and not in arrears), to the best of the
Shareholder's Knowledge, neither the Shareholder nor CTInteractive, nor any
officer, director or Affiliate of CTInteractive, nor any spouse or child of any
of them, has any material direct or indirect interest in any competitor,
contractor, supplier or customer of CTInteractive, or in any person with whom
CTInteractive is doing business or is leasing or buying property or services. No
person who is an officer, director or shareholder of CTInteractive, or any
member of any officer's, director's or shareholder's immediate family, is
directly or indirectly interested in any material contract or informal
arrangement with CTInteractive, including, but not limited to, any loan
arrangements, except for compensation for services as an officer, director or
employee of CTInteractive as listed in Schedule 3.18. None of such officers,
directors, shareholders or family members has any material interest in any
property, real or personal, tangible or intangible, including, without
limitation, inventions, patents, copyrights, trademarks, trade names or trade
secrets, used in the business of CTInteractive, except for the normal rights of
a shareholder.
3.20 Personnel Identification and Compensation. VCAT has been provided
with a written list of the names of all officers, directors, employees, and
agents of CTInteractive who receive an annual salary in excess of $24,000 per
annum, stating the rates of compensation payable to each of them. Except as
listed on such list, no other person, except accountants, auditors, attorneys,
and independent contractors which are not material to CTInteractive's ongoing
business, regularly performs compensable services CTInteractive.
3.21 Powers of Attorney and Suretyships. Except as described in Schedule
3.21, CTInteractive presently has no outstanding powers of attorney or
guarantees, and no material obligations or liabilities, whether actual, accrued,
accruing or contingent, as guarantor, surety, co-xxxxxx, endorser (other than
checks endorsed for presentation in the ordinary course of business), co-maker,
indemnitor or otherwise in respect of the obligation of any person, corporation,
partnership, joint venture, association, organization or other entity.
3.22 Employees.
(a) Other than as set forth in Schedule 3.22, CTInteractive is
not a party to:
(i) any payment in connection with retirement, death or
disability to any person who is or has been a director, officer or employee of
CTInteractive or a relative or dependent or such a person other than pursuant to
any such agreement, arrangement, scheme or fund to which CTInteractive is
required by law to be a party;
(ii) any profit sharing plan or other employee benefit plan for
the payment to employees or directors of bonuses or incentive payments or the
like or of any
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non-cash compensation, including but not limited to grants of options, rights,
warrants, convertible securities and the like; or
(iii) any obligation or ex-gratia arrangement to pay
pensions, gratuities, retirement benefits, periodical sums or any compensation
to any person other than pursuant to any such agreement, arrangement, scheme or
fund to which CTInteractive is required by law to be a party.
(b) CTInteractive is under no obligation (whether actual or
contingent) to any former employee whether for breach of any contract of
service, for compensation for wrongful dismissal or for unfair dismissal or for
payment of any salaries, wages, pension, gratuities, bonuses or otherwise
howsoever or whatsoever and no tax, levy, contribution or payment in respect to
any former employee whether to any governmental authority, pension fund, scheme
or trust or otherwise howsoever or whatsoever will be outstanding or disputed.
3.23 Labor Relations. Except as described in Schedule 3.23, there are no
agreements with, or pending petitions for recognition of, any labor union or
association as the bargaining agent or representative for all of CTInteractive'
employees; no such petitions have been pending at any time within three years of
the date of this Agreement and there has been no organizing effort by any union
or other group seeking to represent any employees of CTInteractive as their
bargaining agent or representative at any time within three years of the date of
this Agreement; no claim has been, nor could be, made that any collective
bargaining agreement set forth on Schedule 3.23 should be applicable to any
employees of CTInteractive not expressly covered by the terms of such
agreements; and there are no labor strikes, work stoppages or other labor
troubles, now pending, or threatened, against CTInteractive, nor have there been
any such labor strikes, work stoppages or other labor troubles, at any time
within the two (2) years preceding the date of this Agreement. To the best of
the Shareholder's Knowledge, except as described on Schedule 3.23, there have
been no grievances filed, nor claims of unfair labor practices, made, against
CTInteractive at any time within the past three years.
3.24 Insurance. Schedule 3.24 includes a list of all insurance policies
in force with respect to CTInteractive showing for each such policy: (a) the
owner; (b) the coverage of such policy; (c) the amount of premium properly
allocable to such policy; (d) the name of the insurer; and (e) the termination
date of the policy. All policies listed on Schedule 3.24 are in full force and
effect and are "claims made" policies. All the conditions of such insurance have
been performed and observed and nothing has been done or omitted to be done
which could make any such insurance void or voidable. All premiums in respect of
such insurance which may have become due have been duly paid. To the best of the
Shareholder's Knowledge, there are no claims outstanding, pending or threatened
against CTInteractive which are not covered by insurance. The Shareholder and
CTInteractive have provided VCAT with complete copies, or summaries, of all
policies listed on Schedule 3.24. Such insurance policies provide coverage
reasonable for the business conducted by CTInteractive and are sufficient for
compliance with all applicable laws or leases or other agreements to which
CTInteractive is a party.
3.25 Compliance with Laws. To the best of the Shareholder's Knowledge,
except as described in Schedule 3.25, CTInteractive has not been and currently
is not in violation
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of any applicable U.S. federal, state, or local statutes, laws and regulations
(including, without limitation, any applicable building, zoning, or other law,
ordinance, or regulation) affecting any of its properties or the conduct or
operation of its business.
3.26 Corporate Documents.
(a) The Shareholder and CTInteractive have furnished to VCAT for
its examination: (i) true and correct copies of articles of incorporation,
bylaws and any other charter documents, including any amendments thereto, of
CTInteractive and (ii) except as described in Schedule 3.26, the statutory
books, minute books and stock transfer registers of CTInteractive which contain
all records concerning all proceedings, consents, actions and meetings of the
shareholders and boards of directors of CTInteractive and issuances of shares,
debentures and other securities thereof.
(b) CTInteractive has complied with its articles of incorporation
and Bylaws in all respects, and none of the business, activities, agreements,
commitments or rights of CTInteractive is ultra xxxxx or unauthorized.
3.27 Credit Cards. Schedule 3.27 contains a true and complete list of
all credit cards issued or caused to be issued by or on behalf of CTInteractive
to any person, firm or entity which CTInteractive is or may be liable for
charges or payments. The Shareholder and CTInteractive shall cause to be
delivered to VCAT on or before the Closing Date all of such credit cards as VCAT
may designate.
3.28 Bank Accounts. Schedule 3.28 contains a true and complete list of
the name of each bank, savings and loan association or other financial
institution in which CTInteractive has any type of account or safe deposit box,
the account name and number of each such account or safe deposit box and the
names of all persons authorized to draw thereon or have access thereto.
3.29 Environmental Matters.
(a) Except as provided in Schedule 3.29, CTInteractive and every
person for whose default CTInteractive may be vicariously liable have, to the
best of the Shareholder's Knowledge, complied with all applicable legislation,
licences, consents and permissions relating to environmental matters.
(b) Except as provided in Schedule 3.29, neither CTInteractive
nor any person for whose default CTInteractive may be vicariously liable is the
subject of any actions, claims or proceedings relating to environmental matters
and, to the best of the Shareholder's Knowledge, no such action, claim or
proceeding is threatened against or expected by CTInteractive or any such
person.
3.30 Customers and Suppliers. Schedule 3.30(a) lists each customer of
CTInteractive which accounted for more than 5% of CTInteractive' revenues for
the twelve months ended December 31, 1999. There has not been any material
adverse change in the business relationship between CTInteractive and any of its
respective customers listed in Schedule 3.30(a) or CTInteractive's suppliers,
nor have there been any material disputes or
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controversies between CTInteractive and any of their respective customers listed
in Schedule 3.30(a) or CTInteractive's suppliers, nor is there any event or
circumstance which could reasonably form the basis for any such material dispute
or controversy. Except as noted on Schedule 3.30(b), to the best of the
Shareholder's Knowledge, the business relationships with customers, suppliers,
employees and other persons with regard to CTInteractive will not be
prejudicially affected by the execution or completion of this Agreement.
3.31 Unlawful Payment. To the best of the Shareholder's Knowledge,
neither CTInteractive nor any officer, director, shareholder, employee, agent or
representative of CTInteractive has made, directly or indirectly, with respect
to the business of any company, any illegal political or illegal charitable
contributions, payments from corporate funds not recorded on the books and
records of the companies, payments from corporate funds that were falsely
recorded on the books and records of the companies, payments from corporate
funds to governmental officials in their individual capacities for the purpose
of affecting their action or the action of the government they represent to
obtain favorable treatment in securing businesses or licenses or to obtain
special concessions, or payments to any officers, employees or agents of a
customer or supplier for the purpose of influencing their action or inaction or
the action or inaction of any other officer, employee or agent of such customer
or supplier.
3.32 Restrictive Covenants. Except as described on Schedule 3.32,
CTInteractive is not bound by any agreement, contract or covenant limiting its
freedom to compete in any line of business or with any person or other entity in
any geographic area.
3.33 Insolvency.
(a) No receiver has been appointed of the whole or any part of
CTInteractive's assets or undertaking and no order has been made or petition
presented or resolution passed for the winding up of CTInteractive.
(b) CTInteractive has not stopped payment nor is it insolvent or
unable to pay its debts within the meaning of the United States Bankruptcy Code.
(c) No unsatisfied judgment is outstanding against CTInteractive.
3.34 Books and Records. The books, records and accounts of CTInteractive
(a) are in all material respects true and complete, (b) have been maintained in
accordance with reasonable business practices on a basis consistent with prior
years, (c) are stated in reasonable detail and accurately and fairly reflect the
transactions and dispositions of the assets of CTInteractive and (d) accurately
and fairly reflect the basis for the CTInteractive Financial Statements.
CTInteractive has devised and maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (a) transactions are executed
in accordance with management's general or specific authorization; (b)
transactions are recorded as necessary (i) to permit preparation of financial
statements in conformity with IRS record keeping requirements, and (ii) to
maintain accountability for assets, and (c) the amount recorded for assets on
the books and records of CTInteractive is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
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3.35 Accuracy of Documents and Information. The copies of all
instruments, agreements, other documents and written information delivered to
VCAT by or on behalf of CTInteractive or the Shareholder or any of their
respective representatives pursuant to this Agreement, are and will be complete
and correct in all material respects as of the date hereof and as of the Closing
Date. The representations and warranties made by CTInteractive and the
Shareholder in this Agreement, or in other written materials furnished to VCAT
hereunder or in connection with the transactions contemplated hereby, taken as a
whole, do not contain any untrue statement of material fact and do not omit any
material fact necessary to make the statements or facts contained herein or
therein not misleading.
3.36 Disclosure.
(a) None of the documents or information provided to VCAT by the
Shareholder and CTInteractive or any agent or employee of CTInteractive in the
course of VCAT's due diligence investigation and the negotiation of this
Agreement and Articles 2 and 3 of this Agreement and the Disclosure Schedules,
contain any untrue statement of any material fact or, to the best of the
Shareholder's Knowledge, omit to state a material fact necessary in order to
make the statements contained in this Agreement or in such documents,
information or Disclosure Schedules not misleading. There is no fact which
materially adversely affects the business, prospects, condition, affairs or
operations of CTInteractive, any of properties or assets of CTInteractive which
has not been set forth in this Agreement or in such documents, information or
Disclosure Schedules.
(b) Notwithstanding anything to the contrary in this Agreement,
(i) no investigation by VCAT shall affect the representations and warranties of
the Shareholder or CTInteractive under this Agreement or contained in any
document, certificate or other writing furnished or to be furnished to VCAT in
connection with the transactions contemplated hereby and (ii) such
representations and warranties shall not be affected or deemed waived by reason
of the fact that VCAT knew or should have known that any of the same is or might
be inaccurate in any respect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF VCAT
In order to induce the Shareholder and CTInteractive to enter
into this Agreement, VCAT hereby makes the representations and warranties set
forth below, which representations and warranties shall be deemed to continue in
full force and effect until the time of the Closing and thereafter as set forth
herein:
4.1 Corporate Existence and Authority. VCAT is a corporation duly
incorporated, validly existing, and in good standing under the laws of the State
of Utah. VCAT has full power, authority and legal right to enter into and
perform its obligations under this Agreement, and all agreements to which VCAT
is or will be a party that are required to be executed pursuant to this
Agreement (the "VCAT Ancillary Agreements") and to consummate the transactions
contemplated hereby.
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4.2 No Conflict. The execution and delivery of this Agreement do not,
and the performance of this Agreement and the consummation of the transactions
contemplated hereby in accordance with the terms, conditions and provisions
hereof will not result in a breach or violation of, or in conflict with, or
constitute (with or without the giving of notice or the passage of time or both)
a default under:
(a) to the best of VCAT's Knowledge, any statute, law, ordinance,
rule or regulation applicable to VCAT, or
(b) the terms, conditions or provisions of the articles of
incorporation or bylaws or other organizational documents of VCAT, or, to the
best of VCAT's Knowledge, any lease, license, promissory note, conditional sales
contract, commitment, indenture, mortgage, deed of trust, partnership agreement
or other agreement, contract, instrument, or arrangement (whether or not in
writing) to which VCAT is a party or by which VCAT or its properties, is or may
be bound, or
(c) any permit, license, order, judgment or decree of any court,
arbitrator or governmental authority by which VCAT or its properties is or may
be bound.
4.3 Consents. To the best of VCAT's Knowledge, no consent, permit,
approval, order, authorization of, or filing with or notice to, any federal,
state, local or foreign governmental department, commission, board, bureau,
agency, instrumentality or authority or any person (whether or not governmental
in character) has been or is required to be obtained, made or given by VCAT in
connection with the execution and delivery of this Agreement and the VCAT
Ancillary Agreements or the consummation of the transactions contemplated hereby
or thereby or the fulfillment of or the compliance with the terms, conditions
and provisions hereof or thereof, except as set forth in Schedule 4.3 to this
Agreement.
4.4 Binding Obligations. This Agreement and the VCAT Ancillary
Agreements are, or when executed by VCAT will be, valid and binding obligations
of VCAT, enforceable against VCAT in accordance with their respective terms,
except as to the effect, if any, of (a) applicable bankruptcy and other similar
laws affecting the rights of creditors generally, and (b) rules of law governing
specific performance, injunctive relief and other equitable remedies; provided,
however, that the Articles of Merger, the Agreement of Merger and the VCAT
Ancillary Agreements will not be effective until the Effective Date.
4.5 Representations. The representations and warranties made by VCAT in
this Agreement, the VCAT Ancillary Agreements or in other written materials
furnished to the Shareholder and CTInteractive hereunder or in connection with
the transactions contemplated hereby, when taken together, do not, to the best
of VCAT's Knowledge, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements contained
herein or therein not misleading.
4.6 Capital Stock. The authorized capital stock of VCAT consists of
100,000,000 shares of VCAT Common, $.001 par value per share. Except as set
forth on Schedule 4.6 hereto, on the date hereof there are no outstanding
warrants, options, "phantom" stock rights, agreements, convertible or
exchangeable securities or other commitments (other than this
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Agreement and other agreements related thereto) pursuant to which VCAT is or may
become obligated to issue, sell, purchase or redeem any shares of capital stock
or other securities of VCAT.
4.7 Corporate Documents.
(a) VCAT has furnished to the Shareholder for his examination:
(a) true and correct copies of the Articles of Incorporation and Bylaws,
including any amendments thereto, of VCAT, (b) the minute books of VCAT which
contain all records concerning all proceedings, consents, actions and meetings
of the shareholders and board of directors of VCAT and (c) all information
required to be filed with the SEC by VCAT or provided to the SEC in accordance
with the rules and regulations of the Commission since December 31, 1999
(together with any such filings or information supplied to the SEC after the
date of this Agreement and prior to the Closing, the "SEC Filings").
(b) VCAT has complied with its Articles of Incorporation and
Bylaws in all material respects, and none of the business, activities,
agreements, commitments or rights of VCAT is ultra xxxxx or unauthorized.
(c) Compliance has been made with all other legal requirements
concerning VCAT and all issues of shares, debentures or other securities thereof
and the stock transfer records and minute books of VCAT are up to date and
contain true, full and accurate records of all matters required to be dealt with
therein, and all annual or other reports required to be filed under the Utah
Business Corporations Act have been filed and all legal requirements relating to
the formation and organization of VCAT and the issue of shares and other
securities have been complied with, except where noncompliance would not result
in a Material Adverse Effect.
(d) To the best of VCAT's Knowledge, all documents required by
the SEC or by any legislation in other relevant jurisdictions to be filed or
registered in respect of VCAT, and in connection with the transactions
contemplated hereby, have been duly filed or registered, and all fees payable in
connection with such documents have been paid.
4.8 Financial Statements. Xxxxx Xxxxxxxx LLP, which has examined and
expressed its opinion on certain financial statements of VCAT filed as part of
the SEC Filings (the "VCAT's Financial Statements"), are independent public
accountants within the meaning of the Securities Act; VCAT's Financial
Statements, together with the notes, forming part of the SEC Filings, comply in
all material respects with the requirements of the Securities Act and have been
prepared and fairly and accurately present the financial condition, the results
of operations and changes in financial position of VCAT at the respective dates
and for the respective periods indicated, in accordance with GAAP throughout
such periods; and the financial and statistical information and data set forth
in the SEC Filings is fairly presented and prepared on a basis consistent with
such VCAT's Financial Statements and the books and records of VCAT, as the case
may be.
4.9 Absence of Undisclosed Liabilities. To the best of VCAT's Knowledge,
as of December 31, 1999 (the "VCAT's Balance Sheet Date"), VCAT did not have and
was not subject to any material liability, indebtedness, claim, obligation or
responsibility, fixed or
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contingent, liquidated or unliquidated, secured or unsecured, or otherwise,
which was not either:
(a) specifically included in the full amount as a liability or
adequately and specifically reserved for or against in the full amount in VCAT's
Financial Statements included in its SEC Filings; or
(b) fully and specifically set forth in Schedule 4.9.
To the best of VCAT's Knowledge, except as set forth on Schedule
4.9, since VCAT's Balance Sheet Date, VCAT has not incurred or become subject to
any material liability, indebtedness, claim, obligation or responsibility, fixed
or contingent, liquidated or unliquidated, secured or unsecured, or otherwise,
other than those incurred since VCAT's Balance Sheet Date in the ordinary course
of business of VCAT consistent with past practice.
4.10 Status of VCAT's Shares of Common Stock. All of the outstanding
shares of VCAT Common have been issued in compliance with all applicable state
and federal securities laws and are duly authorized and validly issued, fully
paid and nonassessable and free of preemptive rights, contractual rights to
purchase and similar rights except as set forth in the SEC Filings; the VCAT
Common to be issued and sold by VCAT have been duly authorized and, upon
delivery to the Shareholder in accordance with the terms hereof, will have been
validly issued and fully paid and will be nonassessable and free of preemptive
rights, contractual rights to purchase and similar rights; and the capital stock
of VCAT, including the VCAT Common and, on March 22, 2000, the number of shares
of VCAT Common outstanding, was __________.
4.11 Governmental Proceedings. There is no legal or governmental
proceeding pending or, to the best of VCAT's Knowledge, threatened or
contemplated to which VCAT is a party or of which the business or property of
VCAT is the subject which is not disclosed in the SEC Filings and which might
result in a judgment or decree having a Material Adverse Effect, and there is no
contract or document of a character required to be described in the SEC Filings
or to be filed as an exhibit to the SEC Filings which is not described or filed
as required.
4.12 Intellectual Property. Except as described in the SEC Filings, VCAT
owns or possesses adequate rights, or can obtain such rights on terms which
would not be materially adverse to VCAT, which protect VCAT's acts necessary for
the conduct of its business as described in the SEC Filings. To the best of
VCAT's Knowledge, and except as described in the SEC Filings, VCAT is not
infringing and has not infringed upon any patent, trademark, trademark right,
service xxxx, service name, trade name, trade secret or proprietary information
owned or held by any other person or entity, and there is no material claim or
action by any other person or entity pending or threatened alleging that VCAT is
infringing upon any patent, trademark, trademark right, service xxxx, service
name, trade name, trade secret or proprietary information owned or held by any
other person or entity which would have a Material Adverse Effect, nor is there
any reasonable basis for any such claim or action by any person.
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31
4.13 Absence of Certain Changes or Events. Since VCAT's Balance Sheet
Date and except as specifically authorized hereunder or as set forth in Schedule
4.13:
(a) VCAT has not entered into any transaction other than in the
ordinary course of business, consistent with past practice;
(b) there have been no changes in the financial condition,
results of operations, assets, liabilities, prospects or business of VCAT other
than changes in the ordinary course of business, consistent with past practice
which in the aggregate have not been materially adverse to VCAT, nor any event
or circumstance which could reasonably be expected to result in any such changes
and, without limiting the foregoing, there has not been any material damage,
destruction or loss, whether or not covered by insurance, affecting any of the
assets or properties of VCAT;
(c) VCAT has not (1) created or otherwise become liable with
respect to any indebtedness for money borrowed or purchase money indebtedness,
except in the ordinary course of business consistent with past practice; (2)
amended VCAT's Certificate of Incorporation or Bylaws; (3) issued, purchased or
disposed of or contracted to issue, purchase, or dispose of any of its capital
stock or any options, warrants or rights with respect thereto or interests
therein; (4) entered into, assumed, modified or terminated any contract,
liability or obligation, except in the ordinary course of business, consistent
with past practice or settled, discharged or waived any right or claim without
adequate consideration; (5) sold, leased or otherwise disposed of or encumbered
in any way any assets, except for sales in the ordinary course of business,
consistent with past practice; (6) directly or indirectly declared or paid any
non-cash dividend or distribution with respect to the capital stock of VCAT; or
(7) agreed to take any action specified in (1)-(6) hereof.
4.14 Compliance with Laws. To the best of VCAT's Knowledge and except as
described in Schedule 4.14, VCAT has not been and currently is not in violation
of any applicable foreign, federal, state, or local statutes, laws and
regulations (including, without limitation, any applicable building, zoning, or
other law, ordinance, or regulation) affecting any of its properties or the
conduct or operation of its business.
4.15 Accuracy of Documents and Information. The copies of all
instruments, agreements, other documents and written information delivered to
the Shareholder by or on behalf of VCAT or any of its representatives pursuant
to this Agreement are and will be complete and correct in all material respects
as of the date hereof and as of the Closing Date. The representations and
warranties made by VCAT in this Agreement, or in other written materials
furnished to the Shareholder hereunder or in connection with the transactions
contemplated hereby, taken as a whole, do not, to the best of VCAT's Knowledge,
contain any untrue statement of material fact and do not omit any material fact
necessary to make the statements or facts contained herein or therein not
misleading.
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ARTICLE 5
CTINTERACTIVE PRECLOSING COVENANTS
-27-
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During the period from the date of this Agreement until the
Effective Date, the Shareholder and CTInteractive, jointly and severally,
covenant and agree with VCAT as follows:
5.1 Advice of Changes. CTInteractive and the Shareholder will promptly
advise VCAT in writing, (a) of any event occurring subsequent to the date of
this Agreement that would render any representation or warranty of CTInteractive
or the Shareholder contained in this Agreement, if made on or as of the date of
such event or the Closing Date (as defined in Section 7.1 hereof), untrue or
inaccurate in any material respect and (b) of any material adverse change in
CTInteractive' financial condition, properties, assets, liabilities, business,
results of operations or prospects.
5.2 Maintenance of Business. The parties hereto understand and
acknowledge that it is their intent to work closely together during the period
from the date hereof until the Closing Date (as defined in Section 7.1 hereof).
If CTInteractive or the Shareholder become aware of a material deterioration in
the relationship with any material customer, supplier or key employee, such
person will promptly bring such information to the attention of VCAT in writing
and, if requested by VCAT, will exert all reasonable efforts to restore the
relationship.
5.3 Conduct of Business. CTInteractive will not, and the Shareholder
shall take all necessary action to ensure that CTInteractive does not, without
the prior written consent of the Chairman of the Board and Chief Executive
Officer or the Executive Vice President, Chief Financial Officer of VCAT, not to
be unreasonably withheld:
(a) borrow any money;
(b) enter into any transaction not in the ordinary course of
business or enter into any transaction or make any commitment involving an
expense of CTInteractive or capital expenditure by CTInteractive in excess of
$10,000, unless such transaction is already listed in the disclosure schedule;
(c) encumber or permit to be encumbered any of its assets except
in the ordinary course of its business consistent with past practice and to an
extent which is not material;
(d) dispose of any of its material assets except in the ordinary
course of business consistent with past practice;
(e) enter into any material lease or contract for the purchase or
sale of any property, real or personal, tangible or intangible, except in the
ordinary course of business consistent with past practice or enter into any
agreement of the types described in Section 3.17;
(f) fail to maintain its equipment and other assets in good
working condition and repair according to the standards it has maintained to the
date of this Agreement, subject only to ordinary wear and tear;
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(g) pay any bonus, royalty, increased salary or special
remuneration to any officer, employee or consultant (except pursuant to existing
arrangements heretofore disclosed in writing to VCAT ) or enter into any new
employment or consulting agreement with any such person, or enter into any new
agreement or plan of the type described in Section 3.18;
(h) change accounting methods;
(i) declare, set aside or pay any cash or stock dividend or other
distribution in respect of capital stock, or redeem or otherwise acquire any of
its capital stock, except as set forth on Schedule 5.3(i);
(j) amend or terminate any contract, agreement or license to
which it is a party except those amended or terminated in the ordinary course of
business, consistent with past practice, and which are not material in amount or
effect;
(k) lend any amount to any person or entity, other than advances
for travel and expenses which are incurred in the ordinary course of business
consistent with past practice, not material in amount, which travel and expenses
shall be documented by receipts for the claimed amounts;
(l) guarantee or act as a surety for any obligation except for
the endorsement of checks and other negotiable instruments in the ordinary
course of business, consistent with past practice which are not material in
amount;
(m) waive or release any material right or claim except in the
ordinary course of business, consistent with past practice;
(n) issue or sell any shares of its capital stock of any class or
any other of its securities, or issue or create any warrants, obligations,
subscriptions, options, convertible securities, stock appreciation rights or
other commitments to issue shares of capital stock, or accelerate the vesting of
any outstanding option or other security;
(o) split or combine the outstanding shares of its capital stock
of any class or enter into any recapitalization affecting the number of
outstanding shares of its capital stock of any class or affecting any other of
its securities;
(p) except for the Merger, merge, consolidate or reorganize with,
or acquire any entity;
(q) except as required to effect the Merger, amend its Articles
of Incorporation or Bylaws;
(r) agree to any audit assessment by any tax authority or file
any federal or state income or franchise tax return unless copies of such
returns have been delivered to VCAT for its review prior to filing;
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(s) license any of CTInteractive's technology or any of the
Intellectual Property of CTInteractive, except in the ordinary course of
business consistent with past practice;
(t) change any insurance coverage or issue any certificates of
insurance;
(u) terminate the employment of any employee listed in Schedule
3.18; or
(v) agree to do any of the things described in the preceding
clauses 5.3(a) through 5.3(u).
5.4 Certain Agreements. CTInteractive and the Shareholder will cause all
present employees and consultants of CTInteractive who have not previously
executed CTInteractive's forms of assignments of copyright and other
intellectual property rights to CTInteractive to execute such forms, copies of
which are attached hereto as Exhibit H.
5.5 Regulatory Approvals. CTInteractive and, if necessary, the
Shareholder, will execute and file, or join in the execution and filing, of any
application or other document that may be necessary in order to obtain the
authorization, approval or consent of any governmental body, federal, state,
local or foreign, which may be reasonably required, or which VCAT may reasonably
request, in connection with the consummation of the transactions provided for in
this Agreement. CTInteractive and the Shareholder will use all reasonable
efforts to obtain or assist VCAT in obtaining all such authorizations, approvals
and consents.
5.6 Necessary Consents. CTInteractive and the Shareholder will use their
respective best efforts to obtain such written consents and take such other
actions as may be necessary or appropriate for CTInteractive, in addition to
those set forth in Section 5.5, to facilitate and allow the consummation of the
transactions provided for herein and to facilitate and allow VCAT to carry on
CTInteractive' business after the Closing Date (as defined in Section 7.1
hereof).
5.7 Litigation. CTInteractive and the Shareholder will notify VCAT in
writing promptly after learning of any action, suit, proceeding or investigation
by or before any court, board or governmental agency, initiated by or against
CTInteractive or threatened against it.
5.8 No Other Negotiations. From the date hereof until the termination of
this Agreement (provided such termination is not in breach of this Agreement) or
the consummation of the Merger, CTInteractive and the Shareholder will not, and
will not authorize any officer, director, employee or affiliate of CTInteractive
or the Shareholder, or any other person, on its behalf, directly or indirectly,
to (a) solicit, facilitate, discuss or encourage any offer, inquiry or proposal
received from any party other than VCAT, concerning the possible disposition of
all or any substantial portion of CTInteractive's business, assets or capital
stock by merger, sale or any other means or to otherwise solicit, facilitate,
discuss or encourage any such disposition (other than the Merger), or (b)
provide any confidential information to or negotiate with any third party other
than VCAT in connection with any offer, inquiry or proposal concerning any such
disposition.
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CTInteractive and the Shareholder will immediately notify VCAT of any such
offer, inquiry or proposal.
5.9 Access to Information. Until the Closing Date (as defined in Section
7.1 hereof) and subject to the terms and conditions hereof relating to the
confidentiality and use of confidential and proprietary information,
CTInteractive and the Shareholder will provide VCAT and its agents with
reasonable access to the files, books, records and offices of CTInteractive,
including, without limitation, any and all information relating to CTInteractive
taxes, material commitments, material contracts, leases, licenses, real,
personal and intangible property, and financial condition, and specifically
including, without limitation, access to CTInteractive source code reasonably
necessary for VCAT to complete its diligence review of the CTInteractive
products and technology. CTInteractive will cause its accountants to cooperate
with VCAT and its agents in making available all financial information
reasonably requested, including without limitation the right to examine all
working papers pertaining to all financial statements prepared or audited by
such accountants.
5.10 Satisfaction of Conditions Precedent. CTInteractive and the
Shareholder will use all reasonable efforts to satisfy or cause to be satisfied
all the conditions precedent which are set forth in Article 9, and CTInteractive
and the Shareholder will use all reasonable efforts to cause the transactions
provided for in this Agreement to be consummated, and, without limiting the
generality of the foregoing, to obtain all consents and authorizations of third
parties and to make all filings with, and give all notices to, third parties
that may be necessary or reasonably required on its part in order to effect the
transactions provided for herein.
5.11 Blue Sky Laws. CTInteractive and the Shareholder shall use their
respective best efforts to assist VCAT to the extent necessary to comply with
the securities and Blue Sky laws of all jurisdictions applicable in connection
with the Merger.
5.12 Notification of Employee Problems. CTInteractive and the
Shareholder will promptly notify VCAT if any of CTInteractive' officers becomes
aware that any of the employees listed in Schedule 3.18 intends to leave its
employ.
ARTICLE 6
VCAT PRECLOSING COVENANTS
During the period from the date of this Agreement until the Effective
Date, VCAT covenants to and agrees with CTInteractive as follows:
6.1 Regulatory Approvals. VCAT will execute and file, or join in the
execution and filing, of any application or other document that may be necessary
in order to obtain the authorization, approval or consent of any governmental
body, federal, state, local or foreign, which may be reasonably required, or
which CTInteractive may reasonably request, in connection with the consummation
of the transactions provided for in this Agreement. VCAT will use all reasonable
efforts to obtain all such authorizations, approvals and consents.
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6.2 Satisfaction of Conditions Precedent. VCAT will use all reasonable
efforts to satisfy or cause to be satisfied all the conditions precedent which
are set forth in Article 8, and VCAT will use all reasonable efforts to cause
the transactions provided for in this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties that may be necessary or reasonably required on its
part in order to effect the transactions provided for herein.
6.3 Blue Sky Laws. VCAT shall use its best efforts to assist
CTInteractive to the extent necessary to comply with the securities and Blue Sky
laws of all jurisdictions applicable in connection with the Merger.
6.4 Advice of Changes. VCAT will promptly advise CTInteractive in
writing, (a) of any event occurring subsequent to the date of this Agreement
that would render any representation or warranty of VCAT contained in this
Agreement, if made on or as of the date of such event or the Closing Date (as
defined in Section 7.1 hereof), untrue or inaccurate in any material respect and
(b) of any material adverse change in VCAT's financial condition, properties,
assets, liabilities, business, results of operations or prospects.
6.5 Litigation. VCAT will notify CTInteractive in writing promptly after
learning of any action, suit, proceeding or investigation by or before any
court, board or governmental agency, initiated by or against VCAT or threatened
against it.
ARTICLE 7
CLOSING MATTERS
7.1 The Closing. Subject to termination of this Agreement as provided in
Article 10 below, the closing of the transactions provided for herein (the
"Closing") will take place at the offices of Xxxx Xxxxxxxx Xxxxxxxx & Xxxxxx
LLP, 000 Xxxx Xxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000 at 10:00 a.m., Pacific
Time on or before March 24, 2000, or, if all conditions to Closing have not been
satisfied or waived by such date, such other place, time and date as
CTInteractive and VCAT may mutually select (the "Closing Date"). Concurrently
with the Closing, the Articles of Merger, the Agreement of Merger and such
officers' certificates or other documents as may be required to effectuate the
Merger will be filed in the offices of the California Secretary of State and the
Utah Division of Corporations and Commercial Code, as appropriate. Accordingly,
the Effective Date of the Merger will be the Closing Date.
7.2 Exchange of Certificates.
(a) As of the Effective Date, all shares of CTInteractive Common
that are outstanding immediately prior thereto will, by virtue of the Merger and
without further action, cease to exist, and all such shares will be converted
into the right to receive from VCAT the number of shares of VCAT Common and cash
determined as set forth in Article 1 hereof.
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(b) At and after the Effective Date, each certificate
representing outstanding shares of CTInteractive Common will represent the
number of shares of VCAT Common into which such shares of CTInteractive Common
have been converted, and such shares of VCAT Common will be deemed registered
with the transfer agent of VCAT in the name of the holder of such certificate.
As soon as practicable after the Effective Date, the Shareholder will surrender
(a) the certificates for such shares (the "CTInteractive Certificates") to VCAT
for cancellation or (b) an affidavit of lost certificate in a form reasonably
satisfactory to VCAT. Promptly following the Effective Date and receipt of the
CTInteractive Certificates, VCAT will cause its transfer agent to issue to such
surrendering holder certificate(s) for the number of shares of VCAT Common to
which such holder is entitled pursuant to Article 1 hereof, and, to the extent
it has not already done so, VCAT will distribute any cash payable under Section
1.2.
(c) All shares of VCAT Common delivered upon the surrender of
CTInteractive Certificates in accordance with the terms hereof will be delivered
to the registered holder. After the Effective Date, there will be no further
registration of transfers of the shares of CTInteractive Common on the stock
transfer books of CTInteractive.
(d) Until CTInteractive Certificates representing CTInteractive
Common outstanding prior to the Merger are surrendered pursuant to this Section
7, such certificates will be deemed, for all purposes, to evidence ownership of
(a) the number of shares of VCAT Common into which the shares of CTInteractive
Common will have been converted, and (b) the right to receive that certain
amount of cash into which the shares of CTInteractive Common will have been
converted.
7.3 Delivery of Cash Consideration. On the Closing Date, VCAT shall
deliver to the Shareholder, in a form reasonably acceptable to the Shareholder,
the Cash Consideration, and the Shareholder shall deliver to VCAT any address or
wire transfer information necessary to effectuate such delivery of Cash
Consideration.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF CTINTERACTIVE
CTInteractive's obligations hereunder are subject to the
fulfillment or satisfaction, on and as of the Closing, of each of the following
conditions (any one or more of which may be waived by CTInteractive, but only in
a writing signed on behalf of CTInteractive by its President or Chief Financial
Officer):
8.1 Accuracy of Representations and Warranties. The representations and
warranties of VCAT set forth in Article 4 shall, to the best of VCAT's
Knowledge, be true and accurate in every material respect on and as of the
Closing Date with the same force and effect as if they had been made at the
Closing, and CTInteractive shall have received a certificate to such effect
executed on behalf of VCAT by its authorized officer.
8.2 Covenants. VCAT shall have performed and complied in all material
respects with all of its covenants contained in Article 6 on or before the
Closing Date, and
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CTInteractive shall have received a certificate to such effect executed on
behalf of VCAT by its authorized officer.
8.3 Compliance with Law. There shall be no order, decree, or ruling by
any court or governmental agency or threat thereof, or any other fact or
circumstance, which would prohibit or render illegal the transactions
contemplated by this Agreement.
8.4 Government Consents. There shall have been obtained at or prior to
the Closing Date such permits or authorizations, and there shall have been taken
such other actions, as may be required to consummate the Merger by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed to be taken, including but not limited to satisfaction of all
requirements under applicable federal and state securities laws.
8.5 Documents. CTInteractive shall have received all written consents,
assignments, waivers, authorizations or other certificates reasonably deemed
necessary by CTInteractive' legal counsel to consummate the transactions
provided for herein.
8.6 No Litigation. No litigation or proceeding shall be pending which
will have the probable effect of enjoining or preventing the consummation of any
of the transactions provided for in this Agreement. No litigation or proceeding
shall be pending which could reasonably be expected to have a material adverse
effect on the financial condition or results of operations of VCAT that has not
been previously disclosed to CTInteractive herein.
8.7 Satisfactory Form of Legal and Accounting Matters. The form, scope
and substance of all legal and accounting matters contemplated hereby and all
closing documents and other papers delivered hereunder shall be reasonably
acceptable to CTInteractive's counsel.
8.8 Employment Agreements. VCAT shall have entered into an Employment
Agreement with the Shareholder, and an At-will Employment Letter with each of
the Key Employees in substantially the form attached hereto as Exhibit C, and
Exhibit D, respectively, which will become effective upon the Effective Date of
the Merger.
8.9 Requisite Approvals. The principal terms of this Agreement, the
Articles of Merger and the Agreement of Merger shall have been approved and
adopted by the Board of Directors of VCAT and Acquisition Corp. and unanimously
approved and adopted by the written consent or vote of the sole shareholder of
Acquisition Corp.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF VCAT
The obligations of VCAT hereunder are subject to the fulfillment
or satisfaction on, and as of the Closing, of each of the following conditions
(any one or more of which may be waived by VCAT, but only in a writing signed on
behalf of VCAT by its
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Chairman of the Board and Chief Executive Officer or Executive Vice
President-Chief Financial Officer):
9.1 Accuracy of Representations and Warranties. The representations and
warranties of the Shareholder and CTInteractive set forth in Articles 2 and 3
shall, to the best of the Shareholder's Knowledge, be true and complete in all
material respects as of the Closing with the same force and effect as if they
had been made at the Closing, and VCAT shall have received a certificate to such
effect executed on behalf of CTInteractive by its President.
9.2 Covenants. CTInteractive and the Shareholder shall have performed
and complied in all material respects with all of their covenants contained in
Article 5 on or before the Closing and VCAT shall have received a certificate to
such effect signed on behalf of CTInteractive by its President and the
Shareholder.
9.3 Absence of Material Adverse Change. There shall not have been, in
the reasonable judgment of the Board of Directors of VCAT, any change which
could be expected to have a Material Adverse Effect on the financial condition
or results of operations of CTInteractive.
9.4 Compliance with Law. There shall be no order, decree, or ruling by
any court or governmental agency or threat thereof, or any other fact or
circumstance, which would prohibit or render illegal the transactions provided
for in this Agreement.
9.5 Government Consents. There shall have been obtained at or prior to
the Closing Date such permits or authorizations, and there shall have been taken
such other action, as may be required to consummate the Merger by any regulatory
authority having jurisdiction over the parties and the actions herein proposed
to be taken, including but not limited to satisfaction of all requirements under
applicable federal and state securities laws.
9.6 Documents. VCAT shall have received all written consents,
assignments, waivers, authorizations or other certificates reasonably deemed
necessary by VCAT's legal counsel to provide for the continuation in full force
and effect of any and all material contracts and leases of CTInteractive, except
as disclosed in CTInteractive' Disclosure Schedules, and for VCAT to consummate
the transactions contemplated hereby.
9.7 No Litigation. No litigation or proceeding shall be pending which
will have the probable effect of enjoining or preventing the consummation of any
of the transactions provided for in this Agreement. No litigation or proceeding
shall be pending which could reasonably be expected to have a Material Adverse
Effect on the financial condition or results of operations of CTInteractive that
has not been previously disclosed to VCAT herein.
9.8 Requisite Approvals. The principal terms of this Agreement, the
Articles of Merger and the Agreement of Merger shall have been approved and
adopted by the Board of Directors of CTInteractive and unanimously approved and
adopted by the written consent or vote of the Shareholder.
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9.9 Employment and Noncompetition Agreements. The Shareholder shall have
executed and delivered to VCAT an Employment Agreement and a Noncompetition
Agreement substantially in the form attached hereto as Exhibits C and E, and
each of the Key Employees shall have executed and delivered to VCAT an At-will
Employment Letter substantially in the form attached hereto as Exhibit D, which
agreements will become effective upon the Effective Date of the Merger.
9.10 Termination of Rights. Any registration rights, rights of refusal,
rights to any liquidation preference, or redemption rights of any person
relating to the shares of capital stock on CTInteractive shall have been
terminated or waived as of the Closing.
9.11 Resignation of Directors. The directors of CTInteractive in office
immediately prior to the Effective Date of the Merger shall have resigned as
directors of CTInteractive effective as of the Effective Date of the Merger.
9.12 Satisfactory Form of Legal and Accounting Matters. The form, scope
and substance of all legal and accounting matters contemplated hereby and all
closing documents and other papers delivered hereunder shall be reasonably
acceptable to VCAT's counsel.
9.13 CTInteractive Options. All outstanding options to purchase the
capital stock of CTInteractive and all other rights, warrants and other
convertible securities to purchase the capital stock of CTInteractive
outstanding as of the Closing Date shall be canceled.
ARTICLE 10
TERMINATION OF AGREEMENT
10.1 Termination. This Agreement may be terminated at any time prior to
the Closing, whether before or after approval of the Merger by the Shareholder
of CTInteractive:
(a) by the mutual written consent of VCAT and CTInteractive;
(b) Unless otherwise specifically provided herein or agreed in
writing by VCAT and CTInteractive, upon notice by either party, this
Agreement will be terminated if all the conditions to Closing have not
been satisfied or waived on or before March 31, 2000 (the "Final Date")
other than as a result of a breach of this Agreement by the terminating
party;
(c) by CTInteractive, if there has been a material breach by
VCAT of any representation, warranty, covenant or agreement set forth in
this Agreement on the part of VCAT, or if any representation of VCAT
will have become untrue, in either case which has or can reasonably be
expected to have a Material Adverse Effect on VCAT and which VCAT fails
to cure within a reasonable time, not to exceed thirty (30) days, after
written notice thereof (except that no cure period will be provided for
a breach by VCAT which by its nature cannot be cured);
(d) by VCAT, if there has been a material breach by
CTInteractive of any representation, warranty, covenant or agreement set
forth in this Agreement on the
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part of CTInteractive, or if any representation of CTInteractive will
have become untrue, in either case which has or can reasonably be
expected to have a Material Adverse Effect on CTInteractive and which
CTInteractive fails to cure within a reasonable time not to exceed
thirty (30) days after written notice thereof (except that no cure
period will be provided for a breach by CTInteractive which by its
nature cannot be cured); or
(e) by either party, if a permanent injunction or other order by
any Federal or state court which would make illegal or otherwise
restrain or prohibit the consummation of the Merger will have been
issued and will have become final and nonappealable.
Any termination of this Agreement under this Section 10.1 will be effective by
the delivery of written notice of the terminating party to the other party
hereto.
10.2 Certain Continuing Obligations. Following any termination of this
Agreement pursuant to this Article 10, the parties hereto will continue to
perform their respective obligations under Article 13 but will not be required
to continue to perform their other covenants under this Agreement.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification by CTInteractive and the Shareholder. CTInteractive
and the Shareholder shall jointly and severally indemnify, defend and hold
harmless VCAT and its officers, directors, attorneys, and agents and its
successors and assigns against and in respect of any and all losses, damages,
claims, obligations, demands, actions, suits, proceedings, assessments,
liabilities, judgments, recoveries and deficiencies, costs and expenses
(including, without limitation, reasonable attorneys' fees and costs and
expenses incurred in investigating, preparing, defending against or prosecuting
any litigation, claim, proceeding or demand), all on an after-tax basis, less
any amounts actually paid as insurance reimbursement, of any kind or character
(collectively, a "Loss"), which arise out of, result from, or relate to any
breach of, or failure by the Shareholder or CTInteractive fully to perform, or
any inaccuracy in, any of the representations, warranties, covenants or
agreements of the Shareholder or CTInteractive in this Agreement (whether known
or unknown at Closing), or in any Schedule, Exhibit, certificate, list, or other
document furnished or to be furnished by the Shareholder or CTInteractive under
this Agreement. The Shareholder shall have the right to assist in the defense
and to select its own counsel for such defense, as noted in Section 11.4 of this
Agreement.
11.2 Indemnification by VCAT. VCAT shall indemnify, defend and hold
harmless the Shareholder, in each capacity in which he has served CTInteractive,
and his attorneys and agents and his successors and assigns against and in
respect of any and all Losses, which arise out of, result from, or relate to any
breach of, or failure by VCAT fully to perform, or any inaccuracy in, any of the
representations, warranties, covenants or agreements of VCAT in this Agreement
(whether known or unknown at Closing), or in any Schedule, Exhibit, certified
list or other document furnished or to be furnished by VCAT under this
Agreement.
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VCAT shall have the right to assist in the defense and to select its own counsel
for such defense, as noted in Section 11.4 of this Agreement.
11.3 Notice of Claim. Whenever VCAT or the Shareholder learns of or
discovers any matter which may give rise to a claim for indemnification (the
"Claim") against any other party under this Article 11 (the "Indemnity
Obligor"), VCAT or the Shareholder, as the indemnified party (the "Indemnified
Party"), shall give notice to the Indemnity Obligor of the Claim. With respect
to Claims which are the subject of actions, suits, or proceedings threatened or
asserted in writing by any third party (a "Third Party Claim"), the Indemnified
Party shall, within 15 days following receipt of such Third Party Claim,
promptly notify the Indemnity Obligor in writing of any Claim for recovery,
specifying in reasonable detail the nature of the Loss and the amount of the
liability estimated to arise therefrom. If the Indemnified Party does not so
notify the Indemnity Obligor within 15 days of its discovery of a Third Party
Claim, such Claim shall be barred only to the extent that the Indemnity Obligor
is prejudiced by such failure to notify. The Indemnified Party shall provide to
the Indemnity Obligor as promptly as practicable thereafter all information and
documentation reasonably requested by the Indemnity Obligor to verify the Claim
asserted.
11.4 Defense. If the facts relating to a Loss arise out a Third Party
Claim, or if there is any claim against a third party available by virtue of the
circumstances of the Loss, the Indemnity Obligor may, by giving written notice
to the Indemnified Party within 15 days following its receipt of the notice of
such claim, elect to assume the defense or the prosecution thereof, including
the employment of counsel or accountants, reasonably satisfactory to the
Indemnified Party, at its cost and expense; provided, however, that during the
interim the Indemnified Party shall use its best efforts to take all action (not
including settlement) reasonably necessary to protect against further damage or
loss with respect to the Loss. The Indemnified Party shall have the right to
employ counsel separate from counsel employed by the Indemnity Obligor in any
such action and to participate therein, but the fees and expenses of such
counsel shall be at the Indemnified Party's own expense, unless (a) the
employment thereof has been specifically authorized by the Indemnity Obligor,
(b) such Indemnified Party has been advised by counsel reasonably satisfactory
to the Indemnity Obligor that there may be one or more legal defenses available
to it which are different from or additional to those available to the Indemnity
Obligor and in the reasonable judgment of such counsel it is advisable for such
Indemnified Party to employ separate counsel, or (c) the Indemnity Obligor has
failed to assume the defense of such action and employ counsel reasonably
satisfactory to the Indemnified Party. Whether or not the Indemnity Obligor
chooses to defend or prosecute such claim, all the parties hereto shall
cooperate in the defense or prosecution thereof and shall furnish such records,
information and testimony and shall attend such conferences, discovery
proceedings and trial as may be reasonably requested in connection therewith.
The Indemnity Obligor shall not be liable for any settlement of any such claim
effected without its prior written consent. In the event of payment by the
Indemnity Obligor to the Indemnified Party in connection with any Loss arising
out of a Third Party Claim, the Indemnity Obligor shall be subrogated to and
shall stand in the place of the Indemnified Party as to any events or
circumstances in respect of which the Indemnified Party may have any right or
claim against such third party relating to such indemnified matter. The
Indemnified Party shall cooperate with the Indemnity Obligor in prosecuting any
subrogated claim. The Indemnity Obligor will take no action in
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connection with any claim that would adversely affect the Indemnified Party
without the consent of the Indemnified Party.
11.5 Duration of the Parties Obligations. The Indemnity Obligor's
indemnification obligations under this Agreement shall survive the Closing and
shall terminate as follows: (a) with respect to claims for indemnity arising as
a result of a breach of the representations and warranties contained in Sections
2.1 through and including 2.7, 3.1, 3.3, 3.4, 3.5, 3.9, 4.1, 4.3, 4.4, 4.6 and
5.8, and claims for indemnity involving any action, suit or proceeding
threatened or asserted in writing by any third party against VCAT or the
Shareholder which arise out of, result from or are attributable to any breach
of, or failure by VCAT, on the one hand, or CTInteractive or the Shareholder, on
the other hand, to materially perform, or any inaccuracy in any of the
representations, warranties, covenants or agreements of VCAT, on the one hand,
or CTInteractive or the Shareholder, on the other hand, in this Agreement or in
any schedule, exhibit, certificate, list or other document furnished by VCAT, on
the one hand, or CTInteractive or the Shareholder, on the other hand, under this
Agreement, they shall continue and not terminate and (b) with respect to all
other claims for indemnity, after one (1) year from the Closing Date.
11.6 Limitations on Amount -- CTInteractive and the Shareholder.
CTInteractive and the Shareholder will have no liability (for indemnification or
otherwise) under Section 11.1 until the total of all amounts that would be
subject to claims for indemnification with respect to such matters exceeds One
Hundred Thousand Dollars ($100,000), in which event CTInteractive and the
Shareholder shall be jointly and severally liable only to the extent such amount
exceeds One Hundred Thousand Dollars ($100,000). However, this Section will not
apply in the case of fraud or misrepresentation or an intentional breach of or
default under any provision of this Agreement on the part of CTInteractive or
the Shareholder.
ARTICLE 12
DEFINITIONS AND ACCOUNTING
12.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Affiliate" (and, with a correlative meaning, "Affiliated") shall
mean, with respect to any Person, any other Person that directly, or through one
or more intermediaries, controls or is controlled by or is under common control
with such first Person, and, if such a Person is an individual, any member of
the immediate family of such individual and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust. As used in this
definition, "control" (including, with correlative meanings, "controlled by" and
"under common control with") shall mean possession, directly or indirectly, of
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise), and "immediate family" shall mean parents, spouse and
children.
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"Disclosure Schedules" means the document prepared by
CTInteractive delivered to VCAT and containing those schedules containing
certain disclosures, if any, referred to within the Agreement.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, or
any similar federal statute, and the rules and regulations of the Securities and
Exchange Commission (or of any other U.S. federal Agency then administering the
Exchange Act) thereunder, all as the same shall be in effect at the time.
"Knowledge" - An individual will be deemed to have "Knowledge" of
a particular fact or other matter if such individual is actually aware of such
fact or other matter. A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer, partner,
executor, or trustee of such Person (or in any similar capacity) has Knowledge
of such fact or other matter.
"Material Adverse Effect" means a material adverse effect on the
business, operations, condition or prospects (financial or otherwise) of
CTInteractive or VCAT, as the context warrants.
"Person" means an individual, corporation, partnership, joint
venture, association, joint stock company, trust, estate of a deceased natural
person, foundation, fund, institution, society, union or club or unincorporated
organization, or a government or any agency or political subdivision thereof.
"Securities Act" means the U.S. Securities Act of 1933, as
amended, or any similar U.S. federal statute, and the rules and regulations of
the U.S. Securities and Exchange Commission (or of any other Federal agency then
administering the Securities Act) thereunder, all as the same shall be in effect
at the time.
12.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with IRS record keeping requirements and
all other financial data submitted pursuant to this Agreement shall be prepared
and calculated in accordance with such requirements.
ARTICLE 13
MISCELLANEOUS
13.1 Governing Law; Venue. The internal laws of the State of California
(irrespective of its choice of law principles) will govern the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement
of the rights and duties of the parties hereto. The parties hereby irrevocably
and unconditionally consent to submit to the exclusive jurisdiction of the
courts of the State of California, County of Los Angeles and/or the United
States District Court for the Central District of California for any actions,
suits, controversies or proceedings arising out of or relating to this agreement
and the transactions contemplated hereby (and the parties agree not to commence
any action, suit or proceeding relating thereto except in such courts), and
further agree that service of any
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process, summons, notice or document by U.S. registered mail to the respective
addresses set forth above shall be effective service of process for any action,
suit or proceeding brought against the parties in any such court. The parties
hereby irrevocably and unconditionally waive any objection to the laying of
venue of any action, suit, controversies or proceeding arising out of this
agreement or the transactions contemplated hereby, in the courts of the State of
California, County of Los Angeles and/or the United States District Court for
the Central District of California, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such action, suit or proceeding brought in any such court has been brought in an
inconvenient or improper forum.
13.2 Assignment; Binding Upon Successors and Assigns. Neither party
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other party hereto. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
13.3 Severability. If any provision of this Agreement, or the
application thereof, is for any reason held to any extent to be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.
13.4 Counterparts. This Agreement may be executed in counterparts, each
of which will be an original as regards any party whose name appears thereon and
all of which together will constitute one and the same instrument. This
Agreement will become binding when one or more counterparts hereof, individually
or taken together, bear the signatures of all parties reflected hereon as
signatories.
13.5 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy will not preclude the exercise of any other.
13.6 Amendment and Waivers. Any term or provision of this Agreement may
be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof will
not be deemed to constitute a waiver of any other default or any succeeding
breach or default. This Agreement may be amended by the parties hereto at any
time before or after approval of the Shareholder.
13.7 No Waiver. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions. The waiver by any party of the
right to enforce any of the provisions hereof on any occasion will not be
construed to be a waiver of the right of such party to enforce such provision on
any other occasion.
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13.8 Expenses. Each party will bear its respective expenses and fees of
its own accountants, attorneys, investment bankers and other professionals
incurred with respect to this Agreement and the transactions contemplated
hereby. If the Merger is consummated, the Shareholder will pay at or immediately
before the Closing the accounting and attorneys' fees and expenses and other
fees and expenses incurred by CTInteractive and the Shareholder in connection
with the Merger, and neither VCAT nor CTInteractive will be responsible for such
fees and expenses.
13.9 Finder's or Broker's Fees. The Shareholder and CTInteractive each
represent to VCAT that it has not made any arrangement or had any dealings
whereby CTInteractive or VCAT could become subject, absolutely or contingently,
to a claim for any brokerage commission or finder's fee. VCAT represents to the
Shareholder and CTInteractive that VCAT has not and will not pay any brokerage
commission or finder's fee in respect of the consideration to be paid under this
Agreement, and VCAT has not made any arrangement or had any dealings whereby the
Shareholder, or CTInteractive could become subject, absolutely or contingently,
to a claim for any brokerage commission or finder's fee. The Shareholder and
CTInteractive on the one hand, and VCAT, on the other hand, each agree to
indemnify and hold harmless the other against any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including interest, penalties, and reasonable attorneys fees,
incurred or suffered by reason of any brokerage commission or finder's fee
alleged to be payable because of any act, omission or statement of the
indemnifying party.
13.10 Notices. Any notice or other communication required or permitted
to be given under this Agreement will be in writing, will be delivered
personally or by mail or express delivery, postage prepaid, and will be deemed
given upon actual delivery or, if mailed by registered or certified mail, on the
third business day following deposit in the mails, addressed as follows:
If to either the
Shareholder
or CTInteractive: CTInteractive, Inc.
000 Xxxxxxxx Xxxx. #000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxx Xxxxxxxx, President
With a copy to: Xxxxxx, Xxxxxxx & Xxxxxx
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxx Xxxx, Esq.
If to VCAT: Venture Catalyst Incorporated
00000 Xxx Xxx Xxxxx Xxxxx #000
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
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Attention: Xxxxx XxXxxxxx,
Chief Financial Officer
With a copy to: Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx Xxxxxx, Esq.
or to such other address as the party in question may have furnished to the
other party by written notice given in accordance with this Section 13.10.
13.11 Construction of Agreement. A reference to an article, section or
exhibit will mean an article or section in, or an exhibit to, this Agreement,
unless otherwise explicitly set forth. The titles and headings in this Agreement
are for reference purposes only and will not in any manner limit the
construction of this Agreement. For the purposes of such construction, this
Agreement will be considered as a whole.
13.12 No Joint Venture. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership between the
parties hereto. No party is by virtue of this Agreement authorized as an agent,
employee or legal representative of any other party. No party will have the
power to control the activities and operations of any other, and the parties'
status is, and at all times, will continue to be, that of independent
contractors with respect to each other. No party will have any power or
authority to bind or commit any other. No party will hold itself out as having
any authority or relationship in contravention of this Section.
13.13 Further Assurances. Each party agrees to cooperate fully with the
other party and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
the other party to evidence and reflect the transactions provided for herein and
to carry into effect the intent of this Agreement.
13.14 Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, partner or employee of any party hereto or any other person
or entity, unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof will be personal solely between the parties to
this Agreement.
13.15 Public Announcement. VCAT and CTInteractive will issue a press
release approved by both parties announcing the Merger as soon as practicable
following the execution of this Agreement. Thereafter, VCAT may issue such press
releases, and make such other disclosures regarding the Merger, as it determines
to be required or appropriate under applicable securities laws or NASD for
Nasdaq Stock Market rules. CTInteractive will not make any other public
announcement or disclosure of the transactions contemplated by this Agreement.
CTInteractive will take all reasonable precautions to prevent any trading in the
securities of VCAT by officers, directors, employees and agents of CTInteractive
having
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knowledge of any material information regarding VCAT provided hereunder until
the information in question has been publicly disclosed.
13.16 Confidentiality. Except as expressly authorized by VCAT in
writing, CTInteractive will not directly or indirectly divulge to any person or
entity or use any VCAT Confidential Information, except as required for the
performance of its duties under this Agreement. Except as expressly authorized
by CTInteractive in writing, VCAT will not directly or indirectly divulge to any
person or entity or use any CTInteractive Confidential Information, except as
required for the performance of its duties under this Agreement. As used herein,
"VCAT Confidential Information" consists of (a) any information designated by
VCAT as confidential whether developed by VCAT or disclosed to VCAT by a third
party, (b) the source code to any VCAT software and any trade secrets relating
to any of the foregoing, and (c) any information relating to VCAT 's product
plans, product designs, product costs, product prices, product names, finances,
marketing plans, business opportunities, personnel, research development or
know-how. As used herein, "CTInteractive Confidential Information" consists of
(x) any information designated by CTInteractive as confidential whether
developed by CTInteractive or disclosed to CTInteractive by a third party, (y)
the source code to any CTInteractive software, and any trade secrets related to
any of the foregoing, and (z) any information relating to CTInteractive product
plans, product designs, product costs, product prices, product names, finances,
marketing plan, business opportunities, personnel, research, development or
know-how. "VCAT Confidential Information" and "CTInteractive Confidential
Information" also include the terms and conditions of this Agreement, except as
disclosed in accordance with Section 13.15 above. The foregoing restriction will
apply to information about a party whether or not it was obtained from such
party's employees, acquired or developed by the other party during such other
party's performance under this Agreement, or otherwise learned. The foregoing
restrictions will not apply to information that (i) has become publicly known
through no wrongful act of the receiving party, (ii) has been rightfully
received from a third party authorized by the party which is the owner, creator
or compiler to make such disclosure without restriction, (iii) has been approved
or released by written authorization of the party which is the owner, creator or
compiler, or (iv) is being or has theretofore been disclosed pursuant to a valid
court order after a reasonable attempt has been made to notify the party which
is the owner, creator or compiler.
13.17 Entire Agreement. This Agreement, the exhibits hereto, the VCAT
Ancillary Agreements, the CTInteractive Ancillary Agreements and the
accompanying letter from VCAT regarding CTInteractive employees constitute the
entire understanding and agreement of the parties hereto with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect to the subject matter hereof. The express terms
hereof control and supersede any course of performance or usage of trade
inconsistent with any of the terms hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
VENTURE CATALYST INCORPORATED
a Utah corporation
By: /S/ L. XXXXXX XXXXX, XX
-------------------------------------
L. Xxxxxx Xxxxx, XX,
Chairman of the Board and
Chief Executive Officer
VENTURE ACQUISITION CORPORATION,
a Utah corporation
By: /S/ XXXXXX XXXXXXX
-------------------------------------
Xxxxxx Xxxxxxx
President
CTINTERACTIVE, INC.,
a California corporation
By: /S/ XXXXXX XXXXX XXXXXXXX
-------------------------------------
Xxxxxx Xxxxx Xxxxxxxx, President
SHAREHOLDER
By: /S/ XXXXXX XXXXX XXXXXXXX
-------------------------------------
Xxxxxx Xxxxx Xxxxxxxx
SIGNATURE PAGE TO AGREEMENT AND
PLAN OF REORGANIZATION
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