AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made and entered
into as of February 24, 2000 by and among, Premier Software Technologies, Inc.,
a California corporation ("Premier"), the Shareholders of Premier (all of whom
are listed on Schedule 1 hereto (the "Premier Shareholders"), and Active
Software, Inc., a Delaware corporation ("Active").
RECITALS
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A. The Boards of Directors of each of Premier and Active believe it is in
the best interests of each company and their respective shareholders that
Premier and Active merge into a single company through the merger of Premier
with and into Active (the "Merger").
B. Pursuant to such Merger, among other things, all of the issued and
outstanding shares of Premier Common Stock (the "Premier Common Stock"), shall
be converted into shares of Active Common Stock ("Active Common Stock") and the
right to receive the Merger Consideration (as defined in Section 2.3), and all
outstanding options to purchase Premier Common Stock shall be assumed by Active
in the manner and on the terms set forth herein.
C. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
AGREEMENT
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NOW, THEREFORE, in consideration of the mutual promises, agreements,
warranties and provisions contained herein, the parties agree as follows:
1. Merger.
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1.1 The Merger. At the Effective Time of the Merger (as defined in
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Section 1.2), subject to and upon the terms and conditions of this Agreement and
an Agreement of Merger in the form attached hereto as Exhibit A (the "Merger
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Agreement") between Premier and Active, Premier shall be acquired by Active
through a merger (the "Merger") of Premier with and into Active in accordance
with the applicable provisions of the corporate laws of the State of Delaware
and the State of California. The Merger Agreement provides, among other things,
the mode of effecting the Merger and the manner and basis of converting each
issued and outstanding share of Premier Common Stock. The Merger Agreement
shall be executed by Premier, the Premier Shareholders and Active concurrently
with the Closing (as defined below).
1.2 Closing Date; Effective Time of the Merger. Unless this
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Agreement shall have been terminated pursuant to Section 10 hereof, the closing
of the Merger (the "Closing") shall be held at the offices of Venture Law Group,
0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000, on February ___, 2000 at 6:00
p.m., or at such other time and place as agreed in writing
by the parties hereto. The date of Closing is referred to herein as the "Closing
Date." Upon delivery of all closing deliverables, the parties shall cause the
Merger to be consummated by causing the Merger Agreement to be filed with the
Secretary of State of the State of Delaware in accordance with Delaware law and
with the Secretary of State of the State of California in accordance with
California law. The Merger shall become effective as of the date that such
filings are completed in accordance with applicable statutory requirements (the
"Effective Time of the Merger").
1.3 Effect of the Merger. At the Effective Time of the Merger, the
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effect of the Merger shall be as provided pursuant to the terms and conditions
of this Agreement, the Merger Agreement and the applicable provisions of
Delaware law and California law. Without limiting the generality of the
foregoing and subject thereto, at the Effective Time of the Merger, (i) Premier
shall be merged with and into Active, the separate corporate existence of
Premier shall cease, and (ii) the Merger shall have all the effects provided by
Delaware law, California law, this Agreement and the Merger Agreement. Active
shall be the surviving corporation in the Merger (and after the Merger is
sometimes referred to herein as the "Surviving Corporation").
1.4 Certificate of Incorporation; Bylaws.
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(a) The Certificate of Incorporation of Active in effect
immediately prior to the Effective Time of the Merger shall be the Certificate
of Incorporation of the Surviving Corporation unless and until amended as
provided by law and by such Certificate of Incorporation.
(b) The Bylaws of Active in effect immediately prior to the
Effective Time of the Merger shall be the Bylaws of the Surviving Corporation
unless and until amended or repealed as provided by applicable law, the
Certificate of Incorporation of the Surviving Corporation and such Bylaws.
1.5 Directors and Officers. The officers and directors of the
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Surviving Corporation shall be the officers and directors of Active immediately
prior to the Effective Time of the Merger, in each case until their successors
shall have been elected and qualified or until otherwise provided by law.
1.6 Actions at the Closing. At the Closing, Premier and Active
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shall take such reasonable actions and execute and deliver such agreements and
other instruments and documents as necessary or appropriate to effect the
transactions contemplated by this Agreement in accordance with its terms,
including without limitation the following:
(a) The Premier Shareholders will deliver to Active certificates
representing all issued and outstanding shares of the Premier Common Stock, duly
endorsed for transfer to Active, and Premier and the Premier Shareholders shall
execute and deliver all other documents required herein, including without
limitation (for the Premier Shareholders) the Stock Restriction Agreements
attached hereto as Exhibit B (the "Stock Restriction Agreements") and the
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Registration Rights Agreement attached hereto as Exhibit C (the "Registration
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Rights Agreement");
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(b) Active will execute and deliver to the Premier Shareholders
the Stock Restriction Agreements and the Registration Rights Agreement and all
other documents required by Active; and
(c) Active will execute and deliver Employment Agreements with
each of Xxxxxx Xxxxxx and Xxx van den Xxxx in substantially the form attached
hereto as Exhibit D (the "Employment Agreements") (the Merger Agreement,
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Registration Rights Agreement, Stock Restriction Agreements and Employment
Agreements sometimes collectively referred to as the "Ancillary Agreements").
1.7 Tax Consequences. It is intended by the parties hereto that
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the Merger shall constitute a tax-free reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended, that this
Agreement shall constitute a "plan of reorganization" within the meaning of the
regulations thereunder.
2. Effect on Capital Stock. As of the Effective Time of the Merger, by
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virtue of the Merger and without any action on the part of Active and Premier or
the holder of any shares of Premier Common Stock:
2.1 Cancellation of Premier Common Stock. All shares of Premier
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Common Stock that are owned directly or indirectly by Premier and any shares of
Premier Common Stock that are owned by Active or any Subsidiary of Active shall
be canceled, and no stock of Active or other consideration shall be delivered in
exchange therefor. In this Agreement, a "Subsidiary" of a corporation or other
entity means a corporation or other entity, the voting securities of which are
sufficient to elect at least a majority of the Board of Directors or other
managers of such corporation or other entity and which are owned or otherwise
controlled directly or indirectly by such parent corporation or other entity.
2.2 Conversion of Premier Common Stock. Each issued and
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outstanding share of Premier Common Stock (other than shares to be canceled
pursuant to Section 2.1 hereof) shall be converted, without any action on the
part of the holders thereof, into the right to receive the following:
(a) an amount of cash, without interest thereon, equal to
$500,000 divided by the aggregate number of shares of Premier Common Stock
issued and outstanding immediately prior to the Effective Time of the Merger
(the "Merger Consideration"), and
(b) the right to receive a fraction of a share of Active Common
Stock (such fraction hereinafter referred to as the "Exchange Ratio") to be
calculated as follows:
(i) the numerator shall equal 121,308, and
(ii) the denominator shall equal the aggregate number of
shares of Premier Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger, excluding shares of Premier Common Stock issuable
upon exercise or conversion of all
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Premier Options (as defined below), warrants or other securities exercisable for
or convertible into shares of Premier Common Stock.
2.3 Adjustment of Exchange Ratio. If, between the date of this
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Agreement and the Effective Time of the Merger, the outstanding shares of Active
Common Stock or Premier Common Stock shall have been changed into a different
number of shares or a different class by reason of any reclassification,
reorganization, recapitalization, stock split, reverse split, stock dividend,
combination, exchange of shares or other readjustment, the Exchange Ratio shall
be correspondingly adjusted.
2.4 Fractional Shares. No fractional shares of Active Common Stock
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will be issued, but in lieu thereof, each holder of shares of Premier Common
Stock who would otherwise be entitled to a fraction of a share of Active Common
Stock (after aggregating all fractional shares of Active Common Stock to be
received by such holder) shall be entitled to receive from Active an amount of
cash (rounded to the nearest whole cent) equal to the product of (i) such
fraction, multiplied by (ii) the average closing price of a share of Active
Common Stock for the thirty calendar days ending on the trading day immediately
prior to the date of this Agreement, as reported on the Nasdaq National Market
(the "Active Closing Price"). The parties agree that the Active Closing Price
is equal to $82.80.
2.5 Exchange of Certificates.
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(a) Premier Certificates Delivered at the Closing. At the
---------------------------------------------
Closing, the Premier Shareholders shall deliver the certificates representing
their shares of Premier Common Stock to be exchanged for the shares of Active
Common Stock in the Merger.
(b) Active to Provide Common Stock and Merger Consideration. As
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soon as practicable following the Closing, Active shall cause its transfer agent
to deliver to the Premier Shareholders the certificates representing the shares
of Active Common Stock issuable, and the Merger Consideration payable, pursuant
to Section 2 of this Agreement and the Merger Agreement in exchange for the
shares of Premier Common Stock surrendered pursuant to Section 2.5(a), and cash
in an amount sufficient for payment in lieu of fractional shares pursuant to
Section 2.4 hereof.
(c) Distributions With Respect to Unexchanged Shares. No
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dividends or other distribution on the Active Common Stock shall be paid to the
holder of any unsurrendered certificate until the holder of record of such
certificate shall surrender such certificate subject to the effect, if any, of
applicable escheat and other laws. Following surrender of any such certificate,
there shall be delivered to the person entitled thereto, without interest, the
amount of dividends or other distributions theretofore paid with respect to the
Active Common Stock so withheld as of any date subsequent to the Effective Time
of the Merger and prior to such date of delivery.
(d) No Further Ownership Rights in Premier Common Stock. All
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shares of Active Common Stock issued upon the surrender for exchange of shares
of Premier Common Stock in accordance with the terms hereof (including any cash
paid in respect of
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fractional shares thereof) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Premier Common Stock.
There shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Premier Common Stock that were
outstanding immediately prior to the Effective Time of the Merger. If, after the
Effective Time of the Merger, certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Section 2.
3. Representations and Warranties of Premier and the Premier Shareholders.
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When used in this Section 3, the term "Material Adverse Effect" means any change
or effect that is or is reasonably likely to be materially adverse to the
business, assets (including intangible assets), financial condition or results
of operations of Premier, if any, taken as a whole (with respect to references
to Premier), and of Active, if any, taken as a whole (with respect to references
to Active).
Except as described or disclosed in the disclosure schedules (the "Disclosure
Schedules") delivered to Active and dated the date hereof, Premier and each
Premier Shareholder severally represents and warrants to Active as follows.
3.1 Existence; Good Standing. Premier is a corporation duly
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incorporated, validly existing and in good standing under the laws of the State
of California. Premier does not own or lease real or personal property,
maintain offices or have any employees, contractors or consultants in any
jurisdiction outside of California or is otherwise qualified to do business in
such other jurisdiction(s), except where the failure to qualify would not have a
Material Adverse Effect. Premier neither has any Subsidiaries nor owns voting
securities of any corporation, partnership or other entity. Premier has all
requisite corporate power and authority to own its properties and carry on its
business as now conducted. Premier has delivered a true and complete copy of its
Articles of Incorporation and Bylaws (or similar governing instruments), each as
amended to date, to Active or its counsel.
3.2 Power, Authorization and Validity. Premier and the Premier
---------------------------------
Shareholders have all requisite legal and corporate power and authority to enter
into and perform their respective obligations under this Agreement and the
Ancillary Agreements, and, subject to the approval of Premier Shareholders, to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved and authorized by all necessary action (corporate or other)
on the part of Premier.
This Agreement and the Ancillary Agreements have been duly or will be executed
and delivered by Premier and, subject to such approval by the Premier
Shareholders, constitute valid and binding obligations of Premier, enforceable
in accordance with their respective terms subject to the effect, if any, of
applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time in effect and to general
equitable principles.
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No consent, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality (a "Governmental Entity"), is required
by or with respect to Premier in connection with the execution and delivery of
this Agreement or any Ancillary Agreement or the consummation of the
transactions contemplated hereby or thereby except for (i) the filing of the
Merger Agreement with the Secretary of State of the States of Delaware and
California, (ii) such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and (iii) such other consents, waivers,
authorizations, filings, approvals and registrations which are set forth on
Schedule 3.2.
3.3 Capitalization.
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(a) The authorized capital stock of Premier consists of
10,000,000 shares of Common Stock, of which 53,354 are issued and outstanding,
and no shares of Preferred Stock. All issued and outstanding shares of Common
Stock of Premier have been duly authorized and validly issued, are fully paid
and nonassessable and are not subject to preemptive rights or rights of first
refusal created by statute, the Articles of Incorporation or Bylaws of Premier
or any agreement to which Premier is a party or by which Premier is bound. All
outstanding shares of Common Stock of Premier have been issued in compliance
with all federal, state and foreign securities laws.
(b) There are no options, warrants, calls, conversion rights,
convertible debentures, commitments or agreements of any kind that obligate
Premier to issue, deliver or sell, or cause to be issued delivered or sold,
additional shares of capital stock of Premier or that obligate Premier to grant,
extend or enter into any such option, warrant, call, conversion right,
commitment or agreement.
3.4 Title to Premier Common Stock. Each Premier Shareholder has
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good, valid and marketable title to the Premier Common Stock to be sold by such
Premier Shareholder hereunder, free and clear of all claims, liens, charges,
encumbrances, equities, claims and security interests. Each Premier Shareholder
has full right, power and authority to sell, transfer and deliver the stock to
be sold by such Premier Shareholder hereunder to Active, and, upon delivery of
the certificate or certificates therefor duly endorsed for transfer to Active
and Active's payment for and acceptance thereof, will transfer to Active good,
valid and marketable title thereto free and clear of any claim, lien, charge,
encumbrance, equity, claim or security interest.
3.5 No Violation. The execution, delivery and performance of this
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Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby do not and will not conflict with or result in a
violation of the Articles of Incorporation or Bylaws (or similar instruments) of
Premier, or conflict with, or (with or without notice or lapse of time, or both)
result in a termination, breach, impairment or violation of, give rise to a
right of termination, cancellation or acceleration of any obligation or loss of
any benefit under, or constitute a default or result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets or
properties of Premier or any Premier Shareholder under, (i) any instrument,
indenture, lease, mortgage or other agreement or contract to which Premier is
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a party or by which Premier or any of its assets or properties may be subject or
(ii) any federal, state, local or foreign judgment, writ, decree, order,
ordinance, statute, rule or regulation applicable to Premier or its assets or
properties. The consummation of the transactions contemplated by this Agreement
and the Ancillary Agreements will not require the consent of any third person
with respect to the rights, licenses, franchises, leases or agreements of
Premier, and will not have a Material Adverse Effect upon any such rights,
licenses, franchises, leases or agreements.
3.6 Litigation. There are no suits, actions or legal,
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administrative, arbitration or other proceedings or governmental investigations
or any other claims, pending or threatened in writing against Premier or any
Premier Shareholder, any of their assets or properties or any of Premier's
officers or directors. No reasonable basis for a suit, action, proceeding,
investigation or claim exists, and there are no orders, judgments, injunctions
or decrees of any Governmental Entity with respect to which Premier or any
Premier Shareholder has been named or is a party which apply, in whole or in
part, to the business of Premier or any Premier Shareholder, any of their
respective properties or any of Premier's officers or directors, which could
reasonably be expected to have a Material Adverse Effect. There have been no
and are currently no suits, actions or proceedings initiated by Premier or any
Premier Shareholder.
3.7 Financial Statements; Indebtedness. Attached as Schedule 3.7
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of the Disclosure Schedules are true and complete copies of Premier's unaudited
financial statements for the period from inception to December 31, 1999 (the
"Financial Statements"; and as of December 31, 1999 is hereinafter referred to
as the "Date of the Financial Statements"). The Financial Statements fairly
present the financial condition of Premier at the respective dates therein
indicated and the results of operations for the respective periods therein
specified. Premier has no debt, liability or obligation of any nature, whether
absolute, contingent or otherwise, and whether due or to become due, that is not
disclosed in the Financial Statements, except for those that may have been
incurred after the Date of the Financial Statements in the ordinary course of
its business, and consistent with past practice.
3.8 Taxes.
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(a) Definitions. For purposes of this Agreement, the following
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definitions shall apply:
(i) The term "Taxes" shall mean all taxes, however
denominated, including any interest, penalties or other additions to tax that
may become payable in respect thereof, (A) imposed by any federal, territorial,
state, local or foreign government or any agency or political subdivision of any
such government, which taxes shall include, without limiting the generality of
the foregoing, all income or profits taxes (including but not limited to,
federal income taxes and state income taxes), payroll and employee withholding
taxes, unemployment insurance, social security taxes, sales and use taxes, ad
valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation, Pension Benefit
Guaranty Corporation premiums and other governmental charges, and other
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obligations of the same or of a similar nature to any of the foregoing, which
are required to be paid, withheld or collected, (B) any liability for the
payment of amounts referred to in (A) as a result of being a member of any
affiliated, consolidated, combined or unitary group, or (C) any liability for
amounts referred to in (A) or (B) as a result of any obligations to indemnify
another person.
(ii) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns relating to,
or required to be filed in connection with, any Taxes, including information
returns or reports with respect to backup withholding and other payments to
third parties.
(iii) The term "Code" shall have the meaning set out in
Recital C hereof.
(b) Returns; Taxes Paid. Premier has filed all Returns required
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to be filed. Premier has withheld and paid over all Taxes required to have been
withheld and paid over, and complied with all information reporting and backup
withholding requirements, including maintenance of required records with respect
thereto, in connection with amounts paid or owing to any employee, creditor,
independent contractor, or other third party. There are no liens on any of the
assets of Premier with respect to Taxes, other than liens for Taxes not yet due
and payable. Premier has not been at any time a member of any partnership or
joint venture for a period for which the statue of limitations for any Tax
potentially applicable as a result of such membership has not expired.
(c) Tax Reserves. The amount of Premier's liability for unpaid
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Taxes (whether actual or contingent) for all periods through the date hereof and
the Closing Date does not and will not, in the aggregate, exceed the amount of
the current liability accruals for Taxes (excluding reserves for deferred Taxes)
solely with respect to Premier reflected on the Financial Statements. No
material liability for Taxes has been incurred since the date hereof (or will be
incurred prior to Closing) other than in the ordinary course of business.
(d) Tax Filings. Premier has never been a member of an
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affiliated group of corporations filing consolidated returns or a unitary group
of corporations filing combined returns. Premier is not (nor has it ever been) a
party to any tax sharing agreement. Premier does not do business in or derive
income from any state other than states for which Returns have been duly filed
and furnished to Active.
(e) Tax Deficiencies; Audits; Statutes of Limitations. Premier
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has never been audited by a government or taxing authority, nor is any such
audit in process, or pending or threatened in a writing delivered to Premier,
its agents, the Premier Shareholders, employees or contractors. No deficiencies
exist or have been asserted (either in writing or verbally, formally or
informally) or are expected to be asserted with respect to Taxes of Premier, and
neither Premier nor any Premier Shareholder has received notice (either in
writing or verbally, formally or informally) nor expects to receive notice that
it has not filed a Return or paid Taxes required to be filed or paid. Premier is
neither a party to any action or proceeding for assessment or collection of
Taxes, nor has such event been asserted or threatened (either in
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writing or verbally, formally or informally) against Premier or any of its
assets. No waiver or extension of any statute of limitations is in effect with
respect to Taxes or Returns of Premier. Premier has disclosed on its state
income and franchise tax returns all positions taken therein that could give
rise to a substantial understatement penalty within the meaning of Code Section
6662 or comparable provisions of applicable state tax laws.
(f) Tax Elections and Special Tax Status. Premier is not, nor
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has it been, a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code, and Active is not required to withhold
tax on the purchase of the Premier Common Stock by reason of Section 1445 of the
Code. Premier is not a "consenting corporation" under Section 341(f) of the
Code. Premier has not entered into any compensatory agreements with respect to
the performance of services which payment thereunder would result in a
nondeductible expense to Premier pursuant to Section 280G of the Code or an
excise tax to the recipient of such payment pursuant to Section 4999 of the
Code. Premier has not agreed to, nor is it required to make any adjustment under
Code Section 481(a) by reason of, a change in accounting method, and Premier
does not otherwise have any material income reportable for a period ending after
the Closing Date attributable to a transaction or other event (e.g., an
installment sale) occurring prior to the Closing Date. Premier is not, nor has
it been, a "reporting corporation" subject to the information reporting and
record maintenance requirements of Section 6038A and the regulations thereunder.
Premier is in compliance with the terms and conditions of any applicable tax
exemptions, agreements or orders of any foreign government to which it may be
subject or which it may have claimed, and the transactions contemplated by this
Agreement will not have any adverse effect on such compliance.
(g) Premier has provided to Active accurate and complete
information regarding Premier's net operating losses for federal and each state
tax purposes as of the completion of its most recent taxable year. Premier's net
operating losses or other tax attributes are not currently subject to limitation
under Code Sections 382, 383 or 384.
3.9 No Breach or Default. Premier has not breached, or received
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any claim or threat that it has breached, any of the terms or conditions of any
agreement, contract or commitment. Each such agreement, contract or commitment
is in full force and effect and is a legal, binding and enforceable obligation
for or against Premier and, except as otherwise disclosed and except for
defaults fully remedied or resolved, is not subject to any material default
thereunder of which Premier has knowledge by any party obligated to Premier
pursuant thereto. To the Premier Shareholders' knowledge, the parties to such
agreements, contracts or commitments will fulfill their respective obligations
under such agreements, contracts or commitments and are not threatened with
insolvency.
3.10 Absence of Certain Changes. Since the Date of the Financial
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Statements, there has not been any, with respect to Premier:
(a) amendment or change in the Articles of Incorporation or
Bylaws of Premier;
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(b) capital expenditure by Premier exceeding $10,000,
individually or in the aggregate;
(c) destruction, damage to, or loss of any assets of Premier
(whether or not covered by insurance), either individually or in the aggregate
exceeding $10,000;
(d) change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by Premier;
(e) write-up or write-down by Premier of any of its assets that
exceeds $10,000 individually or in the aggregate or that would have a Material
Adverse Effect;
(f) declaration, setting aside or payment of a dividend or other
distribution with respect to the shares of capital stock of Premier, or any
direct or indirect redemption, purchase or other acquisition by Premier of any
of its shares of capital stock, or any such other change in the equity structure
of Premier;
(g) increase in the salary or other compensation payable or to
become payable by Premier to any of its officers, directors, employees or
contractors or the declaration, payment or commitment or any obligation of any
kind for the payment by Premier of a material bonus or other additional salary
or compensation to any such person other than those payable in accordance with
existing compensation arrangements or agreements;
(h) waiver or release of any right or claim of Premier,
including any write-off or other compromise of any account receivable of
Premier, in excess of $10,000, individually or in the aggregate;
(i) any Material Adverse Effect;
(j) any transaction, contract or commitment which provides for a
period of performance by Premier which extends beyond twelve months from the
date hereof or involves payment or receipt after the date hereof of amounts in
excess of $10,000 outside the ordinary course of business, except this Agreement
and the transactions contemplated hereby; or
(k) negotiation or agreement by Premier or any Premier
Shareholder to do any of the things described in the preceding clauses (a)
through (j), other than negotiations with Active regarding the transactions
contemplated by this Agreement.
3.11 Agreements and Commitments. Premier is not a party to any
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oral or written agreement, obligation or commitment of a type which is described
below, except as disclosed on Schedule 3.11:
(a) any contract, commitment, letter contract, quotation,
purchase order, bid or proposal providing for payments by or to Premier in an
amount in excess of $10,000 per year;
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(b) any license agreement as licensor or licensee (other than
forms of standard non-exclusive software licenses granted to end-user customers
in the ordinary course of business and consistent with past practice);
(c) any agreement by Premier to encumber, transfer, grant rights
to use or sell rights in or with respect to any Intellectual Property (as
defined in Section 3.12 hereof) (except for non-exclusive software licenses
granted to end-user customers in the ordinary course of business, consistent
with past practice, the form of which has been provided to Active or its
counsel);
(d) any agreement for the sale or lease of real or personal
property involving more than $10,000 per year;
(e) any dealer, distributor, sales representative, original
equipment manufacturer, value added remarketer or other agreement for the
reasonably anticipated distribution of more than $10,000 of Premier's products
during the term of such agreement;
(f) any joint venture contract or arrangement or any other
agreement that involves a sharing of profits with other persons;
(g) any contract for goods or services involving more than
$10,000 per year;
(h) any agreement or other document relating to noncompetition
covenants by Premier, the Premier Shareholders, or Premier's employees or
contractors;
(i) any instrument evidencing indebtedness for borrowed money by
way of direct loan, sale of debt securities, purchase money obligation,
conditional sale, guarantee or otherwise, except for trade indebtedness and
advances to employees and contractors incurred in the ordinary course of
business, consistent with past practice;
(j) any collective bargaining agreement;
(k) any agreements that contain any unpaid severance liabilities
or obligations;
(l) any bonus, deferred compensation, incentive compensation,
pension, profit-sharing or retirement plans, or any other employee benefit plans
or arrangements;
(m) any employment or consulting agreement, contract or
commitment with an employee, contractor or individual consultant or salesperson
or consulting or sales or distribution agreement, contract or commitment with a
firm or other organization not terminable by Premier on thirty (30) days' notice
without liability;
(n) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of
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any of the transactions contemplated by this Agreement 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;
(o) any fidelity or surety bond or completion bond;
(p) any agreement of indemnification or guaranty, including,
without limitation, agreements with officers, directors, consultants, advisors
and suppliers;
(q) any agreement, contract or commitment relating to the
disposition or acquisition of assets not in the ordinary course of business or
any ownership interest in any corporation, partnership, joint venture or other
business enterprise;
(r) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money or extension of credit; or
(s) any other agreement, contract or commitment that involves
amounts in excess of $10,000 or is not cancelable without penalty within 30
days.
3.12 Intellectual Property.
---------------------
(a) Premier owns, or is licensed or otherwise possesses legally
enforceable rights to use all copyrights and any applications therefor,
technology, know-how and tangible and intangible proprietary information or
material, and to the best of Premier's knowledge owns, or is licensed or
otherwise possesses legally enforceable rights to use all patents, trademarks,
trade names, service marks, that are used or currently proposed to be used in
the business of Premier as currently conducted or as currently proposed to be
conducted that are material to such business or where the failure to have such
right would result or would reasonably be expected to result in a Material
Adverse Effect (the "Intellectual Property"). Schedule 3.12(a) of the Disclosure
Schedules sets forth a true and complete list of all patents and patent
applications, registered and unregistered trademarks and service marks,
registered copyrights, trade names and service marks and any applications
therefor, included in the Intellectual Property, and specifies the jurisdictions
in which each such Intellectual Property has been issued or registered or in
which an application for such issuance and registration has been filed,
including the respective registration or application numbers and the names of
all registered owners.
(b) Premier is not in violation of, and the execution and
delivery of this Agreement and the performance by the Premier Shareholders of
their obligations hereunder will not impair Premier's rights (or alter the
rights or obligations of any third person that is a party to any agreement,
license or sublicense with Premier) under or violate, any license, sublicense or
other agreement. No claims with respect to the Intellectual Property, any trade
secret of Premier or any patents, trademarks, tradenames, service marks,
copyrights or any applications therefor, technology, know-how, trade secrets or
tangible or intangible proprietary information or material of any third party
("Third Party Intellectual Property Rights") (to the extent arising out of any
use, reproduction or distribution of such Third Party Intellectual
-12-
Property Rights by or through Premier), have been asserted or are threatened by
any person or entity against Premier or the Premier Shareholders, nor does
Premier or any Premier Shareholder know of any valid grounds for any claims (i)
to the effect that the manufacture, sale, licensing or use of any product as now
used, sold or licensed by Premier infringes on any patent, trademark, trade
name, service xxxx, copyright or trade secret; (ii) against the use by Premier
of any patents, trademarks, trade names, service marks, copyrights, technology
or trade secret used in Premier's business as currently conducted or as
currently proposed to be conducted; (iii) challenging the ownership, validity,
enforceability or effectiveness of any Intellectual Property or any trade secret
of Premier or (iv) challenging Premier's license or legally enforceable right to
use any Third Party Intellectual Property Rights.
(c) Neither Premier nor any Premier Shareholder has any
knowledge, after due inquiry, of any material unauthorized use, infringement or
misappropriation of any Intellectual Property by any third party, including any
employee, contractor, former employee or former contractor of Premier. Schedule
3.12(c) of the Disclosure Schedules sets forth a true and complete list of all
employees, contractors, former employees and former contractors who have been
involved in the development of all patents, registered and unregistered
trademarks and service marks, registered copyrights, trade names and service
marks and any applications therefor, included in the Intellectual Property.
(d) Neither Premier nor any Premier Shareholder, after due
inquiry, has any knowledge that any Intellectual Property, trade secret of
Premier or Third Party Intellectual Property Right is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting in any manner the
licensing thereof by Premier. Premier has not entered into any agreement to
indemnify any other person against any charge of infringement of any
Intellectual Property, any trade secret of Premier or any Third Party
Intellectual Property Right other than pursuant to licenses to customers in the
ordinary course of business.
3.13 Transactions with Affiliates. No current director or officer
----------------------------
of Premier or a member of his or her immediate family has or has had, directly
or indirectly, (i) an interest in any entity which furnished or sold, or
furnishes or sells, services or products which Premier furnishes or sells, or
proposes to furnish or sell, or (ii) any interest in any entity which purchases
from or sells or furnishes to Premier, any goods or services, or (iii) a
beneficial interest in any contract or agreement listed or identified or
required to be listed or identified in the Disclosure Schedules (under any
section or subsection thereof); provided, that ownership of no more than 5% of
the outstanding voting stock of a publicly traded corporation shall not be
deemed an "interest in any entity" for purposes of this Section 3.13.
3.14 Compliance with Laws; Governmental Authorizations. Premier
-------------------------------------------------
has complied, and will be on the Closing Date in full compliance, in all
material respects with all applicable, laws, ordinances, regulations and rules,
and all orders, writs, injunctions, awards, judgments and decrees, known to be
applicable to Premier (after due inquiry or consultation with Premier's legal
counsel) or to the assets, properties and business of Premier. Premier has made
all material filings with third parties, including government agencies and
authorities, that are necessary in connection with its present business. The
Disclosure Schedules sets forth a true and
-13-
complete list of each material federal, state, county, local or foreign
governmental consent, license, permit, grant, or other authorization issued to
Premier (i) pursuant to which Premier currently operates or holds any interest
in any of its properties or (ii) which is required for the operation of its
business or the holding of any such interest (herein collectively referred to as
"Premier Authorizations"). The Premier Authorizations are in full force and
effect and constitute all authorizations required to permit Premier to operate
or conduct its business or hold any interest in its properties.
3.15 Employees and Contractors.
-------------------------
(a) Set forth on Schedule 3.15(a) of the Disclosure Schedules is
a true and complete list of all current employees and contractors of Premier,
including current date of hire, position, accrued vacation, wage or salary and
bonus status. In addition, Premier has provided to Active or its legal counsel
true and complete copies of all written, and to Premier's knowledge a
description of the terms of all oral, employment contracts, development
contracts and consulting contracts of Premier. All such contracts are valid and
are in full force and effect in all material respects, and neither Premier, nor
to the knowledge of Premier or the Premier Shareholders, any other party, is in
breach or default of any such contract. Premier has no written or oral agreement
or commitment to pay any person anything of value upon or in connection with the
termination of such person's employment or engagement by Premier.
(b) All past and present directors, officers, employees,
contractors and consultants of Premier who have had and who have access to the
Intellectual Property or other proprietary information of Premier, have executed
and delivered to Premier agreements regarding the confidentiality and non-
disclosure of such Intellectual Property and proprietary information and the
assignment of all intellectual property rights to Premier. Premier has provided
to Active or its legal counsel true and complete copies of the form of all such
agreements. With respect to Premier, and to Premier's and each Premier
Shareholders' knowledge with respect to the other party, all such agreements are
valid and remain in full force and effect, and neither Premier, nor to Premier's
or the Premier Shareholders' knowledge, any other party is in breach or default
of any such agreement.
(c) Neither Premier nor the Premier Shareholders has any
knowledge of any employee or contractor of Premier who intends to leave
Premier's employ and, to the Premier Shareholders' knowledge, all such employees
and contractors are capable of freely contracting with Active for full time
employment upon consummation of the transactions contemplated by this Agreement.
(d) To Premier's and the Premier Shareholders' knowledge, no
employee or contractor of Premier is in material violation of any contract or
agreement, or any restrictive covenant, relating to the right of any such
employee or contractor to be employed by Premier or with respect to security
clearance, trade secrets or proprietary information of others, and the
employment of any employee or contractor of Premier does not subject Premier to
any liability to any third party.
-14-
(e) Set forth on Schedule 3.15(e) of the Disclosure Schedules is
a true and complete list of all employee benefit plans (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar fringe or
employee benefit plans, programs or arrangements, and any current employment or
executive compensation or severance agreements, written or otherwise, for the
benefit of, or relating to, any current or former employee of Premier or with
respect to any such plans which are subject to Code Section 401(a) any trade or
business (whether or not incorporated) which is a member or which is under
common control with Premier (an "ERISA Affiliate") within the meaning of Section
414 of the Code, or any Subsidiary of Premier (together, the "Employee Plans").
(f) None of the Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person except as required by
applicable law, including but not limited to COBRA.
(g) All Employee Plans are in compliance in all material
respects with the requirements prescribed by any and all applicable statutes
(including ERISA and the Code), orders or governmental rules and regulations
currently in effect with respect thereto (including all applicable requirements
for establishment of a plan and trust, reporting and disclosure, claims
procedures, fulfillment of fiduciary duties and notification to participants or
beneficiaries or the Department of Labor, Internal Revenue Service (the "IRS")
or Secretary of the Treasury), and Premier has performed all obligations
required to be performed by it under, is not in default under or violation of,
and the Premier Shareholders have no knowledge of any default or violation by
any other party to, any of the Employee Plans, except as would not have a
Material Adverse Effect. There is no suit, administrative proceeding, action or
other litigation pending or, to the knowledge of Premier, threatened against
Premier with respect to any such Employee Plan (other than routine claims for
benefits).
(h) Each Employee Plan intended to qualify under Section 401(a)
of the Code and each trust intended to qualify under Section 501(a) of the Code
either has received a favorable determination letter with respect to each such
Employee Plan from the IRS, has pending before the IRS an application for such
determination letter for each such Employee Plan or still has a remaining period
of time under applicable Treasury Regulations or IRS pronouncements in which to
apply for such a determination letter and to make any amendments necessary to
obtain a favorable determination.
(i) No Employee Plan is or has been subject to, and Premier has
not incurred or does not expect to incur any liability under, Title IV of ERISA
or Section 412 of the Code.
(j) Subject to the limitations of applicable law, each Employee
Plan may be terminated or consolidated, at Active's option, after the Closing.
(k) Each Employee Plan has been maintained in substantial
compliance with its terms, and all contributions, premiums or other payments due
from Premier
-15-
to (or under) any such Employee Plan have been fully paid or adequately provided
for on the Financial Statements. All accruals thereon (including, where
appropriate) proportional accruals for partial periods) have been made in
accordance with generally accepted accounting principles consistently applied on
a reasonable basis. There has been no amendment, written interpretation or
announcement (whether or not written) by Premier with respect to, or change in
employee participation or coverage under, any Employee Plan that would increase
materially the expense of maintaining such plans or arrangements, individually
or in the aggregate, above the level of expense incurred with respect thereto
for the most recent fiscal year included in the Financial Statements.
(l) Premier has furnished to Active or its counsel complete,
accurate and current copies of all Employee Plans and all amendments, documents,
correspondence and filings relating thereto, including but not limited to any
statements, filings, reports or returns filed with any governmental agency with
respect to the Employee Plans at any time within the two year period ending on
the date hereof.
3.16 No Brokers. Neither Premier nor either of the Premier
----------
Shareholders is obligated for the payment of fees or expenses of any investment
banker, broker or finder in connection with the origin, negotiation or execution
of this Agreement or in connection with the transactions contemplated by this
Agreement.
3.17 Full Disclosure. None of the representations or warranties
---------------
made by Premier or the Premier Shareholders (as modified by the information set
forth in the Disclosure Schedules), nor any statement made in any Schedule or
certificate furnished by Premier to Active pursuant to this Agreement, contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements of facts contained herein and therein,
in light of the circumstances under which such statements were made, not
misleading.
3.18 No Reliance on Representations Regarding Forecasts. In the
--------------------------------------------------
negotiation and consideration of the transaction contemplated by this Agreement,
neither Premier nor the Premier Shareholders have relied upon any information or
documents concerning Active and its business condition except (i) information
and documents that are publicly available, and (ii) representations and
warranties made by Active in this Agreement.
3.19 Books and Records. Set forth on Schedule 3.19 of the
-----------------
Disclosure Schedules is a true and complete list and description of all banks or
other financial institutions (including brokerage firms and money market mutual
funds) in which Premier keeps accounts, deposits, or cash balances or safety
deposit boxes, including addresses, account and identification numbers, and the
names of all persons who have the authority to draw on such deposits, accounts
or balances or who have access to such boxes.
3.20 Insurance. Set forth in Schedule 3.20 of the Disclosure
---------
Schedules is a true and complete list of all insurance policies covering the
assets, business, equipment, properties, operations, employees, contractors,
officers and directors of Premier and all claims, including claims existing but
not yet made, under any such insurance policy since the date of Premier's
inception. There is no claim by Premier pending under any of such policies as
to which coverage
-16-
has been questioned, denied or disputed by the underwriters of such policies.
All premiums payable under all such policies and bonds have been paid and
Premier is otherwise in compliance with the terms of such policies and bonds (or
other policies and bonds providing substantially similar insurance coverage).
Neither Premier nor any of the Premier Shareholders has any knowledge of any
threatened termination of, or material premium increase with respect to, any of
such policies.
3.21 Customers. To Premier's and the Premier Shareholders'
---------
knowledge, no material customer of Premier has indicated that such customer
intends or has under consideration a proposal to cease doing business with or to
materially alter the amount of business done with Premier in the normal course
of business or as a result of the transaction contemplated herein.
3.22 Accounts Receivable. Set forth in Schedule 3.22 of the
-------------------
Disclosure Schedules is a complete list of the accounts and notes receivable of
Premier as of the Date of the Financial Statements, aged by customer or debtor,
as the case may be. All receivables of Premier arose in the ordinary course of
business at the aggregate amounts thereof, and are carried at values determined
in accordance with GAAP consistently applied. To the Premier Shareholders'
knowledge, none of the receivables of Premier is subject to any claim of offset,
recoupment, set-off or counterclaim and there are no facts or circumstances
(whether asserted or unasserted) that would give rise to any such claim. No
receivables are contingent upon the performance by Premier of any obligation or
contract. No person has any lien, charge, pledge, security interest or other
encumbrance on any of such receivables and no agreement for deduction or
discount has been made with respect to any of such receivables.
3.23 Title to Properties.
-------------------
(a) Schedule 3.23 of the Disclosure Schedules sets forth a true
and complete list of all real property owned or leased by Premier, and, in the
case of leased real property, the name of the lessor, the aggregate monthly
rental or other fee payable under any such lease and any cancellation provisions
set forth in such lease. All such leases are in full force and effect and
Premier has not breached, or received any claim or threat that it has breached,
any of the terms or conditions of any such lease.
(b) Premier has good and marketable title to or in the case of
leased properties and assets, valid leasehold interests in, all of its assets
free and clear of all liens, charges or encumbrances. All leases of real or
personal property to which Premier is a party are fully effective and afford
Premier peaceful and undisturbed possession of the subject matter of the lease.
3.24 Condition of Personal Property. Schedule 3.24 of the
------------------------------
Disclosure Schedules sets forth a true and complete list of all of Premier's
tangible personal property, equipment and fixtures used in its business. All
such property, equipment and fixtures are in good condition, reasonable wear and
tear excluded, or in reasonably repairable condition, are valued at their
historical cost less applicable depreciation.
3.25 Environmental Matters.
---------------------
-17-
(a) No underground storage tanks and no amount of any substance
that has been designated by any state or federal Governmental Entity or by
applicable state law to be radioactive, toxic, hazardous or otherwise a danger
to health or the environment, including, without limitation, PCBs, asbestos,
petroleum, urea-formaldehyde and all substances listed as hazardous substances
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to
the United States Resource Conservation and Recovery Act of 1976, as amended,
and the regulations promulgated pursuant to such laws, but excluding office and
janitorial supplies properly and safely maintained (a "Hazardous Material"), is
present, as a result of the actions of Premier, or, to Premier's and the Premier
Shareholders' knowledge, as of result of any actions of any third party or
otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water thereof, that Premier has at any
time owned, operated, occupied or leased.
(b) At no time prior to Closing Date has Premier transported,
stored, used, manufactured, disposed of, released or exposed its employees,
contractors or others to Hazardous Materials in violation of any law in effect
on or before the Closing Date, nor has Premier disposed of, transported, sold or
manufactured any product containing a Hazardous Material (collectively
"Hazardous Materials Activities") in violation of any rule, regulation, treaty
or statute promulgated by any state or federal Governmental Entity to prohibit,
regulate or control Hazardous Materials or any Hazardous Materials Activities.
(c) Premier currently holds all environmental approvals,
permits, licenses, clearances and consents (the "Environmental Permits")
necessary for the conduct of Premier's Hazardous Material Activities and other
business activities of Premier that are material to such activities or where the
failure to have such Environmental Permits would result or reasonably be
expected to result in a Material Adverse Effect.
(d) No action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending or, to the knowledge of Premier
or any Premier Shareholder, threatened, concerning or relating to Premier, any
Environmental Permit or any Hazardous Materials Activity of Premier. Neither
Premier nor any Premier Shareholder is aware of any fact or circumstance that
could involve Premier in any environmental litigation or impose upon Premier any
environmental liability that would have a Material Adverse Effect.
3.26 Minute Books. The minute books of Premier made available to
------------
counsel for Active contain true and complete minutes of all meetings of
directors (and any committee thereof) and shareholders or actions by written
consent since the time of incorporation of Premier.
3.27 Complete Copies of All Materials. Premier and the Premier
--------------------------------
Shareholders have delivered or made available true and complete copies of each
document (or summaries of same that are true and complete in all material
respects) which has been requested by Active or its counsel.
4. Investment Representations of the Premier Shareholders.
------------------------------------------------------
-18-
4.1 Restricted Securities; Legend. Each of the Premier
-----------------------------
Shareholders hereby acknowledges that the Active Common Stock is "restricted
securities" within the meaning of Rule 144 promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act"), and is subject to certain restrictions on
transfer under the federal securities laws of the United States of America. Each
of the Premier Shareholders understands and acknowledges that the stock
certificates representing the Active Common Stock, and any securities issued in
respect thereof or exchange therefor, may bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933."
4.2 Resale Restrictions. Each Premier Shareholder hereby agrees
-------------------
to observe and comply with the Securities Act and the General Rules and
Regulations thereunder, as now in effect and as from time to time amended and
including those hereafter enacted or promulgated, in connection with any offer,
sale, pledge, transfer or other disposition of the Active Common Stock or any
part thereof.
4.3 Share Purchase. Each Premier Shareholder hereby severally
--------------
represents and warrants to Active that:
(a) This Agreement is made with such Premier Shareholder in
reliance upon such Premier Shareholder's representation to Active, which by such
Premier Shareholder's execution of this Agreement such Premier Shareholder
hereby confirms, that the Active Common Stock to be acquired by such Premier
Shareholder will be acquired for investment for such Premier Shareholder's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that such Premier Shareholder has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, such Premier Shareholder
further represents that such Premier Shareholder does not presently have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Active Common Stock. Such Premier Shareholder understands
that the issuance of the Active Common Stock under this Agreement has not been,
registered under the Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of such Premier Shareholder's investment intent and
the accuracy of such Premier Shareholder's representations as expressed herein.
-19-
(b) Such Premier Shareholder believes it has received all the
information it considers necessary or appropriate for deciding whether to
acquire the Active Common Stock. Such Premier Shareholder further represents
that it has had an opportunity to ask questions and receive answers from Active
regarding the terms and conditions of the offering of the Active Common Stock.
Such Premier Shareholder is aware of Active's business affairs and financial
condition and has acquired sufficient information about Active to reach as
informed and knowledgeable decision to acquire the Active Common Stock.
(c) Such Premier Shareholder, by reason of his or her business
or financial experience or the business or financial experience of his or her
professional advisors who are unaffiliated with Active, directly or indirectly,
has the capacity to protect his or her own interests in connection with the
purchase of the Active Common Stock hereunder.
(d) Such Premier Shareholder hereby represents that he or she
has satisfied himself or herself as to the income tax and other tax
consequences, if any, that may be relevant to the purchase, holding, sale or
transfer of the Active Common Stock, and such Premier Shareholder hereby agrees
and acknowledges that Active is not in any way responsible for any tax
consequences to such Premier Shareholder arising out of or related to the
transactions contemplated by this Agreement.
5. Representations and Warranties of Active. Active hereby represents
----------------------------------------
and warrants to the Premier Shareholders as follows:
5.1 Existence; Good Standing. Active is a corporation duly
------------------------
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Active is duly qualified to do business as a foreign corporation
and is in good standing under the laws of any jurisdiction in which the
character of the properties owned or leased by Active therein or in which the
transaction of its business makes such qualification necessary, except for
jurisdictions in which the failure to be so qualified or to be in good standing
would not have a Material Adverse Effect (as such term is defined at the
beginning of this Section 3, except that it shall refer to Active) on Active.
Active has all requisite corporate power and authority to own its properties and
carry on its business as now conducted.
5.2 Power, Authorization and Validity of Active . Active has all
-------------------------------------------
requisite legal and corporate power and authority to enter into and perform its
obligations under this Agreement and the Ancillary Agreements and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Ancillary Agreements and the consummation
of the transactions contemplated hereby and thereby have been duly and validly
approved and authorized by all necessary action (corporate or other) on the part
of Active.
This Agreement and the Ancillary Agreements have been duly or will be executed
and delivered by Active and constitute valid and binding obligations of Active,
enforceable in accordance with their respective terms subject to the effect, if
any, of applicable bankruptcy, reorganization, insolvency, moratorium and other
laws affecting creditors' rights generally from time to time in effect and to
general equitable principles.
-20-
No consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to Active in
connection with the execution and delivery of this Agreement or any Ancillary
Agreement or the consummation of the transactions contemplated hereby or thereby
except for (i) the filing of the Merger Agreement with the Secretary of State of
the States of Delaware and California, and (ii) such consents, waivers,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable federal and state securities laws.
5.3 SEC Documents; Active Financial Statements. Active has
------------------------------------------
furnished or made available to Premier complete copies of all reports or
registration statements filed by it with the SEC under the Securities Exchange
Act of 1934 (the "Exchange Act") for all periods subsequent to January 1, 1999,
all in the form so filed (all of the foregoing being collectively referred to as
the "SEC Documents"). As of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act, and
none of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which they
were made, not misleading, except to the extent corrected by a subsequently
filed documents with the SEC. Active currently complies, and it shall use its
diligent efforts to continue to comply with, the requirements for use of a Form
S-3 Registration Statement. The financial statements of Active, including the
notes thereto, included in the SEC Documents (the "Active Financial Statements")
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles consistently applied (except as may be indicated in the
notes thereto) and present fairly the consolidated financial position of Active
at the dates thereof and of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal audit adjustments
and the inclusion of footnotes). There has been no change in Active accounting
policies except as described in the notes to the Active Financial Statements.
5.4 Full Disclosure. No representation or warranty by Active in
---------------
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements or facts contained
therein in light of the circumstances under which such statements were made, not
misleading.
5.5 Investment. Active is acquiring the Premier Common Stock for
----------
its own account for investment, and not with a view to, or for resale in
connection with, the distribution thereof in violation of federal or state
securities laws and with no present intention of distributing or reselling any
part thereof.
5.6 No Brokers. Active is not obligated for the payment of fees
----------
or expenses of any investment banker, broker or finder in connection with the
origin, negotiating or execution of this Agreement or in connection with the
transactions contemplated by this Agreement.
-21-
5.7 Valid Issuance. The Active Common Stock will, when
--------------
issued in accordance with the provisions of this Agreement, be validly issued
fully paid, nonassessable and issued in compliance with all applicable federal
and California securities laws binding on Active.
5.8 Litigation. There is no action, suit, proceeding, claim,
----------
arbitration or, to Active's knowledge, investigation, pending, or as to which
Active has received any notice of assertion against Active which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay any of the
transactions contemplated by this Agreement or any Ancillary Agreement.
5.9 No Material Adverse Change. Since the date of the balance
--------------------------
sheet included in Active's most recently filed report on Form 10-Q, there has
not occurred: (a) any transaction which would result in a Material Adverse
Effect with respect to Active; (b) any amendment or change in the Articles of
Incorporation or Bylaws of Active; or (c) any damage to, destruction or loss of
any assets of Active, whether or not covered by insurance, that would result in
a Material Adverse Effect with respect to Active.
5.10 No Violation. The execution, delivery and performance of
------------
this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby do not and will not conflict with
or result in a violation of the Certificate of Incorporation or Bylaws (or
similar instruments) of Active or any judgment, order or decree of any court or
government authority binding upon Active, or, to Active's knowledge, any
material conflict with or breach or default under any material agreement to
which Active is a party.
6. Covenants of Premier.
----------------------
6.1 Interim Operations.
------------------
(a) During the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time of the Merger, except as set forth in the Disclosure Schedule,
and unless Active has consented in writing thereto, Premier:
(i) Shall conduct its operations according to its usual,
regular and ordinary course in substantially the same manner as heretofore
conducted;
(ii) To the extent consistent with its business, shall
use commercially reasonable efforts to preserve intact its business organization
and goodwill, keep available the services of its officers, employees and
contractors and maintain satisfactory relationships with those persons having
business relationships with it;
(iii) Shall promptly notify Active of any Material Adverse
Effect, any material litigation or material governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated), or the material breach of any representation or warranty
contained herein;
-22-
(iv) Shall not (A) issue any shares of its capital stock,
effect any stock split or otherwise change its capitalization as it existed on
the date hereof; (B) grant, confer or award any option, warrant, conversion
right or other right not existing on the date hereof to acquire any shares of
its capital stock; (C) increase any compensation, make payment of cash bonuses
to, or enter into or amend any employment agreement with any of its present or
future officers, directors, employees or contractors except for normal increases
consistent with past practice; (D) grant any severance or termination package to
any employee, contractor or consultant; or (E) adopt any new employee benefit
plan (including any stock option, stock benefit or stock purchase plan) or amend
any existing employee benefit plan in any material respect, except to the extent
required by applicable law or under the terms of this Agreement;
(v) Shall not enter into any agreement or transaction,
or agree to enter into any agreement or transaction, outside the ordinary course
of business, including, without limitation, any transaction involving a merger,
consolidation, joint venture, license agreement partial or complete liquidation
or dissolution, reorganization, recapitalization, restructuring or a purchase,
sale, lease or other disposition of a material portion of assets or capital
stock;
(vi) With the exception of licenses entered into in the
ordinary course of business, shall not transfer to any person or entity any
rights to the Intellectual Property Rights;
(vii) Except in the ordinary course of business, with
prior notice to Active, shall not violate, amend, or otherwise change the terms
of any of the contracts set forth in the Disclosure Schedules;
(viii) Shall not commence a lawsuit other than for: the
routine collection of bills (other than against customers or vendors of Active
and its Subsidiaries of which Active or its counsel have received notice); or
for injunctive relief on the grounds that Premier has suffered immediate and
irreparable harm not compensable in money damages provided Premier has obtained
the prior written consent of Active, such consent not to be unreasonably
withheld; or for breach of this Agreement;
(ix) Shall not take any other action which could
reasonably be expected to cause a major customer or supplier or key employee or
contractor to terminate its relationship with Premier;
(b) Dividends; Changes in Premier Common Stock. Premier shall
------------------------------------------
not and shall not propose (i) to declare or pay any dividends on or make any
other distributions (whether in cash, stock or property) in respect to any of
its capital stock, (ii) to split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of capital stock of Premier; or (iii) to
repurchase or otherwise acquire, directly or indirectly, any shares of its
capital stock.
-23-
(c) Governing Documents. Premier shall not amend its Articles of
-------------------
Incorporation or Bylaws.
(d) Exclusivity; Acquisition Proposals. Until the earlier of the
----------------------------------
Effective Time of the Merger or the date this Agreement shall have been
terminated by either party pursuant to Section 10.1 hereof, Premier shall not
(nor will it permit any of its officers, directors, agents, representatives or
affiliates to) directly or indirectly, take any of the following actions with
any party other than Active and its designees: (i) solicit, encourage, initiate
or participate in any negotiations, inquiries or discussions with respect to,
any offer or proposal to acquire all or substantially all of its business and
properties or capital stock whether by merger, purchase of assets, tender offer
or otherwise, (ii) enter into or execute any agreement or plan of
reorganization, merger agreement, or other agreement relating to the sale of all
or substantially all of its business and properties whether by merger, purchase
of assets, tender offer or otherwise, or (iii) otherwise materially assist or
cooperate with any person to make any proposal to purchase all or any part of
the capital stock or assets of Premier or any of its Subsidiaries, other than
inventory in the ordinary course of business, provided, however, that nothing
contained herein shall prohibit Premier from making any disclosure or otherwise
taking any action required by law or required for the Premier Board of Directors
to comply with their fiduciary duties. In the event Premier shall receive any
bona fide offer, proposal or request, directly or indirectly, of the types
referred to in clause (i), (ii) or (iii) above, it shall immediately, and prior
to taking any action in response thereto, inform Active as to all material facts
concerning any such offer or proposal and, except as otherwise required by law,
including fiduciary duties required by law, will thereafter cooperate with
Active by continuing to furnish to Active any additional information it may at
any time request.
(e) No Acquisitions. Premier shall not acquire or agree to
---------------
acquire, by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets, except in the
ordinary course of business consistent with prior practice.
(f) No Dispositions. Premier shall not sell, lease, license or
---------------
otherwise dispose of any of their assets, except in the ordinary course of
business consistent with prior practice.
(g) Indebtedness. Premier shall not incur any indebtedness for
------------
borrowed money or guarantee any such indebtedness or issue or sell any debt
securities of Premier or guarantee any debt securities of others, in each case
other than in the ordinary course of business consistent with prior practice.
6.2 Breach of Representations and Warranties. Neither Premier nor
----------------------------------------
the Premier Shareholders shall take any action that would breach or cause to be
inaccurate any of the representations and warranties set forth in Sections 3 and
4. Promptly after becoming aware of the occurrence of or the pending or
threatened occurrence of any event that could cause or constitute such a breach
or inaccuracy, each of Premier and the Premier Shareholders shall give
-24-
detailed notice thereof to Active and shall use its diligent efforts to prevent
or remedy such breach or inaccuracy promptly.
6.3 Consents. After execution of this Agreement, Premier shall
--------
promptly apply for or otherwise seek, and use its diligent efforts to obtain,
all consents and approvals required for the constitution of the Merger including
the unanimous written consent of the Premier Shareholders to the Merger
contemplated by this Agreement.
6.4 Best Efforts. Premier and the Premier Shareholders shall each
------------
use their best efforts to effectuate the transactions contemplated hereby and to
fulfill and cause to be fulfilled the conditions to Closing under this
Agreement, except to the extent necessary for the Premier Board of Directors to
comply with their fiduciary duties.
6.5 Tax Returns. Premier shall timely file or cause to be filed
-----------
all tax returns, reports and information statements required to be filed by it.
7. Covenants of Active. During the period from the date of this
---------------------
Agreement and continuing until the Effective Time of the Merger, Active agrees
(except to the extent that Premier shall otherwise consent in writing) that:
7.1 Breach of Representations and Warranties . Active shall not
----------------------------------------
take any action that would breach or cause to be inaccurate any of the
representations and warranties set forth in Section 5. Promptly after becoming
aware of the occurrence of or the pending or threatened occurrence of any event
that would cause or constitute such a breach or inaccuracy, Active shall give
detailed notice thereof to Premier and shall use its best efforts to prevent or
promptly remedy such breach or inaccuracy.
7.2 Consents. After execution of this Agreement, Active shall
--------
promptly apply for or otherwise seek, and use its best efforts to obtain, all
consents and approvals required or that Premier may reasonably request for the
consummation of the Merger. Notwithstanding the foregoing, in no event shall
Active or any of its affiliates have any obligation to divest, or agree to
divest, any assets as a condition to obtaining any consent or approval necessary
to consummate the Merger.
7.3 Best Efforts. Active shall use its best efforts to effectuate
------------
the transactions contemplated hereby and to fulfill and cause to be fulfilled
the conditions to Closing under this Agreement.
8. Additional Agreements. In addition to the foregoing, Active and
---------------------
Premier each agree to take the following actions after the execution of this
Agreement;
8.1 Access to Information. Premier and Active shall each afford
---------------------
the other and their respective accountants, counsel and other representatives,
reasonable access during normal business hours during the period prior to the
Effective Time of the Merger to (a) all of their respective books, contracts,
commitments and records, and (b) all other information concerning the business,
properties and personnel of Premier and Active as the other party may reasonably
-25-
request, provided that access to information concerning Active shall be limited
to inquiry concerning information that has otherwise been publicly disclosed.
No information or knowledge obtained in any investigation pursuant to this
Section 8.1 shall affect or be deemed to modify any representation or warranty
contained herein or the conditions to the obligations of the parties to
consummate the Merger.
8.2 Legal Conditions to the Merger. Each of the parties shall take
------------------------------
all reasonable actions necessary to comply promptly with all legal requirements
that may be imposed on such parties with respect to the Merger and will promptly
cooperate with and furnish information to such other parties in connection with
any such requirements imposed upon such other parties in connection with the
Merger. Each of the parties shall take all reasonable actions to obtain (and to
cooperate with such other parties in obtaining) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity, or other
third party, required to be obtained or made by the parties in connection with
the Merger or the taking of any action contemplated thereby or by this Agreement
or the Merger Agreement.
8.3 Premier Employee Benefits. Active shall take such actions as it
-------------------------
deems appropriate to make available as promptly as is reasonably practicable to
Premier employees and contractors such benefits (including vacation, medical,
dental, life and disability insurance, and participation in other company-wide
plans) as are generally made available to employees of Active, or benefits that
taken as a whole are reasonably equivalent thereto, provided that this Section
8.4 shall not obligate Active to maintain or continue any specific benefits in
effect for any period of time, it being the intent of the parties solely to
provide that the benefits to employees and contractors of Premier be reasonably
equivalent to the benefits to Active employees as in effect from time to time.
8.4 Expenses. Whether or not the Merger is consummated, all costs
--------
and expenses incurred in connection with this Agreement, the Merger Agreement
and the transactions contemplated hereby and thereby, together with other
business expenses, shall be paid by the party incurring such expense. The costs
and expenses, including the reasonable fees and expenses of Premier's legal
counsel and accounting firm, incurred by Premier in connection with this
Agreement, the Merger Agreement and the transactions contemplated hereby and
thereby shall not exceed $60,000 in the aggregate.
8.5 Additional Agreements. In case at any time after the Effective
---------------------
Time of the Merger any further action is reasonable and necessary or desirable
to carry out the purposes of this Agreement or to vest the Surviving Corporation
with full title to all properties, assets, rights, approvals, immunities and
franchises of either Active or Premier, the proper officers and directors of
each corporation which is a party to this Agreement shall take all such
reasonable and necessary action.
8.6 Public Announcements. Active and Premier shall cooperate with
--------------------
each other in releasing information concerning this Agreement and the
transactions contemplated herein. Where practicable each of the parties shall
furnish to the other drafts of all releases prior to publication. Nothing
contained herein shall prevent either party at any time from furnishing
-26-
any information to any governmental agency or prevent Active from issuing any
release when it believes it is legally required to do so.
8.7 Confidentiality. Each party hereto shall treat, and shall
---------------
cause its accountants, counsel and other representatives to treat, as
confidential all confidential documents and information concerning the other
party and its Subsidiaries furnished by the other party to such party in
connection with the transactions contemplated by this Agreement, except to the
extent that such information or documents (i) at the time of its disclosure to
the receiving party by or on behalf of the disclosing party is already known or
available to the receiving party or its Subsidiaries, provided that the
receiving party or its Subsidiaries are not subject to similar restrictions of
confidentiality as set forth herein with a third party with respect to such
information (ii) is or becomes known or available to the public other than as a
result of an unauthorized disclosure by the receiving party or its directors,
officers, employees, contractors, agents, representatives or advisors (iii)
becomes known or available to the receiving party or its Subsidiaries without
similar restrictions of confidentiality as set forth herein from a source other
than the disclosing party, provided that such source is not known by the
receiving party, after reasonable inquiry, to be bound by a confidentiality
agreement with, or without obligation of secrecy to, the disclosing party which
would prohibit such disclosures to the receiving party by such other party (iv)
is independently generated by the receiving party or its Subsidiaries and not
derived from confidential information or (v) is required to be disclosed by the
receiving party or its Subsidiaries by law, regulation, court order or other
legal process, using the same standard of care to protect such confidential
documents or information as is used by the receiving party to protect its own
confidential data or information. Subject to the foregoing, each party hereto
will not release or disclose such information or documents to any person other
than its representatives in connection with this Agreement. In the event that
any party or any of its representatives is requested or required to disclose any
of the confidential information referred to above, such party will provide the
other party with prompt notice of any such request or requirement so that the
other party may seek a protective order or waive such party's compliance with
this Section 8.8. If, failing the entry of a protective order or the receipt of
a waiver hereunder, such party is, in the opinion of its counsel (which may be
internal counsel), compelled to disclose such confidential documents or
information, such party may, subject to prior notification thereof, disclose
that portion of such confidential documents or information which its counsel
advises that such party is compelled to disclose. In any event, any party
hereto will not oppose action by, and such party will cooperate with, the other
party to obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded such confidential information. In the
event of the termination of this Agreement, each party, and shall cause its
representatives to, deliver to the other party the originals of all documents
obtained by such party or on behalf of such party from the other party in
connection with this Agreement, whether so obtained before or after the
execution hereof, and such party shall, and shall cause its representatives to,
destroy all copies thereof; provided, that counsel to each party shall be
--------
entitled to keep one copy of each such document for use in the event of
litigation or arbitration. The obligations contained in this Section 8.8 shall
terminate four years after the date hereof.
8.8 FIRPTA Compliance. Premier agrees to deliver to Active, on or
-----------------
prior to the Effective Time of the Merger, a statement executed on its behalf by
its chief executive officer
-27-
or president in such form as reasonably requested by counsel for Active
conforming to the requirements of Treasury Regulation Section 1.897-2(h)(l)(i)
and further agrees to provide the notification, if any, to the Internal Revenue
Service required pursuant to Treasury Regulation Section 1.897-2(h)(2).
8.9 NASD and SEC Filings. Active shall use diligent efforts to
--------------------
remain in compliance with the reporting obligations of all applicable
governmental acts, rules and regulations of any Governmental Entity, including
without limitation the Exchange Act and to remain listed on The Nasdaq National
Market or other comparable exchange, to the extent necessary to permit Active
Common Stock to be traded under Rule 144. In addition, Active shall use
diligent efforts to continue to qualify for the use of a Form S-3 registration
statement and to file with the Nasdaq National Market a Notification for the
Listing of Additional Shares.
8.10 Tax-Free Reorganization. Active shall treat the Merger as a
-----------------------
reorganization within the meaning of Section 368(a) of the Code, and shall
comply with all reporting requirements related thereto and shall not take any
action not otherwise contemplated by this Agreement and the exhibits hereto that
would reasonably be expected to cause the Merger to fail to qualify as a
reorganization.
9. Conditions Precedent.
--------------------
9.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligation of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing of the following conditions:
(a) Legal Action. No temporary restraining order, preliminary
------------
injunction or permanent injunction or other order preventing or prohibiting the
consummation of the Merger shall have been issued by any Federal or state court
of competent jurisdiction and remain in effect, and no litigation seeking the
issuance of such an order or injunction, or seeking the imposition against
Premier, the Premier Shareholders, the Surviving Corporation or Active of
substantial damages if the Merger is consummated, shall be pending that, in the
good faith judgment of Premier's or Active's Board of Directors (acting upon the
written opinion of their respective outside counsel) has a reasonable
probability of resulting in such order, injunction or damages. In the event any
such order or injunction shall have been issued, each party agrees to use its
reasonable efforts to have any such injunction lifted.
(b) Statutes. No legal or regulatory action shall have been
--------
taken, and no statute, rule, regulation or order shall have been enacted,
promulgated or issued applicable to the Merger by any Governmental Entity that
would (i) make the consummation of the Merger illegal, (ii) prohibit Active's or
Premier's ownership or operation of any portion of the business or assets of
Premier or Active and its Subsidiaries, or compel Active or Premier to dispose
of or hold separate any portion of the business or assets of Premier or Active
and its Subsidiaries, as a result of the Merger, or (iii) render Active or
Premier unable to constitute the Merger, except for any waiting period
provisions.
-28-
9.2 Conditions of Obligations of Active. The obligations of Active
-----------------------------------
to effect the Merger are subject to the satisfaction of the following
conditions, unless waived by Active:
(a) Shareholder Approval. This Agreement and each of the
--------------------
Ancillary Agreements shall have been approved and adopted by the unanimous
consent of the Premier Shareholders pursuant to Chapter 11 of the California
General Corporate Law.
(b) Representations and Warranties. The representations and
------------------------------
warranties of Premier and the Premier Shareholders set forth in this Agreement
shall be true and correct in all material respects (except for such
representations and warranties which are qualified by their terms by a reference
to materiality, which representations and warranties as so qualified shall be
true in all respects) as of the date of this Agreement, and as of the Closing
Date, as though made on and as of such date, except as otherwise contemplated by
this Agreement, and Active shall have received a certificate signed by the
president of Premier and each Premier Shareholder to such effect on the Closing
Date.
(c) Audit. An independent accounting firm appointed by Active
-----
shall have completed an audit of the financial statements of Premier for the
year ended December 31, 1999 and as of December 31, 1999, with the results of
such audit being satisfactory to Active in its sole discretion.
(d) [intentionally omitted]
-----------------------
(e) Registration Rights Agreement. The Premier Shareholders
-----------------------------
shall have executed and delivered the Registration Rights Agreement.
(f) Employment Agreements. The Premier Shareholders shall have
---------------------
executed their respective Employment Agreements.
(g) Performance of Obligations of Premier. Premier shall have
-------------------------------------
performed in all material respects all obligations and covenants required to be
performed by it under this Agreement and the Merger Agreement prior to the
Closing Date, and Active shall have received a certificate signed by the
president of Premier and each Premier Shareholder to such effect.
(h) Opinion of Premier's Counsel. Active shall have received an
----------------------------
opinion dated the Closing Date of Berliner Xxxxx, counsel to Premier, in
substantially the form attached hereto as Exhibit E.
---------
(i) Material Adverse Change. There shall not have occurred any
-----------------------
material adverse change in the business condition or results of operations of
Premier between the date of this Agreement and the Closing Date.
(k) Third-Party Approvals. All consents or approvals required
---------------------
from third parties relating to contracts, licenses, leases and other instruments
material to the business condition of Premier shall have been obtained.
-29-
(j) Dissenters Rights. No shares of outstanding Premier Common
-----------------
Stock shall be held by persons entitled to elect dissenters' rights as to such
shares.
9.3 Conditions of Obligations of Premier. The obligation of
------------------------------------
Premier to effect the Merger is subject to the satisfaction of the following
conditions unless waived by Premier:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Active set forth in this Agreement and the Merger Agreement shall
be true and correct in all material respects (except for such representations
and warranties which are qualified by their terms by a reference to materiality,
which representations and warranties as so qualified shall be true in all
respects) as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date, except as otherwise contemplated by this
Agreement, and Premier shall have received a certificate signed by the chief
executive officer or chief financial officer of Active to such effect on the
Closing Date.
(b) [intentionally omitted]
-----------------------
(c) Registration Rights Agreement. Active shall have executed
-----------------------------
and delivered the Registration Rights Agreement.
(d) Employment Agreements. Active shall have executed and
---------------------
delivered the Employment Agreements.
(e) Performance of Obligations of Active. Active shall have
------------------------------------
performed in all material respects all obligations and covenants required to be
performed by them under this Agreement prior to the Closing Date, and Premier
shall have received a certificate signed by the chief executive officer or chief
financial officer of Active to such effect.
(f) Opinion of Active's Counsel. Premier shall have received an
---------------------------
opinion dated the Closing Date of Venture Law Group, A Professional Corporation,
counsel to Active, in substantially the form attached hereto as Exhibit F.
---------
(g) Material Adverse Change. There shall not have occurred any
-----------------------
material adverse change in the business condition or results of operations of
Active between the date of this Agreement and the Closing Date.
10. Termination, Amendment and Waiver.
---------------------------------
10.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Effective Time of the Merger, whether before or after approval of
matters presented in connection with the Merger by the Premier Shareholders:
(a) by mutual written consent of the Chief Executive Officers of
Active and Premier;
(b) by either Active or Premier if such party is not in breach
of its obligations under this Agreement and there has been a material breach of
any representation,
-30-
warranty, covenant or agreement contained in this Agreement on the part of the
other party set forth in this Agreement and such breach of a representation,
warranty, covenant or agreement has not been promptly cured within five business
days after written notice thereof (provided that no cure period shall be
required for a breach which by its nature cannot be cured);
(c) by either Active or Premier if (i) the Merger shall not have
been consummated before March 31, 2000 (provided that the right to terminate
this Agreement under this Section 10.1(c) shall not be available to any party
whose willful failure to fulfill any obligation hereunder has been the cause of,
or resulted in, the failure of the Effective Time of the Merger to occur on or
before such date); (ii) there shall be a final nonappealable order of a Federal
or state court of competent jurisdiction in effect preventing or prohibiting the
consummation of the Merger; or (iii) there shall be any statute, rule,
regulation or order enacted, promulgated or issued applicable to the Merger by
any Governmental Entity that would make consummation of the Merger illegal; or
(d) by Active if any required approval of the Premier
Shareholders shall not have been obtained. If action is taken to terminate this
Agreement pursuant to this Section 10.1, it shall be sufficient for such action
to be authorized by the Board of Directors of the party taking such action.
10.2 Effect of Termination. In the event of termination of this
---------------------
Agreement by either Premier or Active as provided in Section 10.1, this
Agreement and the Merger Agreement shall immediately become void and there shall
be no liability or obligation on the part of Active, Premier or the Premier
Shareholders or their respective officers, directors, shareholders, employees,
contractors, agents or other representatives, except as set forth in Sections
8.5, 8.7, 10 and 13 of this Agreement which shall remain in full force and
effect and survive any termination of this Agreement, and except to the extent
that such termination results from the willful breach by a party hereto of any
of its representations, warranties, covenants or agreements set forth in this
Agreement.
10.3 Amendment. This Agreement may be amended by Active and
---------
Premier, by action taken by their respective Board of Directors, at any time
before or after approval of matters presented in connection with the Merger by
the Premier Shareholders but after any such shareholder approval, no amendment
shall be made which by law requires the further approval of shareholders without
obtaining such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of Active and Premier.
10.4 Extension; Waiver. At any time prior to the Effective Time of
-----------------
the Merger, Active or Premier, by action taken by its Board of Directors may, to
the extent legally allowed, (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto, and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
-31-
11. Survival of Representations and Warranties; Indemnification;
------------------------------------------------------------
Liability.
---------
11.1 Survival of Representations and Warranties. All of the
------------------------------------------
representations and warranties made by Premier, the Premier Shareholders and
Active in this Agreement or in any instrument delivered pursuant to this
Agreement (as modified by the Disclosure Schedules of Premier) shall survive the
Merger and continue until 5:00 p.m., California time, on the date which is
twelve months following the Closing Date (except for the representations
regarding Taxes, which shall not expire until the expiration of the applicable
statute of limitations, and except for the representations contained in Section
3.12 which shall not expire until three years following the Closing Date) (in
each of the above cases, the "Expiration Date").
11.2 Indemnification by and Liability of the Premier Shareholders.
------------------------------------------------------------
The Premier Shareholders agree, severally, to indemnify, defend and hold
harmless Active and its officers, directors and shareholders (the "Indemnified
Parties") against all claims, losses, liabilities, damages, deficiencies, costs
and expenses, including reasonable attorneys, accountants and expert witness'
and the costs and expenses of enforcing this indemnification (hereafter
individually a "Loss" and collectively "Losses"), including without limitation,
Losses resulting from the defense, settlement or compromise of a claim or demand
or assessment incurred by such Indemnified Parties as a result of or with
respect to a breach or inaccuracy of the representations or warranties of
Premier or the Premier Shareholders set forth in this Agreement or in the
Disclosure Schedules, exhibits or other documents delivered pursuant hereto by
Premier or the Premier Shareholders or any failure by Premier or the Premier
Shareholders to perform or comply with any covenant contained herein or in any
schedules, exhibits or other documents delivered pursuant hereto.
11.3 Limitations and Expiration. Notwithstanding the above,
--------------------------
(a) there shall be no liability for indemnification under this
Section 11 unless and until the aggregate amount of all Losses exceeds $100,000
(at which point the Indemnified Parties shall be entitled to be indemnified up
to the total of all Losses, including the initial $100,000),
(b) there shall be no liability for indemnification under this
Section 11 for any Losses which, in the aggregate, exceed the value of 9,722
shares of the Active Common Stock received by such Premier Shareholders (where
the aggregate value shall be equal to the Active Common Stock issued hereunder
multiplied by the Active Closing Price) ("Escrow Amount"), except as provided in
Section 11.3(c) below,
(c) an amount equal to the Escrow Amount shall be withheld from
the Merger Consideration paid by Active to such Premier Shareholders and shall
be held in escrow for a period of twelve months from the Closing Date (the
"Escrow Fund"), and the Escrow Fund shall be Active's sole and exclusive remedy
for any Losses,
(d) all claims for Losses paid to the Indemnified Parties shall
be paid only from the Escrow Fund and any moneys remaining in the Escrow Fund at
the expiration of the twelve month period following the Closing Date shall be
transferred to the Premier
-32-
Shareholders in proportionate interests therein,
(e) nothing in this Agreement shall limit, in any manner
(whether by time, amount, procedure or otherwise), any remedy at law or in
equity to which Active may be entitled as a result of actual fraud by any
Premier Shareholder, and
(f) the indemnification obligations under this Section 11 shall
terminate on the later of (i) the Expiration Date, (ii) the final resolution of
any and all claims under this Agreement pending as of the Expiration Date and
(iii) with respect to representations, warranties and covenants regarding Taxes,
the expiration of the applicable statute of limitations.
11.4 Indemnification Procedures. Upon obtaining knowledge of the
--------------------------
institution of any action, proceeding, or other event which could give rise to a
claim of indemnity pursuant to this Section 11, the Indemnified Party shall
promptly give written notice to the Premier Shareholders. The notice shall
describe the facts or alleged facts and the potential Loss or range of Loss if
the Loss can be estimated. Except to the extent set forth below in this Section
11.4, if such claim or demand relates to a claim or demand asserted by a third
party, the Premier Shareholders shall have the right at their expense to employ
counsel to defend such claim or demand and the Indemnified Party shall have the
obligation to assist in the defense of any such claim or demand; provided,
--------
however, that, notwithstanding the foregoing, Active shall have the right to
-------
control the defense and settlement of claims asserted by any tax authority,
provided that any such settlement shall be subject to the approval of the
--------
Premier Shareholders, which approval will not be unreasonably withheld or
delayed; and provided further, however, that in the event that the Premier
-------- ------- -------
Shareholders have employed counsel to defend a claim or demand, and despite the
absence of a conflict of interest between the Premier Shareholders and the
Indemnified Party, the Indemnified Party elects to engage it own counsel to
assist in the defense, the Indemnified Party shall pay all costs and expenses of
its own counsel. If in fact there exists a conflict of interest relating to any
third party action between the Premier Shareholders and the Indemnified Party,
then the Premier Shareholders shall be responsible for reasonable costs of
counsel to the Indemnified Party. So long as the Premier Shareholders are
defending such claim or demand in good faith, the Indemnified Party will not
settle such claim or demand without the Premier Shareholders' prior written
consent. The Indemnified Party shall make available to the Premier Shareholders
all records and other materials reasonably required by it in contesting a claim
or demand asserted by a third party against the Indemnified Party and shall
cooperate in the defense thereof.
12. Further Acts. If, at any time after the Closing, any further action
------------
is necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full right, title and possession to all assets,
properties, rights, privileges, approvals, immunities, powers and franchises of
Premier and Active, the parties hereto, and the officers and directors thereof
(as applicable), are fully authorized in the name of their respective
corporations or otherwise to take, and they agree to take, all such necessary
action.
13. Miscellaneous.
-------------
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13.1 Assignment. The rights hereunder shall not be assignable and
----------
the duties and obligations hereunder shall not be delegable by any party without
the prior written consent of the parties. Nothing contained in or implied from
this Agreement is intended to confer any rights or remedies upon any person or
entity, other than the parties hereto and their successors in interest and
permitted assignees, unless expressly stated herein to the contrary.
13.2 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof. Each of the parties hereto agrees that process may be served upon
them in any manner authorized by the laws of the State of California for such
persons and waives and covenants not to assert or plead any objection which they
might otherwise have to such jurisdiction and such process.
13.3 Notices. All notices, requests, demands and other
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communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered, couriered via overnight courier, or, if
mailed, when mailed by United States certified or registered mail, prepaid, or
sent via facsimile to the parties or their assignees at the following addresses
(or at such other address as shall be given in writing by any party to the
other):
Active: Active Software, Inc.
0000 Xxxxxxxx Xx.
Xxxxx Xxxxx, XX 00000
Attn: Chief Financial Officer
Facsimile No.: (000) 000-0000
with a copy to: Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
Premier or the Premier Shareholders: Xxxxxx Xxxxxx
Premier Software Technologies, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx
Facsimile No.: (000) 000-0000
with a copy to: Berliner Xxxxx
Xxx Xxxxxxx Xxxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
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13.4 Expenses. Except as set forth in Section 8.5, all expenses
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incurred by either party in connection with the execution and performance of
this Agreement shall be the obligation of and shall be paid by such party.
13.5 Attorney's Fees. In any litigation or arbitration relating
---------------
to this Agreement, including litigation or arbitration with respect to any
instrument, document or agreement made under or in connection with this
Agreement, the prevailing party shall be entitled to recover its costs and
reasonable attorney's fees.
13.6 Dispute Resolution. The parties will negotiate in good
------------------
faith to resolve any dispute between them regarding the Agreement. If such
negotiations do not resolve the dispute to the satisfaction of both parties,
then an officer of Active and Xxxxxx Xxxxxx shall meet in person and alone
(except for one other assistant allowed for each party) and shall attempt in
good faith to resolve the dispute within twenty (20) days of a request for such
meeting. This meeting shall be a required prerequisite before either party may
seek judicial or governmental resolution of the dispute. In the event no
agreement can be reached on such dispute within thirty (30) days after the
meeting of the senior executives between the two parties, either party may
institute legal action.
13.7 Successors and Assigns. All covenants, representations,
----------------------
warranties and agreements of the parties contained herein shall be binding upon
and inure to the benefit of the parties, their respective heirs, personal
representatives, and permitted successors and assigns.
13.8 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.9 Captions and Headings. Captions and headings used herein
---------------------
are for convenience only and are not a part of this Agreement and shall not be
used in construing it.
13.10 Entire Agreement. This Agreement, together with the
----------------
exhibits and schedules to this Agreement and the other documents contemplated
hereby, constitute the final written expression of the agreement among the
parties, and is a complete and exclusive statement of those terms, subject to
any amendments prepared and executed in accordance with Section 13.11 hereof.
It supersedes all prior understandings and negotiations concerning the matters
specified herein and therein. Any representations, promises, warranties or
statements made by any party that differ in any way from the terms of this
written Agreement and the exhibits and schedules to this Agreement and other
documents contemplated hereby, shall be given no force or effect. The parties
specifically represent, each to the others, that there are no additional or
supplemental agreements between them related in any way to the matters contained
in this Agreement unless specifically included or referred to in this Agreement.
13.11 Amendments. This Agreement, including the schedules and
----------
exhibits referred to herein, may be amended only by a written instrument
executed by Active, Premier and the Premier Shareholders or their respective
successors or assignees.
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13.12 Waivers. Any party hereto may by written notice to the
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other parties, (i) extend the time for the performance of any of the obligations
or other actions of the other parties under this Agreement; (ii) waive any
inaccuracies in the representations or warranties of the other parties contained
in this Agreement or in any document delivered pursuant to this Agreement; (iii)
waive compliance with any of the conditions or covenants of the other parties
contained in this Agreement; or (iv) waive performance of any of the obligations
of the other parties under this Agreement. Except as provided in the preceding
sentence, no action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained in this
Agreement. The waiver by any party hereto of a breach of any provision
hereunder shall not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
13.13 Severability. If one or more provisions of this Agreement are
------------
held to be illegal, void or unenforceable by a court of competent jurisdiction
under applicable law, portions of such provisions, or such provisions in their
entirety, to the extent necessary, shall be severed from this Agreement, and the
balance of this Agreement shall be enforceable in accordance with its terms.
13.14 Option Grants. As soon as practicable following the Closing,
-------------
Active shall enter into stock option agreements providing for the grant of
nonqualified options to the individuals listed on Exhibit G attached hereto.
---------
Each such option shall be for the purchase of shares of Common Stock of Active
at an exercise price of $0.01 per share and shall be subject to vesting based on
the schedule set forth opposite the individual's name on Exhibit G.
---------
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
ACTIVE SOFTWARE, INC.
By: /s/ R. XXXXX XXXXX
-------------------
Name: R. XXXXX XXXXX
---------------
Title: CEO
--------------
PREMIER, INC.
By: /s/ XXXXXX X. XXXXXX
----------------------
Name: XXXXXX X. XXXXXX
----------------
Title: PRESIDENT - CTO
---------------
PREMIER SHAREHOLDERS
/s/ XXXXXX X. XXXXXX
----------------------
Xxxxxx Xxxxxx
/s/ XXXXXXXX VAN DEN XXXX
---------------------------
Xxx van den Xxxx
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