EXHIBIT 2.3
STOCK EXCHANGE AND STOCK PURCHASE AGREEMENT
THIS STOCK EXCHANGE AND STOCK PURCHASE AGREEMENT (the "AGREEMENT")
is made and entered into as of December 7, 1999, by and among XXXXXXX.XXX,
INC., a Delaware corporation ("CAYENTA"), CAYENTA OPERATING COMPANY, a
Delaware corporation ("CAYENTA SUB"), THE TITAN CORPORATION, a Delaware
corporation ("TITAN"), ASSIST CORNERSTONE TECHNOLOGIES, INC., a Utah
corporation ("ASSIST" or the "COMPANY"), and the following parties (the
"SELLING SHAREHOLDERS"): XXXXX X. XXXXX, XXXXX X. XXXXXXXX, XXXXXXX X.
XXXXXX, XXXXXXX XXXXXXXXX, XXXXX X. XXXXXX, XXXX X. XXXXXXXXXXX, XXXXXXX X.
XXXX, XXXXXXXXXX & PARTNERS, INC., E. XXXXX XXXXXXXX, XXX X. XXXXXXX, XXXXXX
XXXXXXX-XXXXXXXX, XXXXXXX XXXXXXX, XXXX XXXXXXX, XXXXXX XXXXXXX, XXXX X.
XXXXXXX, X. XXXXXX XXXXX, XXXXXX X. XXXXXXX AND PACIFIC MEZZANINE FUND, LP.
Certain capitalized terms used in this Agreement are defined on Exhibit A.
RECITALS
A. The Selling Shareholders own or will own as of the Closing 9,723,455
shares of the Common Stock of Assist (the "SHARES"), which will constitute
all of the outstanding common stock of Assist as of the Closing.
B. The Selling Shareholders wish to exchange with Cayenta a total of
2,015,838 of the Shares for a total of 516,458 shares of Class A common stock
of Cayenta (the "EXCHANGE") pursuant to Cayenta's plan adopted pursuant to
Section 351 of the Code (the "351 PLAN") and pursuant to the terms set forth
in this Agreement (which are a part of the 351 Plan).
C. Concurrently with the Closing of the Exchange, Titan and the other
stockholders of Cayenta Sub will exchange all of the outstanding shares of
capital stock of Cayenta Sub for shares of capital stock of Cayenta in
accordance with the 351 Plan.
D. Concurrently with the Closing of the Exchange, the Selling
Shareholders wish to sell to Cayenta Sub a total of 7,707,617 of the Shares
pursuant to the terms set forth in this Agreement.
AGREEMENT
The parties to this Agreement agree as follows:
1. EXCHANGE OF SHARES TRANSACTION
1.1 EXCHANGE OF SHARES. At the Closing, the Selling Shareholders
shall exchange, assign, transfer and deliver to Cayenta a total of 2,015,838
of the Shares (the "EXCHANGED SHARES") to Cayenta, and Cayenta shall exchange
and deliver to the Selling Shareholders a total of 516,458 shares of Class A
common stock, $.001 par value, of Cayenta (the "CAYENTA SHARES"), on the
terms and subject to the conditions set forth in this Agreement. Each of the
1.
Selling Shareholders will exchange with Cayenta 20.7% of the total Shares
owned by such Selling Shareholder.
1.2 NO FRACTIONAL SHARES. No fractional shares of Cayenta common
stock shall be issued in the exchange with Cayenta, and no certificates for
any such fractional shares shall be issued. In lieu of such fractional
shares, any Selling Shareholder who would otherwise be entitled to receive a
fraction of a share of Cayenta common stock (after aggregating all fractional
shares of Cayenta Shares issuable to such holder) shall be paid in cash the
dollar amount (rounded to the nearest whole cent), without interest,
determined by multiplying such fraction by $6.58.
1.3 CAYENTA SHARES. The Cayenta Shares shall have the voting and
other rights set forth in the form of Amended and Restated Certificate of
Incorporation attached as Exhibit B. Each Cayenta Share shall be entitled to
the appraisal rights set forth in Section 1.4 and the co-sale, participation
and registration rights set forth in the Investor Rights Agreement attached
as Exhibit C hereto. In addition, each Cayenta Share shall be subject to the
restrictions on transfer and right of first refusal set forth in the Investor
Rights Agreement.
1.4 APPRAISAL RIGHTS. In the event that the Class A common stock of
Cayenta (or any class of common stock of Cayenta for which the Class A common
stock held by the Selling Shareholders are exchanged) is not traded on a
national securities exchange or Nasdaq Stock Market within four years from
the Closing Date, then the Selling Shareholders holding at least 50% of the
Cayenta Shares may require Cayenta to engage a nationally recognized
investment banking firm to determine the Fair Market Value of the Cayenta
Class A Common Stock upon terms usual for engagements of this type. The "FAIR
MARKET VALUE" shall mean the fair market value of the business of Cayenta as
determined by such investment banking firm utilizing and weighing in its sole
discretion applicable generally accepted enterprise valuation methodologies
which may include the market multiple approach, earnings approach, net asset
value approach and discounted cash flow approach based upon the financial
statements of Cayenta and projections prepared by Cayenta using reasonable
assumptions and without reflecting any minority or restricted stock
discounts. To the extent consistent with generally accepted enterprise
valuation methodologies, the investment banking firm may consider the
consideration that Cayenta would receive upon the exercise of outstanding
options or warrants included in the fully diluted capitalization of Cayenta
(on a discounted or other appropriate basis). The "FAIR MARKET VALUE PER
SHARE" shall be determined based upon the fully diluted capitalization of
Cayenta. If the Agent does not agree with the investment banking firm's
determination of the Fair Market Value per Share, then the Agent may engage,
at the Selling Shareholders' expense, a second nationally recognized
investment banking firm to determine the Fair Market Value per Share of the
Class A common stock of Cayenta upon terms usual for engagements of this
type. If the two investment banking firms cannot agree upon a Fair Market
Value per Share within 45 days after the engagement of the second investment
banking firm, then the two investment banking firms shall designate a third
investment banking firm to determine a Fair Market Value per Share within the
range of the Fair Market Value per Share determinations of the other two
investment banking firms. The third investment banking firm's determination
shall be final and binding on Cayenta and the Selling Shareholders. For a
period of 90 days after the final determination of the Fair Market Value per
Share (the "PUT PERIOD"), each of the Selling Shareholders who continue to
hold Cayenta Shares shall have a right to put the Cayenta Shares to
2.
Titan for purchase at the Fair Market Value per Share (the "PUT RIGHT"). If
the Put Right is not exercised within the Put Period, then Titan shall have
the right for a period of 90 days following the final day of the Put Period
to call the Cayenta Shares from any or all of the Selling Shareholders (the
"CALL RIGHT") at the Fair Market Value per Share. The closing of each
exercise of Put Right or the Call Right shall occur within 30 days after the
exercise of the applicable Put Right by each Selling Shareholder or the Call
Right by Titan. Titan may pay the purchase price in cash or in freely
tradable shares of common stock of Titan so long as Titan common stock is
then traded on the New York Stock Exchange or the Nasdaq Stock Market. If
Titan elects to use common stock of Titan, the number of shares of Titan
common stock given for each share of the Cayenta Shares sold will be
determined by dividing the Fair Market Value per Share by the average closing
price of a share of Titan common stock on the New York Stock Exchange (or its
principal exchange or market, if not the New York Stock Exchange) for the 20
trading days ending immediately prior to the closing date for the put or the
call transaction as reported in the WALL STREET JOURNAL.
1.5 CLOSING. The closing of the Exchange and the closing of the
purchase and sale of the Purchased Shares (as defined in Section 2.1) in
accordance with Section 1.5 (the "CLOSING") shall take place at the offices
of Xxxxxx Godward, LLP, 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxx, XX 00000
at 10:00 a.m. (California time) on the later of December 13, 1999 or the date
two business days following the satisfaction of all conditions to the Closing
(or at such other place or time as Cayenta and the Agent may jointly
designate). For purposes of this Agreement: "SCHEDULED CLOSING TIME" shall
mean the time and date as of which the Closing is required to take place
pursuant to this Section 1.5; and "CLOSING DATE" shall mean to the time and
date as of which the Closing actually takes place. At the Closing, the
Selling Shareholders shall deliver to Cayenta the stock certificates
representing the Exchanged Shares, duly endorsed (or accompanied by duly
executed stock powers) and Cayenta shall deliver to each Selling Shareholder
stock certificates for the Cayenta Shares issuable to each such Selling
Shareholder.
2. SALE AND PURCHASE OF SHARES.
2.1 SALE AND PURCHASE OF SHARES. At the Closing, the Selling
Shareholders shall sell, assign, transfer and deliver a total of 7,707,617
Shares (the "PURCHASED SHARES") to Cayenta Sub, and Cayenta Sub shall
purchase the Purchased Shares from the Selling Shareholders, on the terms and
subject to the conditions set forth in this Agreement. Each of the Selling
Shareholders will sell to Cayenta Sub 79.3% of the total Shares owned by such
Selling Shareholder. At the Closing, the Selling Shareholders shall deliver
to Cayenta the stock certificates representing the Purchased Shares, duly
endorsed (or accompanied by duly executed stock powers), and Cayenta shall
deliver the First Installment of the Purchase Price to the Agent.
2.2 PURCHASE PRICE.
(a) For purposes of this Agreement:
(i) The "APPLICABLE FRACTION" shall mean the fraction
determined by dividing one by 7,707,617, which is the total number of
Purchased Shares.
3.
(ii) "DEBT" means all debt of Assist, including without
limitation, bank indebtedness, related party debt, redeemable nonconvertible
preferred stock, subordinated debt, intercompany debt, the redemption price
of the Series A preferred stock, including accrued but unpaid dividends on
Series A preferred stock and the redemption price of the Series B preferred
stock, and capital leases, but excluding trade payables and other current
liabilities incurred or made in the ordinary course of business and
consistent with past practices (E.G. payroll and commissions). The current
portion of any principal or interest on any indebtedness shall constitute
Debt regardless of whether it is classified as a current liability under
GAAP. "NET DEBT" means Debt as of the Closing Date minus $3,100,000.00.
(iii) The "FIRST INSTALLMENT" shall be the Purchase Price
less $3,000,000.00.
(iv) The "SECOND INSTALLMENT" shall be the Purchase Price
less (a) the First Installment, (b) $1,300,000.00 and (c) any setoffs made in
accordance with Section 11.7 of this Agreement, with interest on the Second
Installment at the rate of 8% per annum accruing from the Closing Date to the
payment date of the Second Installment.
(v) The "THIRD INSTALLMENT" shall be the Purchase Price
less (a) the First Installment, (b) the Second Installment and (c) any
setoffs made in accordance with Section 11.7 of this Agreement, with interest
on the Third Installment at the rate of 8% per annum accruing from the
Closing Date to the payment date of the Third Installment.
(vi) The "PURCHASE PRICE" shall be $13,000,000.00 less
(without duplication) (a) each dollar of Net Debt as of the Closing Date, (b)
each dollar of negative Working Capital as of the Closing Date, (c) each
dollar of Transaction Expenses as defined in Section 12.5 and (d) each dollar
paid by Assist for the termination of outstanding options or warrants to
acquire Assist common stock. The Purchase Price shall be increased by an
amount equal to (x) the aggregate cash received by Assist in connection with
the exercise of vested options or warrants to acquire Assist common stock and
(y) the aggregate amount of any Debt (excluding any Net Debt) cancelled in
connection with the exercise of any warrants to acquire Assist capital stock.
The Purchase Price shall be calculated at the Closing using an estimate of
the Working Capital as of the Closing Date. The final determination of the
Purchase Price shall be determined based upon the post-closing audit
conducted in accordance with Section 2.3.
(b) The Purchase Price shall be payable by Cayenta Sub as
follows:
(i) The First Installment shall be deliverable as of the
Closing against delivery of the stock certificates at the Closing in
accordance with Section 2.3. The First Installment shall be paid to the Agent
for distribution to the Selling Shareholders. Each Selling Shareholder will
receive the Applicable Fraction of the First Installment for each of the
Purchased Shares owned by such Selling Shareholder.
(ii) The Second Installment shall be paid on the second
business day following the completion of the audit and the determination of
any adjustments to the Purchase Price pursuant to Section 2.3. Each Selling
Shareholder will receive the Applicable Fraction of the Second Installment
for each of the Purchased Shares owned by such Selling Shareholder.
4.
The Second Installment shall be paid to the Agent for distribution to the
Selling Shareholders. Cayenta Sub's obligation to make the payment
contemplated by this Section 2.2(b)(ii) shall be subject to any right of
setoff that Cayenta Sub may be entitled to exercise (pursuant to Section
11.7). In addition, if Cayenta Sub shall have made in good faith any claim
for indemnification against any of the Selling Shareholders pursuant to this
Agreement and such claim shall not have been setoff in accordance with
Section 11.7, then Cayenta Sub may withhold a good faith estimate of such
claim (and the associated interest) from the Second Installment and pay the
remaining portion of the Second Installment with interest on the portion paid.
(iii) The Third Installment shall be payable on the first
business day after the eighteen-month anniversary of the Closing Date (or on
such earlier date as Cayenta Sub may elect). Each Selling Shareholder will
receive the Applicable Fraction of the Third Installment for each of the
Purchased Shares owned by such Selling Shareholder. The Third Installment
shall be paid to the Agent for the distribution to the Selling Shareholders.
Cayenta Sub's obligation to make the payment contemplated by this Section
2.2(b)(iii) shall be subject to any right of setoff that Cayenta Sub may be
entitled to exercise (pursuant to Section 11.7). In addition, if Cayenta Sub
shall have made in good faith any claim for indemnification against any of
the Selling Shareholders pursuant to this Agreement and such claim shall not
have been setoff in accordance with Section 11.7, then Cayenta Sub may
withhold a good faith estimate of such claim (and the associated interest)
from the Third Installment and pay the remaining portion of the Third
Installment with interest on the portion paid.
(c) Cayenta Sub shall be entitled to deduct and withhold from
any consideration payable or otherwise deliverable to any holder or former
holder of capital stock of Assist pursuant to this Agreement such amounts as
Cayenta Sub or Assist may be required to deduct or withhold therefrom under
the Code or under any provision of state, local or foreign tax law (or, in
the alternative, Cayenta Sub at its option may request tax information and
other documentation so no withholding is necessary). To the extent such
amounts are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the Person to whom such
amounts would otherwise have been paid.
2.3 POST-CLOSING ADJUSTMENT.
(a) The Purchase Price shall be subject to post-closing
adjustment as follows: the Purchase Price shall be reduced dollar for dollar
to the extent of any negative Working Capital as of the Closing Date as shown
on the Audited Balance Sheet that was not deducted in determining the
Purchase Price on the Closing Date and shall be reduced by any Net Debt, as
shown on the Audited Balance Sheet, that was not deducted in determining the
Purchase Price on the Closing Date. The foregoing adjustments shall be made
without double counting any single item of debt in both the calculation of
Working Capital and the determination of Debt.
(b) Within 90 days following the Closing, Xxxxxx Xxxxxxxx LLP
("XXXXXX XXXXXXXX") shall audit Assist's balance sheet as of the Closing Date
(the "CLOSING BALANCE SHEET") and Assist's statements of operations, changes
in shareholders' equity and cash flows for the period from January 1, 1999 to
and including the Closing Date for conformity to GAAP and issue a draft
report thereon. Cayenta Sub shall provide to Agent a copy of the draft
report. Any
5.
adjustment to the Closing Balance Sheet proposed by Xxxxxx Xxxxxxxx,
including adjustments to Working Capital, shall be subject to review by
auditors retained by the Selling Shareholders (the "ASSIST AUDITORS") which
review shall be completed no later than 30 days after the Agent receives the
report from Xxxxxx Xxxxxxxx. If the opinions of Xxxxxx Xxxxxxxx and the
Assist Auditors differ as to the necessity of the adjustment, a third
auditing firm mutually agreeable to Cayenta Sub and the Agent shall be
selected to review the disputed adjustments. The decision of the third
independent auditing firm shall be made no later than 30 days after the
selection and engagement of such firm. The decision of the third independent
auditing firm regarding any such adjustment shall be binding on the parties.
The final determination of the amounts payable hereunder shall be based on
the final determination of the Working Capital as set forth in the final
audited Closing Balance Sheet (the "AUDITED BALANCE SHEET") and each
component in the calculation of such amounts shall be made using the Audited
Balance Sheet. Cayenta Sub shall be responsible for the fees and expenses of
Xxxxxx Xxxxxxxx and the Selling Shareholders shall be responsible for the
fees and expenses of the Assist Auditors. Notwithstanding anything in this
Agreement to the contrary, if the services of a third independent auditing
firm are required pursuant to this Section, Cayenta Sub and the Agent (on
behalf of the Selling Shareholders) shall each bear and pay 50% of all fees
and expenses of such auditing firm.
3. REPRESENTATIONS AND WARRANTIES OF ASSIST AND SELLING SHAREHOLDERS
Except as set forth in the disclosure schedules attached hereto
(each a "SCHEDULE," and collectively, the "DISCLOSURE SCHEDULE"), as of the
date of this Agreement and as of the Closing, Assist and each of the Selling
Shareholders jointly but not severally represents and warrants, to and for
the benefit of the Indemnitees, as follows:
3.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(a) Assist is a corporation duly organized, validly existing
and in good standing under the laws of the State of Utah and has all
necessary power and authority:
(i) to conduct its business in the manner in which its
business is currently being conducted;
(ii) to own and use its assets in the manner in which its
assets are currently owned and used; and
(iii) to perform its obligations under all Assist Contracts.
(b) Assist has never conducted any business under or otherwise
used, for any purpose or in any jurisdiction, any fictitious name, assumed
name, trade name or other name, other than the names "Assist International
Inc.", "Interactive Systems, Inc.", "XxXxxxxx, Xxxxx and Xxxxx, Inc."
(c) Assist is not required to be qualified, authorized,
registered or licensed to do business as a foreign corporation in any
jurisdiction other than the jurisdictions identified in Part 3.1 of the
Disclosure Schedule. Assist is in good standing as a foreign corporation in
each of the jurisdictions identified in Part 3.1 of the Disclosure Schedule.
6.
(d) Part 3.1 of the Disclosure Schedule accurately sets forth
(i) the names of the members of Assist's board of directors, (ii) the names
of the members of each committee of Assist's board of directors, and (iii)
the names and titles of Assist's officers.
(e) Neither Assist nor any of its shareholders has ever
approved, or commenced any proceeding or made any election contemplating, the
dissolution or liquidation of Assist or the winding up or cessation of
Assist's business or affairs.
(f) Assist has no subsidiaries, and Assist has never owned,
beneficially or otherwise, any shares or other securities of, or any direct
or indirect interest of any nature in, any Entity other than a shell
subsidiary that was dissolved. Assist has not agreed and is not obligated to
make any future investment in or capital contribution to any other Entity.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS; RECORDS.
(a) Assist has delivered to Cayenta accurate and complete
copies of:
(i) Assist's certificate of incorporation and bylaws,
including all amendments thereto;
(ii) the stock records of Assist; and
(iii) the minutes and other records of the meetings and
other proceedings (including any actions taken by written consent or
otherwise without a meeting) of the shareholders of Assist, the board of
directors of Assist and all committees of the board of directors of Assist.
There have been no officially called and noticed meetings or other
proceedings of the shareholders of Assist, the board of directors of Assist
or any committee of the board of directors of any of Assist that are not
fully reflected in such minutes or other records.
(b) There has not been any violation of any of the provisions
of Assist's certificate of incorporation or bylaws or of any resolution
adopted by Assist's shareholders, Assist's board of directors or any
committee of Assist's board of directors; and no event has occurred, and no
condition or circumstance exists, that might (with or without notice or lapse
of time) constitute or result directly or indirectly in such a violation.
(c) The books of account, stock records, minute books and other
records of Assist are accurate, up-to-date and complete in all material
respects, and have been maintained in accordance with sound and prudent
business practices. All of the records of Assist are in the actual possession
and direct control of Assist. Assist has in place an adequate and appropriate
system of internal controls which is at least as comprehensive and effective
as the systems of internal controls customarily maintained by Comparable
Entities.
3.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of Assist consists of:
7.
(i) 20,000,000 shares of common stock having a par value of
$.001 per share, of which 4,661,645 shares have been issued and are
outstanding as of the date of this Agreement and of which 9,723,455 shares
shall have been issued and shall be outstanding as of the Closing Date
following the exercise of all then outstanding options and warrants to
acquire common stock of Assist;
(ii) 12,800 shares of preferred stock having a par value of
$.001 per share, of which 6,200 have been designated Series A preferred stock
and 6,600 have been designated Series B preferred stock. 6,200 shares of
Series A preferred are issued and outstanding and are convertible into
413,333 shares of common stock of Assist. 5000 shares of Series B preferred
stock are issued and outstanding, none of which is convertible into common
stock of Assist; and
(iii) Cayenta will acquire at the Closing, good and valid
title to the Exchanged Shares free and clear of any Encumbrances. Cayenta Sub
will acquire at the Closing, good and valid title to the Purchased Shares
free and clear of any Encumbrances. All of such Shares are owned by the
Selling Shareholders in the amounts indicated on the Schedule of Shareholders
attached as Part 3.3(a) and are being sold to Cayenta hereunder.
(b) All of the Exchanged Shares and all of the Purchased Shares
(i) have been duly authorized and validly issued, (ii) are fully paid and
non-assessable, (iii) were issued in compliance with any applicable
preemptive or similar rights and (iv) have been issued in full compliance
with all applicable securities laws and other applicable Legal Requirements
and in compliance with all applicable Contracts. The Selling Shareholders
have delivered or, at the Closing shall deliver, to Cayenta and Cayenta Sub,
respectively, accurate and complete copies of the stock certificates
evidencing the Exchanged Shares and the Cayenta Shares.
(c) Except as set forth in Part 3.3 of the Disclosure Schedule,
there is no:
(i) outstanding subscription, option, call, warrant or
right (whether or not currently exercisable) to acquire any shares of the
capital stock or other securities of Assist;
(ii) outstanding security, instrument or obligation that is
or may become convertible into or exchangeable for any shares of the capital
stock or other securities of Assist;
(iii) Contracts under which Assist is or may become
obligated to sell or otherwise issue any shares of its capital stock or any
other securities; or
(iv) condition or circumstance that may directly or
indirectly give rise to or provide a basis for the assertion of a claim by
any Person to the effect that such Person is entitled to acquire or receive
any shares of capital stock or other securities of Assist.
(d) Except as set forth in Part 3.3 of the Disclosure
Schedule, Assist has never repurchased, redeemed or otherwise reacquired any
shares of capital stock or other securities. All securities so reacquired by
Assist were reacquired in full compliance with the applicable provisions of
the Utah Revised Business Corporations Act and with all other applicable
Legal Requirements.
8.
3.4 FINANCIAL STATEMENTS.
(a) Assist has delivered to Cayenta the following financial
statements and notes (collectively, the "ASSIST FINANCIAL STATEMENTS"):
(i) the audited balance sheet of Assist as of December 31,
1998, and the related audited consolidated statements of operations, changes
in shareholders' equity and cash flows of Assist for the year then ended,
together with the notes thereto and the unqualified report and certification
of Ernst & Young LLP relating thereto;
(ii) the audited balance sheet of Assist as of December 31,
1997, and the related audited statements of operations, changes in
shareholders' equity and cash flows of Assist for the year then ended,
together with the notes thereto and the unqualified report and certification
of Ernst & Young LLP relating thereto; and
(iii) the unaudited balance sheet of Assist as of September
30, 1999 (the "UNAUDITED INTERIM BALANCE SHEET"), and the related unaudited
statements of operations, changes in shareholders' equity and cash flows of
Assist for the nine months then ended.
(b) All of the Assist Financial Statements are accurate and
complete in all material respects The financial statements and notes referred
to in Section 3.4(a)(i) present fairly the financial position of Assist as of
December 31, 1998 and the results of operations, changes in shareholders'
equity and cash flows of Assist for the year then ended. The financial
statements and notes referred to in Sections 3.4(a)(ii) and 3.4(a)(iii)
present fairly the financial position of Assist as of the respective dates
thereof and the results of operations, changes in shareholders' equity and
cash flows of Assist for the periods covered thereby. The Assist Financial
Statements have been prepared in accordance with generally accepted
accounting principles, applied on a consistent basis throughout the periods
covered, except that the financial statements referred to in Section
3.4(a)(iii) do not contain footnotes and are subject to normal recurring
year-end audit adjustment consistent with Assist past practices.
3.5 ABSENCE OF CHANGES. Except as set forth in Part 3.5 of the
Disclosure Schedule, since December 31, 1998
(a) there has not been any material adverse change in Assist's
business, condition, assets, liabilities, operations, financial performance
or net income (or in any aspect or portion thereof), and no event has
occurred that might have a material adverse effect on Assist's business,
condition, assets, liabilities, operations, financial performance or net
income (or on any aspect or portion thereof);
(b) there has not been any material loss, damage or destruction
to, or any material interruption in the use of, any of Assist's assets
(whether or not covered by insurance);
(c) Assist has not (i) declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, or (ii) repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
9.
(d) Assist has not sold or otherwise issued any shares of
capital stock or any other securities;
(e) Assist has not amended its certificate of incorporation or
bylaws and has not effected or been a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock
split or similar transaction;
(f) Assist has not purchased or otherwise acquired any asset
from any other Person, except for supplies and equipment acquired by Assist
in the Ordinary Course of Business;
(g) Assist has not leased or licensed any asset from any other
Person that is either incorporated in any product or service sold by Assist
or that had lease or license payments that exceeded $25,000 since December
31, 1998;
(h) Assist has not made any capital expenditure in excess of
$20,000 per item and $200,000 in the aggregate;
(i) Assist has not sold or otherwise transferred, and has not
leased or licensed, any asset to any other Person except for products sold or
licensed by Assist from its inventory in the Ordinary Course of Business;
(j) Assist has not written off as uncollectible, or established
any extraordinary reserve with respect to, any individual account receivable
in an amount of more than $20,000 or other indebtedness owing to Assist or
collectively in an amount of more than $200,000;
(k) Assist has not pledged or hypothecated any of its assets or
otherwise permitted any of its assets to become subject to any Encumbrance;
(l) Assist has not made any loan or advance to any other Person;
(m) Assist has not (i) established or adopted any Employee
Benefit Plan, or (ii) paid any bonus or made any profit-sharing or similar
payment to any directors, officers or employees other than pursuant to
Employee Benefit Plans that were established or adopted prior to December 31,
1998 and that were not amended since December 31, 1998, in amounts consistent
with prior bonus or profit-sharing amounts, or increased the amount of the
wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or employees;
(n) Assist has not entered into, and neither Assist nor any of
the assets owned or used by Assist has become bound by, any Contract that is
not an Excluded Contract;
(o) no Contract by which Assist or any of the assets owned or
used by Assist is or was bound, or under which Assist has or had any rights
or interest (other than an Excluded Contract), has been amended or terminated;
(p) Assist has not incurred, assumed or otherwise become
subject to any Liability, other than accounts payable (of the type required
to be reflected as current liabilities in
10.
the "liabilities" column of a balance sheet prepared in accordance with GAAP)
incurred by Assist in the Ordinary Course of Business;
(q) Assist has not discharged any Encumbrance or discharged or
paid any indebtedness or other Liability, except for accounts payable that
(i) are reflected as current liabilities in the "liabilities" column of the
Unaudited Interim Balance Sheet or have been incurred by Assist since
September 30, 1999 in the Ordinary Course of Business, and (ii) have been
discharged or paid in the Ordinary Course of Business;
(r) Assist has not forgiven any debt or otherwise released or
waived any material right or claim;
(s) Assist has not changed any of its methods of accounting or
accounting practices in any respect;
(t) Assist has not entered into any transactions or taken any
other action outside the Ordinary Course of Business; and
(u) Assist has not agreed, committed or offered (in writing or
otherwise) to take any of the actions referred to in clauses "(c)" through
"(t)" above.
3.6 TITLE TO ASSETS.
(a) Assist owns, and has good, valid and marketable title to,
all assets purported to be owned by it, including:
(i) all assets reflected on the Unaudited Interim Balance
Sheet (except for inventory sold by Assist since September 30, 1999 in the
Ordinary Course of Business);
(ii) all assets acquired by Assist since September 30, 1999
(except for inventory sold by Assist since September 30, 1999 in the Ordinary
Course of Business);
(iii) all assets referred to in Parts 3.8, 3.10 and 3.12 of
the Disclosure Schedule and all of Assist's rights under Assist Contracts; and
(iv) all other assets reflected in Assist's books and
records as being owned by Assist.
Except as set forth in Part 3.6 of the Disclosure Schedule, all of
said assets are owned by Assist free and clear of any Encumbrances except for
any lien for Taxes that are not yet due and payable.
(b) Part 3.6 of the Disclosure Schedule identifies all assets
that are being leased or licensed to Assist (except for any Proprietary Asset
that is licensed to Assist under any third party software license generally
available to the public at a cost of less than $1,000 per copy).
11.
3.7 BANK ACCOUNTS. Part 3.7 of the Disclosure Schedule accurately
sets forth, with respect to each account maintained by or for the benefit of
Assist at any bank or other financial institution:
(a) the name and location of the institution at which such
account is maintained;
(b) the name in which such account is maintained and the
account number of such account;
(c) a description of such account and the purpose for which
such account is used;
(d) the current balance in such account;
(e) the rate of interest being earned on the funds in such
account; and
(f) the names of all individuals authorized to draw on or make
withdrawals from such account.
Except as provided in Part 3.7 of the Disclosure Schedule, there are
no safe deposit boxes or similar arrangements maintained by or for the
benefit of Assist.
3.8 RECEIVABLES; MAJOR CUSTOMERS.
(a) Part 3.8 of the Disclosure Schedule provides an accurate
and complete breakdown and aging of all accounts receivable, notes receivable
and other receivables of Assist as of September 30, 1999.
(b) Except as set forth in Part 3.8 of the Disclosure Schedule,
all existing accounts receivable of Assist (including those accounts
receivable reflected on the Unaudited Interim Balance Sheet that have not yet
been collected and those accounts receivable that have arisen since September
30, 1999 and have not yet been collected):
(i) represent valid obligations of customers of Assist
arising from bona fide transactions entered into in the Ordinary Course of
Business; and
(ii) are current and will be collected in full (without any
counterclaim or setoff, subject to write-offs for bad debt not to exceed the
reserve for bad debt on the Interim Balance Sheet) or in the Ordinary Course
of Business consistent with Assist's historical collection experience.
(c) No customer has accounted for more than 10% of Assist
annual revenues in each of its fiscal years ended December 31, 1997 and
December 31, 1998 and on an annualized basis during the fiscal year ending
December 31, 1999.
3.9 INVENTORY. Part 3.9 of the Disclosure Schedule provides an
accurate and complete breakdown of all inventory (including raw materials,
work in process and finished
12.
goods) of Assist as of September 30, 1999. All of Assist's existing inventory
(including all inventory that is reflected on the Unaudited Interim Balance
Sheet and that has not been disposed of by Assist since September 30, 1999):
(a) is of such quality and quantity as to be usable and
saleable by Assist in the Ordinary Course of Business;
(b) has been priced at the lower of cost or market value; and
(c) is free of any material defect or deficiency that is not
covered through a third party manufacturer's warranty.
The inventory levels maintained by Assist (i) are not excessive in
light of Assist's normal operating requirements, and (ii) are adequate for
the conduct of Assist's operations in the Ordinary Course of Business.
3.10 EQUIPMENT, ETC.
(a) Part 3.10 of the Disclosure Schedule accurately identifies
all equipment, furniture, fixtures, improvements and other tangible assets
(other than inventory) owned by Assist. Part 3.10 also accurately identifies
all tangible assets leased to Assist.
(b) Each asset identified or required to be identified in Part
3.10 of the Disclosure Schedule:
(i) is structurally sound, free of material defects and
deficiencies and in good condition and repair (ordinary wear and tear
excepted);
(ii) complies in all respects with, and is being operated
and otherwise used in full compliance with, all applicable Legal
Requirements; and
(iii) is adequate for the uses to which it is being put.
The assets identified in Part 3.10 of the Disclosure Schedule are
adequate for the conduct of Assist's business in the manner in which such
business is currently being conducted.
3.11 REAL PROPERTY. Assist does not own any real property or any
interest in real property, except for the leaseholds created under the real
property leases identified in Part 3.13 of the Disclosure Schedule. Part 3.11
of the Disclosure Schedule provides an accurate description of the premises
covered by said leases and the facilities located on such premises. Assist
enjoys peaceful and undisturbed possession of such premises.
3.12 PROPRIETARY ASSETS.
(a) Part 3.12(a) of the Disclosure Schedule sets forth, with
respect to each Proprietary Asset of Assist registered with any Governmental
Body or for which an application has been filed with any Governmental Body,
(i) a brief description of such Assist Proprietary Asset, and (ii) the names
of the jurisdictions covered by the applicable registration or application.
13.
Part 3.12(a) of the Disclosure Schedule identifies and provides a brief
description of all other material Proprietary Assets owned by Assist. Part
3.12(a) of the Disclosure Schedule identifies and provides a brief
description of each Proprietary Asset licensed to Assist by any Person
(except for any Proprietary Asset that is licensed to Assist under any third
party software license generally available to the public at a cost of less
than $1,000 per copy), and identifies the license agreement under which such
Proprietary Asset is being licensed to Assist. Except as set forth in Part
3.12(a) of the Disclosure Schedule, Assist has good, valid and marketable
title to all of the Proprietary Assets used in its business free and clear of
all liens and other Encumbrances, and has a valid right (contractual or
otherwise) to use all Proprietary Assets identified in Part 3.12(a) of the
Disclosure Schedule. Except as set forth in Part 3.12(a) of the Disclosure
Schedule, Assist is not obligated to make any payment to any Person for the
use of any Proprietary Asset. Except as set forth in Part 3.12(a) of the
Disclosure Schedule, Assist has not developed jointly with any other Person
any Proprietary Asset with respect to which such other Person has any rights.
(b) Assist has taken all commercially reasonable measures and
precautions to protect and maintain the confidentiality and secrecy of all
Proprietary Assets (except Proprietary Assets whose value would be unimpaired
by public disclosure) and otherwise to maintain and protect the value of all
Proprietary Assets. Except as set forth in Part 3.12(a) of the Disclosure
Schedule, Assist has not disclosed or delivered to any Person, or permitted
the disclosure or delivery to any Person of, (i) the source code, or any
portion or aspect of the source code, of any Proprietary Asset, or (ii) the
object code, or any portion or aspect of the object code, of any Proprietary
Asset.
(c) None of the Proprietary Assets infringes or conflicts with
any Proprietary Asset owned or used by any other Person except for any
inadvertent infringement of which Assist is unaware that does not impose any
material liability on Assist or cause Assist to spend any material amount to
replace any Proprietary Assets. Assist is not infringing, misappropriating or
making any unlawful use of, and Assist has not at any time infringed,
misappropriated or made any unlawful use of, or received any notice or other
communication (in writing or otherwise) of any actual, alleged, possible or
potential infringement, misappropriation or unlawful use of, any Proprietary
Asset owned or used by any other Person. To the Knowledge of Assist, no other
Person is infringing, misappropriating or making any unlawful use of, and no
Proprietary Asset owned or used by any other Person infringes or conflicts
with, any Proprietary Asset.
(d) Except as set forth in Part 3.12(d) of the Disclosure
Schedule: (i) each Proprietary Asset conforms in all material respects with
any specification, documentation, performance standard, representation or
statement made or provided with respect thereto by or on behalf of Assist;
and (ii) during the last 24 months, there has not been any material claim by
any customer or other Person alleging that any Proprietary Asset (including
each version thereof that has ever been licensed or otherwise made available
by Assist to any Person) does not conform in all material respects with any
specification, documentation, performance standard, representation or
statement made or provided by or on behalf of Assist other than reports of
programming errors that (x) occur or are experienced from time to time by
customers using Assist's products in a unique or custom fashion, (y) have
been resolved or are resolvable through Assist's help desk (without the
devotion of material additional resources) and (z) are consistent
14.
with the experience of Comparable Entities, and, to the knowledge of Assist,
there is no basis for any such claim.
(e) Proprietary Assets constitute all the Proprietary Assets
necessary to enable Assist to conduct its business in the manner in which
such business has been and is being conducted. Except as set forth in Part
3.12(e) of the Disclosure Schedule, (i) Assist has not licensed any of its
Proprietary Assets to any Person on an exclusive basis, and (ii) Assist has
not entered into any covenant not to compete or Contract limiting its ability
to exploit fully any of its Proprietary Assets or to transact business in any
market or geographical area or with any Person.
(f) Except as disclosed in Part 3.12 of the Disclosure
Schedule, all Proprietary Assets of Assist do not and will not contain any
viruses, which shall mean any computer code designed to disrupt, disable,
harm, or otherwise impede in any manner, the operation of the computer
program, or any other associated software, firmware, hardware, or network
(including local area or wide-area networks), in a manner not intended by the
creator(s) of such software, firmware, hardware, or network.
3.13 CONTRACTS.
(a) Part 3.13 of the Disclosure Schedule identifies and
provides an accurate and complete description of each Assist Contract, except
for any Excluded Contract. Assist has delivered to Cayenta accurate and
complete copies of all Assist Contracts identified in Part 3.13 of the
Disclosure Schedule, including all amendments thereto.
(b) Each Assist Contract is valid and in full force and effect,
and is enforceable by Assist in accordance with its terms. No Assist Contract
contains any term or provision that is extraordinary for similar types of
commercial contracts or licenses.
(c) Except as set forth in Part 3.13 of the Disclosure Schedule:
(i) Assist has not violated or breached, or declared or
committed any default under, any Assist Contract and to Assist's Knowledge,
no other Person has violated, breached or committed any default under any
Assist Contract;
(ii) no event has occurred, and no circumstance or
condition exists, that reasonably might (with or without notice or lapse of
time) (A) result in a violation or breach of any of the provisions of any
Assist Contract by Assist or, to Assist's Knowledge by any Person other than
Assist, (B) give any Person (other than Assist) the right to declare a
default or exercise any remedy under any Assist Contract, (C) give any Person
(other than Assist) the right to accelerate the maturity or performance of
any Assist Contract, or (D) give any Person (other than Assist) the right to
cancel, terminate or modify any Assist Contract;
(iii) Assist has not received any notice or other
communication (in writing or otherwise) regarding any actual, alleged,
possible or potential violation or breach of, or default under, any Assist
Contract; and
(iv) Assist has not waived any of its rights under any
Assist Contract.
15.
(d) To the Knowledge of Assist, none of its customers under
existing Assist Contracts is insolvent or unable to satisfy its current or
future monetary obligations and other obligations and Liabilities to Assist.
(e) Except as set forth in Part 3.13 of the Disclosure Schedule:
(i) Assist has never guaranteed or otherwise agreed to
cause, insure or become liable for, and Assist has never pledged any of its
assets to secure, the performance or payment of any obligation or other
Liability of any other Person; and
(ii) Assist has never been a party to or bound by (A) any
joint venture agreement, partnership agreement, profit-sharing agreement,
cost-sharing agreement, loss-sharing agreement or similar Contract, or (B)
any Contract that creates or grants to any Person, or provides for the
creation or grant of, any stock appreciation right, phantom stock right or
similar right or interest.
(f) The performance of the Assist Contracts will not result in
any violation of or failure to comply with any material Legal Requirement.
(g) No Person is renegotiating, or has the right to
renegotiate, any amount paid or payable to Assist under any Assist Contract
or any other term or provision of any Assist Contract.
(h) The Contracts identified in Part 3.13 of the Disclosure
Schedule and the Excluded Contracts collectively constitute all of the
Contracts necessary to enable Assist to conduct its business in the manner in
which its business is currently being conducted.
(i) Part 3.13 of the Disclosure Schedule identifies and
provides an accurate and complete description of each proposed Contract as to
which any bid, offer, award, written proposal, term sheet or similar document
has been submitted or received by Assist since September 30, 1999.
3.14 LIABILITIES; MAJOR SUPPLIERS.
(a) Assist has no Liabilities, except for:
(i) liabilities identified as such in the "liabilities"
column of the Unaudited Interim Balance Sheet;
(ii) accounts payable (of the type required to be reflected
as current liabilities in the "liabilities" column of a balance sheet
prepared in accordance with GAAP) incurred by Assist in the Ordinary Course
of Business since September 30, 1999; and
(iii) Assist's obligations under the Contracts listed in
Part 3.13 of the Disclosure Schedule and under Excluded Contracts, to the
extent that the existence of such obligations is ascertainable solely by
reference to such Contracts.
(b) Part 3.14 of the Disclosure Schedule:
16.
(i) provides an accurate and complete breakdown and aging
of Assist's accounts payable as of September 30, 1999;
(ii) provides an accurate and complete breakdown of all
customer deposits and other deposits held by Assist as of the date of this
Agreement; and
(iii) provides an accurate and complete breakdown of
Assist's long-term debt as of the date of this Agreement.
(c) Assist has not paid, and Assist is not and will not become
liable for the payment of, any fees, costs or expenses of the type referred
to in Section 12.5(a).
(d) Part of the Disclosure Schedule accurately identifies, and
provides an accurate and complete breakdown of the amounts paid to, each
supplier or other Person that received (i) more than $200,000 from Assist in
1997, (ii) more than $200,000 from Assist in 1998, or (iii) more than
$150,000 from Assist in the first three quarters of 1999.
3.15 COMPLIANCE WITH LEGAL REQUIREMENTS.
(a) Except as set forth in Part 3.15 of the Disclosure Schedule:
(i) Assist is in material compliance with each Legal
Requirement that is applicable to it or to the conduct of its business or the
ownership or use of any of its assets;
(ii) Assist has at all times been in material compliance
with each Legal Requirement that is or was applicable to it or to the conduct
of its business or the ownership or use of any of its assets;
(iii) no event has occurred, and no condition or
circumstance exists, that might (with or without notice or lapse of time)
constitute or result directly or indirectly in a violation by Assist of, or a
failure on the part of Assist to comply with, any material Legal Requirement;
and
(iv) Assist has never received, at any time, any notice or
other communication (in writing or otherwise) from any Governmental Body or
any other Person regarding (i) any actual, alleged, possible or potential
violation of, or failure to comply with, any Legal Requirement, or (ii) any
actual, alleged, possible or potential obligation on the part of Assist to
undertake, or to bear all or any portion of the cost of, any cleanup or any
remedial, corrective or response action of any nature.
(b) Assist has delivered to Cayenta an accurate and complete
copy of each report, study, survey or other document in Assist's possession
or if not in Assist's possession of which it is aware and to which Assist has
access that addresses or otherwise relates to the compliance of Assist with,
or the applicability to Assist of, any Legal Requirement.
(c) To the Knowledge of Assist and the Selling Shareholders, no
Governmental Body has proposed or is considering any Legal Requirement that,
if adopted or otherwise put into effect, (i) may have an adverse effect on
Assist's business, condition, assets,
17.
liabilities, operations, financial performance, net income or prospects or on
the ability of Assist or any of the Selling Shareholders to comply with or
perform any covenant or obligation under any of the Transactional Agreements,
or (ii) may have the effect of preventing, delaying, making illegal or
otherwise precluding any of the Transactions.
3.16 GOVERNMENTAL AUTHORIZATIONS.
(a) Part 3.16 of the Disclosure Schedule identifies:
(i) each Governmental Authorization that is held by Assist;
and
(ii) each other Governmental Authorization that, to the
Knowledge of Assist and the Selling Shareholders, is held by any of Assist's
employees is necessary in connection with Assist's business.
Assist has delivered to Cayenta accurate and complete copies of all
of the Governmental Authorizations identified in Part 3.16 of the Disclosure
Schedule, including all renewals thereof and all amendments thereto. Each
Governmental Authorization identified or required to be identified in Part
3.16 of the Disclosure Schedule is valid and in full force and effect.
(b) Except as set forth in Part 3.16 of the Disclosure Schedule:
(i) Assist and its employees are and have at all times
been, in material compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in Part
3.16 of the Disclosure Schedule;
(ii) no event has occurred, and no condition or
circumstance exists, that might (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of or a failure to
comply with any material term or requirement of any Governmental
Authorization identified or required to be identified in Part 3.16 of the
Disclosure Schedule, or (B) result directly or indirectly in the revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization identified or required to be identified in Part
3.16 of the Disclosure Schedule;
(iii) Assist has never received, and, to the Knowledge of
Assist, no employee of Assist has ever received, any notice or other
communication (in writing or otherwise) from any Governmental Body or any
other Person regarding (A) any actual, alleged, possible or potential
violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (B) any actual, proposed, possible or
potential revocation, withdrawal, suspension, cancellation, termination or
modification of any Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations required to be identified in Part
3.16 of the Disclosure Schedule have been duly filed on a timely basis with
the appropriate Governmental Bodies, and each other notice or filing required
to have been given or made with respect to such Governmental Authorizations
has been duly given or made on a timely basis with the appropriate
Governmental Body.
18.
(c) The Governmental Authorizations identified in Part 3.16 of
the Disclosure Schedule constitute all of the Governmental Authorizations
necessary (i) to enable Assist to conduct its business in the manner in which
its business is currently being conducted, and (ii) to permit Assist to own
and use its assets in the manner in which they are currently owned and used.
3.17 TAX MATTERS.
(a) Each Tax required to have been paid, or claimed by any
Governmental Body to be payable, by Assist (whether pursuant to any Tax
Return or otherwise) has been duly paid in full or on a timely basis. Any Tax
required to have been withheld or collected by Assist has been duly withheld
and collected; and (to the extent required) each such Tax has been paid to
the appropriate Governmental Body.
(b) Part 3.17 of the Disclosure Schedule accurately identifies
all Tax Returns required to be filed by or on behalf of Assist with any
Governmental Body with respect to any taxable period beginning January 1,
1993 and ending on or before the Closing Date ("ASSIST RETURNS"). All Assist
Returns (i) have been or will be filed when due, and (ii) have been, or will
be when filed, accurately and completely prepared in compliance with all
applicable Legal Requirements. All amounts shown on the Assist Returns to be
due on or before the Closing Date, and all amounts otherwise payable in
connection with the Assist Returns on or before the Closing Date, have been
or will be paid on or before the Closing Date. Assist has delivered to
Cayenta accurate and complete copies of all Assist Returns filed since
December 31, 1996.
(c) The Assist Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the
dates thereof in accordance with GAAP. Assist will establish, in the Ordinary
Course of Business, reserves adequate for the payment of all Taxes for the
period from September 30, 1999 through the Closing Date, and Assist will
disclose the dollar amount of such reserves to Cayenta on or prior to the
Closing Date.
(d) Each Assist Return relating to income Taxes that has been
filed with respect to any period ended on or prior to December 31, 1995 has
either (i) been examined and audited by all relevant Governmental Bodies, or
(ii) by virtue of the expiration of the limitation period under applicable
Legal Requirements, is no longer subject to examination or audit by any
Governmental Body. Part 3.17 of the Disclosure Schedule accurately identifies
each examination or audit of any Assist Return that has been conducted since
January 1, 1997. Assist has delivered to Cayenta accurate and complete copies
of all audit reports and similar documents (to which Assist has access)
relating to Assist Returns. Except as set forth in Part 3.17 of the
Disclosure Schedule, no extension or waiver of the limitation period
applicable to any of the Assist Returns has been granted (by Assist or any
other Person), and no such extension or waiver has been requested from Assist.
(e) From inception through June 30, 1997, the Company was an S
corporation for federal tax purposes within the meaning of Section 1361(a)(1)
of the Code and the Company was not and is not subjection to the imposition
of any tax under Section 1374 of the Code for any period prior to the
Company's termination of its S corporation status effective June 30, 1997.
19.
(f) Except as set forth in Part 3.17 of the Disclosure
Schedule, no claim or other Proceeding is pending or has been threatened
against or with respect to Assist in respect of any Tax. There are no
unsatisfied Liabilities for Taxes (including liabilities for interest,
additions to tax and penalties thereon and related expenses) with respect to
any notice of deficiency or similar document received by Assist. Assist has
not entered into or has become bound by any agreement or consent pursuant to
Section 341(f) of the Code. Assist will not be, required to include any
adjustment in taxable income for any tax period (or portion thereof) pursuant
to Section 481 or 263A of the Code or any comparable provision under state or
foreign Tax laws as a result of transactions or events occurring, or
accounting methods employed, prior to the Closing.
(g) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of Assist that, individually or collectively, could
give rise directly or indirectly to the payment of any amount that would not
be deductible pursuant to Section 280G or Section 162 of the Code. Assist is
not, and has never been, a party to or bound by any tax indemnity agreement,
tax sharing agreement, tax allocation agreement or similar Contract.
3.18 EMPLOYEE AND LABOR MATTERS.
(a) Part 3.18 of the Disclosure Schedule accurately sets forth,
with respect to each employee of Assist (including any employee of Assist who
is on a leave of absence or on layoff status):
(i) the name of such employee and the date as of which such
employee was originally hired by Assist;
(ii) such employee's title, and a description of such
employee's duties and responsibilities;
(iii) the aggregate dollar amount of the compensation
(including wages, salary, commissions, director's fees, fringe benefits,
bonuses, profit-sharing payments and other payments or benefits of any type)
received by such employee from Assist with respect to services performed in
1998;
(iv) such employee's annualized compensation as of the date
of this Agreement;
(v) each Current Benefit Plan in which such employee
participates or is eligible to participate; and
(vi) any Governmental Authorization that is held by such
employee and that is necessary in connection with Assist's business.
(b) Part 3.18 of the Disclosure Schedule accurately identifies
each former employee of Assist who is receiving or is scheduled to receive
(or whose spouse or other dependent is receiving or is scheduled to receive)
any benefits (whether from Assist or
20.
otherwise) relating to such former employee's employment with Assist; and
Part 3.18 of the Disclosure Schedule accurately describes such benefits.
(c) Except as set forth in Part 3.18 of the Disclosure
Schedule, Assist is not a party to or bound by, and Assist has never been a
party to or bound by, any employment agreement or any union contract,
collective bargaining agreement or similar Contract.
(d) The employment of each of Assist's employees is terminable
by Assist at will. Assist has delivered to Cayenta accurate and complete
copies of all employee manuals and handbooks, disclosure materials, policy
statements and other materials relating to the employment of the current and
former employees of Assist.
(e) To the Knowledge of Assist and the Selling Shareholders:
(i) no employee of Assist intends to terminate his
employment with Assist;
(ii) no employee of Assist has received an offer to join a
business that may be competitive with Assist's business; and
(iii) no employee of Assist is a party to or is bound by
any confidentiality agreement, noncompetition agreement or other Contract
(with any Person) that may have a material adverse effect on (A) the
performance by such employee of any of his duties or responsibilities as an
employee of Assist, or (B) Assist's business or operations.
(f) Assist is not engaged, and has never been engaged, in any
unfair labor practice of any nature. There has never been any slowdown, work
stoppage, labor dispute or union organizing activity, or any similar activity
or dispute, affecting Assist or any of their employees. There is not now
pending, and no Person has threatened to commence, any such slowdown, work
stoppage, labor dispute or union organizing activity or any similar activity
or dispute. No event has occurred, and no condition or circumstance exists,
that might directly or indirectly give rise to or provide a basis for the
commencement of any such slowdown, work stoppage, labor dispute or union
organizing activity or any similar activity or dispute.
3.19 BENEFIT PLANS; ERISA.
(a) Part 3.19 of the Disclosure Schedule identifies and
provides an accurate description of each Current Benefit Plan and each Past
Benefit Plan. Assist has never established, adopted, maintained, sponsored,
contributed to, participated in or incurred any Liability with respect to any
Employee Benefit Plan, except for Company Plans identified in Part 3.19 of
the Disclosure Schedule; and Assist has never provided or made available any
fringe benefit or other benefit of any nature to any of its employees, except
as set forth in Part 3.19 of the Disclosure Schedule.
(b) No Company Plan:
(i) provides or provided any benefit guaranteed by the
Pension Benefit Guaranty Corporation;
21.
(ii) is or was a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA; or
(iii) is or was subject to the minimum funding standards of
Section 412 of the Code or Section 302 of ERISA.
There is no Person that (by reason of common control or otherwise)
is or has at any time been treated together with Assist as a single employer
within the meaning of Section 414 of the Code.
(c) Assist has delivered to Cayenta, with respect to each
Company Plan:
(i) an accurate and complete copy of such Company Plan and
all amendments thereto (including any amendment that is scheduled to take
effect in the future);
(ii) an accurate and complete copy of each Contract
(including any trust agreement, funding agreement, service provider
agreement, insurance agreement, investment management agreement or
recordkeeping agreement) relating to such Company Plan;
(iii) an accurate and complete copy of any description,
summary, notification, report or other document that has been furnished to
any employee of Assist with respect to such Company Plan;
(iv) an accurate and complete copy of any form, report,
registration statement or other document that has been filed with or
submitted to any Governmental Body with respect to such Company Plan; and
(v) an accurate and complete copy of any determination
letter, notice or other document that has been issued by, or that has been
received by Assist from, any Governmental Body with respect to such Company
Plan.
(d) Each Current Benefit Plan is being operated and
administered in compliance in all material respects with the provisions
thereof, and each Company Plan has at all times been operated and
administered in compliance in all material respects with the provisions
thereof. Each contribution or other payment that is required to have been
accrued or made under or with respect to any Company Plan has been duly
accrued and made on a timely basis.
(e) Each Current Benefit Plan complies and is being operated
and administered in compliance in all material respects with, and each
Company Plan has at all times complied and been operated and administered in
full compliance with, all applicable reporting, disclosure and other
requirements of ERISA and the Code and all other applicable Legal
Requirements. Assist has never incurred any Liability to the Internal Revenue
Service or any other Governmental Body with respect to any Company Plan; and
no event has occurred, and no condition or circumstance exists, that
reasonably might (with or without notice or lapse of time) give rise directly
or indirectly to any such Liability. None of the Companies, and no Person
that is or was an administrator or fiduciary of any Company Plan (or that
Assists or has Assisted as an agent of Assist or any such administrator or
fiduciary), has engaged in any transaction or has otherwise Assisted or
failed to Assist in a manner that has subjected or may subject Assist to any
22.
Liability for breach of any fiduciary duty or any other duty. No Company
Plan, and no Person that is or was an administrator or fiduciary of any
Company Plan (or that Assists or has Assisted as an agent of any such
administrator or fiduciary):
(i) has engaged in a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code;
(ii) has failed to perform any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA; or
(iii) has taken any action that (A) may subject such
Company Plan or such Person to any Tax, penalty or Liability relating to any
"prohibited transaction," or (B) may directly or indirectly give rise to or
serve as a basis for the assertion (by any employee or by any other Person)
of any claim under, on behalf of or with respect to such Company Plan.
(f) No inaccurate or misleading representation, statement or
other communication has been made or directed (in writing or otherwise) to
any current or former employee of Assist (i) with respect to such employee's
participation, eligibility for benefits, vesting, benefit accrual or coverage
under any Company Plan or with respect to any other matter relating to any
Company Plan, or (ii) with respect to any proposal or intention on the part
of Assist to establish or sponsor any Employee Benefit Plan or to provide or
make available any fringe benefit or other benefit of any nature.
(g) Except as set forth in Part 3.19 of the Disclosure
Schedule, Assist has not advised any of its employees (in writing or
otherwise) that it intends or expects to establish or sponsor any Employee
Benefit Plan or to provide or make available any fringe benefit or other
benefit of any nature in the future.
3.20 ENVIRONMENTAL MATTERS.
(a) Assist is not liable or potentially liable for any response
cost or natural resource damages under Section 107(a) of CERCLA, or under any
other so-called "superfund" or "superlien" law or similar Legal Requirement,
at or with respect to any site.
(b) None of the Companies has ever received any notice or other
communication (in writing or otherwise) from any Governmental Body or other
Person regarding any actual alleged, possible or potential Liability arising
from or relating to the presence, generation, manufacture, production,
transportation, importation, use, treatment, refinement, processing,
handling, storage, discharge, release, emission or disposal of any Hazardous
Material. No Person has ever commenced or threatened to commence any
contribution action or other Proceeding against Assist in connection with any
such actual, alleged, possible or potential Liability; and no event has
occurred, and no condition or circumstance exists, that may directly or
indirectly give rise to, or result in Assist becoming subject to, any such
Liability.
(c) Except as set forth in Part 3.20 of the Disclosure
Schedule, none of the Companies has ever generated, manufactured, produced,
transported, imported, used, treated, refined, processed, handled, stored,
discharged, released or disposed of any Hazardous Material (whether lawfully
or unlawfully). Except as set forth in Part 3.20 of the Disclosure Schedule,
23.
none of the Companies has ever permitted (knowingly or otherwise) any
Hazardous Material to be generated, manufactured, produced, used, treated,
refined, processed, handled, stored, discharged, released or disposed of
(whether lawfully or unlawfully):
(i) on or beneath the surface of any real property that is,
or that has at any time been, owned by, leased to, controlled by or used by
Assist;
(ii) in or into any surface water, groundwater, soil or air
associated with or adjacent to any such real property; or
(iii) in or into any well, pit, pond, lagoon, impoundment,
ditch, landfill, building, structure, facility, improvement, installation,
equipment, pipe, pipeline, vehicle or storage container that is or was
located on or beneath the surface of any such real property or that is or has
at any time been owned by, leased to, controlled by or used by Assist.
(d) All property that is owned by, leased to, controlled by or
used by Assist, and all surface water, groundwater, soil and air associated
with such property:
(i) is free of any Hazardous Material and any harmful
chemical or physical conditions; and
(ii) is free of any material environmental contamination of
any nature.
(e) Each storage tank or other storage container that is or has
been owned by, leased to, controlled by or used by Assist, or that is located
on or beneath the surface of any real property owned by, leased to,
controlled by or used by Assist:
(i) is in sound condition; and
(ii) has been demonstrated by accepted testing
methodologies to be free of any corrosion or leaks.
3.21 SALE OF PRODUCTS; PERFORMANCE OF SERVICES.
(a) Each product that has been sold by Assist and each service
that has been performed by any Assist for any Person:
(i) conformed and complied in all in all material respects
with the terms and requirements of any applicable warranty or other Contract
and with all applicable Legal Requirements; and
(ii) was free of any design defects, programming errors,
construction defects or other defects or deficiencies at the time of sale
other than programming errors that (x) occur or are experienced from time to
time by customers using Assist's products in a unique or custom fashion, (y)
have been resolved or are resolvable through Assist's help desk (without the
devotion of material additional resources) and (z) are consistent with the
experience of Comparable Entities. All design integration services, repair
services, technical, maintenance and other services that have been performed
by the Companies were performed properly and in full
24.
conformity with the terms and requirements of all applicable warranties and
other Contracts and with all applicable Legal Requirements.
(b) Assist will not incur or otherwise become subject to any
Liability arising directly or indirectly from any product manufactured or
sold, or any services performed by Assist on or at any time prior to the
Closing Date except for claims made on warranties in any Contracts entered
into prior to the Closing Date which shall not in the aggregate exceed the
warranty reserve on the Closing Balance Sheet.
(c) No product manufactured or sold by Assist has been the
subject of any recall or other similar action; and no event has occurred, and
no condition or circumstance exists, that might (with or without notice or
lapse of time) directly or indirectly give rise to or serve as a basis for
any such recall or other similar action relating to any such product.
(d) Except as set forth in Part 3.21 of the Disclosure
Schedule, no customer or other Person has ever asserted or threatened to
assert any material claim against Assist (i) under or based upon any warranty
provided by or on behalf of Assist, or (ii) under or based upon any other
warranty relating to any product sold by Assist or any services performed by
Assist. To the Knowledge of Assist and the Selling Shareholders, no event has
occurred, and no condition or circumstance exists, that reasonably might
(with or without notice or lapse of time) directly or indirectly give rise to
or serve as a basis for the assertion of any such claim.
(e) Assist has in place and at all times has had in place, an
adequate and appropriate quality control system that is at least as
comprehensive and effective as the quality control systems customarily
maintained by Comparable Entities.
3.22 INSURANCE.
(a) Part 3.22 of the Disclosure Schedule accurately sets forth,
with respect to each insurance policy maintained by or at the expense of, or
for the direct or indirect benefit of, Assist:
(i) the name of the insurance carrier that issued such
policy and the policy number of such policy;
(ii) whether such policy is a "claims made" or an
"occurrences" policy;
(iii) a description of the coverage provided by such policy
and the material terms and provisions of such policy (including all
applicable coverage limits, deductible amounts and co-insurance arrangements
and any non-customary exclusions from coverage);
(iv) the annual premium payable with respect to such
policy, and the cash value (if any) of such policy; and
(v) a description of any claims pending, and any claims
that have been asserted in the past, with respect to such policy.
25.
Part 3.22 also identifies (1) each pending application for insurance
that has been submitted by or on behalf of Assist, and (2) each
self-insurance or risk-sharing arrangement affecting Assist or any of its
assets. Assist has delivered to Cayenta accurate and complete copies of all
of the insurance policies identified in Part 3.22 of the Disclosure Schedule
(including all renewals thereof and endorsements thereto) and all of the
pending applications identified in Part 3.22 of the Disclosure Schedule.
(b) Each of the policies identified in Part 3.22 of the
Disclosure Schedule is valid, enforceable and in full force and effect. All
of the information contained in the applications submitted in connection with
said policies was (at the times said applications were submitted) accurate
and complete, and all premiums and other amounts owing with respect to said
policies have been paid in full on a timely basis. The nature, scope and
dollar amounts of the insurance coverage provided by said policies are
sufficient to adequately insure Assist's business, assets, operations, key
employees, services and potential liabilities.
(c) Except as set forth in Part 3.22 of the Disclosure
Schedule, there is no pending claim under or based upon any of the policies
identified in Part 3.22 of the Disclosure Schedule; and no event has
occurred, and no condition or circumstance exists, that might (with or
without notice or lapse of time) directly or indirectly give rise to or serve
as a basis for any such claim.
(d) Assist has not received:
(i) any notice or other communication (in writing or
otherwise) regarding the actual or possible cancellation or invalidation of
any of the policies identified in Part 3.22 of the Disclosure Schedule or
regarding any actual or possible adjustment in the amount of the premiums
payable with respect to any of said policies;
(ii) any notice or other communication (in writing or
otherwise) regarding any actual or possible refusal of coverage under, or any
actual or possible rejection of any claim under, any of the policies
identified in Part 3.22 of the Disclosure Schedule; or
(iii) any indication that the issuer of any of the policies
identified in Part 3.22 of the Disclosure Schedule may be unwilling or unable
to perform any of its obligations thereunder.
3.23 RELATED PARTY TRANSACTIONS. Except as set forth in Part 3.23
of the Disclosure Schedule:
(a) no Related Party has, and no Related Party has at any time
since December 31, 1997 had, any direct or indirect interest of any nature in
any asset used in or otherwise relating to the business of Assist;
(b) no Related Party is, or has at any time since December 31,
1997 been, indebted to Assist;
26.
(c) since December 31, 1997, no Related Party has entered into,
or has had any direct or indirect financial interest in, any Contract,
transaction or business dealing of any nature involving Assist;
(d) no Related Party is competing, or has at any time since
December 31, 1997 competed, directly or indirectly, with Assist in any market
served by Assist;
(e) no Related Party has any claim or right against Assist; and
(f) no event has occurred, and no condition or circumstance
exists, that reasonably might (with or without notice or lapse of time)
directly or indirectly give rise to or serve as a basis for any claim or
right in favor of any Related Party against Assist.
3.24 CERTAIN PAYMENTS, ETC. Neither Assist, nor any officer,
employee, agent or other Person associated with or acting for or on behalf of
Assist, has at any time, directly or indirectly:
(a) used any corporate funds (i) to make any unlawful political
contribution or gift or for any other unlawful purpose relating to any
political activity, (ii) to make any unlawful payment to any governmental
official or employee, or (iii) to establish or maintain any unlawful or
unrecorded fund or account of any nature;
(b) intentionally made any false or fictitious entry, or failed
to make any entry that should have been made, in any of the books of account
or other records of Assist;
(c) made any payoff, influence payment, bribe, rebate, kickback
or unlawful payment to any Person;
(d) performed any favor or given any gift which was not
deductible for federal income tax purposes;
(e) made any unlawful payment to any Person, or provided any
unlawful favor or anything of value (whether in the form of property or
services, or in any other form) to any Person, for the purpose of obtaining
or paying for (i) favorable treatment in securing business, or (ii) any other
special concession; or
(f) agreed, committed, offered or attempted to take any of the
actions described in clauses "(a)" through "(e)" above.
3.25 PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 3.25 of the Disclosure
Schedule, there is no pending Proceeding, and no Person has threatened to
commence any Proceeding:
(i) that involves Assist or that otherwise relates to or
reasonably might affect Assist's business or any of the assets owned or used
by Assist (whether or not Assist is named as a party thereto); or
27.
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of
the Transactions.
Except as set forth in Part 3.25 of the Disclosure Schedule, no
event has occurred, and no claim, dispute or other condition or circumstance
exists, that might directly or indirectly give rise to or serve as a basis
for the commencement of any such Proceeding.
(b) Except as set forth in Part 3.25 of the Disclosure
Schedule, since January 1, 1996, no Proceeding has ever been commenced by or
against Assist; and no Proceeding otherwise involving or relating to Assist
has been pending or to Assist's Knowledge threatened at any time.
(c) Assist has delivered to Cayenta accurate and complete
copies of all pleadings, correspondence and other written materials to which
Assist has access that relate to the Proceedings identified in Part 3.25 of
the Disclosure Schedule.
(d) There is no Order to which Assist, or any of the assets
owned or used by Assist, is subject; and none of the Selling Shareholders is
subject to any Order that relates to Assist's business or to any of the
assets owned or used by Assist.
(e) To the Knowledge of Assist and the Selling Shareholders, no
officer or employee of Assist is subject to any Order that prohibits such
officer or employee from engaging in or continuing any conduct, activity or
practice relating to Assist's business.
(f) There is no proposed Order that, if issued or otherwise put
into effect, (i) may have an adverse effect on Assist's business, condition,
assets, liabilities, operations, financial performance or net income (or on
any aspect or portion thereof) or on the ability of Assist or any of the
Selling Shareholders to comply with or perform any covenant or obligation
under any of the Transactional Agreements, or (ii) may have the effect of
preventing, delaying, making illegal or otherwise interfering with any of the
Transactions.
3.26 AUTHORITY; BINDING NATURE OF AGREEMENTS.
(a) Assist has the absolute and unrestricted right, power and
authority to enter into and to perform its obligations under this Agreement;
and the execution, delivery and performance by Assist of this Agreement have
been duly authorized by all necessary action on the part of Assist and its
board of directors and officers. This Agreement constitutes the legal, valid
and binding obligation of Assist, enforceable against Assist in accordance
with its terms.
(b) Each Selling Shareholder has the absolute and unrestricted
right, power and capacity to enter into and to perform such Selling
Shareholder's obligations under each of the Transactional Agreements to which
such Selling Shareholder is or may become a party. This Agreement constitutes
the legal, valid and binding obligation of each of the Selling Shareholders,
enforceable against each of the Selling Shareholders in accordance with its
terms. Upon the execution of each of the other Transactional Agreements at
the Closing, each of such other Transactional Agreements will constitute the
legal, valid and binding obligation of each Selling Shareholder who is a
party thereto, and will be enforceable against such Selling Shareholder in
accordance with its terms.
28.
(c) The respective spouses of the Selling Shareholders have the
absolute and unrestricted right, power and capacity to execute and deliver
and to perform their obligations under the Spousal Consents, if any, being
executed by them. Said Spousal Consents constitute their legal, valid and
binding obligations, enforceable against them in accordance with their terms.
(d) The Agent has the unrestricted right, power, authority and
capacity to act for and bind each of the Selling Shareholders with respect to
all matters relating to the Transactional Agreements and the Transactions.
3.27 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 3.27
of the Disclosure Schedule, neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i)
any of the provisions of Assist's certificate of incorporation or bylaws, or
(ii) any currently effective resolution adopted by Assist's shareholders,
Assist's board of directors or any committee of Assist's board of directors;
(b) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Assist or any of the Selling Shareholders,
or any of the assets owned or used by Assist, is subject;
(c) cause Assist, Cayenta or any affiliate of Cayenta to become
subject to, or to become liable for the payment of, any Tax;
(d) cause any of the assets owned or used by Assist to be
reassessed or revalued by any taxing authority or other Governmental Body;
(e) contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by Assist or any of its employees or that
otherwise relates to Assist's business or to any of the assets owned or used
by Assist;
(f) contravene, conflict with or result in a violation or
breach of, or result in a default under, any provision of any Assist
Contracts (other than any Excluded Contract);
(g) give any Person the right under any Assist Contract (other
than any Excluded Contract) to, (i) declare a default or exercise any remedy
under any Assist Contracts, (ii) accelerate the maturity or performance of
any Assist Contracts, or (iii) cancel, terminate or modify any Assist
Contract;
(h) contravene, conflict with or result in a violation or
breach of or a default under any provision of, or give any Person the right
to declare a default under, any Contract to
29.
which any of the Selling Shareholders is a party or by which any of the
Selling Shareholders is bound; or
(i) result in the imposition or creation of any Encumbrance
upon or with respect to any material asset owned or used by Assist.
Except as set forth in Part 3.27 of the Disclosure Schedule, neither
Assist nor any of the Selling Shareholders was, is or will be required to
make any filing with or give any notice to, or to obtain any Consent from,
any Person in connection with the execution and delivery of any of the
Transactional Agreements or the consummation or performance of any of the
Transactional.
3.28 YEAR 2000 COMPLIANCE. All of Assist's products and internal
systems are designed to be used prior to, during and after the year 2000, and
are Year 2000 Compliant. At Cayenta's request, Assist will provide evidence
demonstrating adequate testing of Assist's products and internal systems to
assure that they are Year 2000 Compliant.
(a) BROKERS. Neither Assist nor any of the Selling Shareholders
has agreed or become obligated to pay, or has taken any action that might
result in any Person claiming to be entitled to receive, any brokerage
commission, finder's fee or similar commission or fee in connection with any
of the Transactions.
3.29 FULL DISCLOSURE.
(a) None of the Transactional Agreements contains or will
contain any material untrue statement of fact; and none of the Transactional
Agreements omits or will omit to state any material facts necessary to make
any of the representations, warranties or other statements or information
contained therein not misleading in light of the circumstances in which they
were made.
(b) Except as set forth in Part 3.29 of the Disclosure
Schedule, there is no fact within the Knowledge of Assist (other than
publicly known facts relating exclusively to political or economic matters of
general applicability that will adversely affect all Comparable Entities)
that (i) might have a material adverse effect on Assist's business,
condition, assets, liabilities, operations, financial performance or net
income (or on any aspect or portion thereof) or on the ability of Assist or
any of the Selling Shareholders to comply with or perform any covenant or
obligation under any of the Transactional Agreements, or (ii) may have the
effect of preventing, delaying, making illegal or otherwise preventing any of
the Transactions.
(c) The information in the Information Statement regarding
Assist will not, as of the date of the Information Statement or as of the
Closing Date, (i) contain any statement that is inaccurate or misleading with
respect to any material fact, (ii) omit to state any material fact; or (iii)
omit to state any material fact necessary in order to make such information
(in the light of the circumstances under which it is provided) not false or
misleading.
(d) All of the information set forth in the Disclosure Schedule
is accurate and complete in all respects.
30.
(e) Assist and the Selling Shareholders have provided Cayenta
and Cayenta's Representatives with full and complete access to all of
Assist's records and other documents and data.
3.30 NO OTHER REPRESENTATIONS OR WARRANTIES. Neither Assist nor any
Selling Shareholder shall be deemed to have made to Cayenta, Cayenta Sub or
Titan or to any other Person any representation or warranty other than as
expressly made in this Agreement or any other Transactional Agreement, in the
Disclosure Schedule or in the Closing Certificate. Without limiting the
generality of the foregoing, neither Assist nor any Selling Shareholder makes
any representation or warranty with respect to any projections, estimates or
budgets relating to future operations or results of operations of Assist
heretofore delivered or made available to Cayenta, Cayenta Sub or Titan or
any of their Representatives.
4. REPRESENTATIONS AND WARRANTIES OF CAYENTA AND CAYENTA SUB
Cayenta and Cayenta Sub each represents and warrants, to and for the
benefit of the Selling Shareholders, as follows:
4.1 DUE ORGANIZATION. Cayenta is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all necessary power and authority to conduct its business in the
manner in which its business is currently being conducted and to own and use
its assets in the manner in which its assets are currently owned and used.
Cayenta Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all necessary power
and authority to conduct its business in the manner in which its business is
currently being conducted and to own and use its assets in the manner in
which its assets are currently owned and used. Cayenta and Cayenta Sub are
not required to be qualified, authorized, registered or licensed to do
business as a foreign corporation in any jurisdiction other than California
and Virginia except where the failure to be so qualified has not had and
reasonably is not expected to have a material adverse effect on the business
or financial condition of Cayenta.
4.2 AUTHORITY; BINDING NATURE OF AGREEMENTS. Cayenta and Cayenta
Sub each has the absolute and unrestricted right, power and authority to
enter into and to perform its obligations under the Transaction Agreements;
and the execution, delivery and performance by Cayenta and Cayenta Sub of the
Transaction Agreements have been duly authorized by all necessary action on
the part of Cayenta and its stockholders, board of directors and officers and
by Cayenta Sub and its stockholders, board of directors and officers. This
Agreement constitutes the legal, valid and binding obligation of Cayenta and
Cayenta Sub, enforceable against Cayenta and Cayenta Sub, respectively, in
accordance with its terms.
4.3 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 4.3 of
the Disclosure Schedule, neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i)
any of the provisions of Cayenta's or Cayenta Sub's certificate of
incorporation or bylaws, or (ii) any resolution
31.
adopted by Cayenta's or Cayenta Sub's stockholders, Cayenta's or Cayenta
Sub's board of directors or any committee of Cayenta's or Cayenta Sub's board
of directors;
(b) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Cayenta or any of the assets owned or used
by Cayenta, is subject or to which Cayenta Sub or any of the assets owned or
used by Cayenta Sub is subject;
(c) cause Cayenta or Cayenta Sub or any affiliate of Cayenta or
Cayenta Sub to become subject to, or to become liable for the payment of, any
Tax;
(d) cause any of the assets owned or used by Cayenta or Cayenta
Sub to be reassessed or revalued by any taxing authority or other
Governmental Body;
(e) contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by Cayenta or Cayenta Sub or any of their
respective employees or that otherwise relates to Cayenta's or Cayenta Sub's
business or to any of the assets owned or used by Cayenta or Cayenta Sub;
(f) contravene, conflict with or result in a violation or
breach of, or result in a default under, any provision of any Contracts of
Cayenta or Cayenta Sub;
(g) give any Person the right under any Cayenta or Cayenta Sub
Contracts (other than Excluded Contracts) to (i) declare a default or
exercise any remedy under any Contracts of Cayenta or Cayenta Sub, (ii)
accelerate the maturity or performance of any Contracts of Cayenta or Cayenta
Sub, or (iii) cancel, terminate or modify any Contracts of Cayenta or Cayenta
Sub; or
(h) result in the imposition or creation of any Encumbrance
upon or with respect to any material asset owned or used by Cayenta or
Cayenta Sub.
Except as set forth in Part 4.3 of the Disclosure Schedule, neither Cayenta
nor Cayenta Sub was, is or will be required to make any filing with or give
any notice to, or to obtain any Consent from, any Person in connection with
the execution and delivery of any of the Transactional Agreements or the
consummation or performance of any of Transactions contemplated by this
Agreement.
4.4 CAPITALIZATION, ETC.
(a) The authorized capital stock of Cayenta consists of:
(i) 100,000,000 shares of Class A common stock having a par
value of $.001 per share, none of which is outstanding as of the date of this
Agreement;
(ii) 50,000,000 shares of Class B common stock having a par
value of $.001 per share, none of which is outstanding as of the date of this
Agreement;
32.
(iii) 2,345,000 shares of Series A preferred stock having a
par value of $.001 per share, none of which is outstanding as of the date of
this Agreement;
(iv) 15,000,000 shares of preferred stock (excluding the
Series A preferred stock) having a par value of $.001 per share; and
(v) 3,343,800 shares that will be reserved for issuance
under options and warrants.
(b) Upon Closing and the issuance of the Cayenta Shares
pursuant to this Agreement and upon the concurrent closing of the other
transactions that are part of Section 351 Plan, the following shares of
capital stock of Cayenta will be issued and outstanding:
(i) 10,000,000 shares of Class B common stock;
(ii) 566,458 shares of Class A common stock; and
(iii) 2,345,000 shares of Series A preferred stock.
(c) Upon Closing pursuant to this Agreement and upon the
concurrent closing of the other transactions that are part of the Section 351
Plan, all of the capital stock of Cayenta Sub will be owned by Cayenta.
(d) The Cayenta Shares when issued and delivered in accordance
with this Agreement in the Exchange shall be duly and validly authorized and
issued, fully paid and nonassessable.
4.5 FINANCIAL STATEMENTS. Cayenta Sub has delivered to Assist the
unaudited balance sheet of Cayenta Sub as of September 30, 1999, and the
related unaudited statements of operations, changes in shareholders' equity
and cash flows of Cayenta Sub for the nine months then ended (collectively,
the "CAYENTA FINANCIAL STATEMENTS"). All of the Cayenta Financial Statements
are accurate and complete in all respects, subject to normal year end audit
adjustments. The financial statements present fairly the financial position
of Cayenta Sub as of September 30, 1999 and the results of operations,
changes in shareholders' equity and cash flows of Cayenta Sub for nine months
then ended. The Cayenta Financial Statements have been prepared in accordance
with generally accepted accounting principles, applied on a consistent basis
throughout the periods covered.
4.6 NO ADVERSE CHANGE. There has not been any material adverse
change in Cayenta or Cayenta Sub's business, condition, assets, liabilities,
operations, financial performance or net income (or in any aspect or portion
thereof) since September 30, 1999, and no event since September 30, 1999 has
occurred that reasonably might have a material adverse effect on Cayenta or
Cayenta Sub's business, condition, assets, liabilities, operations, financial
performance or net income (or in any aspect or portion thereof).
33.
4.7 PROCEEDINGS.
(a) There is no pending Proceeding, and no Person has
threatened to commence any Proceeding:
(i) that involves Cayenta or Cayenta Sub or that otherwise
relates to or reasonably might affect Cayenta's or Cayenta Sub's business or
any of the assets owned or used by Cayenta or Cayenta Sub (whether or not
Cayenta or Cayenta Sub is named as a party thereto); or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of
the Transactions.
(b) No event has occurred, and no claim, dispute or other
condition or circumstance exists, that might directly or indirectly give rise
to or serve as a basis for the commencement of any such Proceeding.
4.8 BROKERS. Except for fees payable to Xxxxxxxxxx & Partners, Inc.
by Titan, Cayenta has not agreed or become obligated to pay, and has not
taken any action that might result in any Person claiming to be entitled to
receive, any brokerage commission, finder's fee or similar commission or fee
in connection with any of the Transactions.
4.9 NO OTHER REPRESENTATIONS OR WARRANTIES. Neither Cayenta,
Cayenta Sub nor Titan shall be deemed to have made to Assist, the Selling
Shareholders or to any other Person any representation or warranty other than
as expressly made in this Agreement or any other Transaction Agreement, in
the Closing Certificate. Without limiting the generality of the foregoing,
neither Cayenta, Cayenta Sub, nor Titan makes any representation or warranty
with respect to any projections, estimates or budgets relating to future
operations or results of operations of Cayenta or Cayenta Sub heretofore
delivered or made available to Assist or any of their Representatives.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each Selling Shareholder understands, or has been advised by its
Purchaser Representative, that Cayenta Shares have not been registered under
the Securities Act. Each Selling Shareholder also understands, or has been
advised by its Purchaser Representative, that Cayenta Shares are being issued
pursuant to an exemption from registration contained in the Securities Act
based in part upon such Selling Shareholder's representations contained in
this Agreement. Each Selling Shareholder hereby represents and warrants, to
and for the benefit of Cayenta and Assist, as follows:
5.1 SELLING SHAREHOLDER BEARS ECONOMIC RISK. The Selling
Shareholder has substantial experience in evaluating and investing in private
placement transactions of securities in companies similar to Cayenta so that
he or it is capable of, or has been advised by his or its Purchaser
Representative regarding, evaluating the merits and risks of an investment in
Cayenta and has the capacity to protect his or its own interests. The Selling
Shareholder must bear the economic risk of this investment indefinitely
unless Cayenta Shares are registered pursuant to the Securities Act, or an
exemption from registration is available. The Selling Shareholder
34.
understands that Cayenta has not made any commitment to register any of its
shares under the Securities Act of 1933, as amended. The Selling Shareholder
also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow the Selling Shareholder to transfer
all or any portion of Cayenta Shares under the circumstances, in the amounts
or at the times the Selling Shareholder might propose.
5.2 ACQUISITION FOR OWN ACCOUNT. The Selling Shareholder is
acquiring Cayenta Shares for the Selling Shareholder's own account for
investment only, and not with a view towards their distribution.
5.3 SELLING SHAREHOLDER CAN PROTECT ITS INTEREST. The Selling
Shareholder represents that either (i) by reason of his or its, or of its
management's, business or financial experience, the Selling Shareholder has
the capacity to protect its own interests in connection with the transactions
contemplated by this Agreement or (ii) he or it has had its interests
represented by a Purchaser Representative (as defined in Rule 501 of
Regulation D) in the transactions contemplated by this Agreement. Further,
the Selling Shareholder is aware of no publication of any advertisement in
connection with the transactions contemplated in the Agreement.
5.4 ACCREDITED INVESTOR. The Selling Shareholder represents either
(i) that he or it is an accredited investor within the meaning of Regulation
D under the Securities Act or (ii) that he or it has been advised by a
Purchaser Representative (as defined in Rule 501 of Regulation D).
5.5 COMPANY INFORMATION. The Selling Shareholder has received and
read the information provided by Cayenta or has had such information
explained by its Purchaser Representative and either the Selling Shareholder
or its Purchaser Representative has had an opportunity to discuss Cayenta's
business, management and financial affairs with directors, officers and
management of Cayenta and has had the opportunity to review Cayenta's
operations and facilities. The Selling Shareholder or his or its Purchaser
Representative has also had the opportunity to ask questions of and receive
answers from, Cayenta and its management regarding the terms and conditions
of this investment.
5.6 RULE 144. The Selling Shareholder acknowledges and agrees that
Cayenta Shares must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. The Selling Shareholder has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act as in effect from
time to time, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about
Cayenta, the resale occurring following the required holding period under
Rule 144 and the number of shares being sold during any three-month period
not exceeding specified limitations.
5.7 RESIDENCE. If the Selling Shareholder is an individual, then
the Selling Shareholder resides in the state or province identified in the
address of the Selling Shareholder set forth on Exhibit D; if the Selling
Shareholder is a partnership, corporation, limited liability company or other
entity, then the office or offices of the Selling Shareholder in which its
35.
investment decision was made is located at the address or addresses of the
Selling Shareholder set forth on Exhibit D.
5.8 SELLING SHAREHOLDER.
(a) The Selling Shareholder has the capacity and financial
capability to comply with and perform all of such Selling Shareholder's
covenants and obligations under each of the Transactional Agreements to which
such Selling Shareholder is or may become a party.
(b) No Selling Shareholder:
(i) has, at any time, (A) made a general assignment for the
benefit of creditors, (B) filed, or had filed against such Selling
Shareholder, any bankruptcy petition or similar filing, (C) suffered the
attachment or other judicial seizure of all or a substantial portion of such
Selling Shareholder's assets, (D) admitted in writing such Selling
Shareholder's inability to pay such Selling Shareholder's debts as they
become due, (E) been convicted of, or pleaded guilty to, any felony, or (F)
taken or been the subject of any action that may have an adverse effect on
such Selling Shareholder's ability to comply with or perform any of such
Selling Shareholder's covenants or obligations under any of the Transactional
Agreements; or
(ii) is subject to any Order that may have an adverse
effect on such Selling Shareholder's ability to comply with or perform any of
such Selling Shareholder's covenants or obligations under any of the
Transactional Agreements.
There is no Proceeding pending, and no Person has threatened to
commence any Proceeding, that may reasonably have an adverse effect on the
ability of any Selling Shareholder to comply with or perform any of such
Selling Shareholder's covenants or obligations under any of the Transactional
Agreements. No event has occurred, and no claim, dispute or other condition
or circumstance exists, that reasonably might directly or indirectly give
rise to or serve as a basis for the commencement of any such Proceeding.
6. PRE-CLOSING COVENANTS OF ASSIST AND SELLING SHAREHOLDERS
6.1 ACCESS AND INVESTIGATION. Assist and the Selling Shareholders
shall ensure that, at all times during the Pre-Closing Period:
(a) Assist and its Representatives provide Cayenta and its
Representatives with free and complete access to Assist's Representatives,
personnel and assets and to all existing books, records, Tax Returns, work
papers and other documents and information relating to the Companies;
(b) Assist and its Representatives provide Cayenta and its
Representatives with such copies of existing books, records, Tax Returns,
work papers and other documents and information relating to the Companies as
Cayenta may request in good faith; and
(c) Assist and its Representatives compile and provide Cayenta
and its Representations with such additional financial, operating and other
data and information regarding the Companies as Cayenta may request in good
faith.
36.
6.2 OPERATION OF BUSINESS. Assist and the Selling Shareholders shall
use Best Efforts to ensure that, during the Pre-Closing Period:
(a) none of the Selling Shareholders directly or indirectly
sells or otherwise transfers, or offers, agrees or commits (in writing or
otherwise) to sell or otherwise transfer, any of the Shares or any interest
in or right relating to any of the Shares;
(b) none of the Selling Shareholders permits, and none of the
Selling Shareholders offers, agrees or commits (in writing or otherwise) to
permit, any of the Shares to become subject, directly or indirectly, to any
Encumbrance;
(c) Assist preserves intact its current business organization,
keeps available the services of its current officers and employees and
maintains its relations and good will with all suppliers, customers,
landlords, creditors, licensors, licensees, employees and other Persons
having business relationships with Assist;
(d) Assist keeps in full force all insurance policies
identified in Part 3.22 of the Disclosure Schedule;
(e) Except as otherwise prohibited by law, Assist's officers
confer regularly with Cayenta concerning operational matters and otherwise
report regularly to Cayenta concerning the status of Assist's business,
condition, assets, liabilities, operations, financial performance and
prospects;
(f) Assist immediately notifies Cayenta of any inquiry,
proposal or offer from any Person relating to any Acquisition Transaction;
(g) Assist and its officers use their Best Efforts to cause the
Company to operate the business prudently and in the Ordinary Course of
Business, consistent with past practices, and the Company's current business
plan which includes the development of the application service provider and
total service provider businesses using the Company's current product
offerings;
(h) Assist does not declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares of capital
stock, and does not repurchase, redeem or otherwise reacquire any shares of
capital stock or other securities except for the redemption of the Series A
and Series B preferred stock in accordance with this Agreement and the
cash-out of certain outstanding options prior to the Closing in accordance
with this Agreement;
(i) Assist does not sell or otherwise issue any shares of
capital stock or any other securities other than upon the exercise of
outstanding warrants or options;
(j) Assist does not amend its certificate of incorporation or
bylaws, and does not effect or become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock
split or similar transaction;
(k) Assist does not form any subsidiary or acquire any equity
interest or other interest in any other Entity;
37.
(l) Assist does not make any capital expenditure, except for
capital expenditures that are made in the Ordinary Course of Business and
that, when added to all other capital expenditures made on behalf of Assist
during the Pre-Closing Period, do not exceed $100,000 in the aggregate;
(m) Assist does not enter into or permit any of the assets
owned or used by Assist to become bound by any Contract, except for any
Excluded Contract;
(n) Assist does not incur, assume or otherwise become subject
to any Liability, except for current liabilities (of the type required to be
reflected in the "liabilities" column of a balance sheet prepared in
accordance with GAAP) incurred in the Ordinary Course of Business;
(o) Assist does not establish or adopt any Employee Benefit
Plan, and does not pay any bonus or make any profit-sharing or similar
payment to, or increase the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its
directors, officers or employees;
(p) Assist does not change any of its methods of accounting or
accounting practices in any material respect;
(q) Assist does not make any Tax election;
(r) Assist does not commence any Proceeding;
(s) Assist does not enter into any transaction or take any
other action of the type referred to in Section 3.5;
(t) Assist does not knowingly enter into any transaction or
take any other action that reasonably might cause or constitute a Breach of
any representation or warranty made by Assist or any of the Selling
Shareholders in this Agreement or in the Closing Certificate; and
(u) Assist does not agree, commit or offer (in writing or
otherwise), and does not attempt, to take any of the actions described in
clauses "(i)" through "(t)" of this Section 6.2.
6.3 FILINGS AND CONSENTS. Assist and the Selling Shareholders shall
ensure that:
(a) each other filing or notice required to be made or given
(pursuant to any applicable Legal Requirement, Order or Contract, or
otherwise) by Assist or any of the Selling Shareholders in connection with
the execution and delivery of any of the Transactional Agreements or in
connection with the consummation or performance of any of the Transactions
(including each of the filings and notices identified in Part 3.28 of the
Disclosure Schedule) is made or given as soon as possible after the date of
this Agreement;
(b) each Consent required to be obtained (pursuant to any
applicable Legal Requirement, Order or Contract, or otherwise) by Assist or
any of the Selling Shareholders in connection with the execution and delivery
of any of the Transactional Agreements or in connection with the consummation
or performance of any of the Transactions (including each of
38.
the Consents identified in Part 3.28 of the Disclosure Schedule) is obtained
as soon as possible after the date of this Agreement and remains in full
force and effect through the Closing Date;
(c) Assist promptly delivers to Cayenta a copy of each filing
made, each notice given and each Consent obtained by Assist or any Selling
Shareholder during the Pre-Closing Period; and
(d) during the Pre-Closing Period, Assist and its
Representatives cooperate with Cayenta and with Cayenta's Representatives,
and prepare and make available such documents and take such other actions as
Cayenta may request in good faith, in connection with any filing, notice or
Consent that Cayenta is required or elects to make, give or obtain.
6.4 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, Assist and the Selling
Shareholders shall promptly notify Cayenta in writing of:
(i) the discovery by Assist or any of the Selling
Shareholders of any event, condition, fact or circumstance that occurred or
existed on or prior to the date of this Agreement and that caused or
constitutes a Breach of any representation or warranty made by Assist or any
of the Selling Shareholders in this Agreement;
(ii) any event, condition, fact or circumstance that
occurs, arises or exists after the date of this Agreement and that would
cause or constitute a Breach of any representation or warranty made by Assist
or any of the Selling Shareholders in this Agreement if (A) such
representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or (B)
such event, condition, fact or circumstance had occurred, arisen or existed
on or prior to the date of this Agreement;
(iii) any Breach of any covenant or obligation of Assist or
any of the Selling Shareholders; and
(iv) any event, condition, fact or circumstance that may
make the timely satisfaction of any of the conditions set forth in Section 8
or Section 9 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 6.4(a) requires any change in
the Disclosure Schedule, or if any such event, condition, fact or
circumstance would require such a change assuming the Disclosure Schedule
were dated as of the date of the occurrence, existence or discovery of such
event, condition, fact or circumstance, then Assist and the Selling
Shareholders shall promptly deliver to Cayenta an update to the Disclosure
Schedule specifying such change. No such update shall be deemed to supplement
or amend the Disclosure Schedule for the purpose of (i) determining the
accuracy of any of the representations and warranties made by Assist or any
of the Selling Shareholders in this Agreement or in the Closing Certificate,
or (ii) determining whether any of the conditions set forth in Section 8 has
been satisfied unless Cayenta and Assist agree that such supplement or update
shall constitute an amendment to this Agreement; provided, however, that if
Cayenta agrees to close the Transactions notwithstanding any Breach disclosed
through any
39.
update of the Disclosure Schedule, Cayenta shall not have the right to seek
Damages with respect to such Breach unless Cayenta and Agent have agreed to
amend the Agreement to provide for such indemnity; and provided further, that
if Cayenta and Agent cannot agree in good faith on an appropriate remedy for
a Breach that occurs prior to the Closing and close the Transactions and the
Agreement is terminated, then Cayenta's remedies will be limited as follows:
(a) if the Breach existed as of the date of this Agreement, then Cayenta
shall be entitled to be reimbursed for its direct out of pocket professional
fees for the Transactions; (b) if the Breach is the result of any event,
circumstance, or condition occurring or arising after the date of execution
and prior to the Closing, then Cayenta's sole remedy shall be termination of
this Agreement.
6.5 PAYMENT OF INDEBTEDNESS BY RELATED PARTIES. Assist and the Selling
Shareholders shall cause all indebtedness and other Liabilities of each Related
Party to Assist (including any such indebtedness or other Liability identified
in Part 3.23 of the Disclosure Schedule) to be discharged and paid in full prior
to the Closing.
6.6 NO NEGOTIATION. Assist and the Selling Shareholders shall
ensure that, during the Pre-Closing Period, neither Assist nor any of
Assist's Representatives directly or indirectly:
(a) solicits or encourages the initiation of any inquiry,
proposal or offer from any Person (other than Cayenta) relating to any
Acquisition Transaction;
(b) participates in any discussions (other than the mere
receipt of an unsolicited inquiry, proposal or offer that Assist promptly
reports in writing to Cayenta) or negotiations with, or provides any
non-public information to, any Person (other than Cayenta) relating to any
Acquisition Proposal; or
(c) considers the merits of any unsolicited inquiry, proposal
or offer from any Person (other than Cayenta) relating to any Acquisition
Transaction.
6.7 BEST EFFORTS. During the Pre-Closing Period, Assist and the
Selling Shareholders shall use their Best Efforts to cause the conditions set
forth in Sections 8 and 9 to be satisfied on a timely basis.
6.8 CONFIDENTIALITY. Except for limited disclosures to Persons who
are not parties to this Agreement in order to obtain Consents, Assist and the
Selling Shareholders shall ensure that, during the Pre-Closing Period:
(a) Assist and its Representatives keep strictly confidential
the existence and terms of this Agreement;
(b) neither Assist nor any of its Representatives issues or
disseminates any press release or other publicity or otherwise makes any
disclosure of any nature (to any of Assist's suppliers, customers, landlords,
creditors or employees or to any other Person) regarding any of the
Transactions, except to the extent that Assist is required by law to make any
such disclosure regarding the Transactions; and
40.
(c) if Assist is required by law to make any disclosure
regarding the Transactions, Assist advises Cayenta, at least five business
days before making such disclosure, of the nature and content of the intended
disclosure.
7. PRE-CLOSING COVENANTS OF CAYENTA AND CAYENTA SUB
7.1 Cayenta and Cayenta Sub shall ensure that, during the
Pre-Closing Period:
(a) Cayenta, Cayenta Sub, Titan and their Representatives keep
strictly confidential the existence and terms of this Agreement;
(b) neither Cayenta, Cayenta Sub, nor Titan nor any of their
Representatives issues or disseminates any press release or other publicity
or otherwise makes any disclosure of any nature (to any of Assist's
suppliers, customers, landlords, creditors or employees or to any other
Person) regarding any of the Transactions, except to the extent that Cayenta,
Cayenta Sub or Titan is required by law to make any such disclosure regarding
the Transactions; and
(c) if Titan, Cayenta or Cayenta Sub is required by law to make
any disclosure regarding the Transactions, Cayenta advises Assist at least
five business days before making such disclosure, of the nature and content
of the intended disclosure.
8. CONDITIONS PRECEDENT TO CAYENTA'S OR CAYENTA SUB'S OBLIGATION TO CLOSE
Cayenta's obligation to consummate the Exchange and Cayenta Sub's
obligation to purchase the Purchased Shares and to take the other actions
required to be taken by Cayenta or Cayenta Sub at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Cayenta or Cayenta Sub's, in whole
or in part, in accordance with Section 12.15):
8.1 SATISFACTORY COMPLETION OF PRE-ACQUISITION REVIEW. Cayenta
shall have satisfactorily completed its pre-acquisition investigation and
review of Assist's business, condition, assets, liabilities, operations,
financial performance, net income and prospects and shall be satisfied with
the results of that investigation and review.
8.2 ACCURACY OF REPRESENTATIONS.
(a) Each of the Specified Representations shall have been
accurate in all respects as of the Scheduled Closing Time as if made at the
Scheduled Closing Time and as of the Closing as if made at the Closing,
without giving effect to any update to the Disclosure Schedule.
(b) All of the other representations and warranties made by
Assist and the Selling Shareholders in this Agreement (considered
collectively), and each of said representations and warranties (considered
individually), shall have been accurate in all material respects as of the
date of this Agreement, and shall be accurate in all material respects as of
the Scheduled Closing Time as if made at the Scheduled Closing Time and as of
the Closing, as if made at the Closing, each without giving effect to any
update to the Disclosure Schedule.
41.
8.3 PERFORMANCE OF OBLIGATIONS. All of the other covenants and
obligations that Assist and the Selling Shareholders are required to comply
with or to perform at or prior to the Closing (considered collectively), and
each of said covenants and obligations (considered individually), shall have
been duly complied with and performed in all material respects.
8.4 APPROVAL OF CAYENTA'S BOARD OF DIRECTORS; CONSENTS.
(a) Cayenta's and Cayenta Sub's board of directors shall have
ratified the execution of this Agreement by Cayenta and Cayenta Sub and shall
have approved the consummation of the Transactions.
(b) Each of the Consents identified in Part 3.27 of the
Disclosure Schedule shall have been obtained and shall be in full force and
effect.
8.5 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in Assist's business, condition, assets, liabilities,
operations, financial performance, net income or prospects (or in any aspect
or portion thereof) since September 30, 1999.
8.6 REGULATION D. The Exchange shall be exempt from the
registration requirements of the Securities Act of 1933, as amended, pursuant
to Rule 506 under Regulation D as reasonably determined by counsel for
Cayenta.
8.7 CASH OUT OF OPTIONS. All options and rights to acquire any
capital stock of Assist other than options or warrants exercised by the
Selling Shareholders immediately prior to the Closing shall have been cashed
out in accordance with the Agreement to terminate options, which shall be
fully executed by each holder of a cashed out option or warrant. No more than
5,061,810 options and warrants shall have been exercised by the Selling
Shareholders.
8.8 SECTION 351 PLAN. The other transactions contemplated by the
Section 351 Plan shall have been concurrently consummated in accordance with
the Section 351 Plan attached as Exhibit E.
8.9 CLOSING DOCUMENTS. Cayenta shall have received the following
documents:
(a) the Selling Shareholders shall have executed and deliver to
Cayenta and Assist a General Release in the form of Exhibit F;
(b) Cayenta shall have received from the Selling Shareholders'
and Assist's counsel an opinion of such counsel substantially in the form of
Exhibit G;
(c) Assist shall have executed and deliver to Cayenta a
certificate (the "CLOSING CERTIFICATE") setting forth the estimated Debt and
the estimated Working Capital of Assist as of the Closing Date and that (A)
each of the representations and warranties made by Assist and the Selling
Shareholders in this Agreement was accurate in all respects as of the date of
this Agreement, (B) except as expressly set forth in the Closing Certificate,
each of the Specified Representations made by Assist and the Selling
Shareholders in this Agreement is accurate in all respects as of the Closing
Date as if made on the Closing Date and each of the other representations and
warranties made by Assist and the Selling Shareholders in this
42.
Agreement is accurate in all material respects as of the Closing Date
(without giving effect to any materiality exception within the representation
or warranty), (C) each of the covenants and obligations that Assist and the
Selling Shareholders are required to have complied with or performed pursuant
to this Agreement at or prior to the Closing has been duly complied with and
performed in all respects, and (D) except as expressly set forth in the
Closing Certificate, each of the conditions set forth in Sections 8.4(b),
8.5, 8.7, 8.10, 8.11, 8.12 and 8.13 has been satisfied in all respects;
(d) Assist shall have delivered to Cayenta a statement (in such
form as may be reasonably requested by counsel to Cayenta) conforming to the
requirements of Section 1.897-2(h)(1)(i) of the United States Treasury
Regulations and Assist shall deliver to the Internal Revenue Service the
notification required under Section 1.897-2(h)(2) of the United States
Treasury Regulations;
(e) Resignations of the directors and officers of Assist from
their respective positions as directors and officers of Assist;
(f) Xxxxx Xxxxx shall have executed and delivered to Assist and
Cayenta a noncompetition agreement;
(g) estoppel certificates executed on behalf of Assist's
landlord, dated as of a date not more than three days prior to the Closing
Date and satisfactory in form and content to Cayenta; and
(h) such other documents as Cayenta may request in good faith
for the purpose of (i) evidencing the accuracy of any representation or
warranty made by Assist or any of the Selling Shareholders, (ii) evidencing
the compliance by Assist or any of the Selling Shareholders with, or the
performance by Assist or any of the Selling Shareholders of, any covenant or
obligation set forth in this Agreement, (iii) evidencing the satisfaction of
any condition set forth in this Section 8, or (iv) otherwise facilitating the
consummation of or performance of any of the Transactions.
8.10 NO PROCEEDINGS. Since the date of this Agreement, there shall
not have been commenced or threatened against Cayenta, or against any Person
affiliated with Cayenta, any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the Transactions,
or (b) that may have the effect of preventing, delaying, making illegal or
otherwise interfering with any of the Transactions.
8.11 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. No Person
shall have made or threatened any claim asserting that such Person (a) may be
the holder or the beneficial owner of, or may have the right to acquire or to
obtain beneficial ownership of, any capital stock or other securities of
Assist, or (b) may be entitled to all or any the Purchase Price or Cayenta
Shares.
8.12 NO PROHIBITION. Neither the consummation nor the performance of
any of the Transactions will, directly or indirectly (with or without notice
or lapse of time), contravene or conflict with or result in a violation of,
or cause Cayenta or any Person affiliated with Cayenta to suffer any material
adverse consequence under, (a) any applicable Legal Requirement or Order,
43.
or (b) any Legal Requirement or Order that has been proposed by or before any
Governmental Body.
8.13 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENTS.
All current employees of Assist shall have executed and delivered to Assist
an agreement (containing no exceptions to or exclusions from the scope of its
coverage except for prior inventions that do not conflict with the operations
of Assist's business or the use of Assist assets) that is substantially
identical to the standard form of Confidential Information and Invention
Assignment Agreement previously delivered to Cayenta.
9. CONDITIONS PRECEDENT TO ASSIST'S AND SELLING SHAREHOLDERS'
OBLIGATION TO CLOSE
The Selling Shareholders' obligation to sell the Shares and to take
the other actions required to be taken by the Selling Shareholders at the
Closing is subject to the satisfaction, at or prior to the Closing, of each
of the following conditions (any of which may be waived by the Agent, in
whole or in part, in accordance with Section 12.15):
9.1 ACCURACY OF REPRESENTATIONS. All of the representations and
warranties made by Cayenta in this Agreement (considered collectively), and
each of said representations and warranties (considered individually), shall
have been accurate in all material respects as of the date of this Agreement
and shall be accurate in all material respects as of the Scheduled Closing
Time as if made at the Scheduled Closing Time.
9.2 CAYENTA'S PERFORMANCE. All of the other covenants and
obligations that Cayenta is required to comply with or to perform pursuant to
this Agreement at or prior to the Closing (considered collectively), and each
of said covenants and obligations (considered individually), shall have been
complied with and performed in all material respects.
9.3 CLOSING DOCUMENTS. The Agent shall have received the following
documents:
(a) Cayenta shall have executed and delivered the Investor
Rights Agreement in the form of Exhibit C;
(b) Cayenta and Cayenta Sub shall have executed and delivered
to the Agent a certificate (the "CLOSING CERTIFICATE") that (A) each of the
representations and warranties made by Cayenta and Cayenta Sub in this
Agreement was accurate in all respects as of the date of this Agreement, (B)
except as expressly set forth in the Closing Certificate, each of the
Specified Representations made by Cayenta and Cayenta Sub in this Agreement
is accurate in all respects as of the Closing Date as if made on the Closing
Date and each of the representations and warranties made by Cayenta and
Cayenta Sub in this Agreement is accurate in all material respects as of the
Closing Date as if made on the Closing Date, and (C) each of the covenants
and obligations that Cayenta and Cayenta Sub is required to have complied
with or performed pursuant to this Agreement at or prior to the Closing has
been duly complied with and performed in all respects.
44.
10. TERMINATION
10.1 TERMINATION EVENTS. This Agreement may be terminated prior to
the Closing:
(a) by Cayenta if (i) there is a material Breach of any
covenant or obligation of Assist or any of the Selling Shareholders, or (ii)
Cayenta reasonably determines that the timely satisfaction of any condition
set forth in Section 8 has become impossible or impractical (other than as a
result of any failure on the part of Cayenta to comply with or perform its
covenants and obligations under this Agreement);
(b) by the Agent if (i) there is a material Breach of any
covenant or obligation of Cayenta, or (ii) the Agent reasonably determines
that the timely satisfaction of any condition set forth in Section 9 has
become impossible or impractical (other than as a result of any failure on
the part of Assist or any of the Selling Shareholders to comply with or
perform any covenant or obligation set forth in this Agreement);
(c) by Cayenta at or after the Scheduled Closing Time if any
condition set forth in Section 8 has not been satisfied by the Scheduled
Closing Time;
(d) by the Agent at or after the Scheduled Closing Time if any
condition set forth in Section 9 has not been satisfied by the Scheduled
Closing Time;
(e) by Cayenta if the Closing has not taken place on or before
December 31, 1999 (other than as a result of any failure on the part of
Cayenta to comply with or perform its covenants and obligations under this
Agreement);
(f) by the Agent if the Closing has not taken place on or
before December 31, 1999 (other than as a result of the failure on the part
of Assist or any of the Selling Shareholders to comply with or perform any
covenant or obligation set forth in this Agreement); or
(g) by the mutual consent of Cayenta, Cayenta Sub and the Agent.
10.2 TERMINATION PROCEDURES. If Cayenta and Cayenta Sub wishes to
terminate this Agreement pursuant to Section 10.1(a), Section 10.1(c) or
Section 10.1(e), Cayenta and Cayenta Sub shall deliver to the Agent a written
notice stating that Cayenta and Cayenta Sub is terminating this Agreement and
setting forth a brief description of the basis on which Cayenta and Cayenta
Sub is terminating this Agreement. If the Agent wishes to terminate this
Agreement pursuant to Section 10.1(b), Section 10.1(d) or Section 10.1(f),
the Agent shall deliver to Cayenta and Cayenta Sub a written notice stating
that the Agent is terminating this Agreement and setting forth a brief
description of the basis on which the Agent is terminating this Agreement.
10.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant
to Section 10.1, all further obligations of the parties under this Agreement
shall terminate; PROVIDED, HOWEVER, that:
(a) the parties shall, in all events, remain bound by and
continue to be subject to the provisions set forth in Section 12; and
45.
(b) Assist and the Selling Shareholders shall, in all events,
remain bound by and continue to be subject to Section 6.8.
11. INDEMNIFICATION, ETC.
11.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.
(a) The representations, warranties, covenants and obligations
of each party shall survive (without limitation):
(i) the Exchange, the purchase and sale of the Purchased
Shares and the other Transactions;
(ii) any sale or other disposition of Assist or any assets
of Assist by Cayenta; and
(iii) any Acquisition Transaction effected by or otherwise
involving Cayenta or Assist.
All of said representations, warranties, covenants and obligations
shall remain in full force and effect and shall survive until 11:59 p.m. on
the 18 month anniversary of the Closing Date; except the Specified
Representations shall survive until the fourth anniversary of the Closing
Date.
(b) The representations, warranties, covenants and obligations
of Assist and the Selling Shareholders, and the rights and remedies that may
be exercised by the Indemnitees, shall not be limited or otherwise affected
by or as a result of any information furnished to, or any investigation made
by or Knowledge of, any of the Indemnitees or any of their Representatives.
(c) For purposes of this Agreement, each statement or other
item of information set forth in the Disclosure Schedule or in any update to
the Disclosure Schedule shall be deemed to be a representation and warranty
made by Assist and the Selling Shareholders in this Agreement.
11.2 INDEMNIFICATION BY SELLING SHAREHOLDERS.
(a) The Selling Shareholders, jointly but not severally (except
where the Selling Shareholder makes a representation or warranty only with
respect to himself or itself in which case such Selling Shareholder shall
solely), shall hold harmless and indemnify each of the Indemnitees from and
against, and shall compensate and reimburse each of the Indemnitees for, any
Damages which are directly or indirectly suffered or incurred by any of the
Indemnitees or to which any of the Indemnitees may otherwise become subject
at any time during the 18 month period described in Section 11.1(a) above
(regardless of whether or not such Damages relate to any third-party claim)
and which arise directly or indirectly from or as a direct or indirect result
of, or are directly or indirectly connected with:
46.
(i) any Breach of any representation or warranty made by
Assist or any of the Selling Shareholders in this Agreement or in the Closing
Certificate, subject to Section 6.4(b);
(ii) any Breach of any representation, warranty, statement,
information or provision contained in the Disclosure Schedule, subject to
Section 6.4(b);
(iii) any Breach of any covenant or obligation of Assist or
any of the Selling Shareholders, subject to Section 6.4(b);
(iv) any matter identified or referred to in Part 3.15 or
Part 3.25 of the Disclosure Schedule (provided no Purchase Price adjustment
is made on account of any such specific matter following the post-closing
audit); or
(v) any Proceeding relating directly or indirectly to any
Breach, alleged Breach, Liability or matter of the type referred to in clause
"(i)," "(ii)," "(iii)," or "(iv)," above (including any Proceeding commenced
by any Indemnitee for the purpose of enforcing any of its rights under this
Section 11).
(b) The Selling Shareholders acknowledge and agree that, if
there is any Breach of any representation, warranty or other provision
relating to Assist or Assist's business, condition, assets, liabilities,
operations, financial performance or net income (or any aspect or portion
thereof), then Cayenta and Cayenta Sub itself shall be deemed, by virtue of
its ownership of common stock of Assist, to have incurred Damages as a result
of such Breach or Liability. Nothing contained in this Section 11.2(b) shall
have the effect of (i) limiting the circumstances under which Cayenta and
Cayenta Sub may otherwise be deemed to have incurred Damages for purposes of
this Agreement, (ii) limiting the other types of Damages that Cayenta and
Cayenta Sub may be deemed to have incurred (whether in connection with any
such Breach or Liability or otherwise), or (iii) limiting the rights of
Assist or any of the other Indemnitees under this Section 11.2. Nothing
herein shall entitle Cayenta or Cayenta Sub and Assist to recover Damages
more than once on the same claim although the Damage recovery may be
allocated among the Indemnitees.
11.3 THRESHOLD.
(a) Subject to Section 11.3(b), the Selling Shareholders shall
not be required to make any indemnification payment pursuant to Section 11.2
until such time as the total amount of all Damages (including the Damages
arising from such Breach and all other Damages arising from any other
Breaches of any representations or warranties) that have been directly or
indirectly suffered or incurred by any one or more of the Indemnitees, or to
which any one or more of the Indemnitees has or have otherwise become
subject, exceeds the amount equal to the positive Working Capital as shown in
the Audited Balance Sheet, if any, (the "DEDUCTIBLE"). At such time as the
total amount of Damages exceeds the Deductible, the Indemnitees shall be
entitled to be indemnified against any Damages in excess of the Deductible.
(b) The limitation on the Selling Shareholders' indemnification
obligations that is set forth in Sections 11.3(a) and 11.7 shall not apply to
(i) any Breach of any of the Specified Representations, or (ii) any act or
omission ruled by a non-appealable judgment to
47.
have been fraud by Assist or any of the Selling Shareholders in connection
with the Transaction. In no event shall any Selling Shareholder's liability
for the Specified Representations exceed its or his pro rata share of the
Purchase Price and the then fair market value of the Cayenta Shares. A
Selling Shareholder can satisfy this obligation by delivery of his or its pro
rata share of the Purchase Price and the Cayenta Shares. To the extent that a
Selling Shareholder does not deliver Cayenta Shares, then his or its
liability under this subsection shall be limited to his or its pro rata share
of the Purchase Price plus the fair market value of the Cayenta Shares he or
it still owns plus the proceeds received by the Selling Shareholder from the
sale of such Cayenta Shares, net of brokerage or underwriting commissions
only.
11.4 RIGHT TO REQUIRE CURE OF BREACH. Without limiting the
generality of anything contained in Section 11.2, if there is any Breach of
any representation or warranty made by Assist or any of the Selling
Shareholders after the Deductible is satisfied, then the Selling
Shareholders, jointly but not severally, may elect to (a) pay Damages to
Cayenta, Cayenta Sub or Assist or (b) take such other actions as Cayenta may
in good faith reasonably request for the purpose of causing such Breach to be
corrected, cured and eliminated in all respects (at no cost to Assist or
Cayenta or Cayenta Sub).
11.5 NO CONTRIBUTION. Each Selling Shareholder waives, and
acknowledges and agrees that such Selling Shareholder shall not have and
shall not exercise or assert or attempt to exercise or assert, any right of
contribution or right of indemnity or any other right or remedy against
Assist in connection with any indemnification obligation or any other
Liability to which such Selling Shareholder may become subject under any of
the Transactional Agreements or otherwise in connection with any of the
Transactions.
11.6 INTEREST. Any party that is required to indemnify any other
Person pursuant to this Section 11 with respect to any Damages shall also be
required to pay such other Person interest on the amount of such Damages (for
the period commencing as of the date on which such other Person first gave
notice of such Damages to the Agent and ending on the date on which the
applicable indemnification payment is made by such party) at a floating rate
three percentage points above the rate of interest publicly announced by Bank
of America, N.T. & S.A. from time to time as its prime, base or reference
rate; provided that to the extent that Damages are recovered through setoffs
against the Second Installment or the Third Installment, no interest will be
payable on the set off amount in lieu of recovering interest under this
Section 11.6.
11.7 SETOFF/LIMITED RECOURSE. Subject to Section 11.3, an
Indemnitee's sole remedy under this Agreement shall be to set off any amount
that may be owed to any Indemnitee under this Section 11 against the Second
Installment and the Third Installment. Except in the case of Breach of any of
the Specified Representations by Assist or the Selling Shareholders, the
Indemnitees shall have no recourse against the Selling Shareholders other
than through set offs against the Second Installment (until such installment
is paid) and the Third Installment. Except as set forth in Section 11.3 in no
event shall any Selling Shareholder be liable for any Damages in excess of
such Selling Shareholder's pro rata share of the Second Installment (prior to
the payment thereof) and the Third Installment (prior to payment thereof).
Each Selling Shareholder's pro rata share shall be determined by multiplying
the Second Installment or the Third Installment, as applicable, by a
fraction, the numerator of which is the number of
48.
Purchased Shares that were owned by the Selling Shareholder and the
denominator of which shall be 7,707,617. Cayenta Sub may set off any amount
under this Section 11 upon notice to the Agent of the claim, the amount of
Damages and the date on which such Damages were suffered or incurred and the
nature of the Breach or Liability giving rise to the Damages. Any such set
off shall be without prejudice to the right of the Agent on behalf of the
Selling Shareholders to challenge the validity of the set off and seek
recovery of the set off amounts. If the Selling Shareholders prevail as to
any portion of the set off Second or Third Installments, they will be
entitled to receive interest on the restored portion at the rate of 8% per
annum accruing from the Closing Date to the payment date.
11.8 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion or
commencement by any Person of any claim or Proceeding (whether against
Assist, against any other Indemnitee or against any other Person) with
respect to which any of the Selling Shareholders may become obligated to
indemnify, hold harmless, compensate or reimburse any Indemnitee pursuant to
this Section 11, Cayenta and Cayenta Sub may proceed with the defense of such
claim or Proceeding on its own. If Cayenta and Cayenta Sub so proceeds with
the defense of any such claim or Proceeding on its own:
(a) all expenses relating to the defense of such claim or
Proceeding (whether or not incurred by Cayenta and Cayenta Sub) shall be
borne and paid exclusively by the Selling Shareholders through set offs
against the Second or Third Installment, as applicable;
(b) the Selling Shareholders shall make available to Cayenta
and Cayenta Sub any documents and materials in the possession or control of
any of the Selling Shareholders that may be necessary to the defense of such
claim or Proceeding;
(c) Cayenta and Cayenta Sub shall keep the Agent informed of
all material developments and events relating to such claim or Proceeding;
(d) Cayenta and Cayenta Sub shall have the right to settle,
adjust or compromise such claim or Proceeding with the consent of the Agent;
PROVIDED, HOWEVER, that the Agent shall not unreasonably withhold such
consent; and
(e) The counsel selected by Cayenta or Cayenta Sub to defend
such claim or Proceeding shall be subject to the approval of the Agent (such
approval not to be withheld unreasonably).
11.9 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN CAYENTA AND
CAYENTA SUB. No Indemnitee (other than Cayenta, Cayenta Sub or any of their
respective successor thereto or assign thereof) shall be permitted to assert
any indemnification claim or exercise any other remedy under this Agreement
unless Cayenta or Cayenta Sub (or any respective successor thereto or assign
thereof) shall have consented to the assertion of such indemnification claim
or the exercise of such other remedy.
11.10 INDEMNIFICATION BY CAYENTA AND CAYENTA SUB.
(a) Cayenta and Cayenta Sub shall jointly and severally hold
harmless and indemnify each of the Selling Shareholders from and against, and
shall compensate and
49.
reimburse each of the Selling Shareholders for, any Damages which are
directly or indirectly suffered or incurred by any of the Selling
Shareholders or to which any of the Selling Shareholders may otherwise become
subject at any time (regardless of whether or not such Damages relate to any
third-party claim) and which arise directly or indirectly from or as a direct
or indirect result of, or are directly or indirectly connected with any
Breach of any representation, warranty, covenant or obligation made by
Cayenta or Cayenta Sub in this Agreement (without giving effect to any update
to the Disclosure Schedule) or in the Closing Certificate and any Proceeding
relating directly or indirectly to any Breach or alleged Breach referred to
herein (including any Proceeding commenced by the Selling Shareholders for
the purpose of enforcing any of their rights under this Section 11).
(b) Subject to Section (c), Cayenta or Cayenta Sub shall not be
required to make any indemnification payment pursuant to Section 11.10 until
such time as the total amount of all Damages (including the Damages arising
from such Breach and all other Damages arising from any other Breaches of any
representations or warranties) that have been directly or indirectly suffered
or incurred by any one or more of the Selling Shareholders, or to which any
one or more of the Selling Shareholders has or have otherwise become subject,
exceeds $600,000.00. At such time as the total amount of such Damages exceeds
$600,000.00, the Selling Shareholders shall be entitled to be indemnified
against any Damages in excess of $600,000.00. Except as set forth in Section
11, in no event shall Cayenta, Cayenta Sub or any affiliate of Cayenta or
Cayenta Sub be liable for any Damages arising under this Agreement in excess
of $1,300,000.00.
(c) The limitation on Cayenta's and Cayenta Sub's
indemnification obligations that is set forth in Section (b) shall not apply
to (i) any Breach of any of the Specified Representations of Cayenta, or (ii)
any act or omission (including any violation of the securities laws) ruled by
a non-appealable judgment to have been fraud by Cayenta or Cayenta Sub in
connection with the Transaction.
12. MISCELLANEOUS PROVISIONS
12.1 SELLING SHAREHOLDERS' AGENT.
(a) Each of the Selling Shareholders hereby irrevocably
nominates, constitutes and appoints Xxxxxx Xxxxx as the agent and true and
lawful attorney-in-fact of the Selling Shareholders (the "AGENT"), with full
power of substitution, to act in the name, place and stead of the Selling
Shareholders for purposes of executing any documents and taking any actions
that the Agent may, in his sole discretion, determine to be necessary,
desirable or appropriate in connection with any of the Transactional
Agreements or any of the Transactions. Xxxxxx Xxxxx hereby accepts his
appointment as Agent.
(b) The Selling Shareholders hereby grant to the Agent full
authority to execute, deliver, acknowledge, certify and file on behalf of the
Selling Shareholders (in the name of any or all of the Selling Shareholders
or otherwise) any and all documents that the Agent may, in his sole
discretion, determine to be necessary, desirable or appropriate, in such
forms and containing such provisions as the Agent may, in his sole
discretion, determine to be appropriate (including the General Release
referred to in Section 8.9(a), the Closing Certificate and any
50.
amendment to or waiver of rights under any of the Transactional Agreements).
Notwithstanding anything to the contrary contained in any of the
Transactional Agreements:
(i) Cayenta and Cayenta Sub shall be entitled to deal
exclusively with the Agent on all matters relating to the respective
Transactional Agreements and the respective Transactional (including all
matters relating to any notice to, or any Consent to be given or action to be
taken by, any Selling Shareholder); and
(ii) each Indemnitee shall be entitled to rely conclusively
(without further evidence of any kind whatsoever) on any document executed or
purported to be executed on behalf of any Selling Shareholder by the Agent,
and on any other action taken or purported to be taken on behalf of any
Selling Shareholder by the Agent, as fully binding upon such Selling
Shareholder.
(c) The Selling Shareholders recognize and intend that the
power of attorney granted in Section 12.1:
(i) is coupled with an interest and is irrevocable;
(ii) may be delegated by the Agent; and
(iii) shall survive the death or incapacity of each of the
Selling Shareholders.
(d) The Agent shall be entitled to treat as genuine, and as the
document it purports to be, any letter, facsimile, telex or other document
that is believed by him to be genuine and to have been mailed, sent by
overnight delivery or express courier, telexed, telegraphed, faxed or cabled
by a Selling Shareholder or to have been signed and presented by a Selling
Shareholder.
(e) If the Agent shall die, become disabled or otherwise be
unable to fulfill his responsibilities hereunder, the Selling Shareholders
shall, within ten days after such death or disability, appoint a successor to
the Agent and immediately thereafter notify Cayenta and Cayenta Sub of the
identity of such successor. Any such successor shall succeed the Agent as
Agent hereunder. If for any reason there is no Agent at any time, all
references herein to the Agent shall be deemed to refer to the Selling
Shareholders.
(f) All expenses incurred by the Agent in connection with the
performance of his duties as Agent shall be borne and paid by the Selling
Shareholders.
(g) The Agent shall not incur any liability to the Selling
Shareholders directly or indirectly for any action taken by the Agent in good
faith in the exercise of his business judgment. Each Selling Shareholder
shall indemnify, protect and hold the Agent harmless from any against any and
all liability, loss, cost, claim, or expense, including attorneys' fees and
costs arising from his performance as the Agent.
12.2 FURTHER ASSURANCES. Each party hereto shall execute and/or
cause to be delivered to each other party hereto such instruments and other
documents, and shall take such
51.
other actions, as such other party may reasonably request (prior to, at or
after the Closing) for the purpose of carrying out or evidencing any of the
Transactions.
12.3 RETIREMENT OF DEBT. Within five (5) business days following the
Closing, Cayenta Sub shall have paid or shall have caused Assist to have paid
(1) to the Pacific Mezzanine Fund L.P. cash in the amount representing all
principal and any accrued interest on the Secured Promissory Notes and the
redemption price of all outstanding Series B 8% non-cumulative redeemable
preferred stock, (2) to Silicon Valley Bank all principal and any accrued
debt on its credit facility, (3) the redemption price of all outstanding
Series A preferred stock, including all accrued but unpaid dividends on the
Series A preferred stock and (4) any other Debt that Cayenta Sub agrees in
writing to satisfy within such period.
12.4 STOCK OPTIONS. Following the Closing, Cayenta shall grant to
the key managerial employees of Assist (the "KEY EMPLOYEES") listed on
Exhibit H hereto, either nonqualified options or incentive stock options to
acquire shares of Cayenta's Class A Common Stock (the "KEY EMPLOYEE OPTIONS")
in Cayenta's sole discretion. The Key Employee Options will be granted to the
Key Employees subject to substantially similar terms and conditions as
options granted to similarly situated employees of Cayenta. The exercise
price for such options shall be set at the fair market value of Cayenta's
Class A common stock on the date of grant and shall vest from the date of
grant equally over four years, on an annual basis.
12.5 FEES AND EXPENSES.
(a) Without limiting the generality of anything contained in
Section 12.5(b), the Selling Shareholders shall bear and pay all fees, costs
and expenses (including all legal fees and expenses payable to counsel for
Assist, which Assist shall pay at Closing, subject to reduction in the
Purchase Price as provided below) that have been incurred or that are in the
future incurred by, on behalf of or for the benefit of Assist or any of the
Selling Shareholders in connection with:
(i) the negotiation, preparation and review of any term
sheet or similar document relating to any of the Transactions;
(ii) the investigation and review conducted by Cayenta and
its Representatives with respect to Assist's business (and the furnishing of
information to Cayenta and its Representatives in connection with such
investigation and review);
(iii) the negotiation, preparation and review of this
Agreement (including the Disclosure Schedule), the other Transactional
Agreements and all certificates, opinions and other instruments and documents
delivered or to be delivered in connection with the Transactional
(iv) the preparation and submission of any filing or notice
required to be made or given in connection with any of the Transactions the
obtaining of any Consent required to be obtained in connection with any of
the Transactions; and
(v) the consummation and performance of the Transactions.
52.
Assist shall not bear or pay, and the Selling Shareholders shall not
permit Assist to bear or pay, any such fees, costs or expenses. To the extent
Assist bears or pays any such fees, costs, or expenses (the "TRANSACTION
EXPENSES"), the Purchase Price will be reduced on a dollar for dollar basis.
The Transaction Expenses shall not include the fees payable by Assist in the
Ordinary Course of Business to Xxxxxxxxxx & Partners, Inc. for outsourced
services.
(b) Subject to the provisions of Section 11 (including the
indemnification and other obligations of the Selling Shareholders thereunder)
and the provisions of Section 12.5(b)(iv), Cayenta shall bear and pay all
fees, costs and expenses (including all legal fees and expenses payable to
Xxxxxx Godward LLP) that have been incurred or that are in the future
incurred by or on behalf of Cayenta in connection with:
(i) the negotiation, preparation and review of any term
sheet or similar document relating to any of the Transactions;
(ii) the investigation and review conducted by Cayenta and
its Representatives with respect to Assist's business;
(iii) the negotiation, preparation and review of this
Agreement, the other Transactional Agreements and all certificates, opinions
and other instruments and documents delivered or to be delivered in
connection with the Transactions; and
(iv) the consummation and the performance of the
Transactions.
12.6 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to any of the Transactional Agreements or the enforcement of any
provision of any of the Transactional Agreements is brought against any party
hereto, the prevailing party shall be entitled to recover reasonable
attorneys' fees, costs and disbursements (in addition to any other relief to
which the prevailing party may be entitled).
12.7 NOTICES. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall be in
writing and shall be deemed properly delivered, given and received when
delivered (by hand, by registered mail, by courier or express delivery
service or by facsimile) to the address or facsimile number set forth beneath
the name of such party below (or to such other address or facsimile number as
such party shall have specified in a written notice given to the other
parties hereto):
if to Assist:
Assist Cornerstone Technologies, Inc.
00 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
WITH A COPY TO:
53.
Xxxxx X. Xxxxxx, Esq.
LeBoeuf, Lamb, Xxxxxx & XxxXxx LLP
1000 Xxxxxx Building
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
if to any of the Selling Shareholders:
c/o of the Agent
if to the Agent:
Xxxxxx Xxxxx as Agent of the Selling Shareholders
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
WITH A COPY TO:
Ed Xxx, Esq.
Xxxxxxx Coie, LLP
000 Xxxxxxxxxxxx #000
Xxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
if to Cayenta or Cayenta Sub:
Xxxxxxx.xxx, Inc. and Cayenta Operating Company
c/o The Titan Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
WITH A COPY TO:
Xxxxxxxx X. Xxxxxxxx, Esq.
The Titan Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
54.
12.8 PUBLICITY. Without limiting the generality of anything
contained in Section 6.8, on and at all times after the Closing Date:
(a) no press release or other publicity concerning any of the
Transactions shall be issued or otherwise disseminated by or on behalf of any
of the Selling Shareholders, and the Selling Shareholders shall continue to
keep the existence and terms of this Agreement and the other Transactional
Agreements strictly confidential; and
(b) each Selling Shareholder shall keep strictly confidential,
and shall not use or disclose to any other Person, any non-public document or
other information in such Selling Shareholder's possession that relates
directly or indirectly to the business of Assist, Cayenta or any affiliate of
Cayenta.
12.9 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
12.10 HEADINGS. The underlined headings contained in this Agreement
are for convenience of reference only, shall not be deemed to be a part of
this Agreement and shall not be referred to in connection with the
construction or interpretation of this Agreement.
12.11 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one agreement.
12.12 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to
this Agreement or the enforcement of any provision of this Agreement may be
brought or otherwise commenced in any state or federal court located in the
County of San Diego, California. Each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the County of San
Diego, California (and each appellate court located in the State of
California) in connection with any such legal proceeding;
(ii) agrees that each state and federal court located in
the County of San Diego, California shall be deemed to be a convenient forum;
and
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any state or federal
court located in the County of San Diego, California, any claim that such
party is not subject personally to the jurisdiction of such court, that such
legal proceeding has been brought in an inconvenient forum, that the venue of
such proceeding is improper or that this Agreement or the subject matter of
this Agreement may not be enforced in or by such court.
55.
(c) Each Selling Shareholder agrees that, if any Proceeding is
commenced against any Indemnitee by any Person in or before any court or
other tribunal anywhere in the world, then such Indemnitee may proceed
against such Selling Shareholder in such court or other tribunal with respect
to any indemnification claim or other claim arising directly or indirectly
from or relating directly or indirectly to such Proceeding or any of the
matters alleged therein or any of the circumstances giving rise thereto.
(d) Nothing contained in Section 12.12(b) or 12.12(c) shall be
deemed to limit or otherwise affect the right of any Indemnitee to commence
any legal proceeding or otherwise proceed against Assist or any of the
Selling Shareholders in any other forum or jurisdiction.
(e) The Selling Shareholders irrevocably constitute and
appoint the Agent as their agent to receive service of process in connection
with any legal proceeding relating to this Agreement or the enforcement of
any provision of this Agreement.
(f) The Selling Shareholders irrevocably waive the right to a
jury trial in connection with any legal proceeding relating to this Agreement
or the enforcement of any provision of this Agreement.
12.13 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon:
Assist and its successors and assigns (if any); the Selling Shareholders and
their respective personal representatives, executors, administrators,
estates, heirs, successors and assigns (if any); and Cayenta and its
successors and assigns (if any). This Agreement shall inure to the benefit
of: Assist; the Selling Shareholders; Cayenta; the other Indemnitees (subject
to Section 11.9); and the respective successors and assigns (if any) of the
foregoing. Cayenta may freely assign any or all of its rights under this
Agreement (including its indemnification rights under Section 11), in whole
or in part, to any other Person without obtaining the consent or approval of
any other party hereto or of any other Person.
12.14 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and
remedies of the parties hereto shall be cumulative (and not alternative).
Each of the parties agrees that:
(a) in the event of any Breach or threatened Breach by a party
to this Agreement of any covenant, obligation or other provision set forth in
this Agreement, the other parties shall be entitled (in addition to any other
remedy that may be available to it) to (i) a decree or order of specific
performance or mandamus to enforce the observance and performance of such
covenant, obligation or other provision, and (ii) an injunction restraining
such Breach or threatened Breach; and
(b) the party seeking specific performance or an injunction
shall not be required to provide any bond or other security in connection
with any such decree, order or injunction or in connection with any related
action or Proceeding.
12.15 WAIVER.
(a) No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the
part of any Person in exercising any power, right,
56.
privilege or remedy under this Agreement, shall operate as a waiver of such
power, right, privilege or remedy; and no single or partial exercise of any
such power, right, privilege or remedy shall preclude any other or further
exercise thereof or of any other power, right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy
is expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have
any effect except in the specific instance in which it is given.
12.16 AMENDMENTS. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of Cayenta and the Agent.
12.17 SEVERABILITY. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as
to which it is determined to be invalid, unlawful, void or unenforceable,
shall not be impaired or otherwise affected and shall continue to be valid
and enforceable to the fullest extent permitted by law.
12.18 PARTIES IN INTEREST. Except for the provisions of Section 11
hereof, none of the provisions of this Agreement is intended to provide any
rights or remedies to any Person other than the parties hereto and their
respective successors and assigns (if any).
12.19 ENTIRE AGREEMENT. The Transactional Agreements set forth the
entire understanding of the parties relating to the subject matter thereof
and supersede all prior agreements and understandings among or between any of
the parties relating to the subject matter thereof.
12.20 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party
shall not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of
this Agreement and Exhibits to this Agreement.
57.
12.21 NEGOTIATION OF DISPUTES. If a dispute arises between the
parties relating to the interpretation or performance of this Agreement or
the grounds for the termination thereof, and the parties cannot resolve the
dispute within thirty days of a written request by either party to the other,
such dispute shall be referred to the Chief Executive Officer, Chief
Financial Officer or General Counsel of Cayenta and the Agent for resolution.
Such persons shall hold a meeting to attempt in good faith to negotiate a
resolution of the dispute prior to pursuing other available remedies. If
within 10 business days after such meeting, the Chief Executive Officer,
Chief Financial Officer or General Counsel of Cayenta and the Agent have not
succeeded in negotiating a resolution of the dispute, such dispute may be
resolved in accordance with Section 12.12.
12.22 ERNST & YOUNG LLP CONSENT. The Agent shall use its reasonable
Best Efforts to obtain any consent of Ernst & Young LLP required by Cayenta
in connection with the filing of any consolidated financial statements of
Cayenta in any registration statement, report or other filing made by Cayenta
or Titan with the Securities and Exchange Commission, or any blue sky
securities authority or any securities exchange or market.
12.23 TITAN AS SIGNING PARTY. Titan is signing this Agreement solely
as a party to Section 2 and Titan does not guarantee performance of any of
Cayenta's obligations under this Agreement.
12.24 ASSIST'S LEGAL COUNSEL. Each of the Selling Shareholders
acknowledges and agrees that LeBoeuf, Lamb, Xxxxxx & XxxXxx, LLP has
represented Assist only and not the Selling Shareholders individually. The
Selling Shareholders have been separately represented by and relied upon
their own legal, tax and accounting advisors.
12.25 DIRECTORS' AND OFFICERS' INSURANCE. For a period of four years
from the Closing Date, Cayenta shall cause Assist to maintain in effect the
current policies of directors and officers liability insurance maintained by
Assist covering persons who are currently covered by Assist directors' and
officers' liability insurance policies with respect to acts or omission
occurring prior to the closing; provided that policies of at least the same
coverage containing terms and conditions which are no less advantageous to
the insured as may be substituted therefor.
[THIS SPACE INTENTIONALLY LEFT BLANK]
58.
The parties hereto have caused this Agreement to be executed and
delivered as of ______________, 1999.
CAYENTA: XXXXXXX.XXX, INC.,
a Delaware corporation
By:
-------------------------------
Its:
-------------------------------
CAYENTA OPERATING COMPANY,
a Delaware corporation
By:
-------------------------------
Its:
-------------------------------
TITAN: THE TITAN CORPORATION,
a Delaware corporation
By:
-------------------------------
Its:
-------------------------------
ASSIST: ASSIST CORNERSTONE
TECHNOLOGIES, INC.,
a Utah corporation
By:
-------------------------------
Xxxxx X. Xxxxx
President
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
SELLING SHAREHOLDERS:
-------------------------------
XXXXX X. XXXXX
-------------------------------
XXXXX X. XXXXXXXX
-------------------------------
XXXXXXX X. XXXXXX
-------------------------------
XXXXXXX XXXXXXXXX
-------------------------------
XXXXX X. XXXXXX
-------------------------------
XXXX X. XXXXXXXXXXX
-------------------------------
XXXXXXX X. XXXX
XXXXXXXXXX & PARTNERS, INC.
By:
----------------------------
Its:
----------------------------
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
-------------------------------
E. XXXXX XXXXXXXX
-------------------------------
XXX X. XXXXXXX
-------------------------------
XXXXXX XXXXXXX-XXXXXXXX
-------------------------------
XXXXXXX XXXXXXX
-------------------------------
XXXX XXXXXXX
-------------------------------
XXXXXX XXXXXXX
-------------------------------
XXXX X. XXXXXXX
-------------------------------
C. XXXXXX XXXXX
-------------------------------
XXXXXX X. XXXXXXX
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
PACIFIC MEZZANINE FUND, L.P.
By:
----------------------------
Its:
----------------------------
Agent
By:
----------------------------
XXXXXX XXXXX
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, license or other disposition or acquisition of
all or any portion of Assist's business or assets (other than in the
Ordinary Course of Business);
(b) the issuance, sale or other disposition of (i) any capital
stock or other equity security of Assist (other than common stock
issued to employees of Assist in routine transactions in accordance
with Assist's past practices), (ii) any option, call, warrant or right
(whether or not immediately exercisable) to acquire any capital stock
or other equity security of Assist other than stock options granted to
employees of Assist in routine transactions in accordance with Assist's
past practices), or (iii) any security, instrument or obligation that
is or may become convertible into or exchangeable for any capital stock
or other equity security of Assist; or
(c) any merger, consolidation, business combination, share
exchange, reorganization or similar transaction involving Assist.
ASSIST. "Assist" shall mean Assist Cornerstone Technologies, Inc., a
Utah corporation.
ASSIST CONTRACT. "Assist Contract" shall mean any Contract:
(a) to which Assist is a party;
(b) by which Assist or any of its assets is or may become
bound or under which Assist has, or may become subject to, any
obligation; or
(c) under which Assist has or may acquire any right or
interest.
ASSIST FINANCIAL STATEMENTS. "Assist Financial Statements" shall
have the meaning specified in Section 3.4(a) of the Agreement.
ASSIST RETURNS. "Assist Returns" shall have the meaning specified in
Section 3.17(a) of the Agreement.
AGENT. "Agent" shall have the meaning specified in Section 12.1 of
the Agreement.
AGREEMENT. "Agreement" shall mean the Stock Exchange and Stock
Purchase Agreement to which this Exhibit A is attached (including the
Disclosure Schedule), as it may be amended from time to time.
A-1.
BEST EFFORTS. "Best Efforts" shall mean the efforts that a prudent
and reasonable Person desiring to achieve a particular result would use in
order to achieve such result as expeditiously as possible.
BREACH. There shall be deemed to be a "Breach" of a representation,
warranty, covenant, obligation or other provision if there is or has been (a)
any inaccuracy in or breach of, or any failure to comply with or perform,
such representation, warranty, covenant, obligation or other provision, or
(b) any claim (by any Person) or other circumstance that is inconsistent with
such representation, warranty, covenant, obligation or other provision; and
the term "Breach" shall be deemed to refer to any such inaccuracy, breach,
failure, claim or circumstance.
CERCLA. "CERCLA" shall mean the Comprehensive Environmental
Response, Compensation and Liability Assist.
CLOSING. "Closing" shall have the meaning specified in Section 1.5
of the Agreement.
CLOSING CERTIFICATE. "Closing Certificate" shall have the meaning
specified in Section 8.9(b) of the Agreement.
CLOSING DATE. "Closing Date" shall have the meaning specified in
Section 1.5 of the Agreement.
CODE. "Code" shall mean the Internal Revenue Code of 1986.
COMPANY PLAN. "Company Plan" shall mean any Current Benefit Plan or
Past Benefit Plan.
COMPARABLE ENTITIES. "Comparable Entities" shall mean Entities
(other than Assist) that are engaged in businesses similar to Assist's
business and are of comparable size in annualized revenues.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental
Authorization).
CONTRACT. "Contract" shall mean any written, oral, implied or other
agreement, contract, understanding, arrangement, instrument, note, guaranty,
indemnity, representation, warranty, deed, assignment, power of attorney,
certificate, purchase order, work order, insurance policy, benefit plan,
commitment, covenant, assurance or undertaking of any nature.
CURRENT BENEFIT PLAN. "Current Benefit Plan" shall mean any Employee
Benefit Plan that is currently in effect and:
(a) that was established or adopted by Assist or any ERISA
Affiliate or is maintained or sponsored by Assist;
(b) in which Assist participates;
A-2.
(c) with respect to which Assist or any ERISA Affiliate is or
may be required or permitted to make any contribution; or
(d) with respect to which Assist or any ERISA Affiliate is or
may become subject to any Liability.
DAMAGES. "Damages" shall include any loss, damage, injury, decline
in value, lost opportunity, Liability, claim, demand, settlement, judgment,
award, fine, penalty, Tax, fee (including any legal fee, expert fee,
accounting fee or advisory fee), charge, cost (including any cost of
investigation) or expense of any nature, less any amounts recovered through
insurance policies of Assist so long as the claim does not result in a
material increase in Assist's premiums for such policy or policies or the
cancellation of such policy or policies.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to Cayenta on behalf of
Assist and the Selling Shareholders, a copy of which is attached to the
Agreement and incorporated in the Agreement by reference.
EMPLOYEE BENEFIT PLAN. "Employee Benefit Plan" shall have the
meaning specified in Section 3(3) of ERISA.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge,
hypothecation, charge, mortgage, security interest, encumbrance, equity,
trust, equitable interest, claim, preference, right of possession, lease,
tenancy, license, encroachment, covenant, infringement, interference, Order,
proxy, option, right of first refusal, preemptive right, community property
interest, legend, defect, impediment, exception, reservation, limitation,
impairment, imperfection of title, condition or restriction of any nature
(including any restriction on the voting of any security, any restriction on
the transfer of any security or other asset, any restriction on the receipt
of any income derived from any asset, any restriction on the use of any asset
and any restriction on the possession, exercise or transfer of any other
attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any
non-profit corporation), general partnership, limited partnership, limited
liability partnership, joint venture, estate, trust, cooperative, foundation,
society, political party, union, company (including any limited liability
company or joint stock company), firm or other enterprise, association,
organization or entity.
ERISA. "ERISA" shall mean the Employee Retirement Income Security
Assist of 1974.
ERISA AFFILIATE. "ERISA Affiliate" shall mean any Person that is,
was or would be treated as a single employer with Assist under Section 414 of
the Code.
EXCLUDED CONTRACT. "Excluded Contract" shall mean any Assist
Contract that:
(a) Assist has entered into in the Ordinary Course of
Business;
(c) has a term of less than 90 days or may be terminated by
Assist (without penalty) within 90 days after the delivery of a
termination notice by Assist; and
A-3.
(d) does not contemplate or involve the payment of cash or
other consideration in an amount or having a value in excess of
$15,000.
GAAP. "GAAP" shall mean United States generally accepted accounting
principles, applied on a basis consistent with the basis on which the Assist
Financial Statements were prepared.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any:
(a) permit, license, certificate, franchise, concession,
approval, consent, ratification, permission, clearance, confirmation,
endorsement, waiver, certification, designation, rating, registration,
qualification or authorization that is, has been or may in the future
be issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal
Requirement; or
(b) right under any Contract with any Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any:
(a) nation, principality, state, commonwealth, province,
territory, county, municipality, district or other jurisdiction of any
nature;
(b) federal, state, local, municipal, foreign or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental division, subdivision, department, agency,
bureau, branch, office, commission, council, board, instrumentality,
officer, official, representative, organization, unit, body or Entity
and any court or other tribunal);
(d) multi-national organization or body; or
(e) individual, Entity or body exercising, or entitled to
exercise, any executive, legislative, judicial, administrative,
regulatory, police, military or taxing authority or power of any
nature.
HAZARDOUS MATERIAL. "Hazardous Material" shall include:
(a) any petroleum, waste oil, crude oil, asbestos, urea
formaldehyde or polychlorinated biphenyl;
(b) any waste, gas or other substance or material that is
explosive or radioactive;
(c) any "hazardous substance," "pollutant," "contaminant,"
"hazardous waste," "regulated substance," "hazardous chemical" or
"toxic chemical" as designated, listed or defined (whether expressly or
by reference) in any statute, regulation or other Legal Requirement
(including CERCLA, any other so-called "superfund" or "superlien" law,
the Resource Conservation Recovery Assist, the Federal Water Pollution
Control
A-4.
Assist, the Toxic Substances Control Assist, the Emergency Planning
and Community Right-to-Know Assist and the respective regulations
promulgated thereunder);
(d) any other substance or material (regardless of physical
form) or form of energy that is subject to any Legal Requirement which
regulates or establishes standards of conduct in connection with, or
which otherwise relates to, the protection of human health, plant life,
animal life, natural resources, property or the enjoyment of life or
property from the presence in the environment of any solid, liquid,
gas, odor, noise or form of energy; and
(e) any compound, mixture, solution, product or other
substance or material that contains any substance or material referred
to in clause "(a)", "(b)", "(c)" or "(d)" above.
INDEMNITEES. "Indemnitees" shall mean the following Persons:
(a) Cayenta;
(b) Cayenta Sub;
(c) Cayenta's and Cayenta Sub's current and future affiliates
(including Assist);
(d) the respective Representatives of the Persons referred to
in clauses "(a)" , "(b)" and "(c)" above; and
(d) the respective successors and assigns of the Persons
referred to in clauses "(a)", "(b)", "(c)" and "(d)" above;
PROVIDED, HOWEVER, that (i) Assist shall not be entitled to exercise
any rights as an Indemnitee prior to the Closing, and (ii) the Selling
Shareholders shall not be deemed to be "Indemnitees" as such term is used
herein.
INFORMATION STATEMENT. "Information Statement" shall mean an
information statement for the Assist Shareholders for purposes of soliciting
their approval of the Exchange in accordance with this Agreement. The
Information Statement will contain the type of information generally included
in an S-4 registration statement as required under the Exchange Act. Assist
shall submit a draft report to Cayenta for its prior approval.
KNOWLEDGE. An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual could reasonably be expected to
discover or otherwise become aware of such fact or other matter in the
course of conducting a diligent investigation concerning the truth or
existence of such fact or other matter.
A-5.
Assist shall be deemed to have "Knowledge" of a particular fact or
other matter if any Xxxxx Xxxxx, Xxxxxx Xxxxxxx-Xxxxxxxx, Xxxxx Xxxxxxxx, Xxx
Xxxxxxx, Xxxxxxx Xxxxxxx or Xxxx Xxxxxxx has Knowledge of such fact or other
matter.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal,
state, local, municipal, foreign or other law, statute, legislation,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, proclamation, treaty, convention, rule, regulation, ruling,
directive, pronouncement, requirement, specification, determination,
decision, opinion or interpretation that is, has been or may in the future be
issued, enacted, adopted, passed, approved, promulgated, made, implemented or
otherwise put into effect by or under the authority of any Governmental Body.
LIABILITY. "Liability" shall mean any debt, obligation, duty or
liability of any nature (including any unknown, undisclosed, unmatured,
unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious,
derivative, joint, several or secondary liability), regardless of whether
such debt, obligation, duty or liability would be required to be disclosed on
a balance sheet prepared in accordance with generally accepted accounting
principles and regardless of whether such debt, obligation, duty or liability
is immediately due and payable.
ORDER. "Order" shall mean any:
(a) order, judgment, injunction, edict, decree, ruling,
pronouncement, determination, decision, opinion, verdict, sentence,
subpoena, writ or award that is, has been or may in the future be
issued, made, entered, rendered or otherwise put into effect by or
under the authority of any court, administrative agency or other
Governmental Body or any arbitrator or arbitration panel; or
(b) Contract with any Governmental Body that is, has been or
may in the future be entered into in connection with any Proceeding.
ORDINARY COURSE OF BUSINESS. An action taken by or on behalf of
Assist shall not be deemed to have been taken in the "Ordinary Course of
Business" unless:
(a) such action is recurring in nature, is consistent with
Assist's past practices and is taken in the ordinary course of Assist's
normal day-to-day operations;
(c) such action is not required to be authorized by Assist's
shareholders, Assist's board of directors or any committee of Assist's
board of directors and does not require any other separate or special
authorization of any nature; and
(d) such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization, in
the ordinary course of the normal day-to-day operations of other
Entities that are engaged in businesses similar to Assist's business.
PAST BENEFIT PLAN. "Past Benefit Plan" shall mean any Employee
Benefit Plan (other than a Current Benefit Plan):
A-6.
(a) of which Assist or any ERISA Affiliate has ever been a
"plan sponsor" (as defined in Section 3(16)(B) of ERISA) or that
otherwise has at any time been established, adopted, maintained or
sponsored by Assist or by any ERISA Affiliate;
(b) in which Assist or any ERISA Affiliate has ever
participated;
(c) with respect to which Assist or any ERISA Affiliate has
ever made, or has ever been required or permitted to make, any
contribution; or
(d) with respect to which Assist or any ERISA Affiliate has
ever been subject to any Liability.
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
PRE-CLOSING PERIOD. "Pre-Closing Period" shall mean the period
commencing as of the date of the Agreement and ending on the Closing Date.
PROCEEDING. "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding),
prosecution, contest, hearing, inquiry, inquest, audit, examination or
investigation that is, has been or may in the future be commenced, brought,
conducted or heard by or before, or that otherwise has involved or may
involve, any Governmental Body or any arbitrator or arbitration panel.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any patent, patent
application, trademark (whether registered or unregistered and whether or not
relating to a published work), trademark application, trade name, fictitious
business name, service xxxx (whether registered or unregistered), service
xxxx application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know-how,
franchise, system, computer software, invention, design, blueprint,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset.
RELATED PARTY. Each of the following shall be deemed to be a
"Related Party":
(a) each of the Selling Shareholders;
(b) each individual who is, or who has at any time been, an
officer of Assist;
(c) each member of the family of each of the individuals
referred to in clauses "(a)" and "(b)" above; and
(d) any Entity (other than Assist) in which any one of the
individuals referred to in clauses "(a)", "(b)" and "(c)" above holds
(or in which more than one of such individuals collectively hold),
beneficially or otherwise, a material voting, proprietary or equity
interest.
A-7.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives. The
Selling Shareholders and all other Related Parties shall be deemed to be
"Representatives" of Assist.
SCHEDULED CLOSING TIME. "Scheduled Closing Time" shall have the
meaning specified in Section 1.5 of the Agreement.
SELLING SHAREHOLDERS. "Selling Shareholders" shall have the meaning
specified in the introductory paragraph of the Agreement.
SPECIFIED REPRESENTATIONS. "Specified Representations" shall mean
the representations and warranties set forth in Sections 3.1, 3.3, 3.17 and
3.20 of the Agreement and the representations and warranties set forth in
Section 4.1 and Section 4.4 of the Agreement.
TAX. "Tax" shall mean any tax (including any income tax, franchise
tax, capital gains tax, estimated tax, gross receipts tax, value-added tax,
surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use
tax, property tax, business tax, occupation tax, inventory tax, occupancy
tax, withholding tax or payroll tax), levy, assessment, tariff, impost,
imposition, toll, duty (including any customs duty), deficiency or fee, and
any related charge or amount (including any fine, penalty or interest), that
is, has been or may in the future be (a) imposed, assessed or collected by or
under the authority of any Governmental Body, or (b) payable pursuant to any
tax-sharing agreement or similar Contract.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule,
notice, notification, form, election, certificate or other document or
information that is, has been or may in the future be filed with or submitted
to, or required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection or payment of any
Tax or in connection with the administration, implementation or enforcement
of or compliance with any Legal Requirement relating to any Tax.
TRANSACTIONAL AGREEMENTS. "Transactional Agreements" shall mean:
(a) the Agreement;
(b) the Investor Rights Agreement;
(c) the Noncompetition Agreement referred to in Section 8.9(f)
of the Agreement;
(d) the General Release referred to in Section 8.9(a) of the
Agreement;
(e) the Closing Certificate; and
(f) the mutual non-disclosure agreement between the parties
executed prior to the date of this Agreement.
A-8.
TRANSACTIONS. "Transactions" shall mean (i) the consummation of the
Exchange as part of the 351 Plan, (ii) the consummation of the purchase and
sale of the Purchased Shares; (iii) the execution and delivery of the
respective Transactional Agreements, and (iv) all of the transactions
contemplated by the respective Transactional Agreements.
WORKING CAPITAL. "Working Capital" shall mean as of the Closing Date
the difference between Assist's current assets and Assist's current
liabilities (excluding the current portion of any Debt) as determined under
GAAP. Notwithstanding the foregoing, any cash contributions made or deemed to
be made by Cayenta at Closing to fund repayment or retirement of Debt and any
cash payments made to cash-out options shall be excluded from the calculation
of Working Capital.
YEAR 2000 COMPLIANT. "Year 2000 Compliant" shall mean, in regard to
any product or internal system, that such product or internal system can
individually continue to be used normally and to operate successfully (both
in functionality and performance in all material respects) over the
transition into the twenty first century when used in accordance with the
documentation relating to such product or internal system, including being
able to, before, on and after January 1, 2000 substantially conform to the
following: (i) use logic pertaining to dates that allow users to identify
and/or use the century portion of any date fields without special processing;
and (ii) respond to all date elements and date input so as to resolve any
ambiguity as to century in a disclosed, defined and pre-determined manner and
provide date information in ways that are unambiguous as to century, either
by permitting or requiring the century to be specified or where the data
element is represented without a century, the correct century is unambiguous
for all manipulations involving that element.
A-9.
==============================================================================
STOCK EXCHANGE AND STOCK PURCHASE AGREEMENT
among:
XXXXXXX.XXX, INC.,
a Delaware corporation
CAYENTA OPERATING COMPANY.,
a Delaware corporation
THE TITAN CORPORATION,
a Delaware corporation
ASSIST CORNERSTONE TECHNOLOGIES, INC.,
a Utah corporation
and
SELLING SHAREHOLDERS
Dated as of December 7, 1999
==============================================================================
TABLE OF CONTENTS
PAGE
1.1 Exchange of Shares..............................................................1
1.2 No Fractional Shares............................................................2
1.3 Cayenta Shares..................................................................2
1.4 Appraisal Rights................................................................2
1.5 Closing.........................................................................3
2. SALE AND PURCHASE OF SHARES..............................................................3
2.1 Sale and Purchase of Shares.....................................................3
2.2 Purchase Price..................................................................3
2.3 Post-Closing Adjustment.........................................................5
3. REPRESENTATIONS AND WARRANTIES OF ASSIST AND SELLING SHAREHOLDERS........................6
3.1 Due Organization; No Subsidiaries; Etc..........................................6
3.2 Certificate of Incorporation and Bylaws; Records................................7
3.3 Capitalization, Etc.............................................................7
3.4 Financial Statements............................................................9
3.5 Absence of Changes..............................................................9
3.6 Title to Assets................................................................11
3.7 Bank Accounts..................................................................12
3.8 Receivables; Major Customers...................................................12
3.9 Inventory......................................................................12
3.10 Equipment, Etc.................................................................13
3.11 Real Property..................................................................13
3.12 Proprietary Assets.............................................................13
3.13 Contracts......................................................................15
3.14 Liabilities; Major Suppliers...................................................16
3.15 Compliance With Legal Requirements.............................................17
3.16 Governmental Authorizations....................................................18
3.17 Tax Matters....................................................................19
3.18 Employee and Labor Matters.....................................................20
3.19 Benefit Plans; ERISA...........................................................21
3.20 Environmental Matters..........................................................23
3.21 Sale of Products; Performance of Services......................................24
i.
3.22 Insurance......................................................................25
3.23 Related Party Transactions.....................................................26
3.24 Certain Payments, Etc..........................................................27
3.25 Proceedings; Orders............................................................27
3.26 Authority; Binding Nature of Agreements........................................28
3.27 Non-Contravention; Consents....................................................29
3.28 Year 2000 Compliance...........................................................30
(a) Brokers...............................................................30
3.29 Full Disclosure................................................................30
3.30 No Other Representations or Warranties.........................................31
4. REPRESENTATIONS AND WARRANTIES OF CAYENTA AND CAYENTA SUB...............................31
4.1 Due Organization...............................................................31
4.2 Authority; Binding Nature of Agreements........................................31
4.3 Non-Contravention; Consents....................................................31
4.4 Capitalization, Etc............................................................32
4.5 Financial Statements...........................................................33
4.6 No Adverse Change..............................................................33
(a) 34
4.8 Brokers........................................................................34
4.9 No Other Representations or Warranties.........................................34
5. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS..............................34
5.1 Selling Shareholder Bears Economic Risk........................................34
5.2 Acquisition for Own Account....................................................35
5.3 Selling Shareholder Can Protect Its Interest...................................35
5.4 Accredited Investor............................................................35
5.5 Company Information............................................................35
5.6 Rule 144.......................................................................35
5.7 Residence......................................................................35
5.8 Selling Shareholder............................................................36
6. PRE-CLOSING COVENANTS OF ASSIST AND SELLING SHAREHOLDERS................................36
ii.
6.1 Access and Investigation.......................................................36
6.2 Operation of Business..........................................................37
6.3 Filings and Consents...........................................................38
6.4 Notification; Updates to Disclosure Schedule...................................39
6.5 Payment of Indebtedness by Related Parties.....................................40
6.6 No Negotiation.................................................................40
6.7 Best Efforts...................................................................40
6.8 Confidentiality................................................................40
7. PRE-CLOSING COVENANTS OF CAYENTA AND CAYENTA SUB........................................41
8. CONDITIONS PRECEDENT TO CAYENTA'S OR CAYENTA SUB'S OBLIGATION TO CLOSE..................41
8.1 Satisfactory Completion of Pre-Acquisition Review..............................41
8.2 Accuracy of Representations....................................................41
8.3 Performance of Obligations.....................................................42
8.4 Approval of Cayenta's Board of Directors; Consents.............................42
8.5 No Material Adverse Change.....................................................42
8.6 Regulation D...................................................................42
8.7 Cash Out of Options............................................................42
8.8 Section 351 Plan...............................................................42
8.9 Closing Documents..............................................................42
8.10 No Proceedings.................................................................43
8.11 No Claim Regarding Stock Ownership or Sale Proceeds............................43
8.12 No Prohibition.................................................................43
8.13 Confidential Information and Invention Assignment Agreements...................44
9. CONDITIONS PRECEDENT TO ASSIST'S AND SELLING SHAREHOLDERS' OBLIGATION TO CLOSE..........44
9.1 Accuracy of Representations....................................................44
9.2 Cayenta's Performance..........................................................44
9.3 Closing Documents..............................................................44
10. TERMINATION.............................................................................45
10.1 Termination Events.............................................................45
iii.
10.2 Termination Procedures.........................................................45
10.3 Effect of Termination..........................................................45
11. INDEMNIFICATION, ETC....................................................................46
11.1 Survival of Representations and Covenants......................................46
11.2 Indemnification by Selling Shareholders........................................46
11.3 Threshold......................................................................47
11.4 Right to Require Cure of Breach................................................48
11.5 No Contribution................................................................48
11.6 Interest.......................................................................48
11.7 Setoff/ Limited Recourse.......................................................48
11.8 Defense of Third Party Claims..................................................49
11.9 Exercise of Remedies by Indemnitees Other Than Cayenta and Cayenta Sub.........49
11.10 Indemnification by Cayenta and Cayenta Sub.....................................49
12. MISCELLANEOUS PROVISIONS................................................................50
12.1 Selling Shareholders' Agent....................................................50
12.2 Further Assurances.............................................................51
12.3 Retirement of Debt.............................................................51
12.4 Stock Options..................................................................52
12.5 Fees and Expenses..............................................................52
(i) 53
12.6 Attorneys' Fees................................................................53
12.7 Notices........................................................................53
12.8 Publicity......................................................................54
12.9 Time of the Essence............................................................55
12.10 Headings.......................................................................55
12.11 Counterparts...................................................................55
12.12 Governing Law; Venue...........................................................55
12.13 Successors and Assigns.........................................................56
12.14 Remedies Cumulative; Specific Performance......................................56
12.15 Waiver.........................................................................56
iv.
12.16 Amendments.....................................................................57
12.17 Severability...................................................................57
12.18 Parties in Interest............................................................57
12.19 Entire Agreement...............................................................57
12.20 Construction...................................................................57
12.21 Negotiation of Disputes........................................................57
12.22 Ernst & Young LLP Consent......................................................58
12.23 Titan as Signing Party.........................................................58
12.24 Assist's Legal Counsel.........................................................58
12.25 Directors' and Officers' Insurance.............................................58
EXHIBITS
Exhibit A: Certain Definitions
Exhibit B: Amended and Restated Certificate of Incorporation
Exhibit C: Investor Rights Agreement
Exhibit D: Selling Shareholders Address List
Exhibit E: Section 351 Plan
Exhibit F: General Release
Exhibit G: Opinion Letter
Exhibit H: List of Key Employees
v.
