Exhibit 10.12
AGREEMENT AND PLAN OF AMALGAMATION
BY AND AMONG
AVESTA TECHNOLOGIES, INC.
(A DELAWARE CORPORATION)
AND
AVESTA TECHNOLOGIES CANADA, INC.
(AN ONTARIO CORPORATION AND WHOLLY
OWNED SUBSIDIARY OF AVESTA TECHNOLOGIES, INC.)
AND
CARAVELLE INC.
(AN ONTARIO CORPORATION)
AND
THE CARAVELLE SHAREHOLDERS
AS OF MAY 8, 1998
TABLE OF CONTENTS
ARTICLE 1....................................................................................................... 2
1.1 SURVIVING CORPORATION; EFFECTIVE TIME..................................................... 2
1.2 ARTICLES OF INCORPORATION AND BYLAWS....................................................... 2
1.3 DIRECTORS AND OFFICERS..................................................................... 2
1.4 PURCHASE PRICE AND CONVERSION OF CARAVELLE STOCK........................................... 2
1.5 EXCHANGE OF CERTIFICATES................................................................... 3
1.6 TREATMENT OF CARAVELLE OPTIONS............................................................. 3
ARTICLE 2........................................................................................................ 4
2.1 CORPORATE EXISTENCE AND GOOD STANDING...................................................... 4
2.2 CORPORATE AUTHORITY........................................................................ 5
2.3 CAPITALIZATION............................................................................. 5
2.4 SUBSIDIARIES............................................................................... 5
2.5 FINANCIAL STATEMENTS....................................................................... 5
2.6 ABSENCE OF CERTAIN CHANGES................................................................. 6
2.7 PROPERTIES................................................................................. 7
2.8 INVENTORIES................................................................................ 7
2.9 ACCOUNTS RECEIVABLE........................................................................ 8
2.10 LITIGATION................................................................................. 8
2.11 TAXES...................................................................................... 8
2.12 NO BREACH OF AGREEMENTS.................................................................... 8
2.13 EMPLOYEES AND SERVICE PROVIDERS............................................................ 9
2.14 CERTAIN AGREEMENTS AFFECTED BY THE AMALGAMATION............................................ 10
2.15 DIRECTORS, OFFICERS AND EMPLOYEES.......................................................... 11
2.16 INSURANCE.................................................................................. 11
2.17 CONTRACTS AND LICENSES..................................................................... 11
2.18 INTELLECTUAL PROPERTY RIGHTS............................................................... 13
2.19 COMPLIANCE WITH LAW; CONSENTS.............................................................. 14
2.20 ENVIRONMENTAL MATTERS...................................................................... 14
2.21 AFFILIATE RELATIONSHIPS.................................................................... 15
2.22 NO TERMINATION OF BUSINESS RELATIONSHIP.................................................... 16
2.23 CUSTOMERS.................................................................................. 16
2.24 CORPORATE RECORDS.......................................................................... 16
2.25 POWERS OF ATTORNEY; BANK ACCOUNTS.......................................................... 16
2.26 VOTE REQUIRED.............................................................................. 16
2.27 BOARD APPROVAL............................................................................. 16
2.28 BROKERS OR FINDERS......................................................................... 17
2.29 RETAINED EMPLOYEES AND AGREEMENTS.......................................................... 17
2.30 CERTAIN AGREEMENTS......................................................................... 17
2.31 LIENS...................................................................................... 17
2.32 REPRESENTATIONS COMPLETE................................................................... 17
2.33 CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES.......................................... 17
ARTICLE 3........................................................................................................ 17
3.1 AUTHORITY.................................................................................. 17
3.2 INVESTMENT REPRESENTATIONS................................................................. 18
3.3 ACCURACY OF REPRESENTATIONS AND WARRANTIES................................................. 18
3.4 SHARE OWNERSHIP............................................................................ 18
3.5 REPRESENTATIONS COMPLETE................................................................... 18
3.6 CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES.......................................... 18
ARTICLE 4........................................................................................................ 19
4.1 CORPORATE EXISTENCE AND GOOD STANDING...................................................... 19
4.2 CORPORATE AUTHORITY........................................................................ 19
4.3 CONSENTS................................................................................... 19
4.4 NO BREACH OF AGREEMENTS.................................................................... 19
4.5 BROKERS.................................................................................... 20
4.6 SHARES..................................................................................... 20
4.7 FINANCIAL STATEMENTS....................................................................... 20
4.8 CAPITALIZATION............................................................................. 20
4.9 REPRESENTATIONS COMPLETE................................................................... 21
4.10 CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES.......................................... 21
ARTICLE 5........................................................................................................ 21
5.1 CONDUCT OF BUSINESS BY AVESTA TECHNOLOGIES CANADA AND CARAVELLE............................ 21
5.2 CONDUCT OF BUSINESS OF CARAVELLE........................................................... 22
5.3 EXCLUSIVE DEALING.......................................................................... 23
5.4 ACCESS TO INFORMATION...................................................................... 24
5.5 DISCLOSURE OF TRANSACTION.................................................................. 24
5.6 CERTAIN DEFAULTS; LITIGATION............................................................... 24
5.7 AUDITED FINANCIAL STATEMENTS............................................................... 25
5.8 BREACH OF REPRESENTATIONS AND WARRANTIES................................................... 25
5.9 NECESSARY CONSENTS......................................................................... 25
5.10 COMMERCIALLY REASONABLE EFFORTS............................................................ 25
5.11 ESCROW AGREEMENT........................................................................... 25
ARTICLE 6........................................................................................................ 26
6.1 REPRESENTATIONS AND WARRANTIES TRUE........................................................ 26
6.2 COVENANTS PERFORMED........................................................................ 26
6.3 CERTIFICATE................................................................................ 26
6.4 NO VIOLATIONS; NO ACTIONS.................................................................. 26
6.5 OPINION OF COUNSEL FOR CARAVELLE........................................................... 26
6.6 PROCEEDINGS AND DOCUMENTS.................................................................. 26
6.7 DELIVERY OF DOCUMENTS...................................................................... 26
6.8 NO MATERIAL ADVERSE EFFECT................................................................. 26
6.9 REQUIRED CONSENTS.......................................................................... 27
6.10 SCHEDULES.................................................................................. 27
6.11 ILLEGALITY OR LEGAL CONSTRAINT............................................................. 27
6.12 CARAVELLE AUDIT............................................................................ 27
6.13 ESCROW AGREEMENT........................................................................... 27
6.14 AGREEMENTS................................................................................. 27
6.15 CARAVELLE OPTION HOLDER WAIVERS............................................................ 27
6.16 RELEASES AND INDEMNIFICATIONS.............................................................. 27
6.17 SHAREHOLDER VOTE AND INDEMNITY............................................................. 27
6.18 RIGHTS OFFERING............................................................................ 27
6.19 SEVERANCE AGREEMENT WITH TIM BOREHAM....................................................... 27
6.20 TERMINATION OF EMPLOYMENT AGREEMENTS....................................................... 28
6.21 FUNDAMENTAL AGREEMENTS..................................................................... 28
6.22 DUE DILIGENCE.............................................................................. 28
ARTICLE 7........................................................................................................ 28
7.1 REPRESENTATIONS TRUE....................................................................... 28
7.2 COVENANTS PERFORMED........................................................................ 28
7.3 CERTIFICATE................................................................................ 28
7.4 NO VIOLATIONS; NO ACTIONS.................................................................. 28
7.5 OPINION OF COUNSEL FOR AVESTA AND AVESTA TECHNOLOGIES CANADA............................... 28
7.6 PROCEEDINGS AND DOCUMENTS.................................................................. 29
7.7 DELIVERY OF DOCUMENTS...................................................................... 29
7.8 REQUIRED CONSENTS.......................................................................... 29
7.9 ILLEGALITY OR LEGAL CONSTRAINT............................................................. 29
7.10 EMPLOYMENT BY AVESTA AND AVESTA TECHNOLOGIES CANADA........................................ 29
7.11 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT............................................. 29
7.12 NO MATERIAL ADVERSE EFFECT................................................................. 29
ARTICLE 8........................................................................................................ 29
8.1 TIME AND PLACE............................................................................. 29
8.2 DELIVERIES BY CARAVELLE.................................................................... 29
8.3 DELIVERIES OF AVESTA AND AVESTA TECHNOLOGIES CANADA........................................ 31
ARTICLE 9........................................................................................................ 32
9.1 TERMINATION................................................................................ 32
9.2 TERMINATION FEES........................................................................... 33
ARTICLE 10....................................................................................................... 33
10.1 ESCROW FUND................................................................................ 33
10.2 DAMAGES.................................................................................... 33
10.3 ITCS....................................................................................... 34
10.4 POST-CLOSING ADJUSTMENTS................................................................... 34
10.5 THRESHOLD.................................................................................. 34
10.6 ESCROW PERIOD.............................................................................. 35
10.7 CLAIMS UPON ESCROW FUND.................................................................... 35
10.8 OBJECTIONS TO CLAIMS....................................................................... 35
10.9 RESOLUTION OF CONFLICTS; ARBITRATION....................................................... 36
10.10 SHAREHOLDERS' AGENT........................................................................ 36
10.11 ACTIONS OF THE SHAREHOLDERS' AGENT......................................................... 37
10.12 THIRD-PARTY CLAIMS......................................................................... 37
ARTICLE 11....................................................................................................... 38
11.1 CURRENCY; EXCHANGE RATE.................................................................... 38
11.2 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS..................................... 38
11.3 ACKNOWLEDGEMENT OF ENFORCEABILITY.......................................................... 38
11.4 FURTHER ASSURANCES......................................................................... 38
11.5 BROKER OR FINDER........................................................................... 38
11.6 EACH PARTY TO BEAR OWN COSTS............................................................... 38
11.7 HEADINGS................................................................................... 38
11.8 ENTIRE AGREEMENT; WAIVERS.................................................................. 38
11.9 THIRD PARTIES.............................................................................. 39
11.10 PARTIES IN INTEREST........................................................................ 39
11.11 NOTICES.................................................................................... 39
11.12 GOVERNING LAW.............................................................................. 40
11.13 CONSENT TO JURISDICTION AND FORUM SELECTION................................................ 40
11.14 COUNTERPARTS............................................................................... 40
11.15 SEVERABILITY............................................................................... 40
11.16 CONSTRUCTION OF AGREEMENT; KNOWLEDGE....................................................... 41
11.17 PUBLICITY.................................................................................. 41
11.18 MUTUAL DRAFTING............................................................................ 41
11.19 SPECIFIC PERFORMANCE AND OTHER REMEDIES.................................................... 41
11.20 CONFLICT................................................................................... 41
AGREEMENT AND PLAN OF AMALGAMATION
THIS AGREEMENT AND PLAN OF AMALGAMATION (this "AGREEMENT") is made and
entered into as of May 8th, 1998, by and among Avesta Technologies, Inc., a
Delaware corporation ("AVESTA"), Avesta Technologies Canada, Inc., an Ontario
corporation and a wholly-owned subsidiary of Avesta ("AVESTA TECHNOLOGIES
Canada"), Caravelle Inc., an Ontario corporation ("CARAVELLE"), and the
shareholders of Caravelle (collectively, the "CARAVELLE SHAREHOLDERS").
RECITALS
WHEREAS, Avesta, Avesta Technologies Canada and Caravelle have
each determined to engage in the transactions contemplated hereby, pursuant to
which (i) Avesta Technologies Canada will statutorily amalgamate with Caravelle
(the "AMALGAMATION"), (ii) each issued and outstanding share of capital stock of
Caravelle (the "CARAVELLE STOCK") shall be converted
into issued and outstanding exchangeable non-voting shares of Amalco (as defined
below) and (iii) each issued and outstanding share of capital stock of Avesta
Technologies Canada shall be converted into issued and outstanding voting shares
of Amalco, to be issued to Avesta, all in the manner herein described; and
WHEREAS, the respective Boards of Directors of Avesta, Avesta
Technologies Canada and Caravelle, and Avesta, as the sole stockholder of Avesta
Technologies Canada, have each approved this Agreement, the Amalgamation, and
the other transactions contemplated by this Agreement, and the shareholders of
Caravelle (collectively, the "CARAVELLE SHAREHOLDERS") must still approve this
Agreement, the Amalgamation, and the other transactions contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties agree as follows:
ARTICLE 1
THE AMALGAMATION
1.1 SURVIVING CORPORATION; EFFECTIVE TIME.
(a) At the Closing (as hereinafter defined), subject
to the terms and conditions of this Agreement and the certificate of
amalgamation (the "CERTIFICATE OF AMALGAMATION"), Avesta Technologies Canada
shall be amalgamated with Caravelle in accordance with the Ontario Business
Corporations Act (the "OBCA"), whereupon the separate existence of Avesta
Technologies Canada and Caravelle shall cease. The new entity shall be referred
to herein as "AMALCO," and Amalco shall be named Avesta Technologies Canada,
Inc.
(b) Simultaneously with the Closing, Avesta
Technologies Canada and Caravelle shall file the Articles of Amalgamation
pursuant to Section 174 of the OBCA. The said Amalgamation shall become
effective at such time and on such date as such Articles of Amalgamation are
duly filed (the date of such latter filing being hereinafter referred to as the
"EFFECTIVE DATE" and the time of such latter filing being hereinafter referred
to as the "EFFECTIVE TIME"). From and after the Effective Time, Amalco shall
possess all the property, rights, privileges, powers and franchises and be
subject to all of the debts, restrictions, liabilities and duties of both Avesta
Technologies Canada and Caravelle, as provided under the OBCA.
1.2 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation, as amended, and Bylaws of Amalco shall be substantially in the
form as set forth on EXHIBIT 1.2.
1.3 DIRECTORS AND OFFICERS. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, the directors and officers of Amalco shall be as set forth on
SCHEDULE 1.3.
1.4 PURCHASE PRICE AND CONVERSION OF CARAVELLE STOCK. The
purchase price shall be $1,538,222 (the "PURCHASE PRICE"), which shall be
payable in 354,429 exchangeable shares of Amalco which shall be subject to
substantially the same terms and conditions as set forth on EXHIBIT 1.4 (the
"AMALCO EXCHANGEABLE SHARES"), and each of which shall be exchanged for one
share of Avesta Series B Preferred Stock immediately after the Effective Time
(the "AVESTA SERIES B PREFERRED STOCK")(the "EXCHANGE"). Each of the Amalco
Exchangeable Shares shall be valued at $4.34 per
share.
(a) AUTOMATIC CONVERSION. As of the Effective Time,
by virtue of the Amalgamation, and pursuant to the Articles of Amalgamation,
automatically and without any action on the part of any holder thereof, each
share of Caravelle Stock issued and outstanding immediately prior to the
Effective Time shall be converted into that number of fully paid and
nonassessable shares of Amalco Exchangeable Shares determined by multiplying the
share of Caravelle Stock by the Conversion Ratio. For the purposes hereof, the
"CONVERSION RATIO" shall be the number obtained by dividing 354,429 by the
number of shares of Caravelle Stock outstanding immediately prior to the
Effective Time. All shares of Caravelle Stock outstanding immediately prior to
the Effective Time, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such shares shall cease to have any rights
with respect thereto.
(b) ADJUSTMENTS TO CONVERSION RATIO. The Conversion
Ratio shall be adjusted to reflect fully the effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into Amalco Exchangeable Shares or Caravelle Stock),
reorganization, recapitalization or other like change with respect to Amalco
Exchangeable Shares or Caravelle Stock occurring after the date hereof and prior
to the Effective Time.
(c) FRACTIONAL SHARES. No fraction of a share of
Amalco Exchangeable Shares shall be issued, but in lieu thereof each holder of
Caravelle Stock who would otherwise be entitled to a fraction of a share of
Amalco Exchangeable Shares shall receive from Avesta the nearest number of whole
Amalco Exchangeable Shares up to which such fraction would be rounded.
1.5 EXCHANGE OF CERTIFICATES.
(a) At the Closing, Avesta Technologies Canada shall
deliver to each Caravelle Shareholder who delivered his, her or its certificate
representing his or her or its Caravelle Stock (a "CERTIFICATE") a certificate
for the number of Amalco Exchangeable Shares to which such holder is entitled
pursuant to Section 1.4. In the event of a transfer of ownership of Certificates
which has not been registered in the transfer records of Caravelle, Amalco
Exchangeable Shares may be delivered to a transferee if the Certificate is
presented to Avesta Technologies Canada and accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. When surrendered as contemplated
by this Section 1.5(a), each holder of Caravelle Stock immediately prior to the
Effective Date shall thereafter cease to possess any rights with respect to such
Caravelle Stock, except the right to receive upon such surrender such number of
shares of Amalco Exchangeable Shares as provided by Section 1.4 herein. Pursuant
to Section 1.4 of the Amended and Restated Investor Rights Agreement (as defined
below), Technocap Inc. may transfer, without consideration, its shares of Avesta
Series B Preferred Stock to any of its partners or shareholders, or retired
partners or shareholders, or to the estate of any of its partners or
shareholders or retired partners or shareholders, so long as each such
transferee agrees in writing to be bound by the terms and conditions of this
Agreement and the Amended and Restated Investor Rights Agreement.
(b) All Amalco Exchangeable Shares delivered in
exchange for the Caravelle Stock in accordance with the terms hereof shall be
deemed to have been delivered in full satisfaction of all rights pertaining to
such Caravelle Stock. After the Effective Time, there shall be no further
registration of transfers on the stock transfer books of Caravelle of the
Certificates that were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates
are presented for any reason, they shall be cancelled and exchanged as
provided in this Section 1.5.
1.6 TREATMENT OF CARAVELLE OPTIONS.
(a) TERMINATION AND REPLACEMENT. At the Effective
Time, each outstanding option to purchase shares of Caravelle Stock granted
under the Caravelle Plan (the "CARAVELLE OPTION PLAN"), and not exercised and
comprising a portion of the issued and outstanding Caravelle Stock immediately
prior to the Effective Time, whether vested or unvested, shall immediately
terminate and, in lieu of those options, Avesta shall grant to each of the
holders of those terminated options new options to purchase shares of Avesta
Common Stock (the "AVESTA OPTIONS") under the Avesta 1996 Stock Option Plan (the
"AVESTA OPTION PLAN"), each with an exercise price equal to $0.22 per share of
Avesta Common Stock and a term of ten (10) years measured from the Effective
Date. SCHEDULE 1.6 hereto sets forth the total number, as of the date hereof, of
the outstanding options under the Caravelle Option Plan, and, with respect to
the Avesta Options to be granted pursuant to this Agreement, (i) the number of
shares of Avesta Common Stock to be subject to each of the Avesta Options, (ii)
the total number of such shares that shall be vested in connection with the
Amalgamation (the "COLUMN A SHARES") and (iii) the total number of such shares
that shall vest following the Amalgamation, subject to the optionee's continued
employment with Avesta (the "COLUMN B SHARES"). The Column A Shares shall be
fully-vested at the end of the three (3)-month period following the Effective
Date. The Column B Shares shall vest in a series of thirty-six (36) successive
equal monthly installments as the optionee completes each month of employment
with Avesta over the thirty-six (36)-month period following the Amalgamation.
Each such Avesta Option granted pursuant to Section
1.6(a) of this Agreement shall be subject to the provisions of the Avesta Option
Plan and to such other terms and conditions, not inconsistent with the Avesta
Option Plan set forth as EXHIBIT 1.6(A), provided for each such option in a
Stock Option Agreement to be issued to each Caravelle Option Holder as soon as
practicable following the Effective Date but in no event later than 20 days
following such date.
(b) WAIVER. Prior to the Effective Time, Caravelle
shall obtain from each holder of outstanding options under the Caravelle Option
Plan (each, a "CARAVELLE OPTION HOLDER") a written waiver relating to the
cancellation of his or her Caravelle Options, in substantially the form of
attached EXHIBIT 1.6(B) (the "WAIVER").
(c) ASSUMPTION OF BOSSIO OPTION. At the Effective
Time, the option granted to Mr. Carlo Bossio to purchase 9,720 shares of
Caravelle Stock with an adjusted exercise price of $10.98 per share (the "BOSSIO
OPTION") shall be assumed by Avesta. The assumed Bossio Option shall continue to
have the same terms and conditions set forth for the Option in that certain
letter from Caravelle to Mr. Bossio evidencing the Bossio Option, as such terms
were subsequently adjusted; PROVIDED, HOWEVER that (i) such option shall be
exercisable for that number of shares of Avesta Common Stock equal to the
product of the number Caravelle shares that were issuable upon exercise of such
option immediately prior to the Effective Time multiplied by the Conversion
Ratio and rounded down to the next whole share, and (ii) the per share exercise
price for the shares of Avesta Common Stock issuable upon exercise of such
assumed Bossio Option shall be equal to the quotient determined by dividing the
exercise price per share of Caravelle Stock at which such Option was exercisable
immediately prior to the Effective Time by the Conversion Ratio, rounded up to
the next whole cent. As soon as practicable following the Effective Date, Avesta
shall provide Mr. Bossio with a Stock Option Assumption Agreement evidencing the
adjustment of the Bossio Option in connection with the option assumption.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF CARAVELLE
Except as disclosed in a schedule referring specifically to
the applicable representations and warranties in this Agreement, which is
delivered by Caravelle to Avesta and Avesta Technologies Canada prior to the
execution of this Agreement and which is annexed hereto as SCHEDULE 2, and an
update of such schedule which is delivered in connection with the Closing (the
"CARAVELLE DISCLOSURE SCHEDULE"), Caravelle agrees with, and represents and
warrants to, Avesta and Avesta Technologies Canada as set forth below:
2.1 CORPORATE EXISTENCE AND GOOD STANDING. Caravelle is a
corporation duly organized, validly existing and in good standing under the laws
of Ontario, has requisite corporate power and corporate authority to carry on
its business as now being conducted, is entitled to own, lease or operate the
property and assets now owned, leased or operated by it, and has no operations
and conducts no business outside of the jurisdictions in which it is authorized
to do business. Caravelle is qualified to do business, is in good standing and
has all required and appropriate licenses in each jurisdiction in which its
failure to obtain or maintain such qualification, good standing or licensing (i)
would, individually or in the aggregate, have a material adverse effect on the
business, prospects, properties, results of operations, or condition (financial
or otherwise) (each a "MATERIAL ADVERSE EFFECT") of Caravelle, or (ii) would
result in a material breach of any of the other representations, warranties,
covenants or agreements set forth in this Agreement.
2.2 CORPORATE AUTHORITY. Caravelle has all requisite corporate
power and authority to execute and deliver this Agreement and all other
documents contemplated hereby (collectively, the "DOCUMENTS"), to consummate the
transactions contemplated hereby, and to perform its obligations under the terms
of this Agreement. The Documents have been duly executed and delivered by
Caravelle, have been authorized by all necessary corporate action of Caravelle
and constitute legal, valid and binding obligations of Caravelle, enforceable
against Caravelle in accordance with their terms, except as such enforceability
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights generally
and by general equitable principles.
2.3 CAPITALIZATION. The authorized capital stock of Caravelle
consists of an unlimited number of voting common shares, an unlimited number of
non-voting common shares, an unlimited number of Class A Preferred Shares and an
unlimited number of Class B Preferred Shares of Caravelle Stock, of which
10,233,234 voting common shares are presently issued and outstanding. All of the
outstanding shares of Caravelle Stock have been duly authorized and validly
issued and are fully paid and nonassessable and are free from any charge, lien,
encumbrance or adverse claim of any kind whatsoever. There have been no
additional shares of Caravelle Stock which have been issued and are presently
outstanding and other than as set forth on Section 2.3 of the Caravelle
Disclosure Schedule, which sets forth (i) a complete and accurate list of all
persons and entities holding any Caravelle Stock or outstanding options to
purchase Caravelle Stock; (ii) the aggregate number of shares of Caravelle Stock
held by each such person; (iii) the aggregate number of options which are
outstanding and unexercised held by each such person or entity (the "OPTIONS");
and (iv) the number of Options exercisable immediately prior to the Effective
Time to purchase shares of Caravelle Stock that would be, at the time of such
purchase, vested, non-forfeitable and not subject to any repurchase right by
Caravelle (the "VESTED Options") and there are no subscriptions, options,
warrants, calls, conversion rights, rights of exchange, or other rights, plans,
agreements or commitments of any nature whatsoever (including, without
limitation, conversion or preemptive rights) providing for the purchase,
issuance, transaction, registration or sale of any shares of Caravelle's capital
stock or any securities convertible into or exchangeable for any shares of
Caravelle's capital stock. All of the
outstanding shares of Caravelle Stock and the Options have been issued pursuant
to valid exemptions from the prospectus and registration requirements under all
securities laws and in accordance with all other applicable laws.
2.4 SUBSIDIARIES. Caravelle has no subsidiaries and does not
otherwise own or control, directly or indirectly, any interest in any other
corporation, association, joint venture or other business entity.
2.5 FINANCIAL STATEMENTS. Caravelle has delivered to Avesta
the audited balance sheet and related statements of income and cash flows of
Caravelle at and for its fiscal periods ended December 31, 1996, December 31,
1995, and December 31, 1994 and draft financial statements for the year ended
December 31, 1997 (the "FINANCIAL STATEMENTS"), and the unaudited balance sheet
and related statements of income and cash flows of Caravelle at and for the
three month period ended March 31, 1998 (the "INTERIM FINANCIAL STATEMENTS").
The internal books and records of Caravelle from which the Financial Statements
and Interim Financial Statements were derived do not contain any information
which is false or misleading. The Financial Statements and the Interim Financial
Statements (i) were prepared in accordance with such books and records; (ii)
were prepared in accordance with Caravelle's accounting policies and principles,
and are in accordance with Canadian generally accepted accounting principles
("GAAP"), applied on a consistent basis throughout the periods indicated and
consistent with each other; and (iii) fairly present Caravelle's financial
position and results of operations at the dates and for the periods reflected
therein.
2.6 ABSENCE OF CERTAIN CHANGES. Other than as set out in
Section 2.6 of the Caravelle Disclosure Schedule, since January 31, 1998,
Caravelle has conducted its business in the ordinary course and there has not
occurred:
(a) Any change, event or condition (whether covered
by insurance or not) that would result in a Material Adverse Effect on
Caravelle;
(b) Any damage, destruction or loss (whether covered
by insurance or not) materially and adversely affecting any of the properties or
businesses of Caravelle;
(c) Any extraordinary increase in or extraordinary
modification of any compensation or benefits paid by Caravelle to any of its
officers, directors, employees, agents or shareholders;
(d) Any increase in or modification of any bonus,
pension, insurance or other employee benefit plan, payment or arrangement
(including, without limitation, the granting of stock options, restricted stock
awards or stock appreciation rights) made to, for or with any of Caravelle's
directors or employees;
(e) Any declaration, setting aside or payment of
dividends or distributions in respect of the capital stock of Caravelle, or any
split-up or other recapitalization in respect of the capital stock of Caravelle
or any direct or indirect redemption, repurchase or other acquisition of any
such capital stock of Caravelle or any agreement to do any of the foregoing;
(f) Other than the rights offering set forth in
Section 6.19, any issuance, transfer, sale or pledge by Caravelle of any shares
of its capital stock or other securities or of any commitment, option, right or
privilege under which Caravelle is or may become obligated to issue any shares
of its capital stock or other securities;
(g) Any alteration in any term of any outstanding
securities of Caravelle;
(h) Any indebtedness incurred by Caravelle;
(i) Any loan made or agreed to be made by Caravelle,
nor has Caravelle become liable or agreed to become liable as a
guarantor with respect to any loan;
(j) Any change in the accounting methods, practices
or policies followed by Caravelle from those in effect during the past
three (3) fiscal years;
(k) Any sale, assignment, or transfer of any patents,
trademarks, copyrights, trade secrets, other intangible assets or other
Intellectual Property (as hereinafter defined) by Caravelle;
(l) Any purchase or other acquisition of, or any
sale, lease, disposition of, mortgage, pledge or subjection to any lien or
encumbrance on, any material property or asset, tangible or intangible, of
Caravelle or any agreement to do any of the foregoing;
(m) Other than the severance payment owed to Eric
Melka and the Boreham Agreement (as defined below), any contract entered into,
either in writing or orally, between Caravelle and any other party which has a
term of greater than twelve (12) months or which requires Caravelle to pay more
than Five Thousand Dollars ($5,000.00) during the term of such contract;
(n) Any write-down of the value of any asset or
investment on Caravelle's books or records, except for depreciation and
amortization taken in the ordinary course of business and consistent with past
practice, which past practice has been previously disclosed to Avesta and Avesta
Technologies Canada;
(o) Any cancellation of any debts or waiver of any
claims or rights of substantial value, or sale, transfer or other disposition of
any properties or assets (real, personal or mixed, tangible or intangible);
(p) Any actual or threatened amendment, termination
or loss of (i) any contract, lease, license or other agreement to which
Caravelle was or is a party; or (ii) any certificate or other authorization
required for the continued operation by Caravelle of any portion of its
business;
(q) Other than the termination of employment of Eric
Melka, any resignation or termination of employment of any key officer
or employee of Caravelle;
(r) Any change in or amendment to the Articles of
Incorporation or Bylaws of Caravelle; or
(s) Any agreement or commitment, whether written or
oral, by Caravelle to do any of the things described in this Section 2.6.
2.7 PROPERTIES. Caravelle neither owns nor holds title to any
real property. With respect to the property and assets it leases, Caravelle is
in compliance in all material respects with such leases and holds a valid
leasehold interest free of any charges, liens, encumbrances or adverse claims of
any kind whatsoever. The Caravelle Disclosure Schedule sets forth (i) a list of
all leases or
rental contracts under which Caravelle is presently a lessee, lessor, sublessee
or sublessor or has been a lessee, lessor, sublessee or sublessor in the past
twenty-four (24) months and (ii) a list of all equipment used by Caravelle in
the operation of its business which is owned or leased by Caravelle and which
had an original cost of Five Thousand Dollars ($5,000.00) or more. Caravelle has
beneficial ownership of and good and marketable title to all properties and
assets used in its operations or necessary for the conduct of its business, and
such properties and assets are subject to no charges, liens, encumbrances or
adverse claims of any kind whatsoever. All real and tangible personal property,
including machinery, equipment and fixtures currently used by Caravelle in the
operation of its business is, and at the time of the Effective Date will be, in
good operating condition and repair, ordinary wear and tear excepted, and are
adequate and suitable for the purposes for which they are presently being used.
All improvements on leased property used by Caravelle in the operation of its
businesses and the present use thereof are in accordance with all applicable
laws. The value of any fixed asset used by Caravelle in the operation of its
respective business has not been written up or down, other than pursuant to
depreciation or amortization expenses in accordance with past practice.
2.8 INVENTORIES. All of the inventory recorded on the Interim
Financial Statements consists of, and all inventory on the Effective Date will
consist of, items of a quality usable or saleable within six months in the
ordinary course of business, consistent with past practices, and are and will be
in quantities sufficient for the normal operation of the business of Caravelle
in accordance with past practices.
2.9 ACCOUNTS RECEIVABLE. The Caravelle Disclosure Schedule
sets forth (i) a complete and accurate list of the accounts and notes
receivables of Caravelle as of the date of this Agreement, and (ii) a complete
and accurate aging of such accounts and notes receivables. Such accounts and
notes receivables arose in bona-fide arm's length transactions in the normal
course of business and such accounts and notes receivables are, and will be at
the Closing, valid and binding obligations of the account debtors without
counterclaims, set-offs or other defenses thereto, and such accounts and notes
receivables are (except to the extent of the reserves thereon as set forth in
the Interim Financial Statements) collectible in the ordinary course of
business. The values at which accounts and notes receivables are carried on the
books and records of Caravelle reflect the receivables valuation policy of
Caravelle which is consistent with its past practice and in accordance with
Canadian GAAP.
2.10 LITIGATION. Other than as set forth on Section 2.10 of
the Caravelle Disclosure Schedule, there is no litigation, arbitration or
proceeding pending by or against Caravelle, its properties or assets, the
capital stock of Caravelle or its officers, directors or shareholders before any
agency, court, tribunal, foreign or domestic, or any governmental agency, and,
to the best knowledge of Caravelle, there is no threat of any such litigation,
arbitration or proceeding, and no facts exist which might form the basis for any
such litigation, arbitration or proceeding. To the best knowledge of Caravelle,
Caravelle is not the subject of any investigation for violation of any laws,
regulations or administrative orders applicable to its business by any
governmental authority or any other person. There is no judgment, writ, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or arbitrator outstanding against Caravelle, its
properties or assets or the capital stock of Caravelle or which in any manner
would prevent, enjoin, alter or materially delay any of the transactions
contemplated hereby.
2.11 TAXES. Other than as set forth on Section 2.11 of the
Caravelle Disclosure Schedule, Caravelle has (i) duly and timely filed or caused
to be filed all relevant tax returns, statements, reports and forms required to
be
filed prior to the date of this Agreement and will duly and timely file or cause
to be filed all applicable tax returns, statements, reports and forms required
to be filed prior to the Closing which relate to Caravelle or with respect to
which Caravelle is liable or otherwise in any way subject, including, without
limitation, any income, property, sales, use, franchise, added value,
withholding, and social security taxes, and all such tax returns (A) are
complete, accurate and in accordance with all legal requirements applicable
thereto and (B) as of the time of filing, correctly reflected the facts
regarding the income, business assets, operations, activities, status or other
matters of Caravelle required to be shown thereon, (ii) paid, when due, all
taxes shown to be due and payable on such returns, or pursuant to any assessment
or otherwise, and (iii) properly accrued, charged or established adequate
reserves for all taxes arising in respect of any fiscal year of Caravelle. No
tax liabilities, disallowances or assessments relating to the business, assets
or employees or independent contractors of Caravelle have been assessed as of
the date hereof, and, to the best knowledge of Caravelle, there is no basis for
any such liabilities, disallowances or assessments. Caravelle is not delinquent
in the payment of any taxes which would result in the imposition of any charge,
lien, encumbrance or adverse claim of any kind whatsoever on Caravelle, its
properties or assets or the capital stock of Caravelle.
2.12 NO BREACH OF AGREEMENTS. Caravelle is not (a) in
violation of any term or provision of its Articles of Incorporation, as amended,
or Bylaws, or (b) in breach, violation or default of any term or provision of
any contract, lease, license, promissory note, conditional sales contract,
commitment, indenture, mortgage, hypothec or security agreement, deed of trust,
or other agreement, instrument or arrangement to which Caravelle is a party or
by which Caravelle or its assets are bound, where such violation would have a
Material Adverse Effect, or (c) in violation or breach of any law, rule or
regulation of any governmental authority, or any judgment, order, injunction or
decree applicable to Caravelle, its assets or the Caravelle stock. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in or constitute any of the
following: (i) a violation of the Articles of Incorporation, as amended, or
Bylaws of the Corporation; (ii) a conflict, breach, violation or default with or
an event that, with notice or lapse of time or both, would be a conflict,
breach, violation or default of (A) any material contract, lease, license,
promissory note, conditional sales contract, commitment, indenture, mortgage,
deed of trust, or other agreement, instrument or arrangement to which Caravelle
is a party or by which Caravelle or its assets are bound, where such violation
would have a Material Adverse Effect, or (B) any law, rule or regulation of any
governmental authority, or any judgment, order, injunction or decree applicable
to Caravelle, its assets or its capital stock; (iii) an event that would permit
any party to terminate any agreement or to accelerate the maturity of or permit
the subordination of any indebtedness or other obligation of Caravelle or the
Caravelle Stock; or (iv) the creation or imposition of any charge, lien,
encumbrance or adverse claim of any kind whatsoever on any of the assets of
Caravelle or the Caravelle Stock.
2.13 EMPLOYEES AND SERVICE PROVIDERS.
(a) Caravelle is not a party to or bound by any contract or
commitment to pay any royalty, license fee or management fee;
(b) Caravelle does not have any employment contract with any
person whomsoever except such contracts as are listed in Section 2.13 of the
Caravelle Disclosure Schedule, attached hereto and such Schedule truly and
correctly sets out whether such contracts are in writing and the annual salary
and the length of employment of each of the employees of Caravelle;
(c) Caravelle is not bound by or a party to:
(i) any collective bargaining agreement, or
(ii) any benefit plan including, without limiting
the generality of the foregoing, any pension
plan maintained by or on behalf of Caravelle
for any of its employees, except such
agreements and plans as are listed in Section
2.13 of the Caravelle Disclosure Schedule
attached hereto;
(d) All benefit plans listed in Section 2.13 of the Caravelle
Disclosure Schedule attached hereto have been duly registered where required by,
and are in good standing under, all applicable legislation including, without
limiting the generality of the foregoing, the INCOME TAX ACT (Canada) and the
PENSION BENEFITS ACT (Ontario) and all required employer contributions under any
such plans have been made and the applicable funds have been funded in
accordance with the terms thereof of the plans and no past service funding
liabilities exist thereunder;
(e) No trade union, council of trade unions, employee
bargaining agency or affiliated bargaining agent:
(i) holds bargaining rights with respect to any of
Caravelle's employees by way of certification,
interim certification, voluntary recognition,
designation or successor rights,
(ii) has applied to be certified as the bargaining
agent of any of Caravelle's employees, or
(iii) has applied to have Caravelle declared a
related employer pursuant to Section 1(4) of
the LABOUR RELATIONS ACT (Ontario);
(f) There are no actual, threatened or pending organizing
activities of any trade union, council of trade unions, employee bargaining
agency or affiliated bargaining agent or any actual, threatened or pending
unfair labor practice complaints, strikes, work stoppages, picketing, lock-outs,
hand-billings, boycotts, slowdowns, arbitrations, grievances, complaints,
charges or similar labor related disputes or proceedings pertaining to
Caravelle, and there have not been any such activities or disputes or
proceedings within the last year, except as disclosed in Section 2.13 of the
Caravelle Disclosure Schedule.
(g) All vacation pay for employees of Caravelle is properly
reflected and accrued in the books and accounts thereof.
(h) Except in the ordinary course of business or as required
by law of the Collective Agreement and consistent with Caravelle's past
practices, since January 31, 1998, there have been no changes in the terms and
conditions of employment of any employees of Caravelle, including their
salaries, remuneration and any other payments to them, and there have been no
changes in any remuneration payable or benefits provided to any officer,
director, consultant, independent or dependent contractor or agent of Caravelle,
and Caravelle has not agreed or otherwise become committed to change any of the
foregoing since that date.
(i) Section 2.13 of the Caravelle Disclosure Schedule contains
a list of every benefit plan, program, agreement or arrangement (whether written
or unwritten) maintained, contributed to, or provided by Caravelle or any
affiliate or subsidiary thereof for the benefit of any of its employees or
dependent or independent contractors of Caravelle or their respective dependents
or
beneficiaries (the "BENEFIT PLANS") including all bonus, deferred compensation,
incentive compensation, share purchase, share option, stock appreciation,
phantom stock, savings, profit sharing, severance or termination pay, health or
other medical, life, disability or other insurance (whether insured or
self-insured), supplementary unemployment benefit, pension, retirement and
supplementary retirement plans, programs, agreements and arrangements.
(j) Section 2.13 of the Caravelle Disclosure Schedule contains
a list of all compensation policies and practices of Caravelle ("COMPENSATION
POLICIES") applicable to employees and dependent and independent contractors
thereof.
(k) Caravelle has delivered to Avesta true, complete and
up-to-date copies of all Benefit Plans and Compensation Policies and all
amendments thereto together with all summary descriptions of the Benefit Plans
and Compensation Policies provided to past or present participants therein and,
if applicable, the two most recent actuarial reports, the financial statements
and evidence of any registration in respect thereof.
(l) No fact, condition or circumstance exists that would
materially affect the information contained in the documents provided pursuant
to Section 2.13 and, in particular, no promises or commitments have been made by
Caravelle to amend any Benefit Plan or Compensation Policy.
2.14 CERTAIN AGREEMENTS AFFECTED BY THE AMALGAMATION. Other
than with respect to stock options and payments due hereunder, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby shall (i) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute,
bonus or otherwise) becoming due to any director or employee of Caravelle, (ii)
materially increase any benefits otherwise payable by Caravelle to any director
or employee of Caravelle, or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
2.15 DIRECTORS, OFFICERS AND EMPLOYEES. Caravelle has
delivered to Avesta a true and complete list of the names and current salaries
of all employees of Caravelle and of all agreements with such employees
(collectively, the "EMPLOYMENT AGREEMENTS"). Except for the Employment
Agreements, complete and accurate copies of which have been delivered to Avesta
and Avesta Technologies Canada, Caravelle is not a party to any effective
consulting or employment agreements with individual consultants or employees
(including officers and directors). Caravelle is in compliance with all
currently applicable laws and regulations respecting employment, discrimination
in employment, verification of immigration status, terms and conditions of
employment and occupational safety and health and equal employment opportunity
practices, and is not engaged in any unfair labor practice. Caravelle has
received no notice from any governmental entity, and there has not been asserted
before any governmental entity, any claim, action or proceeding to which
Caravelle is a party or involving Caravelle and there is neither pending nor, to
the best knowledge of Caravelle, threatened any investigation or hearing
concerning Caravelle arising out of or based upon any such laws, regulations or
practices.
2.16 INSURANCE. The Caravelle Disclosure Schedule sets forth a
complete and accurate list and summary of all policies of insurance of any
nature whatsoever maintained by Caravelle pertaining to the business of
Caravelle, showing, among other things, the amount of coverage, the company
issuing the policy and expiration date of each policy. Such policies are in full
force and effect and, except as otherwise set forth in the Caravelle Disclosure
Schedule, such policies, or other policies covering the same risks, have been in
full force and effect, without gaps,
continuously for the past two (2) years. Copies of all current insurance
policies of Caravelle have been made available to Avesta and Avesta Technologies
Canada for inspection. Caravelle is not in default under any of such policies,
and has not failed to give any notice or to present any claim under any such
policy in a due and timely fashion. Caravelle is not aware of any facts
concerning Caravelle or its business, operations, assets and liabilities,
contingent or otherwise, upon which an insurer might be justified in
questioning, reducing, or denying coverage or increasing premiums on existing
policies and all such insurance polices can be maintained in full force and
effect without substantial increase in premium or reducing the coverage thereof
following the Effective Date. The Caravelle Disclosure Schedule sets forth by
policy all accrued insurance obligations relating to the business of Caravelle
as of the date of this Agreement.
2.17 CONTRACTS AND LICENSES. The Caravelle Disclosure Schedule
sets forth a complete and accurate list of:
(a) Each contract, whether written or oral, between Caravelle
and any party to whom Caravelle provides products or services, which involved
payments to Caravelle of more than Ten Thousand Dollars ($10,000.00) during the
year ended December 31, 1997 or can reasonably be expected to involve payments
to Caravelle of more than Ten Thousand Dollars ($10,000.00) during the year
ending December 31, 1998;
(b) Each contract (except for real property leases, equipment
rental contracts, evidence of indebtedness and insurance contracts), whether
written or oral, between Caravelle and any party to whom Caravelle is obligated
or can reasonably be expected to pay more than Ten Thousand Dollars ($10,000.00)
for any twelve (12) month period;
(c) Each agreement for the license of any copyright, trade
secret or other proprietary right, or requiring indemnification by Caravelle
with respect to infringements of proprietary rights not entered into in the
ordinary course of business;
(d) Each material permit, license, franchise, certificate of
need and each other material certificate or authorization issued to Caravelle by
any governmental authority having jurisdiction in any area where Caravelle
provides products or services (a "LICENSE" or "LICENSES");
(e) Each agreement, contract or commitment containing any
covenant limiting the freedom of Caravelle to engage in any line of business or
compete with any person;
(f) Each joint marketing or development agreement to which
Caravelle is a party, either directly or indirectly;
(g) Each distribution agreement (identifying any that contain
exclusivity provisions) to which Caravelle is a party and a schedule of all
distributors and resellers of Caravelle's products as of the date hereof;
(h) Each agreement, contract or commitment to which Caravelle
is a party relating to capital expenditures involving future obligations in
excess of Ten Thousand Dollars ($10,000.00) and not cancelable without penalty;
(i) Each agreement of indemnification or guaranty not entered
into in the ordinary course of business to which Caravelle is a party other than
indemnification agreements between Caravelle and any of its officers or
directors;
(j) Each agreement, contract or commitment to which Caravelle
is a party relating to the disposition or acquisition of assets not in the
ordinary course of business or any ownership interest in any corporation,
partnership, joint venture or other business enterprise; and
(k) Each mortgage, indenture, loan or credit agreement,
security agreement or other agreement or instrument to which Caravelle is a
party relating to the borrowing of money or extension of credit.
The contracts and agreements which are required to be identified in the
Caravelle Disclosure Schedule are hereinafter referred to as the "CONTRACTS."
True and complete copies of each written Contract and true and complete written
summaries of each oral Contract have been delivered to Avesta and Avesta
Technologies Canada by Caravelle. Except as set forth on the Caravelle
Disclosure Schedule:
(i) Each of the Contracts is a legal, valid, binding and
enforceable agreement of Caravelle and the other parties thereto and
will continue to be legal, valid, binding and enforceable after the
Effective Date;
(ii) As of the date hereof, Caravelle has no reason to
believe that it will not be able to fulfill all of its obligations
under the Contracts which remain to be performed after the date hereof;
(iii) There has not occurred any material default (or
event which upon the provision of notice or lapse of time or both would
become such a default) under any of the Contracts on the part of
Caravelle of which Caravelle has failed to inform Avesta and Avesta
Technologies Canada or where such default, in the aggregate, would have
a Material Adverse Effect;
(iv) The Contracts are all of the agreements, contracts
and instruments that are material to Caravelle and necessary for the
operation of its business;
(v) The Licenses are the only governmental permits,
licenses, franchises, certificates of need and other certificates and
authorizations that are required for and are material to the operation
of Caravelle's business as such business is now, and since Caravelle's
inception has been, conducted;
(vi) The Licenses are, and as of the Effective Date will
be, in full force and effect and the continuing validity and
effectiveness of such Licenses will not be affected by the exchange of
the Amalco Exchangeable Shares to the Caravelle Shareholders as herein
contemplated; and
(vii) Caravelle is and has been in compliance in all
material respects with all conditions or requirements of the Licenses,
and Caravelle has not been notified by any governmental or licensing
authority that such parties intend to cancel, terminate or modify any
of such Licenses, and, to the best knowledge of Caravelle, there are no
valid grounds for any such cancellation, termination or modification.
2.18 INTELLECTUAL PROPERTY RIGHTS.
(a) Caravelle owns, or is licensed or otherwise
possesses legally
enforceable rights to use all patents, trademarks, trade names, service marks,
copyrights, and any applications therefor, maskworks, net lists, schematics,
technology, know-how, trade secrets, inventory, ideas, algorithms, processes,
computer software programs or applications (in both source code and object code
forms), and tangible or intangible proprietary information or material
(collectively, the "INTELLECTUAL PROPERTY") that are used in the business of
Caravelle as currently conducted or as proposed to be conducted by Caravelle.
(b) Caravelle has provided Avesta and Avesta
Technologies Canada with a list, and such list is set forth on the Caravelle
Disclosure Schedule, of (i) all patents and patent applications and all
registered and unregistered trademarks, trade names and service marks,
registered and unregistered copyrights, and maskworks which Caravelle considers
to be material to its business and included in the Intellectual Property,
including the jurisdictions in which each such Intellectual Property right has
been issued or registered or in which any application for such issuance and
registration has been filed, (ii) all licenses, sublicenses and other agreements
as to which Caravelle is a party and pursuant to which any person is authorized
to use any Intellectual Property, and (iii) all material licenses, sublicenses
and other agreements as to which Caravelle is a party and pursuant to which
Caravelle is authorized to use any third party patents, trademarks or
copyrights, including software (the "THIRD PARTY INTELLECTUAL PROPERTY RIGHTS")
which are incorporated in, are, or form a part of any Caravelle product that is
material to its business.
(c) Caravelle is not aware of any unauthorized use,
disclosure, infringement or misappropriation of any Intellectual Property
rights of Caravelle, any trade secret material to Caravelle, or any Intellectual
Property right of any third party to the extent licensed by or through
Caravelle, by any third party, including any employee or former employee of
Caravelle. Caravelle has not entered into any agreement to indemnify any other
person against any charge of infringement of any Intellectual Property, other
than indemnification provisions contained in purchase orders or customer
agreements arising in the ordinary course of business.
(d) Caravelle is not, nor will it be as a result of
the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, in breach of any license, sublicense or other
agreement relating to the Intellectual Property or Third Party Intellectual
Property Rights.
(e) All patents, registered trademarks, service marks
and copyrights held by Caravelle are valid and subsisting. Caravelle (i) is not
a party to any suit, action or proceeding which involves a claim of infringement
of any patents, trademarks, service marks, copyrights or violation of any trade
secret or other proprietary right of any third party nor, to the best knowledge
of Caravelle, has any such suit, action or proceeding been threatened and (ii)
has not brought any action, suit or proceeding for infringement of Intellectual
Property or breach of any license or agreement involving Intellectual Property
against any third party. The manufacture, marketing, licensing or sale of
Caravelle's products does not infringe any patent, trademark, service mark,
copyright, trade secret or other proprietary right of any third party.
(f) Caravelle has a policy to secure valid written
assignments from all consultants and employees who contribute or have
contributed to the creation or development of Intellectual Property of the
rights to such contributions that Caravelle does not already own by operation of
law. Each person presently employed by Caravelle, and each person, whether
presently employed by Caravelle or not, who has developed technology which
relates to the Intellectual Property, has executed a proprietary information
agreement in Caravelle's standard form a copy of which is set out in the
Caravelle Disclosure Schedule. Such proprietary information agreements
constitute legal, valid and binding obligations of Caravelle and, to the best of
Caravelle's knowledge, of such other persons.
(g) Caravelle has taken all reasonable and
appropriate steps to protect and preserve the confidentiality of all
Intellectual Property not otherwise protected by patents, or patent applications
or copyright (the "CONFIDENTIAL INFORMATION"). To the best of Caravelle's
knowledge, all use, disclosure or appropriation of Confidential Information
owned by Caravelle or by a third party has been pursuant to the terms of a
written agreement between Caravelle and such third party. To the best of
Caravelle's knowledge, all use, disclosure or appropriation of Confidential
Information not owned by Caravelle has been pursuant to the terms of a written
agreement between Caravelle and the owner of such Confidential Information.
2.19 COMPLIANCE WITH LAW; CONSENTS. The business and
operations of Caravelle have been and are being conducted in compliance with all
laws, rules, regulations and licensing requirements applicable thereto.
Caravelle is not aware of any facts which might form the basis for a claim that
any violation of such laws exists. There are no unresolved notices of deficiency
or charges of violation brought or, to the best knowledge of Caravelle,
threatened against Caravelle, under any Federal, state Provincial or other local
laws or regulations. Except in connection with filing the Certificate of
Amalgamation, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any Federal, state,
Provincial or local governmental authority or any non-governmental third party
on the part of Caravelle is required in connection with the execution, delivery
and performance by Caravelle of this Agreement, the consummation of the
transactions contemplated hereby or the Canadian operation of the business of
Caravelle following the Effective Date.
2.20 ENVIRONMENTAL MATTERS.
(a) For the purposes of this Agreement, the term
"ENVIRONMENTAL LAWS" shall mean all Federal, Provincial and local environmental
protection, occupational, health and safety or similar laws, ordinances,
restrictions, licenses, rules, regulations and permit conditions, and the term
"HAZARDOUS MATERIALS" shall mean any hazardous or toxic substances, wastes or
materials, defined as such or governed by any applicable Environmental Law.
(b) Caravelle is in compliance in all material
respects with all Environmental Laws and there are no facts known after due
inquiry by Caravelle that could give rise to a notice of non-compliance with any
Environmental Law.
(c) Section 2.20 of the Caravelle Disclosure Schedule
contains a complete list of all environmental permits, consents, waivers,
licenses and rights used in or required to carry on the business of Caravelle in
its usual and ordinary course, such permits are in full force and effect.
(d) Caravelle has not used any of its facilities to
generate, manufacture, refine, treat, transport, store, handle, dispose,
transfer, produce or process Hazardous Materials except in compliance in all
material respects with all Environmental Laws.
(e) To the knowledge of Caravelle after due inquiry,
there are no pending changes to Environmental Laws that would render illegal, or
materially restrict, the operation of the business in its usual and ordinary
course.
(f) Caravelle has not been convicted of an offence or
been subjected to
any judgment, injunction or other proceeding or been fined or otherwise
sentenced for non-compliance with any Environmental Laws, and it has not settled
any prosecution or other proceeding short of conviction.
(g) Caravelle has not caused or permitted the release
of any Hazardous Material at, on or under the lands occupied thereby,
or the release of any Hazardous Material off-site of such lands, except in
compliance in all material respects with Environmental Laws.
(h) Caravelle has not received written notice, or
knowledge after due inquiry of any facts that could give rise to any
notice, that Caravelle is potentially responsible for any remedial action under
any Environmental Law.
(i) Caravelle has provided Avesta with copies of all
analyses and monitoring data for soil, groundwater and surface water and
all reports pertaining to any environmental assessments or audits relating
thereto that were obtained by, or are in the possession or control of Caravelle.
(j) Caravelle has maintained all environmental and
operating documents and records in the manner and for the time periods required
by Environmental Laws and, except as disclosed in Section 2.20 of the Caravelle
Disclosure Schedule, has never conducted an environmental audit of any lands it
occupies.
(k) Caravelle has not breached any obligation to
report to any person imposed by any Environmental Law.
2.21 AFFILIATE RELATIONSHIPS. Caravelle has no material
financial interest, direct or indirect, in any supplier or service provider to,
or customer of, subsidiary or other party to any contract or other arrangement
which is material to Caravelle. No officer, director of shareholder of Caravelle
(nor any spouse of any of such persons, or any trust, partnership or corporation
in which any of such persons has or has had a material economic interest), has
or has had, directly or indirectly, (i) an interest in any entity which
furnishes or sells a material amount of products or services that Caravelle
furnishes or sells; (ii) an interest in any entity that purchases from or sells
or furnishes to Caravelle, any material amount of products or services; (iii) a
beneficial interest in any contract or agreement set forth on the Caravelle
Disclosure Schedule; or (iv) a beneficial interest in Avesta or Avesta
Technologies Canada; provided, that ownership of no more than one percent (1%)
of the outstanding voting stock of a publicly traded corporation shall not be
deemed an "interest in any entity" for purposes of this Section 2.21.
2.22 NO TERMINATION OF BUSINESS RELATIONSHIP. None of the
entities, governmental or otherwise, with which Caravelle has a material
business relationship or any other present material customer of Caravelle has
given notice of any intention to cancel or otherwise terminate a material
business relationship with Caravelle and Caravelle has no knowledge of any event
(including, without limitation, the transactions contemplated hereby) which
would precipitate the cancellation or termination of, or entitle any such entity
or customer to terminate, such a material business relationship.
2.23 CUSTOMERS. The Caravelle Disclosure Schedule sets forth a
list of all of Caravelle's current customers and suppliers which are material to
the conduct of its business. Other than as set out in the Caravelle Disclosure
Schedule, no customer of Caravelle has exercised any right of return or similar
remedy with respect to any products or services provided by Caravelle, and to
the
best knowledge of Caravelle, there are no intentions, claims or plans by any
customers to return any products in the future.
2.24 CORPORATE RECORDS. The Corporate Records of the
Corporation are materially complete and accurate and all material corporate
proceedings and actions reflected therein have been conducted or taken in
compliance with all applicable Laws and with the articles and by-laws of the
Corporation, and without limiting the generality of the foregoing, (i) the
minute books contain complete and accurate minutes in all material respects of
all meetings of the directors and shareholders of the Corporation held since the
incorporation of the Corporation, and all such meetings were duly called and
held; (ii) the minute books contain all written resolutions that were duly
passed; (iii) the share certificate books, register of shareholders and register
of transfers or any such similar records of the Corporation are complex and
accurate, and all such transfers have been duly completed and approved and any
exigible tax payable by the Corporation in connection with the transfer of any
securities of the Corporation has been duly paid; and (iv) the registers of
directors and officers or any such similar records of the Corporation are
complete and accurate and all former and present directors and officers of the
Corporation were duly elected or appointed, as the case may be.
2.25 POWERS OF ATTORNEY; BANK ACCOUNTS. The Caravelle
Disclosure Schedule sets forth (i) the names and addresses of all persons
holding a power of attorney on behalf of Caravelle; and (ii) the names and
addresses of all banks or other financial institutions in which Caravelle has an
account, deposit, or safe-deposit box, with the number and a description of the
account and the names of all persons authorized to draw on such accounts or
deposits or to have access to such boxes.
2.26 VOTE REQUIRED. The affirmative vote of the holders of
two-thirds of the shares of Caravelle Stock outstanding, plus the approval of
Working Ventures, Technocap and Potter, Alexander and Associates, Inc. is the
only vote, or approval by, the holders of any of Caravelle's capital stock
necessary to approve the Amalgamation.
2.27 BOARD APPROVAL. The Board of Directors of Caravelle has,
prior to the date hereof, unanimously (i) approved this Agreement and the
transactions contemplated hereby; (ii) determined that the Amalgamation is in
the best interests of the Caravelle Shareholders and is on terms that are fair
to such shareholders, and (iii) determined to recommend that the Caravelle
Shareholders approve this Agreement and the transactions contemplated hereby.
2.28 BROKERS OR FINDERS. Caravelle has not incurred, and will
not incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby.
2.29 RETAINED EMPLOYEES AND AGREEMENTS. Caravelle shall use
its best efforts to obtain on or prior to the Effective Date (i) from each of
the Caravelle employees identified on part (a) of SCHEDULE 2.29 attached hereto,
an executed form of Avesta's standard Noncompetition and Nonsolicitation
Agreement; and (ii) from each of the Caravelle employees identified on part (b)
of SCHEDULE 2.29 attached hereto, an executed form of Avesta's standard Employee
Nondisclosure and Developments Agreement (both substantially in the forms
attached hereto as EXHIBIT 2.29), together with any and all other documents
reasonably requested by Avesta in connection with the retention of such
employees by Avesta. Effective as of the Effective Date, Avesta shall continue
the employment of each such person identified on SCHEDULE 2.29 (the "CARAVELLE
EMPLOYEES").
2.30 CERTAIN AGREEMENTS. Caravelle shall use commercially
reasonable efforts to cause (i) each Caravelle employee whose employment with
Caravelle was terminated after January 1,
1998, including but not limited to Eric Melka, as soon as practicable after
Closing, to sign a general release and indemnity in favor of Caravelle and its
successors and (ii) Tim Boreham and Lynda Partner to enter into the Boreham and
Partner Agreements (as hereinafter defined).
2.31 LIENS. Other than as set forth on Section 2.31 of the
Caravelle Disclosure Schedule, there are no liens or rights of others
outstanding against Caravelle or any of its assets.
2.32 REPRESENTATIONS COMPLETE. None of the representations and
warranties made by Caravelle herein, nor any statement made in the Caravelle
Disclosure Schedule or any other Exhibit, Schedule or certificate furnished
pursuant to this Agreement, contains or will contain any untrue statement of a
material fact, or omit to state any material fact required to be stated therein,
or necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
2.33 CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES.
Caravelle shall not take any actions that would result in any of the
representations or warranties set forth in this Article 2 being untrue.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CARAVELLE SHAREHOLDERS
Each Caravelle Shareholder hereby, severally and not jointly,
represents and warrants to Avesta and Avesta Technologies Canada as follows:
3.1 AUTHORITY.
(a) Such Caravelle Shareholder has all requisite
power and authority to execute and deliver this Agreement, the Escrow Agreement
(as hereinafter defined), the Amended and Restated Investor Rights Agreement and
any other agreement required in connection with becoming holders of Amalco
Exchangeable Shares or the Avesta Series B Preferred Shares (together, the
"FUNDAMENTAL AGREEMENTS") and to perform his, her or its obligations under the
Fundamental Agreements. The Fundamental Agreements shall each have been duly and
validly executed and delivered by such stockholder, and each shall constitute a
valid and binding obligation of such stockholder, enforceable against such
stockholder in accordance with its terms.
(b) The execution and delivery of the Fundamental
Agreements by such stockholder and the consummation by such stockholder of
the transactions contemplated thereby will not (i) require on the part of such
stockholder any filing with, or permit, authorization, consent or approval of,
any governmental entity, (ii) conflict with, result in breach of, constitute
(with or without due notice or lapse of time or both) a default under, result in
the acceleration of, create in any party any right to accelerate, terminate,
modify or cancel, or require any notice, consent or waiver under, any contract,
lease, sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, security interest or
other arrangement to which such stockholder is a party or by which such
stockholder is bound or to which any of its assets are subject, or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
such stockholder or any of its properties or assets.
3.2 INVESTMENT REPRESENTATIONS.
(a) Such Caravelle Shareholder is acquiring the
Amalco Exchangeable Shares for his, her or its own account for investment only,
and not with a view to, or for sale in connection with, any distribution of such
Amalco Exchangeable Shares in violation of the Securities Act or any rule or
regulation under the Securities Act.
(b) Such Caravelle Shareholder has had adequate
opportunity to obtain from representatives of Avesta such information, in
addition to the representations set forth in the Agreement, as is necessary to
evaluate the merits and risks of his, her or its investment in Avesta.
(c) Such Caravelle Shareholder has sufficient
experience in business, financial and investment matters to be able to evaluate
the risks involved in the acquisition of the Amalco Exchangeable Shares to be
issued to him, her or it and to make an informed investment decision with
respect to such investment.
3.3 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the
Caravelle Shareholders represents and warrants that it has reviewed the
representations and warranties made by Caravelle and set forth above in Section
2 and, to the best of its knowledge, such representations are true and correct.
3.4 SHARE OWNERSHIP. Each of the Caravelle Shareholders
represents and warrants that it is the owner, free and clear of any
encumbrances, of the number of shares of Caravelle Common Stock set forth
opposite his, her or its name in SCHEDULE 1. Each Caravelle Shareholder has full
right and authority to transfer said shares to Avesta.
3.5 REPRESENTATIONS COMPLETE. None of the representations and
warranties made by the Caravelle Shareholders herein, nor any statement made in
the Caravelle Disclosure Schedule or any other Exhibit, Schedule or certificate
furnished pursuant to this Agreement, contains or will contain any untrue
statement of a material fact, or omit to state any material fact required to be
stated therein, or necessary in order to make the statements made, in light of
the circumstances under which they were made, not misleading.
3.6 CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES. The
Caravelle Shareholders shall not take any actions that would result in any of
the representations or warranties set forth in Articles 2 or 3 being untrue.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AVESTA
AND AVESTA TECHNOLOGIES CANADA
Except as disclosed in a document referring specifically to
the representations and warranties in this Agreement which is delivered by
Avesta and Avesta Technologies Canada to Caravelle prior to the execution of
this Agreement (the "AVESTA DISCLOSURE SCHEDULE"), each of Avesta and Avesta
Technologies Canada, jointly and severally, agrees with, and represents and
warrants to Caravelle and the Caravelle Shareholders as set forth below:
4.1 CORPORATE EXISTENCE AND GOOD STANDING. Each of Avesta and
Avesta Technologies Canada is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation. Each of
Avesta and Avesta Technologies Canada is qualified to do business, is in good
standing and has all required and appropriate licenses in each jurisdiction in
which its failure to obtain or maintain such qualification, good standing or
licensing (i) would, individually or in the aggregate, have or reasonably could
be expected to have a Material Adverse Effect on Avesta and Avesta Technologies
Canada, taken as a whole; or (ii) would result in a material breach of any of
the other representations, warranties, covenants or agreements set forth in this
Agreement.
4.2 CORPORATE AUTHORITY. Each of Avesta and Avesta
Technologies Canada has all requisite corporate power and authority to execute
and deliver this Agreement and all other documents contemplated hereby
(collectively, the "AVESTA DOCUMENTS"), to consummate the transactions
contemplated hereby, and to perform its obligations under the terms of this
Agreement. The Avesta Documents have been duly executed and delivered by each of
Avesta and Avesta Technologies Canada, have been authorized by all necessary
corporate action of Avesta and Avesta Technologies Canada, and constitute legal,
valid and binding obligations of each of Avesta and Avesta Technologies Canada,
enforceable against each of Avesta and Avesta Technologies Canada in accordance
with their terms, except as such enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by general equitable
principles.
4.3 CONSENTS. Except in connection with filing the Articles of
Amalgamation for Amalco, no consent, approval, authorization, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any Federal, state, Provincial or local governmental authority or
any governmental third party on the part of Avesta or Avesta Technologies Canada
is required in connection with the execution, delivery and performance by Avesta
and Avesta Technologies Canada of this Agreement or the consummation of the
transactions contemplated hereby.
4.4 NO BREACH OF AGREEMENTS. The consummation of the
transactions contemplated by this Agreement will not result in or constitute any
of the following: (i) a conflict, breach, violation or default with or an event
that, with notice or lapse of time or both, would be a conflict, breach,
violation or default of (A) the respective Certificates of Incorporation or
Bylaws of Avesta and Avesta Technologies Canada, or (B) of any material
contract, lease, license, promissory note, conditional sales contract,
commitment, indenture, mortgage, deed of trust, or other agreement, instrument
or arrangement to which Avesta or Avesta Technologies Canada is a party or by
which Avesta or Avesta Technologies Canada or their respective assets are bound,
or (C) any law, rule or regulation of any governmental authority, or any
judgment, order, injunction or decree applicable to Avesta or Avesta
Technologies Canada, their respective assets or their respective capital stock;
(ii) an event that would permit any party to terminate any agreement or to
accelerate the maturity of or permit the subordination of any indebtedness or
other obligation of Avesta or Avesta Technologies Canada or the capital stock of
Avesta or Avesta Technologies Canada; or (iii) the creation or imposition of any
charge, lien, encumbrance or adverse claim of any kind whatsoever on any of the
assets of Avesta or Avesta Technologies Canada or the capital stock of Avesta or
Avesta Technologies Canada.
4.5 BROKERS. Neither Avesta nor Avesta Technologies Canada has
incurred, and neither will incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
4.6 SHARES. Each of the shares of Amalco Exchangeable Shares
and Avesta Series B Preferred Stock is free and clear of any encumbrances, and
may be legally transferred to the Caravelle
Shareholders. The Avesta Series B Preferred Stock which shall be issued to the
Caravelle Shareholders shall be the same stock, with the same attributes and
rights, as that issued to every other investor in Avesta who purchased the
Avesta Series B Preferred Stock.
4.7 FINANCIAL STATEMENTS. Avesta has provided Caravelle with
its draft financial statements for the year ended December 31, 1997 and for the
three months January, February and March 1998 (the "AVESTA FINANCIAL
STATEMENTS"). The internal books and records of Avesta from which the Avesta
Financial Statements were derived do not contain any information which is false
or misleading. The Avesta Financial Statements (i) were prepared in accordance
with such books and records; (ii) were prepared in accordance with Avesta's
accounting policies and principles, and are in accordance with GAAP; and (iii)
present fairly Avesta's financial position and results of operations at the
dates and for the periods reflected therein.
4.8 CAPITALIZATION.
(a) The authorized capital stock of Avesta consists
of 20,000,000 shares of Common Stock, 1,767,243 shares of Series A Preferred
Stock, and 2,158,668 shares of Series B Preferred Stock, of which 5,329,720
shares of Common Stock, 1,767,243 shares of Series A Preferred Stock, warrants
to purchase 436,357 shares of Series A Preferred Stock, 1,728,117 shares of
Series B Preferred Stock, and warrants to purchase 61,889 shares of Series B
Preferred Stock are presently issued and outstanding. All of the outstanding
shares of Avesta stock have been duly authorized and validly issued and are
fully paid and nonassessable and are free from any charge, lien, encumbrance or
adverse claim of any kind whatsoever. There are options to purchase 2,091,776
shares of Avesta Common Stock which are outstanding and unexercised pursuant to
the Avesta 1996 Stock Option Plan. All of the outstanding shares of Avesta stock
and the Options have been issued pursuant to valid exemptions from registration
under all securities laws and in accordance with all other applicable laws.
(b) The authorized capital stock of Avesta
Technologies Canada consists of 100 common shares. All of the outstanding shares
of Avesta Technologies Canada stock have been duly authorized and validly issued
and are fully paid and nonassessable and are free from any charge, lien,
encumbrance or adverse claim of any kind whatsoever. Other than as set forth
herein, there are no options which are outstanding and unexercised, and there
are no subscriptions, options, warrants, calls, conversion rights, rights of
exchange, or other rights, plans, agreements or commitments of any nature
whatsoever (including, without limitation, conversion or preemptive rights)
providing for the purchase, issuance, transaction, registration or sale of any
shares of Avesta Technologies Canada's capital stock or any securities
convertible into or exchangeable for any shares of Avesta Technologies Canada's
capital stock. All of the outstanding shares of Avesta Technologies Canada stock
have been issued pursuant to valid exemptions from registration under all
securities laws and in accordance with all other applicable laws.
4.9 REPRESENTATIONS COMPLETE. None of the representations and
warranties made by Avesta and Avesta Technologies Canada herein, any document
provided to Caravelle in connection with this transaction, nor any statement
made in the Avesta and Avesta Technologies Canada Disclosure Schedule or any
other Exhibit, Schedule or certificate furnished pursuant to this Agreement,
contains or will contain any untrue statement of a material fact, or omit to
state any material fact required to be stated therein, or necessary in order to
make the statements made, in light of the circumstances under which they were
made, not misleading.
4.10 CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES. Avesta
and Avesta Technologies Canada shall not take any actions that would result in
any of the representations or
warranties set forth in this Article 4 being untrue.
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS
5.1 CONDUCT OF BUSINESS BY AVISTA TECHNOLOGIES CANADA AND
CARAVELLE. Except as disclosed in Section 5.1 of the Caravelle Disclosure
Schedule, during the period from March 6, 1998 and continuing until the earlier
of the termination of this Agreement or the Effective Time, each of Avesta
Technologies Canada and Caravelle agrees (except to the extent expressly
contemplated by this Agreement or as consented to in writing by the other) to
carry on its business in the usual, regular and ordinary course of business in
substantially the same manner as heretofore conducted, to pay debts and taxes
when due subject to good faith disputes over such debts or taxes, to pay or
perform other obligations when due, and to use all reasonable efforts consistent
with past practice and policies to preserve intact its present business
organizations, use its reasonable efforts consistent with past practice to keep
available the services of its present officers and key employees and use its
reasonable efforts consistent with past practice to preserve its relationships
with customers, suppliers, distributors, licensors, licensees, and others having
business dealings with it to the end that its goodwill and ongoing businesses
shall be unimpaired at the Effective Time. Each of Avesta Technologies Canada
and Caravelle agree to use its best efforts to promptly notify the other of any
event or occurrence not in the ordinary course of its business, and of any event
which would have a Material Adverse Effect on such party taken as a whole.
Without limiting the foregoing, except as expressly contemplated by this
Agreement, neither Avesta Technologies Canada nor Caravelle shall do, cause or
permit any of the following, or allow, cause or permit it to do, cause or permit
any of the following, without the prior written consent of the other parties
hereto:
(a) CHARTER DOCUMENTS. Cause or permit any amendments
to its Articles of Incorporation, as amended, or Bylaws, except for the filing
of Articles of Amendment to create the Exchangeable Shares;
(b) DIVIDENDS; CHANGES IN CAPITAL STOCK. Declare or
pay any dividends on or make any other distributions (whether in cash, stock or
property) in respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of shares
in connection with any termination of service to it;
(c) STOCK OPTION PLANS, ETC. Accelerate, amend or
change the period of exercisability or vesting of options or other rights
granted under its employee stock plans or director stock plans or authorize cash
payments in exchange for any options or other rights granted under any of such
plans;
(d) OTHER. Take, or agree in writing or otherwise to
take, any of the actions described in Sections 5.1(a) through (c) above, or any
action which would make any of its representations warranties, covenants or
agreements contained in this Agreement untrue or incorrect or prevent it from
performing or cause it not to perform its covenants hereunder.
5.2 CONDUCT OF BUSINESS OF CARAVELLE. During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, Caravelle shall not do, cause or permit
any of the following, without the prior written consent of
Avesta and Avesta Technologies Canada:
(a) MATERIAL CONTRACTS. Except for contracts or
commitments entered into in the ordinary course of business consistent with past
practice in an amount less than Ten Thousand Dollars ($10,000.00) in any one
case enter into any contract or commitment, or violate, amend or otherwise
modify or waive any of the terms of any of its existing contracts or
commitments;
(b) ISSUANCE OF SECURITIES. Other than in connection
with the Caravelle Rights Offering, issue, deliver or sell or authorize
or propose the issuance, delivery or sale of, or purchase or propose the
purchase of, any shares of its capital stock or securities convertible into, or
grant any subscriptions, rights, warrants or options to acquire, or other
agreements or commitments of any character obligating it to issue any such
shares or other convertible securities, other than the issuance of shares of
Caravelle Stock pursuant to the exercise of stock options, warrants or other
rights therefor outstanding as of January 31, 1998;
(c) INTELLECTUAL PROPERTY. Transfer to any person or
entity any rights to its Intellectual Property;
(d) EXCLUSIVE RIGHTS. Enter into or amend any
agreements pursuant to which any other party is granted exclusive marketing or
distribution rights with respect to any of its products or technology;
(e) DISPOSITIONS. Sell, lease, license or otherwise
dispose of or encumber any of its properties or assets which are
material, individually or in the aggregate, to its business, taken as a whole;
(f) INDEBTEDNESS. Incur any indebtedness for borrowed
money or guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others, except in the ordinary course of
business consistent with past practice;
(g) LEASES. Enter into any operating lease, except in
the ordinary course of business consistent with past practice;
(h) PAYMENT OF OBLIGATIONS. Pay, discharge or satisfy
in an amount in excess of Ten Thousand Dollars ($10,000.00) in any one case, any
claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction of
liabilities reflected or reserved against in the Interim Financial Statements;
(i) CAPITAL EXPENDITURES. Make any material capital
expenditures, capital additions or capital improvements other than as set forth
on the Caravelle 1998 Operating Plan;
(j) INSURANCE. Reduce the amount of any material
insurance coverage provided by existing insurance policies other than to
reduce or eliminate the Key Person Life Insurance on Lynda Partner;
(k) EMPLOYEE BENEFIT PLANS; NEW HIRES; PAY INCREASES.
Adopt or amend any material employee benefit or stock purchase or stock
ownership or option plan, or hire any new officer level employee (except that it
may hire a replacement for any current officer level employee if it first
provides Avesta and Avesta Technologies Canada ten (10) days' prior written
notice regarding such hiring decision), hire any director level employee in
departments other than sales, marketing or
engineering without first providing Avesta and Avesta Technologies Canada ten
(10) days' prior written notice of such hire, pay any special bonus or special
remuneration to any employee or director, or increase the salaries or wage rates
of its employees;
(l) SEVERANCE ARRANGEMENTS. Grant any severance or
termination pay (i) to any director or officer, or (ii) to any other employee
except payments made pursuant to standard written agreements outstanding on the
date hereof;
(m) LAWSUITS. Commence a lawsuit other than (i) for
the routine collection of bills, (ii) in such cases where it in good
faith determines that failure to commence suit would result in the material
impairment of a valuable aspect of its business, provided that it consults with
Avesta and Avesta Technologies Canada prior to the filing of such a suit, or
(iii) for a breach of this Agreement;
(n) ACQUISITIONS. Acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to its business, taken as a whole, or acquire
or agree to acquire any equity securities of any corporation, partnership,
association or business organization;
(o) TAXES. Other than in the ordinary course of
business, make or change any material election in respect of taxes, adopt or
change any accounting method in respect of taxes, enter into any closing
agreement, settle any claim or assessment in respect of taxes, or consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of taxes;
(p) NOTICES. Caravelle shall give all notices and
other information required to be given to the employees of Caravelle, any
collective bargaining unit representing any group of employees of Caravelle, and
any applicable government authority under the any applicable law in connection
with the transactions contemplated by this Agreement;
(q) REVALUATION. Revalue any of its assets,
including, without limitation, writing down the value of inventory or writing
off notes or accounts receivable; or
(r) OTHER. Take or agree in writing or otherwise to
take, any of the actions described in Sections 5.2(a) through (q) above, or any
action which would make any of its representations warranties, covenants or
agreements contained in this Agreement untrue or incorrect or prevent it from
performing or cause it not to perform its covenants hereunder.
5.3 EXCLUSIVE DEALING. Until the earlier of the Closing or the
termination of this Agreement pursuant to Section 9 hereof, neither Caravelle
nor the Caravelle Shareholders will, directly or indirectly, through any
officer, director, employee, affiliate or agent or otherwise, (a) take any
action to solicit, initiate, seek, entertain, or encourage or support any
inquiry, proposal or offer from any person or business entity relating to an
acquisition or purchase of all or any portion of the assets of (other than in
the ordinary course of business) or an equity interest in Caravelle or any
amalgamation, merger, consolidation or business combination with Caravelle, or
(b) participate in any discussions or negotiations regarding, or furnish to any
other person or business entity, any information with respect to or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other person to do or seek any of the foregoing.
Caravelle and the Caravelle Shareholders shall promptly notify Avesta of any
such proposal or offer,
or any inquiry or contact with respect thereto received by Caravelle or, to
their knowledge, any Caravelle Shareholder.
5.4 ACCESS TO INFORMATION. Each of Caravelle and Avesta (each
a "DISCLOSING PARTY") shall give the other party and their respective
accountants, legal counsel and other representatives (collectively, the
"REQUESTING PARTIES") full access, during normal business hours throughout the
period prior to the Closing, to all of the properties, books, contracts,
commitments and records relating to the business, assets and liabilities of the
Disclosing Party, and shall furnish the Requesting Parties, their respective
accountants, legal counsel and other representatives during such period all such
information concerning its affairs as the Requesting Parties may reasonably
request; provided that any furnishing of such information pursuant hereto or any
investigation by a Requesting Party shall not affect such Requesting Party's
right to rely on the representations, warranties, covenants and agreements made
by the Disclosing Party in this Agreement. Pending the Closing, each Requesting
Party shall hold in confidence all information so obtained and will use such
information only for purposes related to the transactions contemplated hereby.
Each Requesting Party further agrees that, pending the Closing, it will not
disclose any such information to any third party except upon the prior written
consent of the Disclosing Party, or except as required by law or except to its
accountants, legal counsel or other representatives who have agreed to maintain
the confidentiality of such information. If the transactions contemplated hereby
are not consummated, the Requesting Party shall return all data to the
Disclosing Party and continue to honor the foregoing confidentiality and
non-disclosure covenants for a period of three (3) years. Such obligation of
confidentiality shall not extend to any information (i) which is shown to be or
to have been generally known to others engaged in the same trade or business as
the Disclosing Party; (ii) previously known to the Requesting Party prior to the
start of discussions leading to the execution of this Agreement; (iii) obtained
by the Requesting Party in good faith from third parties who are not obligated
to maintain the information confidential; (iv) that is or shall be public
knowledge through no act or omission by the Requesting Party or any of its
directors, officers, employees, or representatives; or (v) that is required to
be disclosed pursuant to any law, rule or regulation or pursuant to any order or
decree of any appropriate court or governmental agency or pursuant to any
disclosure obligations set forth in the Federal securities laws.
5.5 DISCLOSURE OF TRANSACTION. Each of the parties hereto
agrees to issue a mutually acceptable joint press release upon the execution of
this Agreement and upon the Closing. Each party will review and agree to the
text of any other public announcement related to this Agreement, the Closing or
the transactions contemplated hereby prior to the release thereof.
5.6 CERTAIN DEFAULTS; LITIGATION. Caravelle will give prompt
notice to Avesta and Avesta Technologies Canada of:
(a) any notice of default received by Caravelle
subsequent to the date of this Agreement and prior to the Closing under any
instrument or agreement to which Caravelle or its assets is a party or by which
it is bound, which default could, if not remedied, result in a Material Adverse
Effect or which would render incorrect or misleading any representation made
herein; or
(b) any suit, action, proceeding or investigation
instituted or threatened against or affecting Caravelle subsequent to the
date of this Agreement and prior to the Closing which, if adversely determined,
could result in a Material Adverse Effect or which would render incorrect or
misleading any representation made herein.
5.7 AUDITED FINANCIAL STATEMENTS. On the Effective Date,
Caravelle shall have
delivered to Avesta and Avesta Technologies Canada audited financial statements
of Caravelle, including footnotes, for the fiscal year ended December 31, 1997
prepared by Caravelle's independent auditors in accordance with Canadian GAAP
(the "CARAVELLE AUDIT").
5.8 BREACH OF REPRESENTATIONS AND WARRANTIES. Each of
Caravelle, the Caravelle Shareholders, Avesta and Avesta Technologies Canada
shall use commercially reasonable efforts to assure that their respective
representations and warranties remain true and correct in all material respects.
In the event of, and promptly after, becoming aware of the occurrence or pending
or threatened occurrence of any event which would cause their respective
representations and warranties not to be true and correct, each party shall give
detailed notice thereof to the other and shall use commercially reasonable
efforts to prevent or promptly remedy such pending or threatened occurrence or
event.
5.9 NECESSARY CONSENTS. Each of Caravelle, Avesta and Avesta
Technologies Canada shall promptly apply for or otherwise seek, and use its
commercially reasonable efforts to obtain, all consents and approvals required
to be obtained by it for the consummation of the transactions contemplated by
this Agreement, and Caravelle shall use its best efforts to obtain all necessary
consents, waivers and approvals under any of Caravelle's Contracts in connection
with the Amalgamation, (including but not limited to consent to the assignment
of the lease for Caravelle's offices), except such consents and approvals as
Avesta, Avesta Technologies Canada and Caravelle agree Caravelle shall not seek
to obtain, as contemplated by the Caravelle Disclosure Schedule.
5.10 COMMERCIALLY REASONABLE EFFORTS. Caravelle, the Caravelle
Shareholders, Avesta and Avesta Technologies Canada shall each use commercially
reasonable efforts to effectuate the transactions contemplated hereby and to
fulfill and cause to be fulfilled the conditions to closing under this
Agreement.
5.11 ESCROW AGREEMENT. On or before the Effective Time,
Avesta, Caravelle, the Escrow Agent (as hereinafter defined) and the Caravelle
Shareholders will execute the Escrow Agreement contemplated by Article 10
substantially in the form attached hereto as EXHIBIT 5.11 (the "ESCROW
AGREEMENT").
ARTICLE 6
CONDITIONS PRECEDENT TO
OBLIGATIONS OF AVESTA AND AVESTA TECHNOLOGIES CANADA
The obligations of Avesta and Avesta Technologies Canada to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or before the Closing, of all the following conditions, unless
expressly waived in writing by Avesta and Avesta Technologies Canada:
6.1 REPRESENTATIONS AND WARRANTIES TRUE. All representations
and warranties by Caravelle and the Caravelle Shareholders in this Agreement,
the Caravelle Disclosure Schedule, or the other Schedules and Exhibits hereto,
or in any written statement or certificate that shall be delivered by Caravelle
under this Agreement shall be true on and as of the Effective Date as though
such representations and warranties were made on and as of that date.
6.2 CONVENANTS PERFORMED. Caravelle and the Caravelle
Shareholders shall have performed, satisfied, and complied with all covenants,
agreements, and conditions required by this
Agreement to be performed or complied with by Caravelle on or before the
Effective Date.
6.3 CERTIFICATE. Avesta and Avesta Technologies Canada shall
have received from Caravelle a certificate from the Chief Executive Officer and
Chief Financial Officer of Caravelle, as officers of, and on behalf of
Caravelle, and not in their personal capacities, dated the Effective Date,
certifying, in such detail as Avesta and Avesta Technologies Canada and their
counsel may reasonably request, that the conditions specified in this Article 6
have been satisfied (the "CARAVELLE OFFICERS' CERTIFICATE").
6.4 NO VIOLATIONS; NO ACTIONS. Consummation of the
transactions contemplated by this Agreement shall not violate any order, decree
or judgment of any court or governmental body having competent jurisdiction and
no action or proceeding shall have been instituted or threatened by any person,
entity or governmental agency which, in any such case, in the sole judgment of
Avesta and Avesta Technologies Canada acting reasonably, has a reasonable
probability of resulting in (i) the obtaining of material damages from
Caravelle; (ii) an order, judgment or decree restraining, prohibiting or
rendering unlawful the consummation of the transactions contemplated by this
Agreement; or (iii) other relief in connection therewith.
6.5 OPINION OF COUNSEL FOR CARAVELLE. Avesta and Avesta
Technologies Canada shall have received an opinion from LaBarge Weinstein,
counsel for Caravelle, dated the Effective Date, in form and substance
satisfactory to Avesta and Avesta Technologies Canada and their counsel (the
"LABARGE WEINSTEIN OPINION").
6.6 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be in form and
substance satisfactory to Avesta and Avesta Technologies Canada and their
counsel, and Avesta and Avesta Technologies Canada shall have received all such
counterpart originals or certified or other copies of such documents as it may
reasonably request.
6.7 DELIVERY OF DOCOMENTS. Avesta and Avesta Technologies
Canada shall have received all documents and other items to be delivered by
Caravelle pursuant to this Section 6.
6.8 NO MATERIAL ADVERSE EFFECT. During the period from January
31, 1998 to the Effective Date, there shall not have been any material adverse
change in the business, properties, results of operations, or condition
(financial or otherwise) of Caravelle.
6.9 REQUIRED CONSENTS. All consents, approvals and waivers
from third parties and governmental authorities necessary to the transactions as
contemplated hereby shall have been given, including but not limited to the
approval of Innovation Ontario Corporation.
6.10 SCHEDULES. Caravelle shall have completed and attached
hereto the Caravelle Disclosure Schedule required by this Agreement, such
Caravelle Disclosure Schedule shall have been updated immediately prior to the
Closing, and the Caravelle Disclosure Schedule shall have been acceptable to
Avesta and Avesta Technologies Canada and their counsel, in their sole
discretion.
6.11 ILLEGALITY OR LEGAL CONSTRAINT. No statute, rule,
regulation, executive order, decree, injunction or restraining order shall have
been enacted, promulgated or enforced (and not repealed, superseded or otherwise
made inapplicable) by any court or governmental authority which prohibits the
execution of this Agreement or the consummation of the transactions contemplated
hereby (each party agreeing promptly to use its reasonable best efforts to have
any such order, decree
or injunction lifted).
6.12 CARAVELLE AUDIT. Caravelle shall have received a clean
and unqualified opinion from its independent auditors in connection with the
Caravelle Audit.
6.13 ESCROW AGREEMENT. Avesta, the Escrow Agent and the
Shareholders' Agent shall have entered into the Escrow Agreement.
6.14 AGREEMENTS. Caravelle shall have delivered to Avesta (i)
from each of the Caravelle employees identified on part (a) of SCHEDULE 2.29
attached hereto, an executed form of Avesta's standard Noncompetition and
Nonsolicitation Agreement; (ii) from each of the Caravelle employees identified
on part (b) of SCHEDULE 2.29 attached hereto, an executed form of Avesta's
standard Employee Nondisclosure and Developments Agreement; and (iii) an
executed employment agreement between Avesta Technologies Canada and Lynda
Partner which is satisfactory to Avesta (the "PARTNER AGREEMENT").
6.15 CARAVELLE OPTION HOLDER WAIVERS. Each Caravelle Option
Holder shall have executed the Waiver required under Section 1.6 with respect to
his or her outstanding options under the Caravelle Option Plan.
6.16 RELEASES AND INDEMNIFICATIONS. Tim Boreham and Eric Melka
shall have entered into releases and indemnifications, substantially in the form
of EXHIBIT 6.16 (each, a "RELEASE AND INDEMNIFICATION").
6.17 SHAREHOLDER VOTE AND INDEMNITY. Shareholders representing
at least 95% of the Caravelle shares shall have voted in favor of the
Amalgamation and the Caravelle Shareholders shall have agreed to place shares of
Avesta Series B Preferred Stock into escrow pursuant to Section 10 of this
Agreement.
6.18 RIGHTS OFFERING. Caravelle shall have completed a rights
offering and shall have received C $412,500 in proceeds from such offering the
"CARAVELLE RIGHTS OFFERING").
6.19 SEVERANCE AGREEMENT WITH TIM BOREHAM. Caravelle shall
have entered into a severance agreement with Tim Boreham which contains
substantially the same terms and conditions as those set forth on EXHIBIT 6.19
(the "BOREHAM AGREEMENT").
6.20 TERMINATION OF EMPLOYMENT AGREEMENTS. Caravelle shall
have terminated each of the employment agreements for those employees listed on
SCHEDULE 2.29 attached hereto.
6.21 FUNDAMENTAL AGREEMENTS. The Caravelle Shareholders
representing at least 95% of the issued and outstanding shares of Caravelle
Stock shall have each executed this Agreement; the Shareholder's Agent shall
have executed the Escrow Agreement, and the Caravelle Shareholders shall have
executed all other applicable Fundamental Agreements.
6.22 DUE DILIGENCE. Avesta and Avesta Technologies Canada
shall have been, in their sole discretion, reasonably satisfied with their due
diligence review of Caravelle.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF
CARAVELLE AND THE CARAVELLE SHAREHOLDERS
The obligations of Caravelle and the Caravelle Shareholders to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or before the Closing, of all the following conditions, unless
expressly waived in writing by Caravelle:
7.1 REPRESENTATIONS TRUE. All representations and warranties
by Avesta and Avesta Technologies Canada in this Agreement, the Avesta
Disclosure Schedule or the other Schedules and Exhibits hereto, or in any
written statement or certificate that shall be delivered to Caravelle by Avesta
and Avesta Technologies Canada under this Agreement shall be true on and as of
the Effective Date as though such representations and warranties were made on
and as of that date.
7.2 COVENANTS PERFORMED. Avesta and Avesta Technologies Canada
shall have performed, satisfied, and complied with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by
Avesta and Avesta Technologies Canada on or before the Effective Date.
7.3 CERTIFICATE. Caravelle shall have received from Avesta and
Avesta Technologies Canada a certificate from the Chief Executive Officer of
Avesta and Avesta Technologies Canada, respectively, dated the Effective Date,
certifying, in such detail as Caravelle and its counsel may reasonably request,
that the conditions specified in this Article 7 have been satisfied (the "AVESTA
OFFICERS' CERTIFICATE").
7.4 NO VIOLATIONS; NO ACTIONS. Consummation of the
transactions contemplated by this Agreement shall not violate any order, decree
or judgment of any court or governmental body having competent jurisdiction and
no action or proceeding shall have been instituted or threatened by any person,
entity or governmental agency which, in any such case, in the sole judgment of
Caravelle, has a reasonable probability of resulting in (i) the obtaining of
material damages from Avesta; (ii) an order, judgment or decree restraining,
prohibiting or rendering unlawful the consummation of the transactions
contemplated by this Agreement, or (iii) other relief in connection therewith.
7.5 OPINION OF COUNSEL FOR AVESTA AND AVESTA TECHNOLOGIES
CANADA. Caravelle and the Caravelle Shareholders shall have received an opinion
from Brobeck, Phleger & Harrison LLP, counsel for Avesta and an opinion from
McCarthy Tetrault, counsel for Avesta Technologies Canada, dated the Effective
Date, in form and substance reasonably satisfactory to Caravelle and its counsel
(the "BP&H AND MCCARTHY TETRAULT OPINIONS").
7.6 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be in form and
substance satisfactory to Caravelle and its counsel, and Caravelle shall have
received all such counterpart originals or certified or other copies of such
documents as it may reasonably request.
7.7 DELIVERY OF DOCUMENTS. Caravelle shall have received all
documents and other items to be delivered by Avesta and Avesta Technologies
Canada under Section 7.
7.8 REQUIRED CONSENTS. All consents, approvals and waivers
from third parties and governmental authorities necessary to the transactions as
contemplated hereby shall have been obtained.
7.9 ILLEGALITY OR LEGAL CONSTRAINT. No statute, rule,
regulation, executive order, decree, injunction or restraining order shall have
been enacted, promulgated or enforced (and not repealed, superseded or otherwise
made inapplicable) by any court or governmental authority which prohibits the
execution of this Agreement or the consummation of the transactions contemplated
hereby (each party agreeing promptly to use its reasonable best efforts to have
any such order, decree or injunction lifted).
7.10 EMPLOYMENT BY AVESTA AND AVESTA TECHNOLOGIES CANADA.
Avesta shall continue the employment of the Caravelle Employees specified in
SCHEDULE 2.29 hereto.
7.11 AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT. The
Caravelle Shareholders shall have entered into the Amended and Restated Investor
Rights Agreement set forth as EXHIBIT 7.11 hereto.
7.12 NO MATERIAL ADVERSE EFFECT. During the period from
January 31, 1998 to the Effective Date, there shall not have been any material
adverse change in the business, properties, results of operations, or condition
(financial or otherwise) of Avesta.
ARTICLE 8
CLOSING
8.1 TIME AND PLACE. The closing of the Amalgamation (the
"CLOSING") shall occur simultaneously at the offices of Brobeck, Phleger &
Harrison LLP, 1633 Broadway, 47th Floor, New York, New York 10019 and LaBarge
Weinstein, Xerox Tower, 333 Preston Street, 11th Floor, Ottawa, K1S 5NY, Canada
at 10:00 a.m. (eastern standard time) on the earliest practicable date after the
conditions of Articles 6 and 7 shall have been met or at such other time and
date to which the parties may agree in writing (the "CLOSING DATE").
8.2 DELIVERIES BY CARAVELLE. At the Closing, Caravelle shall
execute and deliver or cause to be executed and delivered to Avesta and Avesta
Technologies Canada:
(a) CORPORATE DOCUMENTS. The Articles of
Incorporation, as amended, of Caravelle, certified by the President as of a
recent date, and the Bylaws of Caravelle, certified by the Secretary of
Caravelle as in effect as of the Closing Date;
(b) CERTIFICATES OF STATUS. Certificates of Status,
dated not more than seven days prior to the Effective Date.
(c) RESOLUTIONS. A copy of the resolutions of (i) the
Board of Directors of Caravelle, certified by the Secretary of
Caravelle, as having been duly and validly adopted and being in full force and
effect, authorizing the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby by Caravelle; and (ii) the
Shareholders of Caravelle;
(d) OFFICERS' CERTIFICATE. The Caravelle Officers'
Certificate;
(e) SECRETARY'S CERTIFICATE. A certificate of the
Secretary of Caravelle, in form and substance satisfactory to Avesta and Avesta
Technologies Canada and their counsel, certifying (i) that attached thereto are
true and certified copies of the Articles of Incorporation, as amended, and
Bylaws of Caravelle, as amended to the Closing Date; (ii) that attached thereto
are true
and complete copies of the resolutions of the Board of Directors of Caravelle
authorizing the execution, delivery and performance of this Agreement and any
other documents, instruments and certificates required to be executed by it in
connection herewith and approving the consummation of the transactions
contemplated hereby; (iii) the names and true signatures of the officers of
Caravelle signing this Agreement and all other documents to be delivered in
connection with this Agreement and the consummation of the transactions
contemplated hereby; and (iv) such other matters as Avesta and Avesta
Technologies Canada or their counsel may reasonably request;
(f) BOOKS AND RECORDS. All of the minute books, stock
ledgers and similar corporate records of Caravelle;
(g) SEARCHES. Such searches under the Personal
Property Security Act showing that there are liens or rights of others
outstanding against Caravelle or any of its assets as of the Closing Date or a
date that is not more than five (5) days prior to the Closing Date;
(h) CONSENTS. Evidence that all consents, releases,
approvals, or authorizations of or notifications to any third parties
(including governmental agencies), if any, required to effect the Amalgamation
and to consummate the transactions contemplated hereby have been obtained by
Caravelle;
(i) ESCROW AGREEMENT. The Escrow Agreement;
(j) OPINION OF COUNSEL. The LaBarge Weinstein
Opinion;
(k) CARAVELLE AUDIT. The Caravelle Audit; and
(l) RELEASES AND INDEMNIFICATIONS. Documentation
evidencing the execution and delivery of the Releases and Indemnifications which
shall be in full force and effect as of the Effective Date;
(m) THE BOREHAM AGREEMENT. The Boreham Agreement;
(n) PARTNER AGREEMENT. The Partner Agreement; and
(o) OTHER DOCUMENTS. Such other documents and
instruments as Avesta and Avesta Technologies Canada or its counsel shall deem
reasonably necessary to consummate the transactions contemplated hereby.
All documents delivered to Avesta and Avesta Technologies
Canada shall be in form and substance reasonably satisfactory to Avesta and
Avesta Technologies Canada and their counsel.
8.3 DELIVERIES OF AVESTA AND AVESTA TECHNOLOGIES CANADA. At
the Closing, Avesta and Avesta Technologies Canada shall execute and deliver or
cause to be executed and delivered to Caravelle simultaneously with delivery of
the items referred to in Section 8.2 above:
(a) CORPORATE DOCUMENTS. The Articles of
Incorporation of Avesta and Avesta Technologies Canada, respectively, certified
by the Secretary of State of the State of Delaware and in the case of Avesta
Technologies Canada pursuant to the OBCA by the Ministry of Consumer and
Commercial Relations as of a recent date, and the Bylaws of Avesta and Avesta
Technologies Canada, respectively, certified by the Secretary of Avesta as in
effect at the Closing;
(b) CERTIFICATES OF GOOD STANDING. Certificates from
the Secretary of State of the State of Delaware and in the case of Avesta
Technologies Canada pursuant to the OBCA to the effect that each of Avesta and
Avesta Technologies Canada is in good standing and listing all charter documents
of each of Avesta and Avesta Technologies Canada on file;
(c) RESOLUTIONS. A copy of the resolutions of each of
the Board of Directors of and the sole stockholder of Avesta
Technologies Canada, certified by the Secretary thereof, as having been duly and
validly adopted and being in full force and effect, authorizing the execution
and delivery of this Agreement and the performance of the transactions
contemplated hereby by Avesta and Avesta Technologies Canada;
(d) CONSENTS. Evidence that all consents, releases,
approvals, or authorizations of or notifications to any third parties
(including governmental agencies), if any, required to effect the Amalgamation
and to consummate the transactions contemplated hereby have been obtained by
Avesta and Avesta Technologies Canada;
(e) STOCK CERTIFICATES. Certificates representing the
Amalco Exchangeable Shares to be issued in the Amalgamation;
(f) OPINIONS OF BP&H AND MCCARTHY TETRAULT. The BP&H
Opinion and the McCarthy Tetrault Opinion;
(g) OTHER DOCUMENTS. Such other documents and
instruments as Caravelle or its counsel shall deem reasonably necessary to
consummate the transactions contemplated hereby.
All documents delivered to Caravelle shall be in form and
substance reasonably satisfactory to Caravelle and its counsel.
ARTICLE 9
TERMINATION
9.1 TERMINATION.
(a) This Agreement may be terminated at any time
prior to the Effective Time:
(i) by the respective agreement of the Boards
of Directors of each of Avesta, Avesta Technologies Canada and Caravelle.
(ii) by Avesta or Avesta Technologies Canada
(provided neither Avesta nor Avesta Technologies Canada is otherwise in breach),
if (a) the conditions in Article 6 have not been met; or (b) there has been a
breach by Caravelle or the Caravelle Shareholders of any representation,
warranty, covenant or agreement set forth in this Agreement which is material
and which Caravelle or the Caravelle Shareholders fail to cure within ten (10)
business days after notice thereof is given by Avesta or Avesta Technologies
Canada (except that no cure period shall be provided for a breach by Caravelle
or the Caravelle Shareholders which by its nature cannot be cured);
(iii) by Caravelle (provided Caravelle is not
otherwise in breach), if (a) the conditions in Article 7 have not been met; or
(b) there has been a breach by Avesta or Avesta Technologies Canada of any
representation, warranty, covenant or agreement set forth in this Agreement on
the part of Avesta or Avesta Technologies Canada which is material and which
Avesta or Avesta Technologies Canada fail to cure within ten (10) business days
after notice thereof is given by Caravelle (except that no cure period shall be
provided for a breach by Avesta or Avesta Technologies Canada which by its
nature cannot be cured);
(iv) by Avesta, Avesta Technologies Canada or
Caravelle, if the Closing shall not have occurred before 5:00 p.m. (eastern
standard time) on June 8, 1998;
(v) by Avesta or Avesta Technologies Canada if
the Caravelle Shareholders (a) representing at least 95% of the issued and
outstanding shares of Caravelle Stock fail to vote in favor of the Amalgamation
within five business days after the meeting of the Caravelle Shareholders called
to vote upon the Amalgamation; or (b) fail to place 138,249 shares of Avesta
Series B Preferred Stock into escrow pursuant to Section 10 hereof;
(vi) by Caravelle if there is any litigation
either pending or threatened (including injunctive relief) which attempts to
prevent Avesta or Avesta Technologies Canada from entering into this Agreement
or the transactions contemplated hereby from becoming effective; or
(vii) by Avesta or Avesta Technologies Canada
if (a) there is any litigation pending or threatened (including injunctive
relief) which attempts to prevent Caravelle from entering into this Agreement or
the transactions contemplated hereby from becoming effective.
(b) Where action is taken to terminate this Agreement
pursuant to this Section 9.1, it shall be sufficient for such action to be
authorized by the Board of Directors of the party taking such action.
(c) In the event of termination of this Agreement as
provided in this Section, this Agreement shall forthwith become void; PROVIDED,
HOWEVER, that the agreements contained or referred to in Section 9.2 hereof
shall survive. Termination of this Agreement shall not limit the liability of
any party hereto except as provided in this Agreement.
9.2 TERMINATION FEES. In the event this Agreement is
terminated by:
(a) AVESTA OR AVESTA TECHNOLOGIES CANADA:
(i) pursuant to Section 9.1(a)(v)(a), Caravelle
shall reimburse Avesta and Avesta Technologies Canada for the aggregate of their
expenses incurred in connection with this transaction from the period March 6,
1998 through the date of termination of this Agreement, including but not
limited to legal, audit and travel expenses; and
(ii) for convenience, Avesta shall reimburse
Caravelle for its operating expenses (as set forth on the Caravelle 1998
Operating Plan (attached hereto as EXHIBIT 9.2) from March 6, 1998 through the
date of termination of this Agreement; or
(b) CARAVELLE for convenience, Caravelle shall
reimburse Avesta and
Avesta Technologies Canada for the aggregate of their expenses incurred in
connection with this transaction from the period March 6, 1998 through the date
of termination of this Agreement, including but not limited to legal, audit and
travel expenses.
ARTICLE 10
INDEMNIFICATION, POST-CLOSING ESCROW AND POST-CLOSING ADJUSTMENT
10.1 ESCROW FUND. As soon as practicable after the
Exchange, the Caravelle Shareholders shall place an aggregate of 138,249
shares of the Avesta Series B Preferred Stock to be issued to the Caravelle
Shareholders, in accordance with each Caravelle Shareholder's PRO RATA share
ownership (the "ESCROW SHARES"), shall be registered in the name of, and be
deposited with First Union National Bank or other institution selected by
Avesta with the reasonable consent of the Shareholders' Agent (as defined
below), as escrow agent (the "ESCROW AGENT"), such deposit to constitute the
escrow fund (the "ESCROW FUND") and to be governed by the terms set forth in
the form of Escrow Agreement attached hereto as EXHIBIT 5.11 (the "ESCROW
AGREEMENT"). The Escrow Fund shall be available to compensate Avesta for any
Damages and Deviations (both as defined below).
A total of 92,166 shares of Avesta Series B Preferred Stock
shall be allocated to reimbursing Avesta for Damages (the "DAMAGES SHARES"),
and 46,083 shares of Avesta Series B Preferred Stock shall be allocated to
reimbursing Avesta for Deviations (the "POST-CLOSING AUDIT SHARES"). In
determining the amount of any Damages attributable to a breach, any
materiality standard contained in a representation, warranty or covenant of
Avesta shall be disregarded.
10.2 DAMAGES. The Caravelle Shareholders, severally, and not
jointly, will indemnify and hold harmless Avesta, Amalco and their respective
officers, directors, agents and employees, and each person, if any, who controls
or may control Avesta or Amalco within the meaning of the Securities Act
(hereinafter referred to individually as an "INDEMNIFIED PERSON" and
collectively as "INDEMNIFIED PERSONS") from and against any and all losses,
costs, damages, liabilities and expenses arising from claims, demands, actions,
or causes of action (including, without limitation, reasonable costs of
investigation, defense and prosecution of litigation and attorneys' fees and
costs) that such Indemnified Person has incurred or reasonably anticipates
incurring by reason of the breach by Caravelle or the Caravelle Shareholders of
any representation, warranty, covenant or agreement of Caravelle or the
Caravelle Shareholders contained herein (the "BREACH DAMAGES"). Avesta shall be
entitled to receive out of the Escrow Fund shares of Avesta Series B Preferred
Stock:
(a) in an amount sufficient to reimburse Avesta for
any Breach Damages, and
(b) in an amount sufficient to reimburse Avesta for
any difference between (i) C $383,989; and (ii) the aggregate amount of
Investment Tax Credits relating to current and capital scientific research and
development expenditures ("ITCS") actually awarded by Revenue Canada for the
years 1996 and 1997 (the "ITC DAMAGES"). For the purposes of this Agreement,
Breach Damages and ITC Damages shall be collectively referred to as the
"Damages".
10.3 ITCs. After the Effective Date, Avesta shall use
commercially reasonable efforts to pursue with Revenue Canada the award of the
ITCs.
10.4 POST-CLOSING ADJUSTMENTS.
(a) POST-CLOSING AUDIT. Within 60 days after the
Closing Date, Avesta
shall cause to be conducted an Audit of the Caravelle balance sheet as of the
Closing Date (the "POST-CLOSING AUDIT"). In the event the Post-Closing Audit
results in deviations (other than the Caravelle Rights Offering) from the
Caravelle balance sheet as of January 31, 1998 which are not reflected in the
Caravelle 1998 Operating Plan (each, a "DEVIATION"): (i) in the case the
Post-Closing Audit results in a higher Accumulated Deficit, Avesta shall be
entitled to receive out of the Escrow Fund shares in an amount equal to the
dollar amount of the negative Deviation, all in accordance with this Section 10;
or (ii) in the case the Post-Closing Audit results in Lower Accumulated Deficit,
the Caravelle Shareholders shall be entitled to receive all of the Post-Closing
Audit Shares plus a cash amount equal to the positive Deviation (the "DEVIATION
BONUS"). In any case, Avesta will only consider invoiced receivables less than
or equal to 90 days old for the purposes of credit during the Post-Closing
Audit. Should any receivables older than 90 days as of the Closing Date be
collected after the Closing Date, but prior to the Post-Closing Audit, such
amounts will be considered valid receivables as of the Closing Date.
(b) ADJUSTMENT TO REFLECT ITC AWARD. In the event
Revenue Canada awards ITCs for the years 1996 and 1997 which, in the aggregate,
are greater than C $383,989, then on or after the one year anniversary of the
Effective Date, and after Revenue Canada's final ruling on the ITCs, the
Caravelle Shareholders shall be entitled to receive (a) out of the Escrow Fund
shares of Series B Preferred Stock in an amount equal to 50% of the difference
between (i) the aggregate amount of ITCs actually awarded by Revenue Canada for
the years 1996 and 1997; and (ii) C $383,989; (the "ITC BONUS") or (b) if there
are insufficient Damages Shares in the Escrow Fund to cover the ITC Bonus, the
remainder of Damages Shares in the Escrow Fund, plus a cash amount equal to the
difference between the ITC Bonus and the value of the remaining Damages Shares.
For the purposes of this Agreement, the Deviation Bonus and the ITC Bonus shall
be referred to as the "Adjustment".
10.5 THRESHOLD. Notwithstanding the foregoing, Avesta may not
receive any shares from the Escrow Fund unless and until an Officer's
Certificate (as hereinafter defined) (i) identifying Damages, the aggregate
amount of which exceeds $25,000, has been delivered to the Escrow Agent as
provided in Section 10.7 below and such amount is determined pursuant to this
Article 10 to be payable, in which case Avesta shall receive an amount of shares
of Avesta Series B Preferred Stock equal in value to the amount of Damages over
and above the first $25,000 of Damages, provided, however, that in no event
shall Avesta receive more than 92,166 shares of Avesta Series B Preferred Stock
as reimbursement for such Damages; or (ii) identifying Deviations, the aggregate
amount of which exceeds $15,000, has been delivered to the Escrow Agent as
provided in Section 10.7, below, and such amount is determined pursuant to
Article 10 to be payable, in which case Avesta shall receive an amount of shares
of Avesta Series B Preferred Stock equal in value to the amount of Deviations
over and above the first $15,000 of Deviations, PROVIDED, HOWEVER, that in no
event shall Avesta receive more than 46,083 shares of Avesta Series B Preferred
Stock as reimbursement for such Deviations. Once the foregoing $25,000 Damage
threshold and/or $15,000 Deviation threshold has been met, Avesta shall
thereafter be entitled to receive shares of Avesta Series B Preferred Stock out
of the Escrow Fund to cover any subsequent Damages or Deviations.
10.6 ESCROW PERIOD. The Escrow Period shall terminate (i) with
respect to all the Post-Closing Audit Shares at the expiration of two months
after the Effective Time, and (ii) subject to Section 11.2, with respect to the
Damages Shares at the expiration of the later of (a) twelve (12) months after
the Effective Time, or (b) Revenue Canada's final ruling on the ITCs for the
years 1996 and 1997. Any shares of Avesta Series B Preferred Stock held in the
Escrow Fund at such times shall be delivered to the Caravelle Shareholders in
accordance with such Caravelle Shareholders' respective percentage of share
ownership; PROVIDED, HOWEVER, that the portion of the Escrow Shares, which, in
the reasonable judgment of Avesta, are or may be necessary to satisfy any
unsatisfied claims for Damages or Deviations specified in any Officer's
Certificate delivered to the Escrow Agent prior to termination of the Escrow
Period with respect to facts and circumstances existing prior to expiration of
the Escrow Period, shall remain in the Escrow Fund until such claims have been
resolved in accordance with the provisions of this Section 10.
10.7 CLAIMS UPON ESCROW FUND.
(a) Upon receipt by the Escrow Agent on or before the
last day of the Escrow Period of a certificate signed by the Chief Financial
Officer of Avesta or Amalco (an "OFFICER'S CERTIFICATE") stating that an
Adjustment exists, or Damages exist in an aggregate amount greater than $25,000,
or Deviations exist in an aggregate amount greater than $15,000; and specifying
in reasonable detail the individual items of such Damages or Deviations included
in the amount so stated, the date each such item was paid, or properly accrued
or arose, the nature of the misrepresentation, breach of warranty or claim to
which such item is related, the Escrow Agent shall, subject to the provisions of
this Article 10, deliver to Avesta out of the Escrow Fund, as promptly as
practicable, shares of Avesta Series B Preferred Stock held in the Escrow Fund
having a value equal to such amount of Adjustment, Damages or the Deviation.
(b) For the purpose of compensating Avesta for their
Damages and Deviations, or the Caravelle Shareholders for an Adjustment pursuant
to this Agreement, the Avesta Series B Preferred Stock in the Escrow Fund shall
be valued at U.S. $4.34 per share.
10.8 OBJECTIONS TO CLAIMS. At the time of delivery of any
Officer's Certificate to the Escrow Agent, a duplicate copy of such Officer's
Certificate shall be delivered to the Shareholders' Agent (as defined below) and
for a period of fifteen (15) days after such delivery, the Escrow Agent shall
make no delivery of Avesta Series B Preferred Stock or other property pursuant
to this Section 10.8 unless the Escrow Agent shall have received written
authorization from the Shareholders' Agent to make such delivery. After the
expiration of such fifteen (15) day period, the Escrow Agent shall make delivery
of the Avesta Series B Preferred Stock in accordance with this Section 10.8,
provided that no such payment or delivery may be made if the Shareholders' Agent
shall object in a written statement to the claim made in the Officer's
Certificate, and such statement shall have been delivered to the Escrow Agent
and to Avesta prior to the expiration of such fifteen (15) day period.
10.9 RESOLUTION OF CONFLICTS; ARBITRATION.
(a) In case the Shareholders' Agent shall so object
in writing to any claim or claims by Avesta made in any Officer's Certificate
whether in respect of Damages or Deviations, Avesta shall have fifteen (15) days
to respond in a written statement to the objection of the Shareholders' Agent.
If after such fifteen (15) day period there remains a dispute as to any claims,
the Shareholders' Agent and Avesta shall attempt in good faith for thirty (30)
days to agree upon the rights of the respective parties with respect to each of
such claims. If the Shareholders' Agent and Avesta should so agree, a memorandum
setting forth such agreement shall be prepared and signed by both parties and
shall be furnished to the Escrow Agent. The Escrow Agent shall be entitled to
rely on any such memorandum and shall distribute the Avesta Series B Preferred
Stock in accordance with the terms thereof.
(b) If no such agreement can be reached after good
faith negotiation, either Avesta or the Shareholders' Agent may, by
written notice to the other, demand arbitration of
the matter unless the amount of the damage or loss is at issue in pending
litigation with a third party, in which event arbitration shall not be commenced
until such amount is ascertained or both parties agree to arbitration; and in
either such event the matter shall be settled by arbitration conducted by three
arbitrators. Within fifteen (15) days after such written notice is sent, Avesta
and the Shareholders' Agent shall each select one arbitrator, and the two
arbitrators so selected shall select a third arbitrator. The decision of the
arbitrators as to the validity and amount of any claim in such Officer's
Certificate shall be binding and conclusive upon the parties to this Agreement,
and notwithstanding anything in this Section 10.8, the Escrow Agent shall be
entitled to act in accordance with such decision and make or withhold payments
out of the Escrow Fund in accordance therewith.
(c) Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. Any such
arbitration shall be held in New York City, New York under the commercial rules
then in effect of the American Arbitration Association. For purposes of this
Section 10.8(c), in any arbitration hereunder in which any claim or the amount
thereof stated in the Officer's Certificate is at issue, Avesta shall be deemed
to be the Non-Prevailing Party unless the arbitrators award Avesta more than
one-half (1/2) of the amount in dispute, plus any amounts not in dispute;
otherwise, the Caravelle Shareholders for whom shares of Caravelle Stock
otherwise issuable to them have been deposited in the Escrow Fund shall be
deemed to be the Non-Prevailing Party. The "NON-PREVAILING PARTY" to an
arbitration shall pay its own expenses, the fees of each arbitrator, the
administrative fee of the American Arbitration Association, and the expenses,
including without limitation, attorneys' fees and costs, reasonably incurred by
the other party to the arbitration.
10.10 SHAREHOLDERS' AGENT.
(a) Michael Potter shall be constituted and appointed
as agent (the "SHAREHOLDERS' AGENT") for and on behalf of the Caravelle
Shareholders to give and receive notices and communications, to authorize
delivery to Avesta of the Avesta Series B Preferred Stock in satisfaction of
claims by Avesta, to object to such deliveries, to agree to negotiate, enter
into settlements and compromises of, and demand arbitration and comply with
orders of courts and awards of arbitrators with respect to such claims to assist
Avesta in procuring, or to procure on behalf of Avesta, the ITCs, and to take
all actions necessary or appropriate in the judgment of the Shareholders' Agent
for the accomplishment of the foregoing. Such agency may be changed by the
holders of a majority in interest of the Escrow Fund from time to time upon not
less than thirty (30) days' prior written notice to Avesta. No bond shall be
required of the Shareholders' Agent, and the Shareholders' Agent shall receive
no compensation for its services, or expense reimbursement in connection with
its expenses incurred. Notices or communications to or from the Shareholders'
Agent shall constitute notice to or from each of the Caravelle Shareholders. The
Shareholders' Agent shall possess and be exclusively entitled in his sole
discretion to exercise all shareholder rights of every kind and nature in
connection with the Escrow Shares, including, without limiting the generality of
the foregoing, the right to receive all notices of and to attend at all meetings
of the shareholders of Amalco, to vote in person or in proxy thereat, to receive
and review all documentation with respect to such meetings and to exercise all
rights attaching to the shares of Amalco.
(b) The Shareholders' Agent shall not be liable for
any act done or omitted hereunder as Shareholders' Agent while acting in
good faith and in the exercise of reasonable judgment, and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence of such
good faith. The Caravelle Shareholders shall, severally and not jointly,
indemnify the Shareholders' Agent and hold him harmless against any loss,
liability or expense incurred without gross negligence or bad faith on the part
of the Shareholders' Agent and arising out of or in connection with the
acceptance or administration of his duties hereunder.
(c) The Shareholders' Agent shall have reasonable
access to information about Caravelle and the reasonable assistance of
Amalco's officers and employees for purposes of performing his duties and
exercising its rights hereunder, provided that the Shareholders' Agent shall
treat confidentially and not disclose any nonpublic information from or about
Caravelle to anyone (except on a need to know basis to individuals who agree to
treat such information confidentially).
10.11 ACTIONS OF THE SHAREHOLDERS' AGENT. A decision, act,
consent or instruction of the Shareholders' Agent shall constitute a decision of
all Caravelle Shareholders for whom shares of Avesta Series B Preferred Stock
otherwise issuable to them are deposited in the Escrow Fund and shall be final,
binding and conclusive upon each such Caravelle Shareholder, and the Escrow
Agent and Avesta may rely upon any decision, act, consent or instruction of the
Shareholders' Agent as being the decision, act, consent or instruction of each
and every such Caravelle Shareholder. The Escrow Agent and Avesta is hereby
relieved from any liability to any person for any acts done by them in
accordance with such decision, act, consent or instruction of the Agent.
10.12 THIRD-PARTY CLAIMS. In the event Avesta becomes aware of
a third-party claim which Avesta or Caravelle believe may result in a Demand
against the Escrow Fund, Avesta shall notify the Shareholders' Agent of such
claim, and the Shareholders' Agent and the Caravelle Shareholders for whom
shares of Avesta Series B Preferred Stock otherwise issuable to them are
deposited in the Escrow Fund shall be entitled, at their expense, to participate
in any defense of such claim. Avesta shall have the right in its sole discretion
to settle any such claim. In the event that the Shareholders' Agent has
consented to any such settlement, the Shareholders' Agent shall have no power or
authority to object under any provision of this Article 10 to the amount of any
claim by Avesta against the Escrow Fund for indemnity with respect to such
settlement.
10.13 LIMITATION OF LIABILITY OF CARAVELLE SHAREHOLDERS. Other
than with respect to claims for causes of action based in fraud, willful
misconduct, criminal acts, or suits brought by, and with respect to, the
Caravelle Shareholders, the liability of the Caravelle Shareholders hereunder
shall not exceed the sum of $1,200,000. Each Caravelle Shareholder's liability
shall be in proportion with his, her or its pro-rata percentage of ownership of
Caravelle Stock.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 CURRENCY; EXCHANGE RATE. All sums referenced herein shall
be in U.S. Dollars. Any sum which is to be paid hereunder in Canadian Dollars
shall be designated C $ and shall be calculated at the average of the exchange
rates published by the Royal Bank of Canada for the month of April, 1998.
11.2 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
All representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall survive the
consummation of the Amalgamation, shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of any party
hereto, and shall (except to the extent that survival is necessary to effectuate
the intent of the provisions hereof) terminate twelve (12) months after the
Effective Date.
11.3 ACKNOWLEDGEMENT OF ENFORCEABILITY. Each of the parties
hereto acknowledges that due to logistical and legal reasons, this Agreement may
be executed by each of the parties hereto at different times. Each of the
parties hereto agrees that each provision of this Agreement, including
but not limited to the provisions of Article 9, shall be fully binding upon all
of the parties hereto once it is signed by Avesta, Caravelle, and Potter
Alexander and Associates, Inc.
11.4 FURTHER ASSURANCES. At the request of any of the parties
hereto, and without further consideration, each party agrees to execute such
documents and instruments and to do such further acts as may be necessary or
desirable to effectuate the transactions contemplated hereby.
11.5 BROKER OR FINDER. Each of the parties represents and
warrants that it has dealt with no broker or finder in connection with any of
the transactions contemplated by this Agreement and, insofar as it knows, no
broker or other person is entitled to any broker or finder's fee in connection
with these transactions. Each of the parties hereto further agrees to indemnify
and hold harmless any other against any loss, liability, damage, cost, claim, or
expense incurred by reason of any brokerage commission or finder's fee alleged
to be payable to any party.
11.6 EACH PARTY TO BEAR OWN COSTS. Other than with respect to
the Termination Fees set forth in Section 9.2 and arbitration costs pursuant to
10.8(c), each of the parties hereto shall pay all costs and expenses incurred or
to be incurred by it in negotiating and preparing this Agreement and in closing
and carrying out the transactions contemplated by this Agreement.
11.7 HEADINGS. The subject headings of the Articles and
Sections of this Agreement are included for purposes of convenience only, and
shall not affect the construction or interpretation of any of its provisions.
11.8 ENTIRE AGREEMENT; WAIVERS. This Agreement, the disclosure
schedules, and the Exhibits and Schedules hereto constitute the entire agreement
between the parties pertaining to the contemporaneous agreements,
representations, and understandings of the parties with respect to the subject
matter and supersede all prior assignments and understandings, both written and
oral, among the parties with respect to the subject matter hereof and are not
intended to confer upon any other person any rights or remedies hereunder except
as otherwise provided herein. No supplement, modification, or amendment of this
Agreement shall be binding unless executed in writing by all parties. No waiver
of any of the provisions of this Agreement shall be deemed, or shall constitute,
a waiver of any other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless executed in
writing by the party making the waiver.
11.9 THIRD PARTIES. Nothing in this Agreement, whether express
or implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any persons other than the parties to it and their respective
successors and permitted assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third person to any
party to this Agreement, nor shall any provision give any third persons any
right of subrogation or action over against any party to this Agreement.
11.10 PARTIES IN INTEREST. This Agreement and the rights and
obligations set forth herein may not be transferred, assigned, pledged or
hypothecated by any party hereto, other than by operation of law, without the
consent of each party hereto. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and permitted assigns.
11.11 NOTICES. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party to
whom notice is to be given, on the date of transmittal of services via
telecopy to the party to whom notice is to be given, or on the third day after
mailing if mailed to the party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid, and properly addressed as
follows (or at such other address for a party as shall be specified by like
notice):
To Avesta or Avesta Technologies Canada at:
Avesta Technologies, Inc.
Two Rector Street
New York, New York 10006
Attention: Kevin Boyle, Esq.
Telecopy No.: (212) 209-1558
With a copy to: Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, New York 10019
Attention: Alexander D. Lynch, Esq.
Telecopy No.: (212) 586-7878
To Caravelle at: Caravelle Inc.
210 Colonnade Road, South
Suite 301
Ottawa, Ontario K2E-7L5
Canada
Attention: Lynda Partner, President and CEO
Telecopy No.: (613) 225-4777
With a copy to: LaBarge Weinstein
Xerox Tower
333 Preston Street, 11th Floor
Ottawa, K1S 5N4
Canada
Attention: Debbie Weinstein, Esq.
Telecopy No.: (613) 231-3900
To the Shareholders'
Agent: Sussex Capital
62 John Street
Ottawa, ON K1M 1M3
Canada
Attention: Michael Potter
Telecopy No.: (613) 741-6511
With a Copy to: LaBarge Weinstein
Xerox Tower
333 Preston Street, 11th Floor
Ottawa, K1S 5N4
Canada
Attention: Debbie Weinstein, Esq.
Telecopy No.: (613) 231-3900
Any party may change its address for purposes of this Section by giving notice
of the new address to each of the other parties in the manner set forth above.
11.12 GOVERNING LAW. The terms of this Agreement shall be
governed by the laws of the State of New York, without regard to principles of
choice or conflicts of laws.
11.13 CONSENT TO JURISDICTION AND FORUM SELECTION. The parties
agree that all actions or proceedings arising in connection with this Agreement
shall be tried and litigated exclusively in the state and Federal courts located
in the State of New York. The aforementioned choice of venue is intended by the
parties to be mandatory and not permissive in nature, thereby precluding the
possibility of litigation between the parties with respect to or arising out of
this Agreement in any jurisdiction other than that specified in this Section
11.13. Each party hereby waives any right it may have to assert the doctrine of
forum non conveniens or similar doctrine or to object to venue with respect to
any proceeding brought in accordance with this Section, and stipulates that the
state and Federal courts located in the State of New York shall have in personam
jurisdiction and venue over each of them for the purposes of litigating any
dispute, controversy or proceeding arising out of or related to this Agreement.
Each party hereby authorizes and accepts service of process sufficient for
personal jurisdiction in any action against it as contemplated by this Section
11.13 by registered or certified mail, return receipt requested, postage
prepaid, to its address for the giving of notices as set forth in this
Agreement. Any final judgment rendered against a party in any action or
proceeding shall be conclusive as to the subject of such final judgment and may
be enforced in other jurisdictions in any manner provided by law.
11.14 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument and shall become effective when one
or more counterparts have been signed by each of the parties and delivered to
the other party.
11.15 SEVERABILITY. All provisions contained herein are
severable and in the event that any of them shall be held to be to any extent
invalid or otherwise unenforceable by any court of competent jurisdiction, such
provision shall be construed as if it were written so as to effectuate to the
greatest possible extent the parties' expressed intent; and in every case the
remainder of this Agreement shall not be affected thereby and shall remain valid
and enforceable, as if such affected provision were not contained herein.
11.16 CONSTRUCTION OF AGREEMENT; KNOWLEDGE. The words
"include," "includes," and "including" when used herein shall be deemed in each
case to be followed by the words "without limitation." For purposes of this
Agreement, and except as provided in the following sentence, the term
"knowledge," when used in reference to a corporation means the actual knowledge
of the executive officers of such corporation after such officers shall have
made inquiry that is customary and appropriate under the circumstances to which
reference is made, and when used in reference to an individual means the actual
knowledge of such individual after the individual shall have made inquiry that
is customary and appropriate under the circumstances to which reference is made.
11.17 PUBLICITY. The parties shall cooperate with each other
in the development and distribution of all news releases and other public
disclosures relating to the transactions contemplated hereby. None of the
parties shall issue or make, or cause to have issued or made, any
press release or announcement concerning the transactions contemplated hereby
without the advance approval in writing of the form and substance thereof by the
other parties, unless otherwise required by applicable law.
11.18 MUTUAL DRAFTING. This Agreement is the joint product of
the parties hereto, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of such parties, and shall not be
construed for or against any party hereto.
11.19 SPECIFIC PERFORMANCE AND OTHER REMEDIES. The parties
hereto each acknowledge that the rights of each party to consummate the
transactions contemplated hereby are special, unique and of extraordinary
character, and that, in the event that any party violates or fails or refuses to
perform any covenant or agreement made by it herein, the non-breaching party may
be without an adequate remedy at law. The parties each agree, therefore, that in
the event that either party violates or fails or refuses to perform any covenant
or agreement made by such party herein, the non-breaching party or parties may,
subject to the terms of this Agreement and in addition to any remedies at law
for damages or other relief, institute and prosecute an action in any court of
competent jurisdiction to enforce specific performance of such covenant or
agreement or seek any other equitable relief.
11.20 CONFLICT. In the event of a conflict or inconsistency
between the terms of this Agreement and the terms of any other agreement,
including the Escrow Agreement, the terms of this Agreement shall govern.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement and Plan of Reorganization as of the date set forth below his, her or
its signature, to be effective on the date first set forth above.
AVESTA TECHNOLOGIES, INC.
BY: /S/ KAM SAIFI
---------------------------------
ITS:
---------------------------------
AVESTA TECHNOLOGIES CANADA, INC.
BY: /S/ KAM SAIFI
---------------------------------
ITS:
---------------------------------
CARAVELLE, INC.
BY: /S/ LYNDA PARTNER
---------------------------------
ITS: PRESIDENT & CEO
---------------------------------
CARAVELLE SHAREHOLDERS
BY: /S/ CARAVELLE SHAREHOLDERS
---------------------------------
ITS:
---------------------------------
SCHEDULE OF EXHIBITS
Exhibit 1.2 Articles of Incorporation and Bylaws of Amalco
Exhibit 1.4 Amalco Exchangeable Share Conditions
Exhibit 1.6(a) Avesta Option Plan
Exhibit 1.6(b) Caravelle Option Holders' Waiver Letter
Exhibit 2.29 Avesta's Standard Noncompetition and Nonsolicitation Agreement
Avesta's Standard Employee Nondisclosure and Developments Agreement
Exhibit 5.11 Escrow Agreement
Exhibit 6.16 Release and Indemnification Agreement
Exhibit 6.19 The Boreham Agreement
Exhibit 7.11 Amended and Restated Investor Rights Agreement
Exhibit 9.2 Caravelle 1998 Operating Plan
SCHEDULE OF SCHEDULES
Schedule 1 Caravelle Shareholders
Schedule 1.3 Directors and Officers of Amalco
Schedule 1.6 Caravelle Options
Schedule 2 Caravelle Disclosure Schedule
Schedule 2.29 List of Caravelle Employees