AGREEMENT AND PLAN OF MERGER
AMONG
WESTERN TECHNOLOGY AND RESEARCH, INC.
CIMNET ACQUISITION CORP.
AND
CIMNET, INC.
DATED AS OF DECEMBER 30, 1998
TABLE OF CONTENTS
Page
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.1. The Merger. . . . . . . . . . . . . . . . . . . . 7
SECTION 1.2. Closing.. . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.3. Effective Time. . . . . . . . . . . . . . . . . . 7
SECTION 1.4. Effects of the Merger.. . . . . . . . . . . . . . 8
SECTION 1.5. Certificate of Incorporation and By-laws
of the Surviving Corporation. . . . . . . . . . . 8
SECTION 1.6. Boards, Committees and Officers.. . . . . . . . . 8
SECTION 1.7. Name of the Surviving Corporation.. . . . . . . . 8
SECTION 1.8. Reservation of Right to Revise Transaction. . . . 8
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
EFFECT OF THE MERGER ON THE CAPITAL STOCK. . . . . . . . . . . . 9
SECTION 2.1. Effect on Capital Stock. . . . . . . . . . . . . 9
(a) Cancellation of Stock. . . . . . . . . . . . . . . . . 9
(b) Conversion of Cimnet Common Stock. . . . . . . . . . . 9
(c) Cimnet Convertible Promissory Notes and Warrants. . . . 9
SECTION 2.2. Exchange of Certificates.. . . . . . . . . . . . 9
(a) Exchange Agent.. . . . . . . . . . . . . . . . . . . . 9
(b) Exchange Procedures. . . . . . . . . . . . . . . . . . 10
(c) Distributions with Respect to Unexchanged Shares . . . 10
(d) No Further Ownership Rights in Cimnet
Common Stock.. . . . . . . . . . . . . . . . . . . . . 11
(e) No Fractional Shares.. . . . . . . . . . . . . . . . . 11
(f) Termination of Exchange Fund. . . . . . . . . . . . . 11
(g) No Liability.. . . . . . . . . . . . . . . . . . . . . 12
(h) Investment of Exchange Fund. . . . . . . . . . . . . . 12
(i) Lost Certificates. . . . . . . . . . . . . . . . . . . 12
SECTION 2.3. Certain Adjustments.. . . . . . . . . . . . . . . 12
ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 12
SECTION 3.1. Representations and Warranties of Cimnet . . . . 12
(a) Organization, Standing and Corporate Power.. . . . . . 12
(b) Subsidiaries.. . . . . . . . . . . . . . . . . . . . . 13
(c) Capital Structure.. . . . . . . . . . . . . . . . . . . 13
(d) Authority; Noncontravention. . . . . . . . . . . . . . 14
(e) Undisclosed Liabilities. . . . . . . . . . . . . . . . 14
(f) Information Supplied.. . . . . . . . . . . . . . . . . 15
(g) Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . 15
(h) Voting Requirements.. . . . . . . . . . . . . . . . . . 15
(i) State Takeover Statutes. . . . . . . . . . . . . . . . 15
(j) Financial Statements.. . . . . . . . . . . . . . . . . 16
SECTION 3.2. Representations and Warranties of
Western Tech.. . . . . . . . . . . . . . . . . . 16
(a) Organization, Standing and Corporate Power. . . . . . . 16
(b) Subsidiaries. . . . . . . . . . . . . . . . . . . . . . 16
(c) Capital Structure.. . . . . . . . . . . . . . . . . . . 16
(d) Authority; Noncontravention.. . . . . . . . . . . . . . 17
(e) SEC Documents; Undisclosed Liabilities. . . . . . . . . 18
(f) Information Supplied. . . . . . . . . . . . . . . . . . 18
(g) Absence of Certain Changes or Events. . . . . . . . . . 19
(h) Compliance with Applicable Laws; Litigation.. . . . . . 19
(i) Absence of Changes in Benefit Plans.. . . . . . . . . . 20
(j) ERISA Compliance. . . . . . . . . . . . . . . . . . . . 20
(k) Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . 20
(l) Voting Requirements.. . . . . . . . . . . . . . . . . . 21
(m) State Takeover Statutes; Certificate of
Incorporation. . . . . . . . . . . . . . . . . . . . . 21
(n) INTENTIONALLY OMITTED.. . . . . . . . . . . . . . . . . 21
(o) Intellectual Property.. . . . . . . . . . . . . . . . . 21
(p) Certain Contracts.. . . . . . . . . . . . . . . . . . . 21
SECTION 3.3. Representations and Warranties of MergerSub. . . 22
(a) Organization, Standing and Corporate Power.. . . . . . 22
(b) Subsidiaries.. . . . . . . . . . . . . . . . . . . . . 22
(c) Capital Structure.. . . . . . . . . . . . . . . . . . . 22
(d) Authority; Noncontravention. . . . . . . . . . . . . . 22
(e) Undisclosed Liabilities. . . . . . . . . . . . . . . . 23
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
COVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . . . . . . . . 23
SECTION 4.1. Conduct of Business.. . . . . . . . . . . . . . . 23
(a) Conduct of Business by Cimnet.. . . . . . . . . . . . . 23
(b) Conduct of Business by Western Tech and
Subsidiaries.. . . . . . . . . . . . . . . . . . . . . 24
(c) Other Actions.. . . . . . . . . . . . . . . . . . . . . 25
(d) Advice of Changes.. . . . . . . . . . . . . . . . . . . 25
SECTION 4.2. Intentionally Omitted.. . . . . . . . . . . . . . 25
SECTION 4.3. No Solicitation by Western Tech.. . . . . . . . . 25
ARTICLE V. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.1. Preparation of the Proxy Statement;
Stockholders Meeting.. . . . . . . . . . . . . . 27
SECTION 5.2. Intentionally Omitted.. . . . . . . . . . . . . . 28
SECTION 5.3. Access to Information; Confidentiality. . . . . . 28
SECTION 5.4. Best Efforts. . . . . . . . . . . . . . . . . . . 29
SECTION 5.5. Intentionally Omitted.. . . . . . . . . . . . . . 29
SECTION 5.6. Indemnification, Exculpation and Insurance. . . . 29
SECTION 5.7. Fees and Expenses.. . . . . . . . . . . . . . . . 30
SECTION 5.8. Public Announcements. . . . . . . . . . . . . . . 30
SECTION 5.9. Affiliates.. . . . . . . . . . . . . . . . . . . 30
SECTION 5.10. Bulletin Board Listing.. . . . . . . . . . . . . 30
SECTION 5.11. Stockholder Litigation.. . . . . . . . . . . . . 30
SECTION 5.12. Tax Treatment. . . . . . . . . . . . . . . . . . 31
SECTION 5.13. Company Officers; Employment Contracts;
Equity Awards.. . . . . . . . . . . . . . . . . 31
SECTION 5.14. Post-Merger Operations.. . . . . . . . . . . . . 31
SECTION 5.15. Conveyance Taxes.. . . . . . . . . . . . . . . . 31
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.1. Conditions to Each Party's Obligation
to Effect the Merger.. . . . . . . . . . . . . . 31
(a) Stockholder Approvals.. . . . . . . . . . . . . . . . . 32
(b) Governmental and Regulatory Approvals.. . . . . . . . . 32
(c) No Injunctions or Restraints. . . . . . . . . . . . . . 32
(d) Information Statement.. . . . . . . . . . . . . . . . . 32
(e) Corporate Governance. . . . . . . . . . . . . . . . . . 32
(f) Employment Arrangements. . . . . . . . . . . . . . . . 32
(g) Opinion of Counsel.. . . . . . . . . . . . . . . . . . 32
SECTION 6.2. Conditions to Obligations of Western Tech . . . . 32
(a) Representations and Warranties. . . . . . . . . . . . . 32
(b) Performance of Obligations of Cimnet. . . . . . . . . . 33
(c) No Material Adverse Change.. . . . . . . . . . . . . . . 33
SECTION 6.3. Conditions to Obligations of Cimnet.. . . . . . . 33
(a) Representations and Warranties. . . . . . . . . . . . . 33
(b) Performance of Obligations of Western Tech. . . . . . . 33
(c) No Material Adverse Change. . . . . . . . . . . . . . . 33
SECTION 6.4. Frustration of Closing Conditions.. . . . . . . . 33
ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . . . . . . . 33
SECTION 7.1. Termination.. . . . . . . . . . . . . . . . . . . 33
SECTION 7.2. Effect of Termination.. . . . . . . . . . . . . . 34
SECTION 7.3. Amendment.. . . . . . . . . . . . . . . . . . . . 35
SECTION 7.4. Extension; Waiver.. . . . . . . . . . . . . . . . 35
SECTION 7.5. Procedure for Termination, Amendment,
Extension or Waiver. . . . . . . . . . . . . . . 35
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . 35
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.1. Nonsurvival of Representations and
Warranties.. . . . . . . . . . . . . . . . . . . 35
SECTION 8.2. Notices.. . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.3. Definitions.. . . . . . . . . . . . . . . . . . . 36
SECTION 8.4. Interpretation. . . . . . . . . . . . . . . . . . 37
SECTION 8.5. Counterparts. . . . . . . . . . . . . . . . . . . 37
SECTION 8.6. Entire Agreement; No Third-Party
Beneficiaries.. . . . . . . . . . . . . . . . . 37
SECTION 8.7. Governing Law.. . . . . . . . . . . . . . . . . . 37
SECTION 8.8. Assignment. . . . . . . . . . . . . . . . . . . . 37
SECTION 8.9. Headings. . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.10. Severability.. . . . . . . . . . . . . . . . . . 38
EXHIBITS
Exhibit A- Form of Corporate Resolutions
Exhibit B - Form of Employment Agreement
AGREEMENT AND PLAN OF MERGER dated as of December 30, 1998,
among WESTERN TECHNOLOGY AND RESEARCH, INC., a Wyoming corporation
("Western Tech"), CIMNET, INC., a Delaware corporation ("Cimnet"),
and CIMNET ACQUISITION CORP., a Delaware corporation
("MergerSub").
WHEREAS, the respective Boards of Directors of Western Tech,
MergerSub and Cimnet have each approved the merger of MergerSub
with and into Cimnet (the "Merger"), upon the terms and subject to
the conditions set forth in this Agreement, whereby each issued
and outstanding share of common stock, par value $.0001 per share,
of Cimnet ("Cimnet Common Stock"), will be converted into the
right to receive the Merger Consideration (as defined in Section
1.8); and
WHEREAS, the respective Boards of Directors of Western Tech,
MergerSub and Cimnet have each determined that the Merger and the
other transactions contemplated hereby are consistent with, and in
furtherance of, their respective business strategies and goals and
are in the best interests of their respective stockholders; and
WHEREAS, Western Tech, MergerSub and Cimnet desire to make
certain representations, warranties, covenants and agreements in
connection with the Merger and also to prescribe various
conditions to the Merger.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement,
the parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the
Delaware General Corporation Law (the "DGCL"), MergerSub shall be
merged with and into Cimnet at the Effective Time (as defined in
Section 1.3). Following the Effective Time, Cimnet shall be the
surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all the rights and obligations of MergerSub
in accordance with the DGCL.
SECTION 1.2. Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the
parties (the "Closing Date"), which shall be no later than the
second business day after satisfaction or waiver of the conditions
set forth in Article VI, unless another time or date is agreed to
by the parties hereto. The Closing will be held at such location
as is agreed to by the parties hereto.
SECTION 1.3. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties
shall cause the Merger to be consummated by filing a certificate
of merger or other appropriate documents (in any such case, the
"Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Merger shall become
effective at such time as the Certificate of Merger is duly filed
with the Secretary of State of Delaware, or at such subsequent
date or time as Western Tech and Cimnet shall agree and specify in
the Certificate of Merger (the time the Merger becomes effective
being hereinafter referred to as the "Effective Time").
SECTION 1.4. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.5. Certificate of Incorporation and By-laws of the
Surviving Corporation. The Certificate of Incorporation of
Cimnet, shall be the Certificate of Incorporation of the Surviving
Corporation (the "Surviving Certificate of Incorporation"). The
By-laws of Cimnet, as in effect immediately prior to the Effective
Time, shall be the By-laws of the Surviving Corporation (the
"Surviving By-laws").
SECTION 1.6. Boards, Committees and Officers. Prior to the
Effective Time, Western Tech shall adopt resolutions in the form
attached hereto as part of Exhibit A, establishing the Board of
Directors of Western Tech and Cimnet from and after the Effective
Time. From and after the Effective Time, the members of the Board
of Directors, the committees of the Board of Directors, the
composition of such committees (including chairmen thereof) and
the officers of the Surviving Corporation shall be as set forth on
or designated in accordance with the Surviving Certificate of
Incorporation, the Surviving By-laws and Exhibit A hereto until
the earlier of the resignation or removal of any individual set
forth on or designated in accordance with the Surviving
Certificate of Incorporation, the Surviving By-laws and Exhibit A
or until their respective successors are duly elected and
qualified, as the case may be, or until as otherwise provided in
the Surviving Certificate of Incorporation, the Surviving By-laws
and Exhibit A.
SECTION 1.7. Name of the Surviving Corporation. The name of the
Surviving Corporation shall be Cimnet, Inc.
SECTION 1.8. Reservation of Right to Revise Transaction. If each
of Cimnet, MergerSub and Western Tech agree, the parties hereto
may change the method of effecting the business combination
between MergerSub and Cimnet, and each party shall cooperate in
such efforts, including to provide for (a) a merger of MergerSub
with and into Cimnet, or (b) a merger of Cimnet with and into
Western Tech; provided, however, that no such change shall alter
or change the amount or kind of consideration to be issued to
holders of Cimnet Common Stock as provided for in this Agreement
(the "Merger Consideration").
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
SECTION 2.1. Effect on Capital Stock. As of the Effective Time,
by virtue of the Merger and without any action on the part of the
holder of any shares of Cimnet Common Stock:
(a) Cancellation of Stock. Each share of capital stock
of Western Tech that is owned by Cimnet, and each share of capital
stock of Cimnet owned by Western Tech, shall automatically be
cancelled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(b) Conversion of Cimnet Common Stock. Subject to
Section 2.2(e), each issued and outstanding share of Cimnet
Common Stock (other than shares to be cancelled in accordance with
Section 2.1(a)) shall be converted into the right to receive one
(1) (the "Exchange Ratio") validly issued, fully paid and
nonassessable shares of common stock, no par value per share
("Western Tech Common Stock"), of Western Tech. As of the
Effective Time, all such shares of Cimnet Common Stock 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 of Cimnet Common Stock shall cease to
have any rights with respect thereto, except the right to receive
the Merger Consideration and any cash in lieu of fractional shares
of Western Tech Common Stock to be issued or paid in
consideration therefor upon surrender of such certificate in
accordance with Section 2.2, without interest.
(c) Cimnet Warrants. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder
thereof, each outstanding warrant to purchase shares of Cimnet
Common Stock (the "Warrants"), shall remain outstanding, unchanged
by reason of the Merger, except that, in accordance with the
adjustment provisions thereof, each Warrant shall no longer be
exercisable for Cimnet Common Stock, but shall thereafter be
exercisable for that whole number of shares of Western Tech
Common Stock and cash in lieu of fractional share interests as the
holder thereof would have been entitled to receive pursuant to the
Merger had such holder exercised such Warrant in full immediately
prior to the Effective Time, at an exercise price per share of
Western Tech Common Stock equal to $2.50. Western Tech shall
comply with the terms and provisions of all such Warrants and the
Notes.
SECTION 2.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Western
Tech shall enter into an agreement with American Stock Transfer
and Trust Company or other transfer agent designated by Cimnet
(the "Exchange Agent"), which shall provide that Western Tech
shall deposit with the Exchange Agent as of the Effective Time,
for the benefit of the holders of shares of Cimnet Common Stock,
for exchange in accordance with this Article II, through the
Exchange Agent, certificates representing the shares of Western
Tech Common Stock issuable pursuant to Section 2.1 in exchange for
outstanding shares of Cimnet Common Stock.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, but no more than twenty (20)
days after the Effective Time, the Exchange Agent shall mail to
each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding
shares of Cimnet Common Stock (the "Certificates") whose shares
were converted into the right to receive the Merger Consideration
pursuant to Section 2.1, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and
have such other provisions as Western Tech and Cimnet may
reasonably specify) and (ii) instructions for use in surrendering
the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Exchange
Agent, the holder of such Certificate shall be entitled to receive
in exchange therefor a certificate representing that number of
whole shares of Western Tech Common Stock which such holder has
the right to receive pursuant to the provisions of this Article
II, and cash in lieu of any fractional share of Western Tech
Common Stock in accordance with Section 2.2(e), and the
Certificate so surrendered shall forthwith be canceled (such cash
and Western Tech Common Stock deposited with the Exchange Agent
for the purpose of the Merger, collectively, the "Exchange Fund").
In the event of a surrender of a Certificate representing shares
of Cimnet Common Stock which are not registered in the transfer
records of Cimnet under the name of the person surrendering such
Certificate, a certificate representing the proper number of
shares of Western Tech Common Stock may be issued to a person
other than the person in whose name the Certificate so surrendered
is registered if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person
requesting such issuance shall pay any transfer or other taxes
required by reason of the issuance of shares of Western Tech
Common Stock to a person other than the registered holder of such
Certificate or establish to the satisfaction of Western Tech that
such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed
at any time after the Effective Time to represent only the right
to receive upon such surrender the Merger Consideration which the
holder thereof has the right to receive in respect of such
Certificate pursuant to the provisions of this Article II, and
cash in lieu of any fractional share of Western Tech Common Stock
in accordance with Section 2.2(e). No interest shall be paid or
will accrue on any cash payable to holders of Certificates
pursuant to the provisions of this Article II.
(c) Distributions with Respect to Unexchanged Shares.
No dividends or other distributions with respect to Western Tech
Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect
to the shares of Western Tech Common Stock represented thereby,
and, in the case of Certificates representing Cimnet Common Stock,
no cash payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.2(e), and all such dividends,
other distributions and cash in lieu of fractional shares of
Western Tech Common Stock shall be paid by Western Tech to the
Exchange Agent for payment to holders of Cimnet Common Stock, in
each case until the surrender of such Certificate in accordance
with this Article II. Subject to the effect of applicable escheat
or similar laws, following surrender of any such Certificate there
shall be paid to the holder of the certificate representing whole
shares of Western Tech Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares
of Western Tech Common Stock and, in the case of Certificates
representing Cimnet Common Stock, the amount of any cash payable
in lieu of a fractional share of Western Tech Common Stock to
which such holder is entitled pursuant to Section 2.2(e) and (ii)
at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time and with
a payment date subsequent to such surrender payable with respect
to such whole shares of Western Tech Common Stock.
(d) No Further Ownership Rights in Cimnet Common
Stock. All shares of Western Tech Common Stock issued upon the
surrender for exchange of Certificates in accordance with the
terms of this Article II (including any cash paid pursuant to this
Article II) shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the shares of Cimnet
Common Stock, theretofore represented by such Certificates,
subject, however, to Western Tech obligation to pay any dividends
or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by Cimnet on
such shares of Cimnet Common Stock which remain unpaid at the
Effective Time, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation
of the shares of Cimnet Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or
the Exchange Agent for any reason, they shall be cancelled and
exchanged as provided in this Article II, except as otherwise
provided by law.
(e) No Fractional Shares. (i) No certificates or
scrip representing fractional shares of Western Tech Common Stock
shall be issued upon the surrender for exchange of Certificates,
no dividend or distribution of Western Tech shall relate to such
fractional share interests and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a
stockholder of Western Tech.
(ii) Western Tech shall pay each former holder of Cimnet
Common Stock an amount in cash equal to the product obtained by
multiplying (A) the fractional share interest to which such former
holder (after taking into account all shares of Cimnet Common
Stock held at the Effective Time by such holder) would otherwise
be entitled by (B) the average of the closing prices of the
Western Tech Common Stock as reported on OTC Bulletin Board during
the ten trading days ending on the fifth trading day prior to the
Closing Date (the "Average Western Tech Price").
(iii) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Certificates
formerly representing Cimnet Common Stock with respect to any
fractional share interests, the Exchange Agent shall make
available such amounts to such holders of Certificates formerly
representing Cimnet Common Stock subject to and in accordance with
the terms of Section 2.2(c).
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of the
Certificates for three months after the Effective Time shall be
delivered to Western Tech, upon demand, and any holders of the
Certificates who have not theretofore complied with this Article
II shall thereafter look only to Western Tech for payment of their
claim for Merger Consideration, any dividends or distributions
with respect to Western Tech Common Stock and any cash in lieu of
fractional shares of Western Tech Common Stock.
(g) No Liability. None of Western Tech, Cimnet, the
Surviving Corporation or the Exchange Agent shall be liable to any
person in respect of any shares of Western Tech Common Stock, any
dividends or distributions with respect thereto, any cash in lieu
of fractional shares of Western Tech Common Stock or any cash from
the Exchange Fund, in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar
law.
(h) Investment of Exchange Fund. The Exchange Agent
shall invest any cash
included in the Exchange Fund, as directed by Western Tech, on a
daily basis. Any interest and other income resulting from such
investments shall be paid to Western Tech.
(i) Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by Western Tech, the posting
by such person of a bond in such reasonable amount as Western Tech
may direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificate
the Merger Consideration and, if applicable, any unpaid dividends
and distributions on shares of Western Tech Common Stock
deliverable in respect thereof and any cash in lieu of fractional
shares, in each case pursuant to this Agreement.
SECTION 2.3. Certain Adjustments. If between the date hereof and
the Effective Time, the outstanding shares of Cimnet Common Stock
or of Western Tech Common Stock shall be changed into a different
number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or
any dividend payable in stock or other securities shall be
declared thereon with a record date within such period, the
Exchange Ratio shall be adjusted accordingly to provide to the
holders of Cimnet Common Stock the same economic effect as
contemplated by this Agreement prior to such reclassification,
recapitalization, split-up, combination, exchange or dividend.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of Cimnet. Except
as set forth on the Disclosure Schedule delivered by Cimnet to
Western Tech prior to the execution of this Agreement (the
"Cimnet Disclosure Schedule") and making reference to the
particular subsection of this Agreement to which exception is
being taken, Cimnet represents and warrants to Western Tech and
MergerSub as follows:
(a) Organization, Standing and Corporate Power. (i)
Cimnet is a corporation or other legal entity duly organized,
validly existing and in good standing (with respect to
jurisdictions which recognize such concept) under the laws of the
jurisdiction in which it is organized and has the requisite
corporate or other power and authority to carry on its business as
now being conducted, except, for those jurisdictions where the
failure to be so organized, existing or in good standing
individually or in the aggregate would not have a material adverse
effect (as defined in Section 8.3) on Cimnet. Cimnet is duly
qualified or licensed to do business and is in good standing (with
respect to jurisdictions which recognize such concept) in each
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification
or licensing necessary, except for those jurisdictions where the
failure to be so qualified or licensed or to be in good standing
would not have a material adverse effect on Cimnet.
(ii) Cimnet has delivered to Western Tech prior to the
execution of this Agreement complete and correct copies of its
Certificate of Incorporation and By-Laws, as amended to date.
(b) Subsidiaries. Cimnet does not beneficially own any
subsidiaries.
(c) Capital Structure. The authorized capital stock of
Cimnet consists of 15,000,000 shares of Cimnet Common Stock and
5,000,000 shares of preferred stock, par value $.0001 per share
("Cimnet Preferred Stock"). At the close of business on the date
hereof: (i) 4,430,000 shares of Cimnet Common Stock were issued
and outstanding; (ii) no shares of Cimnet Common Stock were held
by Cimnet in its treasury; (iii) no shares of Series A Preferred
Stock were issued and outstanding of any class or series; and (iv)
300,000 shares of Cimnet Common Stock were reserved for issuance
upon the exercise of 300,000 Warrants. Section 3.1(c) of the
Cimnet Disclosure Schedule sets forth a complete and correct list,
as of December 30, 1998, of the number of shares of Cimnet Common
Stock subject to employee stock options or other rights to
purchase or receive Cimnet Common Stock granted under the Cimnet
Stock Plans (collectively, "Cimnet Employee Stock Options"), the
dates of grant and exercise prices thereof. All outstanding
shares of capital stock of Cimnet are, and all shares which may be
issued will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights.
Except as set forth in this Section 3.1(c) or Section 3.1(c) of
the Cimnet Disclosure Schedule, (x) there are not issued, reserved
for issuance or outstanding (A) any shares of capital stock or
other voting securities of Cimnet, (B) any securities of Cimnet
or any Cimnet subsidiary convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of
Cimnet, (C) any warrants, calls, options or other rights to
acquire from Cimnet or any Cimnet subsidiary, and any obligation
of Cimnet or any Cimnet subsidiary to issue, any capital stock,
voting securities or securities convertible into or exchangeable
or exercisable for capital stock or voting securities of Cimnet,
and (y) there are no outstanding obligations of Cimnet or any
Cimnet subsidiary to repurchase, redeem or otherwise acquire any
such securities or to issue, deliver or sell, or cause to be
issued, delivered or sold, any such securities. There are no
outstanding (A) securities of Cimnet or any Cimnet subsidiary
convertible into or exchangeable or exercisable for shares of
capital stock or other voting securities or ownership interests in
any Cimnet subsidiary, (B) warrants, calls, options or other
rights to acquire from Cimnet or any Cimnet subsidiary, and any
obligation of Cimnet or any Cimnet subsidiary to issue, any
capital stock, voting securities or other ownership interests in,
or any securities convertible into or exchangeable or exercisable
for any capital stock, voting securities or ownership interests
in, any Cimnet subsidiary or (C) obligations of Cimnet or any
Cimnet subsidiary to repurchase, redeem or otherwise acquire any
such outstanding securities of Cimnet subsidiaries or to issue,
deliver or sell, or cause to be issued, delivered or sold, any
such securities.
(d) Authority; Noncontravention. Cimnet has all
requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by Cimnet
and the consummation by Cimnet of the transactions contemplated by
this Agreement have been duly authorized by all necessary
corporate action on the part of Cimnet, subject, in the case of
the Merger, to the Cimnet Stockholder Approval. This Agreement
has been duly executed and delivered by Cimnet and, assuming the
due authorization, execution and delivery by Western Tech and
MergerSub constitutes the legal, valid and binding obligation of
Cimnet, enforceable against Cimnet in accordance with its terms.
The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement
and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any
obligation or loss of a benefit under, or result in the creation
of any Lien upon any of the properties or assets of Cimnet or any
of its subsidiaries under, (i) the certificate of incorporation or
By-Laws of Cimnet or the comparable organizational documents of
any of its subsidiaries, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, license or similar authorization applicable to
Cimnet or any of its subsidiaries or their respective properties
or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule or regulation
applicable to Cimnet or any of its subsidiaries or their
respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, defaults,
rights, losses or Liens that individually or in the aggregate
would not (x) have a material adverse effect on Cimnet or (y)
reasonably be expected to impair the ability of Cimnet to perform
its obligations under this Agreement. No consent, approval, order
or authorization of, action by or in respect of, or registration,
declaration or filing with, any federal, state, local or foreign
government, any court, administrative, regulatory or other
governmental agency, commission or authority or any
nongovernmental self-regulatory agency, commission or authority (a
"Governmental Entity") is required by or with respect to Cimnet
or any of its subsidiaries in connection with the execution and
delivery of this Agreement by Cimnet or the consummation by Cimnet
of the transactions contemplated by this Agreement, except for (1)
the filing of the Certificate of Merger with the Secretary of
State of Delaware and appropriate documents with the relevant
authorities of other states in which Cimnet is qualified to do
business and such filings with Governmental Entities to satisfy
the applicable requirements of state securities or "blue sky"
laws; and (2) such consents, approvals, orders or authorizations
the failure of which to be made or obtained individually or in
the aggregate would not (x) have a material adverse effect on
Cimnet or (y) reasonably be expected to impair the ability of
Cimnet to perform its obligations under this Agreement.
(e) Undisclosed Liabilities. Except (i) as reflected
in the Cimnet Financial Statements (as defined in Section 3.1(n))
or in the notes thereto, (ii) for liabilities incurred in
connection with this Agreement or the transactions contemplated
hereby, or (iii) liabilities incurred in the ordinary cause of
Cimnet's business since September 30, 1998, neither Cimnet nor any
of its subsidiaries has any liabilities or obligations of any
nature which, individually or in the aggregate, would have a
material adverse effect on Cimnet.
(f) Information Supplied. None of the information
supplied or to be supplied by Cimnet specifically for inclusion or
incorporation by reference in the Schedule 14C Information
Statement (the "Information Statement") to be filed with the SEC
by Western Tech in connection with the approval of the Merger by
the stockholders of Western Tech 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
therein, in light of the circumstances under which they are made,
not misleading. The Information Statement will comply as to form
in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder, except that no
representation or warranty is made by Cimnet with respect to
statements made or incorporated by reference therein based on
information supplied by Western Tech specifically for inclusion or
incorporation by reference in the Information Statement.
(g) Taxes. (i) Each of Cimnet and its subsidiaries has
filed all material tax returns and reports required to be filed by
it and all such returns and reports are complete and correct in
all material respects, or requests for extensions to file such
returns or reports have been timely filed, granted and have not
expired, except to the extent that such failures to file, to be
complete or correct or to have extensions granted that remain in
effect individually or in the aggregate would not have a material
adverse effect on Cimnet. Cimnet and each of its subsidiaries has
paid (or Cimnet has paid on its behalf) all taxes (as defined
herein) shown as due on such returns.
(ii) As used in this Agreement, "taxes" shall include all (x)
federal, state, local or foreign income, property, sales, excise
and other taxes or similar governmental charges, including any
interest, penalties or additions with respect thereto, (y)
liability for the payment of any amounts of the type described in
(x) as a result of being a member of an affiliated, consolidated,
combined or unitary group, and (z) liability for the payment of
any amounts as a result of being party to any tax sharing
agreement or as a result of any express or implied obligation to
indemnify any other person with respect to the payment of any
amounts of the type described in clause (x) or (y).
(h) Voting Requirements. The affirmative vote at the
Cimnet Stockholders Meeting (the "Cimnet Stockholder Approval") of
the holders of a majority of the total votes represented by all
outstanding shares of Cimnet Common Stock to adopt this Agreement
is the only vote of the holders of any class or series of Cimnet's
capital stock necessary to approve and adopt this Agreement and
the transactions contemplated hereby, including the Merger.
(i) State Takeover Statutes. The Board of Directors of
Cimnet has approved this Agreement and the transactions
contemplated hereby and such approval constitutes approval of the
Merger and the other transactions contemplated hereby by the
Cimnet Board of Directors under the provisions of Section 203 of
the DGCL such that Section 203 of the DGCL does not apply to this
Agreement and the transactions contemplated hereby. To the
knowledge of Cimnet, no other state takeover statute is applicable
to the Merger or the other transactions contemplated hereby.
(j) Financial Statements. Cimnet has heretofore
delivered to Western Tech financial statements, which are
accountants compilations, relating to the period ending September
30, 1998 (the "Financial Statements"). The Financial Statements
fairly present the financial position and results of operations of
the Cimnet for the periods presented.
SECTION 3.2. Representations and Warranties of Western Tech.
Except as disclosed in the Western Tech Filed SEC Documents (as
defined in Section 3.2(g)) or as set forth on the Disclosure
Schedule delivered by Western Tech to Cimnet prior to the
execution of this Agreement (the "Western Tech Disclosure
Schedule") and making reference to the particular subsection of
this Agreement to which exception is being taken, Western Tech
represents and warrants to Cimnet as follows:
(a) Organization, Standing and Corporate Power. (i)
Each of Western Tech and its subsidiaries is a corporation or
other legal entity duly organized, validly existing and in good
standing (with respect to jurisdictions which recognize such
concept) under the laws of the jurisdiction in which it is
organized and has the requisite corporate or other power, as the
case may be, and authority to carry on its business as now being
conducted, except, as to subsidiaries, for those jurisdictions
where the failure to be so organized, existing or in good standing
individually or in the aggregate would not have a material adverse
effect on Western Tech. Each of Western Tech and its subsidiaries
is duly qualified or licensed to do business and is in good
standing (with respect to jurisdictions which recognize such
concept) in each jurisdiction in which the nature of its business
or the ownership, leasing or operation of its properties makes
such qualification or licensing necessary, except for those
jurisdictions where the failure to be so qualified or licensed or
to be in good standing individually or in the aggregate would not
have a material adverse effect on Western Tech.
(ii) Western Tech has delivered to Cimnet prior to the
execution of this Agreement complete and correct copies of its
Certificate of Incorporation and By-Laws, as amended to date.
(b) Subsidiaries. Cimnet Acquisition Corp., a Delaware
corporation, is the only subsidiary of Western Tech. All the
outstanding shares of capital stock of, or other equity interests
in, each such subsidiary have been validly issued and are fully
paid and nonassessable and are owned directly or indirectly by
Western Tech, free and clear of all Liens and free of any other
restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other ownership
interests).
(c) Capital Structure. The authorized capital stock of
Western Tech consists of 50,000,000 shares of Western Tech Common
Stock, no par value per share. At the close of business on
December 30, 1998 (i) 750,000 shares of Western Tech Common Stock
were issued and outstanding (including shares of restricted
Western Tech Common Stock); (ii) no shares of Western Tech Common
Stock were held by Western Tech in its treasury; and (iii) no
shares of preferred stock (of any Class) were authorized, issued
and outstanding. All outstanding shares of capital stock of
Western Tech are, and all shares which may be issued pursuant to
this Agreement or otherwise will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except as set forth in this Section 3.2(c),
Section 3.2 (c) of the Western Tech Disclosure Schedule there are
not issued, reserved for issuance or outstanding (A) any shares of
capital stock or other voting securities of Western Tech, (B) any
securities of Western Tech or any Western Tech subsidiary
convertible into or exchangeable or exercisable for shares of
capital stock or voting securities of Western Tech, (C) any
warrants, calls, options or other rights to acquire from Western
Tech or any Western Tech subsidiary, and any obligation of Western
Tech or any Western Tech subsidiary to issue, any capital stock,
voting securities or securities convertible into or exchangeable
or exercisable for capital stock or voting securities of Western
Tech, and (D) there are no outstanding obligations of Western Tech
or any Western Tech subsidiary to repurchase, redeem or otherwise
acquire any such securities or to issue, deliver or sell, or cause
to be issued, delivered or sold, any such securities. There are no
outstanding (X) securities of Western Tech or any Western Tech
subsidiary convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities or ownership
interests in any Western Tech subsidiary, (Y) warrants, calls,
options or other rights to acquire from Western Tech or any
Western Tech subsidiary, and any obligation of Western Tech or any
Western Tech subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities
convertible into or exchangeable or exercisable for any capital
stock, voting securities or ownership interests in, any Western
Tech subsidiary or (Z) obligations of Western Tech or any Western
Tech subsidiary to repurchase, redeem or otherwise acquire any
such outstanding securities of Western Tech subsidiaries or to
issue, deliver or sell, or cause to be issued, delivered or sold,
any such securities. Neither Western Tech nor any Western Tech
subsidiary is a party to any agreement restricting the transfer
of, relating to the voting of, requiring registration of, or
granting any preemptive or, antidilutive rights with respect to,
any securities of the type referred to in the two preceding
sentences. Other than the Western Tech subsidiaries, Western Tech
does not directly or indirectly beneficially own any securities or
other beneficial ownership interests in any other entity except
for non-controlling investments made in the ordinary course of
business in entities which are not individually or in the
aggregate material to Western Tech and its subsidiaries as a
whole.
(d) Authority; Noncontravention. Western Tech has all
requisite corporate power and authority to enter into this
Agreement and, subject to the Western Tech Stockholder Approval
(as defined in Section 3.2(l)), to consummate the transactions
contemplated by this Agreement. The execution and delivery of this
Agreement by Western Tech and the consummation by Western Tech of
the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of
Western Tech. This Agreement has been duly executed and delivered
by Western Tech and, assuming the due authorization, execution and
delivery by Cimnet, constitutes the legal, valid and binding
obligations of Western Tech, enforceable against Western Tech in
accordance with its terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a
benefit under, or result in the creation of any Lien upon any of
the properties or assets of Western Tech or any of its
subsidiaries under, (i) the certificate of incorporation or By-
Laws of Western Tech or the comparable organizational documents
of any of its subsidiaries, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license or similar
authorization applicable to Western Tech or any of its
subsidiaries or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to
in the following sentence, any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Western Tech or
any of its subsidiaries or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any such
conflicts, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not (x) have a material
adverse effect on Western Tech or (y) reasonably be expected to
impair the ability of Western Tech to perform its obligations
under this Agreement. No consent, approval, order or
authorization of, action by, or in respect of, or registration,
declaration or filing with, any Governmental Entity is required by
or with respect to Western Tech or any of its subsidiaries in
connection with the execution and delivery of this Agreement by
Western Tech or the consummation by Western Tech of the
transactions contemplated by this Agreement, except for (1) the
filing with the SEC of (A) the Information Statement and (B) such
reports under Section 13(a), 13(d), 15(d) or 16(a) of the Exchange
Act as may be required in connection with this Agreement and the
transactions contemplated by this Agreement; (2) the filing of the
Certificate of Merger with the Secretary of State of Delaware and
appropriate documents with the relevant authorities of other
states in which Western Tech is qualified to do business and such
filings with Governmental Entities to satisfy the applicable
requirements of state securities or "blue sky" laws; and (3) such
consents, approvals, orders or authorizations the failure of which
to be made or obtained individually or in the aggregate would not
(x) have a material adverse effect on Western Tech or (y)
reasonably be expected to impair the ability of Western Tech to
perform its obligations under this Agreement.
(e) SEC Documents; Undisclosed Liabilities. Western
Tech has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other
documents (including exhibits and all other information
incorporated therein) with the SEC since September 30, 1998, (the
"Western Tech SEC Documents"). As of their respective dates, the
Western Tech SEC Documents complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Western Tech SEC Documents, and none
of the Western Tech SEC Documents when filed contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of Western
Tech included in the Western Tech SEC Documents comply as to form,
as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto,
have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the consolidated financial
position of Western Tech and its consolidated subsidiaries as of
the dates thereof and the consolidated results of their operations
and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments.
(f) Information Supplied. None of the information
supplied or to be supplied by Western Tech specifically for
inclusion or incorporation by reference in the Information
Statement, 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 therein, in light of the
circumstances under which they are made, not misleading. The
Information Statement will comply as to form in all material
respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations thereunder, except that
no representation or warranty is made by Western Tech with
respect to statements made or incorporated by reference therein
based on information supplied by Cimnet specifically for inclusion
or incorporation by reference in the Information Statement.
(g) Absence of Certain Changes or Events. Except for
liabilities incurred in connection with this Agreement or the
transactions contemplated hereby, and except as permitted by
Section 4.1(b), since September 30, 1998, Western Tech and its
subsidiaries have conducted their business only in the ordinary
course or as disclosed in any Western Tech SEC Document filed
since such date and prior to the date hereof, and there has not
been (i) any material adverse change in Western Tech, (ii) any
declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to
any of Western Tech's capital stock, (iii) any split, combination
or reclassification of any of Western Tech's capital stock or any
issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares
of Western Tech's capital stock, (iv)(A) any granting by Western
Tech or any of its subsidiaries to any current or former director,
executive officer or other key employee of Western Tech or its
subsidiaries of any increase in compensation, bonus or other
benefits, except for normal increases as a result of promotions,
normal increases of base pay in the ordinary course of business or
as was required under any employment agreements in effect as of
September 30, 1998, (B) any granting by Western Tech or any of its
subsidiaries to any such current or former director, executive
officer or key employee of any increase in severance or
termination pay, or (C) any entry by Western Tech or any of its
subsidiaries into, or any amendment of, any employment, deferred
compensation consulting, severance, termination or indemnification
agreement with any such current or former director, executive
officer or key employee, (v) except insofar as may have been
disclosed in Western Tech SEC Documents filed and publicly
available prior to the date of this Agreement (as amended to the
date hereof, the "Western Tech Filed SEC Documents") or required
by a change in GAAP, any change in accounting methods, principles
or practices by Western Tech materially affecting its assets,
liabilities or business, (vi) except insofar as may have been
disclosed in the Western Tech Filed SEC Documents, any tax
election that individually or in the aggregate would have a
material adverse effect on Western Tech or any of its tax
attributes or any settlement or compromise of any material income
tax liability or (vii) any action taken by Western Tech or any of
the Western Tech subsidiaries during the period from December 31,
1997 through the date of this Agreement that, if taken during the
period from the date of this Agreement through the Effective Time
would constitute a breach of Section 4.1(b).
(h) Compliance with Applicable Laws; Litigation. (i)
Western Tech, its subsidiaries and employees hold all permits,
licenses, variances, exemptions, orders, registrations and
approvals of all Governmental Entities which are required for the
operation of the businesses of Western Tech and its subsidiaries
(the "Western Tech Permits") except where the failure to have any
such Western Tech Permits individually or in the aggregate would
not have a material adverse effect on Western Tech. Western Tech
and its subsidiaries are in compliance with the terms of the
Western Tech Permits and all applicable statutes, laws,
ordinances, rules and regulations, except where the failure so to
comply individually or in the aggregate would not have a material
adverse effect on Western Tech. As of the date of this Agreement,
except as disclosed in the Western Tech Filed SEC Documents, no
action, demand, requirement or investigation by any Governmental
Entity and no suit, action or proceeding by any person, in each
case with respect to Western Tech or any of its subsidiaries or
any of their respective properties, is pending or, to the
knowledge of Western Tech, threatened, other than, in each case,
those the outcome of which individually or in the aggregate would
not (A) have a material adverse effect on Western Tech or (B)
reasonably be expected to impair the ability of Western Tech to
perform its obligations under this Agreement or prevent or
materially delay the consummation of any of the transactions
contemplated by this Agreement.
(ii) Neither Western Tech nor any Western Tech subsidiary is
subject to any outstanding order, injunction or decree which has
had or, insofar as can be reasonably foreseen, individually or in
the aggregate will have a material adverse effect on Western Tech.
(i) Absence of Changes in Benefit Plans. Western Tech
has delivered to Cimnet true and complete copies of (i) all
severance and employment agreements of Western Tech with
directors, executive officers or key employees, (ii) all severance
programs and policies of each of Western Tech and each Western
Tech subsidiary, and (iii) all plans or arrangements of Western
Tech. Since December 31, 1997, there has not been any adoption or
amendment in any material respect by Western Tech or any of its
subsidiaries of any collective bargaining agreement or any
material bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding providing benefits to any current or
former employee, officer or director of Western Tech or any of its
wholly owned subsidiaries (collectively, the "Western Tech Benefit
Plans"), or any material change in any actuarial or other
assumption used to calculate funding obligations with respect to
any Western Tech pension plans, or any material change in the
manner in which contributions to any Western Tech pension plans
are made or the basis on which such contributions are determined.
(j) ERISA Compliance. Western Tech has never had any
Benefit Plans.
(k) Taxes. (i) Each of Western Tech and its
subsidiaries has filed all material tax returns and reports
required to be filed by it and all such returns and reports are
complete and correct in all material respects, or requests for
extensions to file such returns or reports have been timely filed,
granted and have not expired, except to the extent that such
failures to file, to be complete or correct or to have extensions
granted that remain in effect individually or in the aggregate
would not have a material adverse effect on Western Tech. Western
Tech and each of its subsidiaries has paid (or Western Tech has
paid on its behalf) all taxes shown as due on such returns, and
the most recent financial statements contained in the Western
Tech Filed SEC Documents reflect an adequate reserve in accordance
with GAAP for all taxes payable by Western Tech and its
subsidiaries for all taxable periods and portions thereof accrued
through the date of such financial statements.
(ii) No deficiencies for any taxes have been proposed,
asserted or assessed against Western Tech or any of its
subsidiaries that are not adequately reserved for, except for
deficiencies that individually or in the aggregate would not have
a material adverse effect on Western Tech. The federal income tax
returns of Western Tech and each of its subsidiaries consolidated
in such returns for tax years through 1997 have closed by virtue
of the applicable statute of limitations.
(iii) Neither Western Tech nor any of its subsidiaries has
taken any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section
368(a) of the Code.
(l) Voting Requirements. The affirmative vote of the
holders of a majority of all outstanding voting shares of
MergerSub is the only vote of the holders of any class or series
of capital stock necessary to approve and adopt this Agreement and
the transactions contemplated hereby, including the Merger, and
the issuance of the Western Tech Common Stock pursuant to the
Merger.
(m) State Takeover Statutes; Certificate of
Incorporation. The Board of
Directors of Western Tech (including the disinterested Directors
thereof) has unanimously approved this Agreement and the
transactions contemplated hereby and such approval constitutes
approval of the Merger and the other transactions contemplated
hereby by the Western Tech Board of Directors under the applicable
provisions of the Wyoming Business Corporation Act ("WBCA") and
constitutes approval of the Merger the issuance of Western Tech
Common Stock in connection therewith and the other transactions
contemplated hereby.
(n) Intentionally Omitted.
(o) Intellectual Property. Western Tech and its
subsidiaries own or have a valid license to use all trademarks,
service marks, trade names, patents and copyrights (including any
registrations or applications for registration of any of the
foregoing) (collectively, the "Western Tech Intellectual
Property") necessary to carry on its business substantially as
currently conducted, except for such Western Tech Intellectual
Property the failure of which to own or validly license
individually or in the aggregate would not have a material adverse
effect on Western Tech. Neither Western Tech nor any such
subsidiary has received any notice of infringement of or conflict
with, and, to Western Tech's knowledge, there are no infringements
of or conflicts (i) with the rights of others with respect to the
use of, or (ii) by others with respect to, any Western Tech
Intellectual Property that individually or in the aggregate, in
either such case, would have a material adverse effect on Western
Tech.
(p) Certain Contracts. Except as set forth in the
Western Tech Filed SEC Documents, neither Western Tech nor any of
its subsidiaries is a party to or bound by (i) any "material
contract" (as such term is defined in item 601(b)(10) of
Regulation S-K of the SEC), (ii) any non-competition agreement or
any other agreement or obligation which purports to limit in any
material respect the manner in which, or the localities in which,
all or any material portion of the business of Western Tech and
its subsidiaries (including Cimnet and its subsidiaries, assuming
the Merger had taken place), taken as a whole, is or would be
conducted, or (iii) any contract or other agreement which would
prohibit or materially delay the consummation of the Merger or any
of the transactions contemplated by this Agreement (all contracts
of the type described in clauses (i) and (ii) being referred to
herein as "Western Tech Material Contracts"). Each Western Tech
Material Contract is valid and binding on Western Tech (or, to the
extent a Western Tech subsidiary is a party, such subsidiary) and
is in full force and effect, and Western Tech and each Western
Tech subsidiary have in all material respects performed all
obligations required to be performed by them to date under each
Western Tech Material Contract, except where such noncompliance,
individually or in the aggregate, would not have a material
adverse effect on Western Tech. Neither Western Tech nor any
Western Tech subsidiary knows of, or has received notice of, any
violation or default under (nor, to the knowledge of Western Tech,
does there exist any condition which with the passage of time or
the giving of notice or both would result in such a violation or
default under) any Western Tech Material Contract.
SECTION 3.3. Representations and Warranties of MergerSub.
Except as set forth on the Disclosure Schedule delivered by
MergerSub to Cimnet prior to the execution of this Agreement (the
"MergerSub Disclosure Schedule") and making reference to the
particular subsection of this Agreement to which exception is
being taken, Western Tech and MergerSub represents and warrants to
Cimnet as follows:
(a) Organization, Standing and Corporate Power. (i)
MergerSub is a corporation or other legal entity duly organized,
validly existing and in good standing (with respect to
jurisdictions which recognize such concept) under the laws of the
jurisdiction in which it is organized and has the requisite
corporate or other power and authority to carry on its business as
now being conducted, except, for those jurisdictions where the
failure to be so organized, existing or in good standing
individually or in the aggregate would not have a material adverse
effect (as defined in Section 8.3) on MergerSub.
(ii) MergerSub has delivered to Western Tech prior to
the execution of this Agreement complete and correct copies of its
Certificate of Incorporation and By-Laws, as amended to date.
(b) Subsidiaries. MergerSub does not beneficially own
any subsidiaries.
(c) Capital Structure. The authorized capital stock of
MergerSub consists of 1,000 shares of MergerSub Common Stock and
no shares of preferred stock. At the close of business on the
date hereof: (i) 1,000 shares of MergerSub Common Stock were
issued and outstanding; and (ii) no shares of MergerSub Common
Stock were held by MergerSub in its treasury. All outstanding
shares of capital stock of MergerSub are, and all shares which may
be issued will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights.
There are no issued, reserved for issuance or outstanding
securities of MergerSub or any MergerSub subsidiary convertible
into or exchangeable or exercisable for shares of capital stock or
voting securities of MergerSub, or any warrants, calls, options or
other rights to acquire from MergerSub or any MergerSub
subsidiary.
(d) Authority; Noncontravention. MergerSub has all
requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by
MergerSub and the consummation by MergerSub of the transactions
contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of MergerSub, subject, in
the case of the Merger, to the MergerSub Stockholder Approval.
This Agreement has been duly executed and delivered by MergerSub
and, assuming the due authorization, execution and delivery by
Western Tech and MergerSub constitutes the legal, valid and
binding obligation of MergerSub, enforceable against MergerSub in
accordance with its terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a
benefit under, or result in the creation of any Lien upon any of
the properties or assets of MergerSub or any of its subsidiaries
under, (i) the certificate of incorporation or By-Laws of
MergerSub or the comparable organizational documents of any of
its subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, license or similar authorization applicable to
MergerSub or any of its subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to MergerSub or any of its subsidiaries or
their respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, defaults,
rights, losses or Liens that individually or in the aggregate
would not (x) have a material adverse effect on MergerSub or (y)
reasonably be expected to impair the ability of MergerSub to
perform its obligations under this Agreement. No consent,
approval, order or authorization of, action by or in respect of,
or registration, declaration or filing with, any federal, state,
local or foreign government, any court, administrative, regulatory
or other governmental agency, commission or authority or any
nongovernmental self-regulatory agency, commission or authority (a
"Governmental Entity") is required by or with respect to
MergerSub or any of its subsidiaries in connection with the
execution and delivery of this Agreement by MergerSub or the
consummation by MergerSub of the transactions contemplated by this
Agreement, except for (1) the filing of the Certificate of Merger
with the Secretary of State of Delaware and appropriate documents
with the relevant authorities of other states in which MergerSub
is qualified to do business and such filings with Governmental
Entities to satisfy the applicable requirements of state
securities or "blue sky" laws; and (2) such consents, approvals,
orders or authorizations the failure of which to be made or
obtained individually or in the aggregate would not (x) have a
material adverse effect on MergerSub or (y) reasonably be expected
to impair the ability of MergerSub to perform its obligations
under this Agreement.
(e) Undisclosed Liabilities. Except for liabilities
incurred in connection with this Agreement or the transactions
contemplated hereby, neither MergerSub nor any of its subsidiaries
has any liabilities or obligations of any nature which,
individually or in the aggregate, would have a material adverse
effect on MergerSub.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1. Conduct of Business.
(a) Conduct of Business by Cimnet. Except as set forth
in Section 4.1(a) of the Cimnet Disclosure Schedule, as otherwise
expressly contemplated by this Agreement or as consented to by
Western Tech in writing, such consent not to be unreasonably
withheld or delayed, during the period from the date of this
Agreement to the Effective Time, Cimnet shall carry on its
business in the ordinary course consistent with past practice and
in compliance in all material respects with all applicable laws
and regulations and, to the extent consistent therewith, use all
reasonable efforts to preserve intact their current business
organizations, use reasonable efforts to keep available the
services of their current officers and other key employees and
preserve their relationships with those persons having business
dealings with them to the end that their goodwill and ongoing
businesses shall be unimpaired at the Effective Time.
(b) Conduct of Business by Western Tech and
Subsidiaries. Except as set forth in Section 4.1(b) of the
Western Tech Disclosure Schedule, as otherwise expressly
contemplated by this Agreement or as consented to by Cimnet in
writing, such consent not to be unreasonably withheld or delayed,
during the period from the date of this Agreement to the Effective
Time, Western Tech shall, and shall cause its subsidiaries to,
carry on their respective businesses in the ordinary course
consistent with past practice and in compliance in all material
respects with all applicable laws and regulations and, to the
extent consistent therewith, use all reasonable efforts to
preserve intact their current business organizations, use
reasonable efforts to keep available the services of their current
officers and other key employees and preserve their relationships
with those persons having business dealings with them to the end
that their goodwill and ongoing businesses shall be unimpaired at
the Effective Time. Without limiting the generality of the
foregoing (but subject to the above exceptions), during the period
from the date of this Agreement to the Effective Time, Western
Tech shall not, and shall not permit any of its subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, make any
other distributions in respect of, or enter into any agreement
with respect to the voting of, any of its capital stock, (y)
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 ;
(ii) issue, deliver, sell, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other
voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting
securities or convertible securities;
(iii) except as contemplated hereby, amend its certificate of
incorporation, By-Laws or other comparable organizational
documents;
(iv) 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 person;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties
or assets (including securitization);
(vi) take any action that would cause the representations and
warranties set forth in Section 3.2(g) to no longer be true and
correct;
(vii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as
an accommodation become responsible for the obligations of any
person for borrowed money; or
(viii) authorize, or commit or agree to take, any of the
foregoing actions.
(c) Other Actions. Except as required by law, Cimnet
and Western Tech shall not, and shall not permit any of their
respective subsidiaries to, voluntarily take any action that
would, or that could reasonably be expected to, result in (i) any
of the representations and warranties of such party set forth in
this Agreement that are qualified as to materiality becoming
untrue at the Effective Time, except as provided in the proviso
in Section 6.2(a) or Section 6.3(a), (ii) any of such
representations and warranties that are not so qualified becoming
untrue in any material respect at the Effective Time, except as
provided in the proviso in Section 6.2(a) or Section 6.3(a), or
(iii) any of the conditions to the Merger set forth in Article VI
not being satisfied.
(d) Advice of Changes. Cimnet and Western Tech shall
promptly advise the other party orally and in writing to the
extent it has knowledge of (i) any representation or warranty made
by it contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming
untrue or inaccurate in any material respect, (ii) the failure by
it to comply in any material respect with or satisfy in any
material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement and (iii)
any change or event having, or which, insofar as can reasonably
be foreseen, could reasonably be expected to have a material
adverse effect on such party or on the truth of their respective
representations and warranties or the ability of the conditions
set forth in Article VI to be satisfied; provided, however, that
no such notification shall affect the representations, warranties,
covenants or agreements of the parties (or remedies with respect
thereto) or the conditions to the obligations of the parties under
this Agreement.
SECTION 4.2. Intentionally Omitted.
SECTION 4.3. No Solicitation by Western Tech. (a) Western Tech
shall not, nor shall it permit any of its subsidiaries to, nor
shall it authorize or permit any of its directors, officers or
employees or any investment banker, financial advisor, attorney,
accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly through another person,
(i) solicit, initiate or encourage (including by way of
furnishing information), or take any other action designed to
facilitate, any inquiries or the making of any proposal which
constitutes any Western Tech Takeover Proposal (as defined below)
or (ii) participate in any discussions or negotiations regarding
any Western Tech Takeover Proposal; provided, however, that if the
Board of Directors of Western Tech determines in good faith,
based on the advice of outside counsel, that it is necessary to do
so in order to act in a manner consistent with its fiduciary
duties to Western Tech's stockholders under applicable law,
Western Tech may, in response to a Western Tech Superior Proposal
(as defined in Section 4.3(b)) which was not solicited by it,
which did not otherwise result from a breach of this Section
4.3(a) and which is made or received prior to the obtaining of the
Western Tech Stockholder Approval, and subject to providing prior
written notice of its decision to take such action to Cimnet and
compliance with Section 4.3(c) (x) furnish information with
respect to Western Tech and its subsidiaries to any person making
a Western Tech Superior Proposal pursuant to a customary
confidentiality agreement (as determined by Western Tech based on
the advice of its outside counsel, the terms of which are no more
favorable to such person than the Confidentiality Agreement) and
(y) participate in discussions or negotiations regarding such
Western Tech Superior Proposal. For purposes of this Agreement,
"Western Tech Takeover Proposal" means any inquiry, proposal or
offer from any person relating to any direct or indirect
acquisition or purchase of a business that constitutes 50% or more
of the net revenues, net income or the assets of Western Tech and
its subsidiaries, taken as a whole, or 25% or more of any class of
equity securities of Western Tech, any tender offer or exchange
offer that if consummated would result in any person beneficially
owning 25% or more of any class of equity securities of Western
Tech, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction
involving Western Tech or the Western Tech Common Stock (or any
Western Tech subsidiary whose business constitutes 50% or more of
the net revenues, net income or the assets of Western Tech and its
subsidiaries, taken as a whole), other than the transactions
contemplated by this Agreement.
(b) Except as expressly permitted by this Section 4.3,
neither the Board of Directors of Western Tech nor any committee
thereof shall (i) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to Cimnet, the approval or
recommendation by such Board of Directors or such committee of the
Merger, this Agreement or the issuance of Western Tech Class A
Common Stock in connection with the Merger, (ii) approve or
recommend, or propose publicly to approve or recommend, any
Western Tech Takeover Proposal, or (iii) cause Western Tech to
enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, a "Western
Tech Acquisition Agreement") related to any Western Tech Takeover
Proposal. Notwithstanding the foregoing, at any time prior to the
obtaining of the Western Tech Stockholder Approval, the Board of
Directors of Western Tech, to the extent that it determines in
good faith, based upon the advice of outside counsel, that it is
necessary to do so in order to act in a manner consistent with its
fiduciary duties to Western Tech's stockholders under applicable
law, may (subject to this and the following sentences) terminate
this Agreement solely in order to concurrently enter into any
Western Tech Acquisition Agreement with respect to any Western
Tech Superior Proposal, but only at a time that is after the fifth
business day following Western Tech's receipt of written notice
advising Cimnet that the Board of Directors of Western Tech is
prepared to accept a Western Tech Superior Proposal, specifying
the material terms and conditions of such Western Tech Superior
Proposal and identifying the person making such Western Tech
Superior Proposal. For purposes of this Agreement, a "Western Tech
Superior Proposal" means any proposal made by a third party to
acquire, directly or indirectly, including pursuant to a tender
offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or
similar transaction, for consideration consisting of cash and/or
securities, more than 50% of the combined voting power of the
shares of Western Tech Common Stock then outstanding or all or
substantially all the assets of Western Tech and otherwise on
terms which the Board of Directors of Western Tech determines in
its good faith judgment (based on the advice of a financial
advisor of nationally recognized reputation) to be more favorable
to Western Tech's stockholders than the Merger and for which
financing, to the extent required, is then committed or which, in
the good faith judgment of the Board of Directors of Western Tech
based on the advice of its financial advisor, is reasonably
capable of being obtained by such third party.
(c) In addition to the obligations of Western Tech set
forth in paragraphs (a) and (b) of this Section 4.3, Western Tech
shall immediately advise Cimnet orally and in writing of any
request for information or of any Western Tech Takeover Proposal,
the material terms and conditions of such request or Western Tech
Takeover Proposal and the identity of the person making such
request or Western Tech Takeover Proposal. Western Tech will keep
Cimnet reasonably informed of the status and details (including
amendments or proposed amendments) of any such request or Western
Tech Takeover Proposal. Cimnet shall treat any information it
receives from Western Tech pursuant to this section as
confidential information.
(d) Nothing contained in this Section 4.3 shall prohibit
Western Tech from taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to Western Tech's
stockholders if, in the good faith judgment of the Board of
Directors of Western Tech, after consultation with outside
counsel, failure so to disclose would be inconsistent with its
obligations under applicable law; provided, however, that neither
Western Tech nor its Board of Directors nor any committee thereof
shall withdraw or modify, or propose publicly to withdraw or
modify, its position with respect to this Agreement, the Merger,
the issuance of Western Tech Class A Common Stock in connection
with the Merger, or approve or recommend, or propose publicly to
approve or recommend, a Western Tech Takeover Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Preparation of the Information Statement;
Stockholders Meeting. (a) As soon as practicable following the
date of this Agreement, Western Tech shall prepare (with the
assistance of Cimnet) and file with the SEC the Information
Statement. Western Tech shall use best efforts to have the
Information Statement declared effective under the Securities
Exchange Act of 1934 (the "1934 Act") as promptly as practicable
after such filing. Western Tech will use all best efforts to cause
the Information Statement to be mailed to its stockholders.
Western Tech shall also take any action (other than qualifying to
do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process)
required to be taken under any applicable state securities laws in
connection with the issuance of Western Tech Common Stock in the
Merger and Cimnet shall furnish all information concerning Cimnet
and the holders of Cimnet Common Stock as may be reasonably
requested in connection with any such action. No filing of, or
amendment or supplement to, the Proxy Statement will be made by
Western Tech without providing Cimnet the opportunity to review
and comment thereon. Western Tech will advise Cimnet, promptly
after it receives notice thereof, of the time when the Information
Statement has become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the
qualification of the Western Tech Common Stock issuable in
connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the
Information Statement or comments thereon and responses thereto or
requests by the SEC for additional information. If at any time
prior to the Effective Time any information relating to Cimnet or
Western Tech, or any of their respective affiliates, officers or
directors, should be discovered by Cimnet or Western Tech which
should be set forth in an amendment or supplement to the Proxy
Statement, so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the
party which discovers such information shall promptly notify the
other parties hereto and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC
and, to the extent required by law, disseminated to the
stockholders of Western Tech.
(b) Cimnet shall, as promptly as practicable after the
Information Statement is approved, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Cimnet
Stockholders Meeting") in accordance with the DGCL for the purpose
of obtaining the Cimnet Stockholder Approval and through its Board
of Directors, recommend to its stockholders the approval and
adoption of this Agreement, the Merger, and the other transactions
contemplated hereby.
(c) Western Tech shall, as promptly as practicable after
the Information Statement is approved duly call, its stockholders
in accordance with the requirements of 1934 Act and, subject to
its rights to terminate this Agreement pursuant to Section 4.3(b),
shall, through its Board of Directors, recommend to its
stockholders the approval and adoption of this Agreement, the
Merger, and the other transactions contemplated hereby. Without
limiting the generality of the foregoing but subject to its rights
to terminate this Agreement pursuant to Section 4.3(b), Western
Tech agrees that its obligations pursuant to the first sentence of
this Section 5.1(c) shall not be affected by the commencement,
public proposal, public disclosure or communication to Western
Tech of any Western Tech Takeover Proposal.
(d) Western Tech and Cimnet will use best efforts to
hold the Cimnet Stockholders Meeting and the Western Tech
Stockholders Meeting on the same date and as soon as reasonably
practicable after the date hereof.
SECTION 5.2. Intentionally Omitted.
SECTION 5.3. Access to Information; Confidentiality. Subject to
the Letter Agreement dated October 25, 1998, between Western Tech
and Cimnet (the "Confidentiality Agreement"), and subject to
restrictions contained in confidentiality agreements to which such
party is subject (which such party will use its best efforts to
have waived) and applicable law, each of Cimnet and Western Tech
shall, and shall cause each of its respective subsidiaries to,
afford to the other party and to the officers, employees,
accountants, counsel, financial advisors and other representatives
of such other party, reasonable access during normal business
hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel
and records and, during such period, each of Cimnet and Western
Tech shall, and shall cause each of its respective subsidiaries
to, furnish promptly to the other party (a) a copy of each report,
schedule, registration statement and other document filed by it
during such period pursuant to the requirements of federal or
state securities laws and (b) all other information concerning its
business, properties and personnel as such other party may
reasonably request. No review pursuant to this Section 5.4 shall
affect any representation or warranty given by the other party
hereto. Each of Cimnet and Western Tech will hold, and will cause
its respective officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to
hold, any nonpublic information in accordance with the terms of
the Confidentiality Agreement.
SECTION 5.4. Best Efforts. (a) Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees
to use best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including (i) the
obtaining of all necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making
of all necessary registrations and filings and the taking of all
steps as may be necessary to obtain an approval or waiver from, or
to avoid an action or proceeding by, any Governmental Entity, (ii)
the obtaining of all necessary consents, approvals or waivers from
third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated by
this Agreement, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental
Entity vacated or reversed, and (iv) the execution and delivery of
any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes
of, this Agreement. Nothing set forth in this Section 5.5(a) will
limit or affect actions permitted to be taken pursuant to Sections
4.2 and 4.3.
(b) In connection with and without limiting the
foregoing, Cimnet and Western Tech shall (i) take all action
necessary to ensure that no state takeover statute or similar
statute or regulation is or becomes applicable to the Merger, this
Agreement, or any of the other transactions contemplated by this
Agreement and (ii) if any state takeover statute or similar
statute or regulation becomes applicable to the Merger, this
Agreement, or any other transaction contemplated by this
Agreement, take all action necessary to ensure that the Merger
and the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated
by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Merger and the other transactions
contemplated by this Agreement.
SECTION 5.5. Intentionally Omitted.
SECTION 5.6. Indemnification, Exculpation and Insurance. (a)
Western Tech agrees to maintain in effect in accordance with their
terms all rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former
directors or officers of Cimnet and its subsidiaries as provided
in their respective certificates of incorporation or By-Laws (or
comparable organizational documents) and any indemnification
agreements of Cimnet. In addition, from and after the Effective
Time, directors and officers of Cimnet who become directors or
officers of Western Tech will be entitled to the same indemnity
rights and protections as are afforded to other directors and
officers of Western Tech.
SECTION 5.7. Fees and Expenses. All fees and expenses incurred in
connection with the Merger, this Agreement, and the transactions
contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is
consummated.
SECTION 5.8. Public Announcements. Western Tech and Cimnet will
consult with each other before issuing, and provide each other the
opportunity to review, comment upon and concur with and use
reasonable efforts to agree on, any press release or other public
statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such
press release or make any such public statement prior to such
consultation, except as either party may determine is required by
applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange. The
parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement shall
be in the form heretofore agreed to by the parties.
SECTION 5.9. Affiliates. (a) As soon as practicable after the
date hereof, Cimnet shall deliver to Western Tech a letter
identifying all persons who are, at the time this Agreement is
submitted for adoption by the stockholders of Cimnet, "affiliates"
of Cimnet for purposes of Rule 145 under the Securities Act and
such list shall be updated as necessary to reflect changes from
the date hereof.
(b) Western Tech shall publish no later than 45 days
after the end of the first month after the Effective Time in which
there are at least 30 days of post Merger combined operations
(which month may be the month in which the Effective Time occurs),
combined sales and net income figures as contemplated by and in
accordance with the terms of SEC Accounting Series Release No.
135.
SECTION 5.10. Bulletin Board Listing. Western Tech shall use its
best efforts to maintain the listing of its shares of Common Stock
on the OTC Bulletin Board.
SECTION 5.11. Stockholder Litigation. Each of Cimnet and Western
Tech shall give the other the reasonable opportunity to
participate in the defense of any stockholder litigation against
Cimnet or Western Tech, as applicable, and its directors relating
to the transactions contemplated by this Agreement. In case any
such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, subject to the
provisions herein stated, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. The indemnified party shall have the right to
employ separate counsel in any such action and to participate in
the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with
counsel reasonably satisfactory to the indemnified party; provided
that the reasonable fees and expenses of such counsel shall be at
the expense of the indemnifying party if (i) the employment of
such counsel has been specifically authorized in writing by the
indemnifying party or (ii) the named parties to any such action
(including any impleaded parties) include both the indemnified
party and the indemnifying party and in the reasonable judgment of
the counsel to the indemnified party, it is advisable for the
indemnified party to be represented by separate counsel (in which
case the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party, it
being understood, however, that the indemnifying party shall not,
in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one
separate firm of attorneys for the indemnified party, which firm
shall be designated in writing by the indemnified party). No
settlement of any action against an indemnified party shall be
made without the consent of the indemnified party, which shall not
be unreasonably withheld in light of all factors of importance to
such indemnified party. If it is ultimately determined that
indemnification is not permitted, then an indemnified party will
return all monies advanced to the indemnifying party.
SECTION 5.12. Tax Treatment. Each of Western Tech and Cimnet
shall use best efforts to cause the Merger to qualify as a
reorganization under the provisions of Section 368 of the Code.
SECTION 5.13. Company Officers; Employment Contracts; Equity
Awards. At or prior to the Effective Time, Western Tech agrees
to enter into the employment agreements substantially in the forms
set forth in Exhibit B attached hereto.
SECTION 5.14. Post-Merger Operations. Following the Effective
Time, the combined company shall maintain its principal corporate
office in Robesonia, Pennsylvania.
SECTION 5.15. Conveyance Taxes. Western Tech and Cimnet shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real
property transfer or gains, sales, use, transfer, value added,
stock transfer and stamp taxes, any transfer, recording,
registration and other fees or any similar taxes which become
payable in connection with the transactions contemplated by this
Agreement that are required or permitted to be filed on or before
the Effective Time. Western Tech shall pay, and Cimnet shall pay,
without deduction or withholding from any amount payable to the
holders of Cimnet Common Stock, any such taxes or fees imposed by
any Governmental Entity (and any penalties and interest with
respect to such taxes and fees), which become payable in
connection with the transactions contemplated by this Agreement,
on behalf of their respective stockholders.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the
Merger is subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) Stockholder Approvals. Each of the Cimnet
Stockholder Approval and the approval of the stockholders of
MergerSub shall have been obtained.
(b) Governmental and Regulatory Approvals. Other than
the filing provided
for under Section 1.3, all consents, approvals and actions of,
filings with and notices to any Governmental Entity required of
Cimnet, Western Tech or any of their subsidiaries to consummate
the Merger and the other transactions contemplated hereby, the
failure of which to be obtained or taken (i) is reasonably
expected to have a material adverse effect on the Surviving
Corporation and its prospective subsidiaries, taken as a whole, or
(ii) will result in a violation of any laws, shall have been
obtained, all in form and substance reasonably satisfactory to
Cimnet and Western Tech.
(c) No Injunctions or Restraints. No judgment, order,
decree, statute, law, ordinance, rule or regulation, entered,
enacted, promulgated, enforced or issued by any court or other
Governmental Entity of competent jurisdiction or other legal
restraint or prohibition (collectively, "Restraints") shall be in
effect (i) preventing the consummation of the Merger, or (ii)
which otherwise is reasonably likely to have a material adverse
effect on Cimnet or Western Tech, as applicable; provided,
however, that each of the parties shall have used its best efforts
to prevent the entry of any such Restraints and to appeal as
promptly as possible any such Restraints that may be entered.
(d) Information. The Information Statement shall have
been submitted to the SEC and mailed to all stockholders of
Western Tech not less than 10 days prior to the Effective Date.
(e) Corporate Governance. Western Tech shall have taken
all such actions as shall be necessary so that the resolutions set
forth as part of Exhibit A shall have been adopted, to be
effective upon the Effective Time.
(f) Employment Arrangements. Xxxx Xxxxxxxxxx shall
have entered into employment agreements with Western Tech and/or
Cimnet which are satisfactory to the parties.
(g) Opinion of Counsel.. Each of the parties hereto
shall have received a legal opinion from Wyoming counsel which
opinion shall, among other things, state that the transactions
contemplated hereby are as of the Effective Time valid and legally
enforceable under Wyoming law.
(h) Western Tech Assets and Liabilities. Western Tech
shall at the Closing have no liabilities and no assets.
SECTION 6.2. Conditions to Obligations of Western Tech. The
obligation of Western Tech to effect the Merger is further subject
to satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations
and warranties of Cimnet set forth herein shall be true and
correct both when made and at and as of the Closing Date, as if
made at and as of such time (except to the extent expressly made
as of an earlier date, in which case as of such date), except
where the failure of such representations and warranties to be so
true and correct (without giving effect to any limitation as to
"materiality" or "material adverse effect" set forth therein)
does not have, and is not likely to have, individually or in the
aggregate, a material adverse effect on Cimnet.
(b) Performance of Obligations of Cimnet. Cimnet shall
have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the
Closing Date.
(c) No Material Adverse Change. At any time after the
date of this Agreement there shall not have occurred any material
adverse change relating to Cimnet.
SECTION 6.3. Conditions to Obligations of Cimnet. The obligation
of Cimnet to effect the Merger is further subject to satisfaction
or waiver of the following conditions:
(a) Representations and Warranties. The representations
and warranties of Western Tech and MergerSub set forth herein
shall be true and correct both when made and at and as of the
Closing Date, as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of
such date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any
limitation as to "materiality," or "material adverse effect" set
forth therein) does not have, and is not likely to have,
individually or in the aggregate, a material adverse effect on
Western Tech.
(b) Performance of Obligations of Western Tech. Western
Tech shall have performed in all material respects all
obligations required to be performed by it under this Agreement at
or prior to the Closing Date.
(c) No Material Adverse Change. At any time after the
date of this Agreement there shall not have occurred any material
adverse change relating to Western Tech.
SECTION 6.4. Frustration of Closing Conditions. Neither Western
Tech nor Cimnet may rely on the failure of any condition set forth
in Section 6.1, 6.2 or 6.3, as the case may be, to be satisfied if
such failure was caused by such party's failure to use best
efforts to consummate the Merger and the other transactions
contemplated by this Agreement, as required by and subject to
Section 5.5.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination. This Agreement may be terminated at any
time prior to the Effective Time, and (except in the case of
7.1(d) or 7.1(f)) whether before or after the Cimnet Stockholder
Approval or the Western Tech Stockholder Approval:
(a) by mutual written consent of Western Tech, MergerSub
and Cimnet;
(b) by either Western Tech or Cimnet:
(i) if the Merger shall not have been consummated by March
31, 1999, provided, however, that the right to terminate this
Agreement pursuant to this Section 7.1(b)(i) shall not be
available to any party whose failure to perform any of its
obligations under this Agreement results in the failure of the
Merger to be consummated by such time; provided, however, that
this Agreement may be extended not more than 30 days by either
party by written notice to the other party if the Merger shall not
have been consummated as a direct result of Western Tech or Cimnet
having failed to receive all regulatory approvals required to be
obtained with respect to the Merger.
(ii) if the Cimnet Stockholder Approval shall not have been
obtained at an Cimnet Stockholders Meeting duly convened therefor
or at any adjournment or postponement thereof;
(iii) if the Western Tech Stockholder Approval shall not have
been obtained at a Western Tech Stockholders Meeting duly convened
therefor or at any adjournment or postponement thereof; or
(iv) if any restraint having any of the effects set forth in
Section 6.1(d) shall be in effect and shall have become final and
nonappealable; provided, that the party seeking to terminate this
Agreement pursuant to this Section 7.1(b)(iv) shall have used best
efforts to prevent the entry
of and to remove such Restraint;
(c) by Western Tech, if Cimnet shall have breached or
failed to perform in any material respect any of its
representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform
(A) would give rise to the failure of a condition set forth in
Section 6.2(a) or (b), and (B) is incapable of being cured by
Cimnet or is not cured within 45 days of written notice thereof;
(d) prior to receipt of the Western Tech Stockholder
Approval, by Western Tech in accordance with Section 4.3(b);
provided that, in order for the termination of this Agreement
pursuant to this paragraph (d) to be deemed effective, Western
Tech shall have complied with all provisions contained in Section
4.3, including the notice provisions therein, and with applicable
requirements, including the payment of the Termination Fee, of
Section 5.9; or
(e) by Cimnet, if Western Tech shall have breached or
failed to perform in any material respect any of its
representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform
(A) would give rise to the failure of a condition set forth in
Section 6.3(a) or (b), and (B) is incapable of being cured by
Western Tech or is not cured within 45 days of written notice
thereof.
SECTION 7.2. Effect of Termination. In the event of termination
of this Agreement by either Cimnet or Western Tech as provided in
Section 7.1, this Agreement shall forthwith become void and have
no effect, without any liability or obligation on the part of
Western Tech or Cimnet, other than the provisions of Section
3.1(o), Section 3.2(o), the last sentence of Section 5.4, Section
5.9, this Section 7.2 and Article VIII, which provisions survive
such termination, and except to the extent that such termination
results from the willful and material breach by a party of any of
its representations, warranties, covenants or agreements set forth
in this Agreement.
SECTION 7.3. Amendment. This Agreement may be amended by the
parties at any time before or after the Cimnet Stockholder
Approval or the Western Tech Stockholder Approval; provided,
however, that after any such approval, there shall not be made any
amendment that by law requires further approval by the
stockholders of Cimnet or Western Tech without the further
approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the
parties.
SECTION 7.4. Extension; Waiver. At any time prior to the
Effective Time, a party may (a) extend the time for the
performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and
warranties of the other parties contained in this Agreement or in
any document delivered pursuant to this Agreement or (c) subject
to the proviso of Section 7.3, waive compliance by the other party
with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure
of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such
rights.
SECTION 7.5. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 7.1,
an amendment of this Agreement pursuant to Section 7.3 or an
extension or waiver pursuant to Section 7.4 shall, in order to be
effective, require, in the case of Western Tech or Cimnet, action
by its Board of Directors or, with respect to any amendment to
this Agreement, the duly authorized committee of its Board of
Directors to the extent permitted by law.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the
Effective Time. This Section 8.1 shall not limit any covenant or
agreement of the parties which by its terms contemplates
performance after the Effective Time.
SECTION 8.2. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and
shall be deemed given if delivered personally, telecopied (which
is confirmed) or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Western Tech or MergerSub, to
Western Technology & Research, Inc.
000 Xxxx "X" Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Zenith X. Xxxxxxx
with a copy to:
Xxxxxxx X. Xxxxxxx, Esq.
1211 East 0000 Xxxxx
Xxxxx 000, Xxxx. X
Xxxx Xxxx Xxxx, Xxxx 00000
(b) if to Cimnet, to
CIMNET, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx
with a copy to:
Berlack, Israels & Xxxxxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxx
SECTION 8.3. Definitions. For purposes of this Agreement:
(a) except for purposes of Section 5.11, an "affiliate"
of any person means another person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person, where "control"
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a
person, whether through the ownership of voting securities, by
contract, as trustee or executor, or otherwise;
(b) "material adverse change" or "material adverse
effect" means, when used in connection with Cimnet or Western
Tech, any change, effect, event, occurrence or state of facts that
is, or would reasonably be expected to be, materially adverse to
the business, financial condition or results of operations of such
party and its subsidiaries taken as a whole; and the terms
"material" and "materially" have correlative meanings;
(c) "person" means an individual, corporation,
partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity;
(d) a "subsidiary" of any person means another person,
an amount of the voting securities, other voting ownership or
voting partnership interests of which is sufficient to elect at
least a majority of its Board of Directors or other governing body
(or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such
first person; provided however, that with respect to Western Tech,
such term shall not include Cimnet; and
(e) "knowledge" of any person which is not an individual
means the knowledge of such person's executive officers or senior
management of such person's operating divisions and segments, in
each case after reasonable inquiry.
SECTION 8.4. Interpretation. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall
be to an Article or Section of, or an Exhibit to, this Agreement
unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein" and
"hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms defined in this
Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in
this Agreement are applicable to the singular as well as the
plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and
assigns.
SECTION 8.5. Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the
same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered
to the other parties.
SECTION 8.6. Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to
herein) and the Confidentiality Agreement (a) constitute the
entire agreement, and supersede all prior agreements and
understandings, both written and oral, between the parties with
respect to the subject matter of this Agreement and (b) except for
the provisions of Article II, Section 5.6 and Section 5.8, are
not intended to confer upon any person other than the parties any
rights or remedies.
SECTION 8.7. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflict of laws thereof.
SECTION 8.8. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by
either of the parties hereto without the prior written consent of
the other party. Any assignment in violation of the preceding
sentence shall be void. Subject to the preceding two sentences,
this Agreement will be binding upon, inure to the benefit of, and
be enforceable by, the parties and their respective successors and
assigns.
SECTION 8.9. Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 8.10. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced
by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full
force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as
closely as possible to the fullest extent permitted by applicable
law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
IN WITNESS WHEREOF, Western Tech, MergerSub and Cimnet
have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first
written above.
WESTERN TECHNOLOGY AND
RESEARCH, INC.
By:
Name:
Title:
CIMNET ACQUISITION CORP.
By:
Name:
Title:
CIMNET, INC.
By:
Name:
Title:
