UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 8-K
CURRENT REPORT
-------------------
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
-------------------
Date of Report (Date of earliest event reported): December 31, 1997
-------------------
SENTO TECHNICAL INNOVATIONS CORPORATION
--------------------------------------------
(Exact name of registrant as specified in its charter)
Utah 0 6425 87-0284979
(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification
incorporation) No.)
311 North State Street
Orem, Utah 84057
(Address of principal executive
offices, including zip code)
(801) 226-6222
(Registrant's telephone number,
including area code)
ITEM 2. ACQUISITION OF ASSETS.
On December 31, 1997, the Registrant executed an Amendment No. 1 to
Acquisition Agreement (the "Amendment") for the purpose of amending that
certain Acquisition Agreement (the "Acquisition Agreement"), dated November 19,
1997 by and among the Registrant, Astron Incorporated ("Astron"), and Jay
Barth, an individual and Astron's sole shareholder, and closed the transactions
contemplated by the Acquisition Agreement, as amended (collectively, the
"Acquisition"), consisting principally of the following:
(a) The Registrant acquired all of the issued and outstanding capital
stock of Astron in exchange for the issuance to Mr. Barth of 180,000
shares (the "Shares") of the Registrant's common stock, par value
$0.25 per share. The Acquisition was accomplished through a merger
of Sento Acquisition, Inc., a newly formed and wholly-owned
subsidiary of the Registrant ("Sento Acquisition"), with and into
Astron. Upon completion of the merger, the Registrant became the
sole shareholder of Astron, the Articles of Incorporation and Bylaws
of Sento Acquisition existing prior to the Acquisition became the
Articles of Incorporation and Bylaws of Astron and the individuals
serving as officers and directors of Sento Acquisition became the
officers and directors of Astron.
(b) Mr. Barth deposited 36,000 of the Shares in escrow pursuant to the
terms of a Stock Escrow Agreement securing certain indemnification
and restrictive covenant obligations undertaken by Astron and Mr.
Barth pursuant to the Acquisition Agreement, as amended.
(c) The Registrant executed employment agreements with Mr. Barth and
Joseph J. Bunker, the President and Training Manager of Astron,
respectively, pursuant to which the Registrant agreed to employ
Messrs. Barth and Bunker as Director of Training and Education and
Manager of Training and Education of Spire Technologies, Inc., a
wholly owned subsidiary of the Registrant.
Astron is a recognized provider of computer training and education courses
delivered nationwide. Astron's certification training courses include
Microsoft MCSE (Microsoft Certified System Engineer) for Windows NT, Novell CNE
(Certified Novell Engineer), and Citrix CWA (Certified WinFrame Administrator).
The Registrant will account for the Acquisition as a purchase.
The consideration paid by the Registrant in connection with the
Acquisition was determined through arms-length negotiations between the
Registrant and the other parties to the Acquisition, based upon the business,
assets, liabilities, operations and prospects of Astron. The Acquisition was
funded by the issuance of the Shares without any borrowing of funds. Prior to
the closing of the Acquisition, there was no material relationship between Mr.
Barth and the Registrant or any of its affiliates, any director or officer of
the Registrant or any associate of any such director or officer.
Copies of the Acquisition Agreement, the Amendment, the other documents
described in this report, and press releases announcing the execution of the
Acquisition Agreement and the consummation of the Acquisition are attached to
this Report as Exhibits 2.1 through 2.2 and 4.1 through 4.2 and 99.1 through
99.4, respectively. Certain financial statements and pro forma information
relating to the Registrant and the Acquisition are included herein under Item 7
below.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
The financial statements required pursuant to this Item 7(a) are
filed as part of this Report as pages __ through __.
(b) Pro forma financial information.
The pro forma financial information required pursuant to this Item
7(b) are filed as part of this Report as pages __ through __.
(c) Exhibits.
The following exhibits are included herein:
REG S-B
EXHIBIT EXHIBIT
NO. DESCRIPTION NO.
2.1 Acquisition Agreement dated as of November 19, 1997 1
2.2 Amendment No. 1 dated as of December 31, 1997 2
4.1 Stock Escrow Agreement dated as of December 31, 1997 3
4.2 Articles of Merger including Plan of Merger 4
99.1 Employment Agreement by and between the Registrant and
Jay Barth 5
99.2 Employment Agreement by and between the Registrant and
Joseph J. Bunker 6
99.3 Press Release dated November 20, 1997 7
99.4 Press Release dated January 6, 1998 8
______________________________
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned thereunto duly authorized.
SENTO TECHNICAL INNOVATIONS CORPORATION
/s/ Robert K. Bench
----------------------------------------
Robert K. Bench, Chief Financial Officer
Dated: January 15, 1998
<PAGE>
ASTRON INCORPORATED
Financial Statements
Nine months ended September 30, 1997 and
years ended December 31, 1996 and 1995
(With Independent Auditors' Report Thereon)
Independent Auditors' Report
The Board of Directors and Stockholders of
Astron Incorporated:
We have audited the accompanying balance sheets of Astron Incorporated as of
September 30, 1997 and December 31, 1996 and 1995, and the related statements
of operations, stockholders' equity (deficit), and cash flows for the nine
months ended September 30, 1997 and years ended December 31, 1996 and 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Astron Incorporated as of
September 30, 1997 and December 31, 1996 and 1995, and the results of its
operations and its cash flows for the nine months ended September 30, 1997 and
years ended December 31, 1996 and 1995, in accordance with generally accepted
accounting principles.
KPMG Peat Marwick LLP
October 23, 1997
<PAGE>
ASTRON INCORPORATED
Balance Sheets
September 30, December 31, December 31,
Assets 1997 1996 1995
---------- ---------- ----------
Current assets:
Cash $ 8,055 62,623 42,579
Accounts receivable,
less allowance for 105,381 103,553 54,290
doubtful accounts of
$23,732 in 1997,
$38,006 in 1996, and
$5,030 in 1995
Employee advances 2,385 2,900 2,900
Deposits 3,113 3,113 7,913
Other current assets 64,583 60,000 60,000
(notes 2 and 6) --------- --------- ---------
Total current assets 183,517 232,189 167,682
Fixed assets:
Land 25,600 35,389 9,789
Buildings 102,400 102,400 -
Condo - 90,783 90,000
Equipment 393,384 465,564 341,279
Office equipment 43,661 43,661 8,506
Accumulated depreciation (221,733) (201,139) (133,067)
--------- --------- ---------
Net fixed assets 343,312 536,658 316,507
Other assets (note 2) 36,130 34,466 39,184
--------- --------- ---------
$ 562,959 803,313 523,373
=========== ========== ==========
Liabilities and
Stockholders' Equity
(Deficit)
Current liabilities:
Current portion of long- $ 63,903 60,455 23,091
term debt (note 3)
Accounts payable 228,732 133,653 12,784
Accrued liabilities 94,107 41,432 10,000
Income taxes payable 53,260 193,521 196,878
(note 4)
Accrued payroll wages 45,246 43,373 25,693
and taxes
Deferred revenue 110,443 82,280 27,620
--------- --------- ---------
Total current 595,691 554,714 296,066
liabilities --------- --------- ---------
Long-term debt, 161,222 121,020 40,728
excluding current --------- --------- ---------
portion (note 3)
Commitments (note 5)
Stockholders equity
(deficit):
Common stock, no par
value. Authorized, 1,000 1,000 1,000
issued, and outstanding
50,000 shares
Retained earnings (194,954) 126,579 185,579
(deficit) --------- --------- ---------
Total stockholders' (193,954) 127,579 186,579
equity (deficit) --------- --------- ---------
$ 562,959 803,313 523,373
========== ========== ==========
See accompanying notes to the financial statements.
<PAGE>
ASTRON INCORPORATED
Statements of Operations
Nine
months Year Year
ended ended ended
September December December
30, 1997 31, 1996 31, 1995
-------- --------- ---------
Revenues:
Network training $ 3,371,015 2,646,072 1,892,275
Real estate seminars 590,309 44,152 -
Equipment sales 2,819 35,152 8,701
--------- --------- --------
Total revenues 3,964,143 2,725,376 1,900,976
Expenses:
Cost of sales 653,822 265,918 219,451
Selling, general, and administrative 3,693,763 2,500,270 1,498,798
(note 7) --------- --------- ---------
Income (loss) from operations (383,442) (40,812) 182,727
Other income (expense):
Interest income 5,160 7,717 1,683
Interest expense (25,706) (22,193) (17,689)
Other, net (57,806) 494 2,207
--------- --------- ---------
Total other income (expense) (78,352) (13,982) (13,799
--------- --------- ---------
Income (loss) before income taxes (461,794) (54,794) 168,928
Income tax expense (benefit) (note 4) (140,261) 3,874 102,546
--------- -------- --------
Net income (loss) $ (321,533) (58,668) 66,382
========= ========= ========
See accompanying notes to the financial statements.
<PAGE>
ASTRON INCORPORATED
Statements of Stockholders Equity (Deficit)
Nine months ended September 30, 1997 and years ended December 31, 1996 and 1995
Total
stock-
Retained holders'
Common stock earnings equity
------------
Shares Amount (deficit) (deficit)
------- ------- --------- --------
Balances at December 31, 1994 50,000 $ 1,000 137,958 138,958
Dividends paid - - (18,761) (18,761)
Net income - - 66,382 66,382
-------- ------ --------- ---------
Balances at December 31, 1995 50,000 1,000 185,579 186,579
Dividends paid - - (332) (332)
Net loss - - (58,668) (58,668)
------- ------- -------- ---------
Balances at December 31, 1996 50,000 1,000 126,579 127,579
Net loss - - (321,533) (321,533)
------- ------- --------- ---------
Balances at September 30, 1997 $ 50,000 1,000 (194,954) (193,954)
======== ======= ========= =========
See accompanying notes to the financial statements.
<PAGE>
ASTRON INCORPORATED
Statements of Cash Flows
Nine months Year
ended Year ended ended
September December December
30, 1997 31, 1996 31, 1995
----------- --------- -------
Cash flows from operating
activities:
Net income (loss) $ (321,533) (58,668) 66,382
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and amortization 106,583 122,690 93,561
Provision for losses
(reduction in allowance) on (14,274) 32,976 5,030
accounts receivable
Loss (gain) on sale of assets 52,938 (308) (2,207)
Changes in operating assets
and liabilities:
Accounts receivable 12,446 (82,239) 17,400
Other current assets (4,068) 4,800 (70,813)
Other assets (1,664) 4,718 (39,184)
Accounts payable 95,079 120,869 (7,198)
Accrued liabilities 52,675 31,432 (19,275)
Accrued payroll wages and 1,873 17,680 16,088
taxes
Income taxes payable (140,261) (3,357) 93,631
Deferred revenue 28,163 54,600 27,620
--------- -------- -------
Net cash provided by (used in) (132,043) 245,193 181,035
operating activities --------- -------- -------
Cash flows from investing
activities:
Capital expenditures (70,833) (399,692) (163,017)
Proceeds from sale of assets 104,658 57,219 15,400
-------- --------- ---------
Net cash provided by (used in) 33,825 (342,473) (147,617)
investing activities -------- --------- ---------
Cash flows from financing
activities:
Principal payments of long- (60,456) (23,091) (13,600)
term debt
Borrowings from long-term debt 104,106 140,747 -
Dividends - (332) (18,761)
--------- --------- ---------
Net cash provided by (used in) 43,650 117,324 (32,361)
financing activities ---------- --------- ---------
Net increase (decrease) in (54,568) 20,044 1,057
cash
Cash at beginning of year 62,623 42,579 41,522
--------- --------- ---------
Cash at end of year $ 8,055 62,623 42,579
========= ========= =========
Supplemental Disclosures of
Cash Flow Information
Cash paid for interest $ 14,777 12,193 7,689
Cash paid for income taxes - 6,301 22,036
See accompanying notes to the financial statements.
<PAGE>
ASTRON INCORPORATED
Notes to the Financial Statements
Nine months ended September 30, 1997 and years ended December 31, 1996 and 1995
(1) Summary of Significant Accounting Policies
(a) Description of Business
Astron Incorporated (the Company) provides education and training to the
information technology industry. The Company's focus is to enhance the
proficiency and skills of computer information system professionals and
students. Courses are designed to assist participants to successfully complete
Novell Netware CNE and Microsoft MCSE testing and certification. The Company's
customers consist of businesses, governmental entities, and individuals
geographically dispersed throughout the United States.
(b) Accounts Receivable
Accounts receivable consist primarily of sales proceeds due from a
marketing company, which markets the Company's network training courses and
collects a major portion of the sales for network training. The Company
performs ongoing credit evaluations of its customers and maintains an allowance
for possible losses.
(c) Fixed Assets
Fixed assets are recorded at cost. Depreciation of equipment and office
equipment is computed primarily on accelerated methods. Depreciation of
buildings is computed using the straight-line method. Estimated useful lives
of the individual classes of assets are as follows:
Buildings 27 - 39 years
Equipment 5 - 7 years
Office equipment 5 - 7 years
(d) Income Taxes
Income taxes are accounted for under the asset and liability method.
Under that method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of the change in tax rates is
recognized in income in the period that includes the enactment date.
(e) Revenue Recognition
Revenue from training and seminars is recognized as the related service is
performed. Deferred revenue consists of payments received in advance of
services provided and is recognized as revenue as the service is performed.
Equipment sales are recognized upon shipment.
(f) Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets, liabilities, revenues and expenses, and
the disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
(2) Other Assets
Other assets consist of a life insurance policy for the president and
treasurer of the Company, prepaid deposits, employee advances, and a note
receivable from a related party discussed in note 6.
(3) Long-term Debt
Long-term debt consist of the following:
September December December
30, 1997 31, 1996 31, 1995
--------- --------
Note payable to a bank bearing
interest at 8.75%, payable monthly, $ 7,119 9,314 13,059
and collateralized by a vehicle
Note payable to a bank bearing
interest at 8.90%, payable monthly, 27,562 31,413 32,818
and collateralized by a vehicle
Note payable to a bank bearing
interest at 9.0%, payable monthly, - - 17,942
and collateralized by a vehicle
Note payable to a bank bearing
interest at 8.50%, payable monthly, 20,488 23,638 -
and collateralized by a vehicle
Note payable to a bank bearing
interest at LIBOR + 3.0%, payable 65,850 117,110 -
monthly, and collateralized by a
building
SBA loan bearing interest at 7.267%,
payable monthly, and collateralized by 55,544 - -
a building
Revolving line of credit up to
$50,000, bearing interest at prime + 48,562 - -
1.5%, with interest payable monthly -------- -------- --------
Total long-term debt 225,125 181,475 63,819
Less current portion 63,903 60,455 23,091
-------- -------- --------
Total long-term debt, excluding
current portion $ 161,222 121,020 40,728
======== ========
Long-term Debt (continued)
Principal payments required on these obligations are as follows:
Period ending September 30:
1998 $ 63,903
1999 15,988
2000 13,767
2001 15,011
Thereafter 116,456
--------
Total $ 225,125
========
(4) Income Taxes
Income tax expense (benefit) consists of:
Current Deferred Total
------- -------- ------
Nine months ended September 30, 1997:
Federal $ (115,566) - (115,566)
State (24,695) - (24,695)
--------- --------- ---------
$ (140,261) - (140,261)
========= ========= =========
Year ended December 31, 1996:
Federal $ 2,865 - 2,865
State 1,009 - 1,009
--------- --------- ---------
$ 3,874 - 3,874
========= ========= =========
Year ended December 31, 1995:
Federal $ 82,189 - 82,189
State 20,357 - 20,357
--------- -------- ---------
$ 102,546 - 102,546
========= ========= =========
Actual income tax expense differs from the "expected" tax expense
(computed by applying the U.S. federal corporate income tax rate of 34 percent
to income before income taxes) as follows:
September December December
30, 1997 31, 1996 31, 1995
--------- -------- ---------
Computed "expected" tax expense $ (157,010) (18,630) 57,436
(benefit)
Increase (decrease) in income taxes
resulting from:
Disallowed travel and entertainment - 18,889 11,447
State income taxes, net of federal tax (16,294) (664) 13,436
benefit
Change in valuation allowance (12,564) 11,442 16,825
Tax penalties 18,964 (5,943) -
Other adjustments 26,643 (1,220) 3,402
--------- --------- ---------
Income tax expense (benefit) $ (140,261) 3,874 102,546
========= ========= =========
(4) Income Taxes (continued)
The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities are presented below:
September December December
30, 1997 31, 1996 31, 1995
--------- --------- ---------
Current deferred tax assets:
Charitable contribution carryover $ 3,155 3,072 -
Other accrued expense - 4,849 3,720
Deferred compensation 3,720 6,208 6,761
Allowance for doubtful accounts 8,828 14,138 6,344
-------- -------- -------
Total current deferred assets 15,703 28,267 16,825
Less valuation allowance 15,703 28,267 16,825
-------- -------- -------
Net current deferred tax assets $ - - -
========= ========= =========
The net change in the total valuation allowance for the nine months ended
September 30, 1997 and year ended December 31, 1996, was a decrease of $12,564
and an increase of $11,442 respectively.
(5) Commitments and Contingencies
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position or results of operations.
(6) Related Party Transactions
During the nine months ended September 30, 1997, the Company loaned the
president $127,089. The balance of the loan to the president is $4,583 as of
September 30, 1997. During the year ended December 31, 1996, the Company had
loaned a relative of the president $35,000. The receivable balance as of
December 31, 1996 was $5,000.
The Company also has a $60,000 investment in an entity which has loaned an
amount in excess of $60,000 to the president.
(7) Marketing Agreement
The Company has entered into a marketing agreement whereby a third party
has rights to market the Company's network training courses within the United
States. The third party receives commissions equal to 50 percent of revenues
generated through its marketing efforts. During the nine months ended
September 30, 1997 and the years ended December 31, 1996 and 1995, the
marketing expenses incurred under this agreement were approximately $1,750,000,
$540,000, and $160,000, respectively, and have been included in selling,
general, and administrative expenses in the accompanying financial statements.
(8) Subsequent Event
On November 19, 1997, the Company entered into a letter of intent to be
acquired by another company. The acquisition is expected to occur on or before
January 2, 1998.
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements
have been prepared using the historical financial statements of the Company,
and the historical financial statements of Astron Incorporated. The pro forma
financial information reflects the adjustments that will result from the
acquisition as if it had occurred as of the beginning of the period presented
with respect to pro forma statements of operations data and as of the balance
sheet date with respect to pro forma balance sheet data. The pro forma
financial data is provided for analysis purposes only and does not purport to
indicate the results which actually would have been obtained if the acquisition
had been effected on the dates indicated, or of the results which may be
obtained in the future.
The pro forma financial information is based on the purchase method of
accounting. The pro forma adjustments are described in the accompanying notes
to the unaudited pro forma condensed combined financial statements. The
unaudited pro forma condensed combined income statements shows the combined
positions of the Company and Astron as of Sept. 30, 1997. The unaudited pro
forma condensed combined financial statements of income combines the results
of the Company for the six months ended September 30, 1997 with the results of
Astron for the six months ended June 30, 1997, and the eleven months ended
March 31, 1997 (as previously reported in the Company's annual report) with the
results of Astron for the twelve months ended December 31, 1996.
Sento Technical Innovations Corporation and Astron Incorporated
Unaudited Pro Forma Condensed Balance Sheets
As of Sept. 30, 1997
Historical Historical Pro Forma
Sento Astron Adjustments Combined
----------- ---------- ------------ ---------
Assets
Current assets:
Cash $9,297,764 $8,055 $9,305,819
Accounts 3,169,514 105,381 3,274,895
Receivable(Net)
Inventories 720,897 0 720,897
Other current 771,936 70,081 842,017
assets
Deferred tax assets 98,917 98,917
----------- -------- --- ----------
Total current assets 14,059,028 183,517 0 14,242,545
----------- -------- --- ----------
Fixed assets
Land 36,021 25,600 61,621
Building 250,489 102,400 352,889
Furniture & 928,906 437,045 1,365,951
equipment
Leasehold 2,800 2,800
improvements
Transportation 54,082 54,082
Acc. depreciation (384,985) (221,733) (606,718)
--------- --------- ----- ---------
Net fixed assets 887,313 343,312 0 1,230,625
--------- --------- ----- ----------
Goodwill 733,954 (1) 733,954
Other assets 775,563 36,130 811,693
$ 15,721,904 $ 562,959 733,954 $17,018,817
============ ========= ======= ===========
Sento Technical Innovations Corporation and Astron Incorporated
Unaudited Pro Forma Condensed Balance Sheets
As of Sept. 30, 1997
Historical
Historical Pro Forma
Sento Astron Adjustments Combined
---------- ----------- ----------- ---------
Liabilities and
Stockholders' Equity
Current liabilities
Due to bank and current $349,870 $63,903 $413,773
portion of long-term
debt
Accounts payable 2,619,001 228,732 2,847,733
Accrued liabilities 872,273 139,353 1,011,626
Income taxes payable 932,207 53,260 985,467
Deferred maintenance 1,182,550 0 1,182,550
revenue
Other deferred revenue 863,584 110,443 974,027
--------- --------- ----------
Total current liabilities 6,819,485 595,691 0 7,415,176
----------- --------- ---- ----------
Long-term liabilities:
Long-term debt, net 1,479,761 161,222 1,640,983
Deferred revenues 583,333 583,333
Deferred tax liability 5,333 5,333
------------ -------- ---- ---------
Total long-term 2,068,427 161,222 0 2,229,649
liabilities ------------ -------- ----- ----------
Stockholders' equity
Common stock 1,286,009 1,000 45,000(1) 1,331,009
(1,000)(1)
Additional paid-in 4,373,474 495,000(1) 4,868,474
capital
Deferred compensation (75,000) (75,000)
Retained earnings 1,249,509 (194,954) 194,954(1) 1,249,509
----------- --------- ---------- ----------
Total stockholders' 6,833,992 (193,954) 733,954 7,373,992
equity
----------- --------- ------- -----------
$15,721,904 $562,959 733,954 $17,018,817
=========== ========= ======= ===========
<PAGE>
Sento Technical Innovations Corporation and Astron Incorporated
Unaudited Pro Forma Condensed Income Statements
Historical
Historical for the 6
for the 6 months
months ended ended
Sept. 30, June 30,
1997 1997 Pro Forma
----------- ---------- ---------
Sento Astron Adjustments Combined
----- ------- ----------- --------
Revenues 8,666,880 2,685,455 11,352,335
Cost of Sales 5,857,317 577,323 6,434,640
Gross Profit 2,809,563 2,108,132 4,917,695
Operating Expenses
Selling, general and 3,786,795 2,456,058 6,242,853
administrative
Amortization of Goodwill 50,400 (2) 50,400
Research and development 78,828 78,828
Income (loss) from (1,056,060) (347,926) (50,400) (1,454,386)
operations
Other income (expense) 2,590,805 (68,402) 2,522,403
Income before taxes 1,534,745 (416,328) (50,400) 1,068,017
Income tax expense 800,250 (123,140) 677,110
(benefit) --------- --------- ---------
Net Income (loss) $734,495 $(293,188) (50,400) $390,907
======== ========== ======== ========
Net Income (loss) per $.14 $.07
common share ===== =====
<PAGE>
Sento Technical Innovations Corporation and Astron Incorporated
Unaudited Pro Forma Condensed Income Statements
Historical Historical
for the 11 for the 12
months ended months
March 31, ended Dec.
1997 31, 1996 Pro Forma
Sento Astron Adjustments Combined
---------- --------- ---------
Revenues 17,609,586 2,725,376 20,334,962
Cost of Sales 11,441,558 265,918 11,707,476
---------- --------- ----------
Gross Profit 6,168,028 2,459,458 8,627,486
Operating Expenses
Selling, general and 5,711,061 2,500,270 8,211,331
administrative
Amortization of Goodwill 100,801 (2) 100,801
Research and development 524,787 524,787
Income (loss) from (67,820) (40,812) (100,801) (209,433)
operations
Other income (expense) 106,375 (13,982) 92,393
Income before taxes 38,555 (54,794) (100,801) (117,040)
Income tax expense 16,139 3,874 20,013
--------- --------- ---------- ----------
Net Income (loss) $22,416 $(58,668) (100,801) $(137,053)
========== ========== ========== ==========
Net Income (loss) per $0.01 $(.03)
common share ============= ==========
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following pro forma adjustments have been made to the historical
condensed consolidated balance sheet of Sento Technical Innovations
Corporation to give effect to the acquisition of Astron Incorporated.
. To record the purchase of all of the issued and outstanding common
stock of Astron Incorporated in exchange for the issuance to the
Astron shareholder of 180,000 shares of common stock, valued at
$3.00 per share, par value $0.25 per share.
2. To record amortization of goodwill on a straight-line method over
7 years.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by
the undersigned thereunto duly authorized.
SENTO TECHNICAL INNOVATIONS CORPORATION
(Registrant)
By: /s/ Robert K. Bench
----------------------------------------
Robert K. Bench, Chief Financial Officer
Date: January 15, 1998
--------------------
ACQUISITION AGREEMENT
BY AND AMONG
SENTO TECHNICAL INNOVATIONS CORPORATION
ASTRON INCORPORATED
AND
JAY BARTH
---------------------
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT, dated as of November 19, 1997 (this
"Agreement"), by and among SENTO TECHNICAL INNOVATIONS CORPORATION, a Utah
corporation ("Sento"), ASTRON INCORPORATED, a Utah corporation ("Astron"), and
Jay Barth (the "Astron Shareholder").
W I T N E S S E T H:
WHEREAS, Astron is in the business of software training and consulting
(the "Business");
WHEREAS, the Astron Shareholder is the owner of all of the issued and
outstanding shares of the capital stock of Astron;
WHEREAS, Sento desires to acquire all of the capital stock of Astron in
exchange solely for 400,000 shares of the voting common stock of Sento, $.25
par value (the "Sento Common Stock"), whereby Sento shall immediately
thereafter become the sole shareholder of Astron;
WHEREAS, the respective Boards of Directors of Sento and Astron have
approved and adopted this Agreement providing for the acquisition by Sento of
all of the capital stock of Astron and the consummation of the related
transactions described in this Agreement (the "Acquisition") in exchange for
Sento's issuance of such shares of Sento Common Stock, upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, it is the intention of the parties that (i) for United States
federal income tax purposes, the Acquisition qualify as a reorganization under
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the
"Code"), and (ii) for accounting purposes, the Acquisition shall be recorded as
a purchase transaction; and
WHEREAS, Sento, Astron and the Astron Shareholder desire to make certain
representations, warranties and agreements in connection with the Acquisition
and also to prescribe various conditions to the Acquisition.
A G R E E M E N T :
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements herein contained, Sento, Astron and
the Astron Shareholder agree as follows:
1. THE ACQUISITION.
a. ACQUISITION OF ASTRON CAPITAL STOCK. Subject to the terms and conditions
of this Agreement, Sento or its designee will acquire all of the issued and
outstanding shares of the capital stock of Astron in exchange solely for shares
of Sento Common Stock, as set forth in Section 1(b) below. As contemplated
pursuant to Section 12(m) below, Sento may assign its rights, duties,
obligations and interest under this Agreement to an affiliated entity. Upon
such assignment, all rights, duties, obligations and interest of Sento
hereunder shall be transferred to Sento's designees and all references to Sento
in this Agreement shall be construed to apply to such designee on the same
basis as Sento.
b. CONSIDERATION. Subject to the provisions of Section 1(c) below, the total
consideration to be provided by Sento in exchange for the performance by Astron
and the Astron Shareholder of their respective obligations under this
Agreement, including, without limitation, the transfer to Sento of all of the
shares of capital stock of Astron, subject to all of the terms, covenants, and
conditions set forth herein, shall consist of 400,000 shares of Sento Common
Stock (the "Shares"). The Shares will be issued and delivered by Sento to the
Astron Shareholder at the Closing as contemplated by Section 2(b) below.
c. ADJUSTMENTS.
i. Prior to the Closing Date (as set forth in Section 2 below), Astron shall
obtain, at its expense, from a reputable certified public accounting firm
approved by Sento in advance, an audited balance sheet setting forth the
financial condition of Astron as of September 30, 1997 (the "Audited Balance
Sheet"), which Audited Balance Sheet shall be prepared in accordance with
generally accepted accounting principles, consistently applied ("GAAP"). In
the event the total shareholders' equity of Astron (the "Net Worth") shown on
the Audited Balance Sheet is less than $230,000, the number of Shares to be
delivered by Sento at the Closing shall be reduced by that number of Shares
(the "Share Reduction") having a value equal to the sum of (A) the product
obtained by multiplying (1) the amount by which the Net Worth shown on the
Audited Balance Sheet is less than $230,000 and (2) 1.25 and (B) the aggregate
amount of all legal, accounting and other professional expenses incurred by
Astron (or incurred by Sento for the benefit of Astron) during the period
between September 30, 1997 and the Closing Date. The amount of the legal,
accounting and professional expenses is currently estimated to be approximately
$30,000; however, the actual amount of such expenses shall be determined by
Sento, in its reasonable discretion, at the Closing.
ii. Solely for purposes of illustration, Sento, Astron and the
Astron Shareholder agree that the following hypothetical example
illustrates the anticipated application of the adjustments described
in Section 1(c)(i) above . If the actual Net Worth, as shown on the
Audited Balance Sheet, were $80,000 and the aggregate amount of
legal, accounting and other professional expenses incurred by Astron
between September 30, 1997 and the Closing Date were $40,000, then
the amount of the adjustment would be equal to the sum obtained
through the following equation: [($230,000 - $80,000) x (1.25)] +
$40,000. Accordingly, the amount of the adjustment would be equal to
the sum of [($150,000)(1.25)] + $40,000 or ($187,500 + $40,000) or
$227,500.
iii. For purposes of determining the number of Shares to be subject to the
adjustments described in this Section 1(c), the value of each of the Shares
shall be equal to the closing sale price for a share of the Sento Common Stock,
as reported by the National Association of Securities Dealers, Inc. (the
"NASD"), as of the Closing Date. Each of Sento, Astron and the Astron
Shareholder acknowledges and agrees that, to the extent Sento is permitted to
reduce the number of Shares to be delivered at the Closing as permitted under
Section 1(c)(i) above or, in the event Sento discovers subsequent to the
Closing that the actual amount of the legal, accounting and professional fees
described in Section 1(c)(i)(B) above is greater than the estimate available at
the Closing, Sento is hereby authorized to instruct the escrow agent acting
pursuant to the terms of the Stock Escrow Agreement to return to Sento a number
of Shares equal to the aggregate amount of (A) the reduction in Shares and (B)
the amount by which the actual legal, accounting and professional fees exceeds
the estimate, which Shares shall be canceled by Sento and shall not be
delivered to the Astron Shareholder.
d. ACCOUNTING FOR TRANSACTION. The Acquisition will be accounted for as a
purchase transaction.
e. RESTRICTIONS ON TRANSFER OF SHARES. The Shares will not be registered
under the Securities Act of 1933, as amended (the "Securities Act"), and may
not be sold, transferred, or otherwise disposed of for value unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available, as evidenced by an opinion of counsel retained by
the Astron Shareholder and addressed to and reasonably satisfactory to Sento.
Each certificate evidencing the Shares shall be stamped or otherwise imprinted
with a legend substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND ARE "RESTRICTED SECURITIES" WITHIN THE
MEANING OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD
OR TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION OR OTHER COMPLIANCE UNDER THE
SECURITIES ACT. THE SECURITIES ARE SUBJECT TO ADDITIONAL
RESTRICTIONS AS SET FORTH IN THAT CERTAIN ACQUISITION AGREEMENT,
DATED AS OF NOVEMBER 19, 1997, BETWEEN SENTO TECHNICAL
INNOVATIONS CORPORATION, A UTAH CORPORATION, ASTRON
INCORPORATED, A UTAH CORPORATION, AND JAY BARTH.
2. CLOSING. The Closing of the Acquisition (the "Closing") shall be on a
date and at such time on or prior to January 2, 1998 as the parties may agree
(the "Closing Date"), following the satisfaction of every material term,
covenant or condition set forth herein that is required to be satisfied prior
to Closing. At the Closing,
a. the Astron Shareholder shall transfer and deliver to Sento certificates
evidencing all of the issued and outstanding shares of the common stock, no par
value, of Astron (the "Astron Common Stock"), constituting all of the capital
stock of Astron, Sento shall obtain and possess all rights in respect thereof,
and Astron shall become a wholly-owned subsidiary of Sento;
b. subject to the provisions of the Stock Escrow Agreement described in the
following subsection, Sento shall issue and deliver to the Astron Shareholder
through such reasonable procedures as Sento may adopt, certificates evidencing
the number of shares of Sento Common Stock equal to 400,000, less (i) the
number of shares subject to the Share Reduction and (ii) the Escrowed Shares
(as defined below), constituting all of the Shares;
c. Sento and the Astron Shareholder shall execute a Stock Escrow Agreement,
substantially in the form of Exhibit 2(c) (the "Stock Escrow Agreement")
attached hereto and incorporated herein by this reference, for the purpose of
securing the indemnification and restrictive covenant obligations of Astron and
the Astron Shareholder pursuant to Sections 1, 8 and 9 hereof, and Sento shall
deposit with the escrow agent identified in the Stock Escrow Agreement 84,000
Shares (the "Escrowed Shares"), on the terms and subject to the conditions set
forth in the Stock Escrow Agreement;
d. Sento and Jay Barth shall execute an employment agreement, substantially
in the form of Exhibit 2(d) attached hereto and incorporated herein by this
reference, for the purpose of setting forth the terms and conditions upon which
Mr. Barth will be employed by Sento or any of its affiliates, including,
without limitation, Astron, as determined by Sento;
e. each of the respective parties hereto shall execute, acknowledge and
deliver (or shall cause to be executed, acknowledged and delivered) any and all
documents, certificates, opinions, financial statements, schedules, agreements,
resolutions, rulings or other instruments required by this Agreement to be so
delivered at or prior to the Closing, together with such other items as may be
reasonably requested by the parties hereto and their respective legal counsel
in order to effectuate or evidence the transactions contemplated hereby;
f. Each of Astron and the Astron Shareholder shall deliver to Sento the
certificates described in Section 7(a)(ii);
g. Astron shall deliver to Sento the Audited Balance Sheet; and
h. in addition to the foregoing, each of the parties shall execute and
deliver such additional documents as may reasonably be required in order to
effectuate the transactions herein contemplated in accordance with the
requirements of Section 368(a)(1)(B) of the Code and shall treat such
transactions for all tax purposes consistently with the other parties'
treatment thereof and with such other characterization as a reorganization
under such Code section.
3. REPRESENTATIONS AND WARRANTIES CONCERNING ASTRON. To induce Sento to
enter into this Agreement and to complete the Acquisition, except as fully and
accurately described in schedules to be prepared by Astron and delivered to
Sento prior to the execution of this Agreement (the "Astron Disclosure
Schedules"), each of Astron and the Astron Shareholder, jointly and severally,
represents and warrants that the following statements concerning the affairs of
Astron are true, correct and complete as of the date hereof, and will be true,
correct and complete as of the Closing Date.
a. ORGANIZATION, STANDING AND QUALIFICATION. Astron is duly
organized, validly existing and in good standing under the laws of the
State of Utah and is authorized and qualified to own and operate its
properties and assets and conduct its business in all jurisdictions where
such properties and assets are owned and operated and such business is
conducted. Astron has all franchises, permits, licenses, and any similar
authority necessary for the conduct of the Business as now being conducted
by it, except where the lack of such would not materially adversely affect
the Business or the financial condition of Astron. Astron is not in
default in any material respect under any of such franchises, permits,
licenses or other similar authority.
b. CAPITALIZATION; SUBSIDIARIES. The authorized capital stock of
Astron consists solely of 100,000 shares of Astron Common Stock, of which
50,000 shares and no more are issued and outstanding. All of the
outstanding shares of Astron Common Stock are duly authorized and validly
issued and are fully paid and nonassessable. There are no outstanding
subscriptions, options, warrants, calls, contracts, demands, commitments,
convertible securities or other rights, agreements or arrangements of any
character or nature whatever relating to the issuance of capital stock or
other securities of Astron. No holder of any security of Astron is
entitled to any preemptive or similar rights to purchase any securities of
Astron. Astron has no subsidiaries and no other investment in any entity.
Astron is not a participant in any joint venture, partnership or other
similar arrangement.
c. NO DEFAULTS. Astron is not in default under or in violation of
any provisions of its Articles of Incorporation or Bylaws. Astron is not
in default under or in violation of any restriction, lien, encumbrance,
indenture, contract, agreement, lease, sublease, loan agreement, note or
other obligation or liability relating to the Business. Neither the
execution and delivery of this Agreement nor consummation of the
transactions contemplated hereby will conflict with or result in a breach
of or constitute a default under any provision of the Articles of
Incorporation or Bylaws of Astron, any law, rule, regulation, judgment,
decree, order or other requirement, or any restriction, lien, encumbrance,
indenture, contract, agreement, lease, sublease, loan agreement, note or
other obligation or liability to which Astron is a party or by which it is
bound, or to which any of its assets are subject, or result in the
creation of any lien or encumbrance upon said assets or any loss to the
Business or Sento.
d. CONSENTS AND APPROVALS. Except as disclosed on Schedule 3(d) of
the Astron Disclosure Schedules, the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby do not require Astron or the Astron Shareholder to obtain any
consent, approval or action of, or make any filing with or give notice to
any corporation, person or firm or any public, governmental or judicial
authority.
e. RELATED-PARTY TRANSACTIONS. Except as disclosed on Schedule
3(e) of the Astron Disclosure Schedules, No employee, officer, director or
shareholder of Astron or member of his or her immediate family is
indebted to Astron, nor is Astron indebted (or committed to make loans or
extend or guarantee credit) to any such individuals. To the knowledge of
the Astron Shareholder, none of such individuals has any direct or
indirect ownership interest in any firm or corporation with which Astron
is affiliated or with which Astron has a business relationship, or any
firm or corporation that competes with Astron. No member of the immediate
family of any employee, officer, director or shareholder of Astron is
directly or indirectly interested in any material contract with Astron.
f. COMPLIANCE WITH LAW. Except as set forth on Schedule 3(f) of the Astron
Disclosure Schedules, to the knowledge of Astron and the Astron Shareholder,
neither Astron nor any of its directors, officers, fiduciaries, agents or
employees is in violation of any applicable statute, law, rule, regulation or
requirement of any governmental authority in any way relating to the Business
or Astron's operations and no material expenditure is or will be required in
order to comply with any such statute, law, rule, regulation or requirement.
Consummation of the transactions contemplated hereby will be in compliance with
all presently applicable laws, rules, regulations and requirements of all
governmental authorities without the necessity for any license or permit or
other action or permission in the nature thereof, or any registration with, or
consent of, any governmental authority.
g. FINANCIAL STATEMENTS. The unaudited balance sheet of Astron,
dated as of September 30, 1997 (the "September 30 Balance Sheet"),
attached hereto as Schedule 3(g) of the Astron Disclosure Schedules, is
correct and complete and presents fairly in all material respects the
financial condition of Astron as of such date, and has been prepared in
accordance with GAAP.
h. TITLE TO ASSETS. Astron has good and indefeasible title to and
the right to and actual exclusive possession of all furniture, machinery,
tools, equipment and other tangible assets used by Astron in the course of
conducting the Business (the "Astron Assets"). The Astron Assets are free
and clear of all liens, claims, security interests, encumbrances,
restrictions and rights, title and interests in others. There are no
existing agreements, leases, subleases, options or commitments or rights
with, to or in any third party to possess or acquire any of the Astron
Assets or Astron or any interest therein, except for those entered into in
the ordinary course of business and not materially adversely affecting the
Astron Assets or property or any other right of Astron. Except as
disclosed on Schedule 3(h) of the Astron Disclosure Schedules, each such
Astron Asset is free from defects (patent and latent), has been maintained
in accordance with normal industry practice, is in good operating
condition and repair (subject to normal wear and tear), and is suitable
for the purposes for which it presently is used and presently is proposed
to be used.
i. INTELLECTUAL PROPERTY. Except as set forth on Schedule 3(i) of
the Astron Disclosure Schedules, Astron owns all trade names, trademarks,
service marks, copyrights, inventions, software, discoveries, ideas,
research, engineering, methods, practices, processes, systems, formulae,
designs, drawings, products, projects, improvements, developments,
technology, know how, trade secrets and intellectual property which are
used in the conduct of the Business, whether registered or unregistered,
patentable or unpatentable and whether or not reduced to practice
(collectively, the "Astron Intellectual Property"). Except as set forth
on Schedule 3(i) of the Astron Disclosure Schedules, Astron created or
developed all of the Astron Intellectual Property and the Astron
Intellectual Property is not subject to any restriction, lien,
encumbrance, right, title or interest in or of others. All of the Astron
Intellectual Property that is not in the public domain stands solely in
the name of Astron and not in the name of any shareholder, director,
officer, agent, partner or employee of Astron or any other person, and
none of the same has any right, title, interest, restriction, lien or
encumbrance therein or thereon or thereto. Astron's ownership and use of
the Astron Intellectual Property do not and will not interfere with,
constitute a misappropriation of, infringe upon, conflict with or violate
in any material respect any patent, trademark, service mark, copyright,
trade secret or other lawful proprietary right of any other party, and no
claim is pending or threatened to the effect that the operations of Astron
interfere with, constitute a misappropriation of, infringe upon, conflict
with or violate the rights of any other person under any proprietary right
(including, without limitation, any claim that Astron must license,
refrain from using or make royalty or other payments in respect of any
intellectual property rights of any third party and/or the Astron
Intellectual Property), and to the knowledge of Astron and the Astron
Shareholder there is no reasonable basis (and no event has occurred that
with the giving of notice or the passage of time or both would provide
such reasonable basis) for any such claim (whether or not pending or
threatened). No claim is pending or, to the knowledge of Astron or the
Astron Shareholder, threatened to the effect that any such Astron
Property is invalid or unenforceable by Astron, and, to Astron's and the
Astron Shareholder's knowledge, there is no reasonable basis for any such
claim (whether or not pending or threatened). Astron has obtained all
licenses and consents necessary to permit Astron to use the intellectual
property of other persons in the Business. Astron has not been advised,
nor, to the knowledge of the Astron Shareholder, is there any basis for
any claim that Astron's proprietary rights are infringed by proprietary
rights of any third party.
j. REAL PROPERTY. Schedule 3(j) of the Astron Disclosure Schedules lists and
describes briefly all real property that Astron owns. Except as set forth on
Schedule 3(j) of the Astron Disclosure Schedules, with respect to each such
parcel of real property: (i) Astron has good and marketable fee simple title
to such parcel of real property free and clear of all liens, claims, security
interests, encumbrances, restrictions and rights, title and interests in others
(including, without limitation, easements, licenses and rights of way), (ii)
there are no existing agreements, leases, subleases, options or commitments or
rights with, to or in any third party to possess or acquire such parcel of real
property and (iii) such parcel abuts on and has direct vehicular access to a
public road. Astron does not use or possess any real property other than the
real property listed on such Schedule 3(j) and the real property subject to the
leases set forth on Schedule 3(k) of the Astron Disclosure Schedules.
k. LEASES. Astron enjoys exclusive, peaceful and undisturbed
possession under all leases to which it is a party. All such leases are
identified on Schedule 3(k) of the Astron Disclosure Schedules, are valid
and enforceable in accordance with their terms against Astron and, to the
knowledge of Astron and the Astron Shareholder, against the other parties
thereto, and no party thereto is in default thereunder.
l. INVENTORY. All finished goods, raw materials, merchandise,
stock in trade, packaging materials, maintenance supplies and other
inventory used in the Business (collectively, the "Inventory") are
accurately reflected on the September 30 Balance Sheet, were valued at
cost (determined on a first-in, first-out basis) or market, whichever is
lower, with proper allowances for obsolescence, in accordance with GAAP.
The Inventory consists of items which Astron reasonably believes are of
quality and quantity readily usable or saleable in Astron's ordinary
course of business, except such amounts as have been revised in accordance
with GAAP and accurately reflected on the September 30 Balance Sheet. No
Inventory is stored or maintained at any location other than at the real
property identified on Schedules 3(j) and 3(k).
m. LICENSES. Each right or license to use the assets (tangible or
intangible) or property (including, without limitation, intellectual
property) of any other party which is material to the operation of the
Business (each a "License" and collectively, the "Licenses") is identified
on Schedule 3(m) of the Astron Disclosure Schedules. Each License is, and
at Closing shall be, in full force and effect and has not been assigned,
modified, supplemented or amended, and neither Astron nor, to the
knowledge of Astron or the Astron Shareholder, the licensor under any such
License is in default under any such License, and, to the knowledge of
Astron and the Astron Shareholder, no circumstances or state of facts
presently exists which, with the giving of notice or passage of time, or
both, would permit the licensor under any License to terminate any
License.
n. MATERIAL CONTRACTS. Other than as disclosed on Schedule 3(n) of
the Astron Disclosure Schedules, Astron does not have, is not party to and
may not be bound by any obligation, contract, agreement, lease, sublease,
license, sublicense, commitment or understanding of any kind, nature or
description that is material to the Business, whether oral or written,
fixed or contingent, due or to become due, existing or inchoate (each a
"Contract"). Astron has delivered to Sento a correct and complete copy of
each written Contract listed on such Schedule 3(n) (as amended to date)
and a written summary setting forth the terms and conditions of each oral
Contract referred to on such Schedule 3(n). With respect to each
Contract: (i) the Contract is legal, valid, binding, enforceable, and in
full force and effect; (ii) the Contract will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby; (iii)
no party is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the Contract; and (iv)
no party has repudiated any provision of the Contract.
o. NO UNDISCLOSED LIABILITIES. Except as set forth on Schedule
3(o) of the Astron Disclosure Schedules, there are no material liabilities
or obligations of Astron, including, without limitation, contingent
liabilities for the performance of any obligation, except for liabilities
or obligations which are fully and accurately disclosed on the September
30 Balance Sheet in accordance with GAAP. Without in any manner limiting
the foregoing, all revenues attributable to Astron's business, operations
and services have been properly accounted for in accordance with GAAP and
all revenues, assets and liabilities attributable to any contract for such
business, operations or services are accurately reflected on the September
30 Balance Sheet in accordance with GAAP.
p. LITIGATION. Except as disclosed in Schedule 3(p) of the Astron
Disclosure Schedules: (i) there are no suits or proceedings at law or in
equity, or before or by any governmental agency or arbitrator, pending or
threatened, or to the knowledge of Astron or the Astron Shareholder,
anticipated or contemplated, which in any way materially affect Astron;
(ii) there are no unsatisfied or outstanding judgments, orders, decrees or
stipulations which in any way affect Astron or its properties or assets or
to which it is or may become a party; (iii) there are no claims against
Astron pending or threatened, or to the knowledge of Astron or the Astron
Shareholder, anticipated, or contemplated which, if valid, would
constitute or result in a breach of any representation, warranty or
agreement set forth herein; and (iv) there are no existing or, to the
knowledge of Astron or the Astron Shareholder, anticipated or contemplated
disputes, grievances, charges of discrimination or harassment charges,
controversies or other employment or labor troubles affecting Astron.
q. TAXES. Except as disclosed in Schedule 3(q) of the Astron
Disclosure Schedules, (i) Astron has duly filed all federal, state, local
and other tax returns and reports required to be filed by Astron
(including sales and use returns and employment-related reports) on or
prior to the date hereof with respect to all taxes withheld by or imposed
upon Astron; (ii) all such returns or reports reflect the liability for
such taxes of Astron as computed therein for the periods indicated, and
all taxes shown on such returns or reports and all assessments received by
Astron have been paid, or fully reserved for, to the extent that such
taxes have become due; (iii) there are no waivers or agreements by Astron
for the extension of time for the assessment of such taxes; and (iv) there
are no material questions of taxation which are, as at the date hereof,
the subject of dispute with any taxing authority.
r. LABOR AND EMPLOYMENT. Except as disclosed in Schedule 3(r) of the Astron
Disclosure Schedules, Astron is not a party to any oral or written (i)
contract, whether express or implied, for the employment of any officer,
director or employee of Astron which is not terminable on 30 days (or less)
notice; (ii) profit sharing, bonus, deferred compensation, stock option,
severance pay, pension benefit or retirement plan, agreement or arrangement
covered by Title IV of the Employee Retirement Income Security Act of 1974, as
amended; (iii) agreement, contract or indenture relating to the borrowing of
money; (iv) guarantee of any obligation for the borrowing of money or
otherwise; (v) consulting or other similar contract with an unexpired term of
more than one year or providing for payments in excess of $10,000 in the
aggregate; (vi) collective bargaining agreement; or (vii) agreement with any
present or former officer, director or employee of Astron. Astron does not
have, except as may be required by law, any obligation or commitment to provide
medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its former employees who have retired from
employment with Astron, including those receiving disability benefits. The
September 30 Balance Sheet fully and accurately reflects, in accordance with
GAAP, all employment or labor-related obligations and liabilities of Astron and
all such obligations and liabilities relating to the Business. Astron is in
compliance with all applicable federal and state laws or regulations regarding
or relating to the employment of its employees, including without limitation
laws or regulations regarding or relating to the payment of wages (including
without limitation minimum wage and overtime requirements), discrimination in
employment, worker's compensation, safe workplace requirements, unemployment
insurance and other laws or regulations relating to employment.
s. ENVIRONMENTAL MATTERS. Except to the extent, if any, that would
not have a material adverse effect on Astron, (i) Astron has not received
notice of any violation of, liability under or investigation relating to
any federal, state, provincial or local environmental or pollution law,
regulation, or ordinance with respect to assets now or previously owned or
operated by Astron that has not been fully and finally resolved; (ii) all
permits, licenses and other authorizations which are required under
federal, state, provincial and local laws with respect to pollution or
protection of the environment ("Environmental Laws") relating to assets
now owned or operated by Astron or any of its subsidiaries, including
Environmental Laws relating to actual or threatened emissions, discharges
or releases of pollutants, contaminants or hazardous or toxic materials or
wastes ("Pollutants"), have been obtained and are effective, and, with
respect to assets previously owned or operated by Astron, were obtained
and were effective during the time of Astron's operation; (iii) to the
knowledge of Astron and the Astron Shareholder, no conditions exist on, in
or about the properties now or previously owned or operated by Astron or
any third-party properties to which any Pollutants generated by Astron
were sent or released that could give rise on the part of Astron to
liability under any Environmental Laws, claims by third parties under
Environmental Laws or under common law or the occurrence of costs to avoid
any such liability or claim; and (iv) to the knowledge of Astron and the
Astron Shareholder, all operators of Astron's assets are in compliance
with all terms and conditions of such Environmental Laws, permits,
licenses and authorizations, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in such laws
or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved there-
under, relating to Astron's assets.
t. NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable of
Astron are reflected properly on its books and records, are valid receivables
subject to no setoffs or counterclaims, are current and collectible, and will
be collected in accordance with their terms at their recorded amounts, subject
only to the reserve for bad debts set forth on the face of the September 30
Balance Sheet (rather than in any notes thereto) as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice
of Astron.
u. POWERS OF ATTORNEY. There are no outstanding powers of attorney executed
on behalf of Astron.
v. NO ADVERSE CHANGE. Since the date of the September 30 Balance Sheet, and
except as set forth on Schedule 3(v) of the Astron Disclosure Schedules, there
has not been with respect to the Business or the Astron Shareholder's interest
in Astron or both:
i. any material adverse change in the Business or the operations, properties,
assets or prospects of Astron (and to the knowledge of Astron or the Astron
Shareholder, no such changes are or have been threatened, anticipated or
contemplated);
ii. any actual or threatened, or, to the knowledge of Astron or the Astron
Shareholder, anticipated or contemplated damage, destruction, loss, conversion,
termination, cancellation, default or taking by eminent domain or other action
by any governmental authority, which has affected or may hereafter materially
affect the Business or the operations, properties, assets or prospects of
Astron;
iii. any material and adverse dispute pending or threatened, or, to the
knowledge of Astron or the Astron Shareholder, anticipated or contemplated of
any kind with any customer, supplier, source of financing, employee, landlord,
subtenant, licensor or licensee of Astron which has not been disclosed in
writing to Sento, or any pending or threatened, or, to the knowledge of Astron
or the Astron Shareholder, anticipated or contemplated occurrence or situation
of any kind, nature or description which is reasonably likely to result in any
material reduction in the amount, or any change in the terms or conditions, of
business with any substantial customer, supplier or source of financing;
iv. any pending, threatened or contemplated occurrence or situation of any
kind, nature or description peculiar to the Business and materially and
adversely affecting Astron's operations, properties, assets or prospects;
v. any sale, lease, transfer, assignment, licensing or sublicensing of any of
its assets, tangible or intangible, other than for a fair consideration in the
ordinary course of business;
vi. any agreement, contract, lease or license (or series of related
agreements, contracts, leases, and licenses) either involving more than $10,000
or outside the ordinary course of business;
vii. any acceleration, termination, modification, or cancellation of any
agreement, contract, lease or license (or series of related agreements,
contracts, leases, and licenses) involving more than $10,000 or outside the
ordinary course of business;
viii. any security interest imposed on any of Astron's assets, tangible or
intangible;
ix. any capital expenditure by Astron (or series of capital expenditures)
either involving more than $10,000 or outside the ordinary course of business;
x. any issuance of any note, bond, or other debt security, or creation,
incurrence, guarantee, or assumption of any indebtedness, by Astron;
xi. any delay or postponement of the payment of any account payable and/or
other liability outside the ordinary course of business;
xii. any cancellation, compromise, waiver, or release of any right or claim (or
series of related rights and claims) either involving more than $10,000 or
outside the ordinary course of business;
xiii. any grant of any license or sublicense of any rights under or with
respect to any Astron Intellectual Property;
xiv. any change made or authorized in the Articles of Incorporation or Bylaws
of Astron;
xv. any issuance, sale, or other disposal of any of Astron's capital stock, or
grant of any options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its capital stock;
xvi. any declaration, setting aside, or payment of any dividend or making of
any distribution with respect to Astron's capital stock (whether in cash or in
kind), any redemption, purchase, or other acquisition any of its capital stock
or any reduction of Astron's capital;
xvii. any loan to, or any other transaction with, any of Astron's
directors, officers, and employees, except for the payment of compensation by
Astron in manner and amounts that are consistent with Astron's historical
practices;
xviii. any employment contract or collective bargaining agreement, written
or oral, to which Astron is a party or by which Astron may be bound, or
modification the terms of any existing such contract or agreement;
xix. any increase in the base compensation of any of Astron's directors,
officers, and employees;
xx. any adoption, amendment, modification, or termination of any bonus,
profit-sharing, incentive, severance, or other plan, contract, or commitment
for the benefit of any of its directors, officers, and employees (or taken any
such action with respect to any other employee benefit plan);
xxi. any other change in employment terms for any of its directors, officers,
and employees; or
xxii. any making or pledge to make any charitable or other capital
contribution outside the ordinary course of business.
w. ACCURACY OF INFORMATION FURNISHED. Neither Astron nor the Astron
Shareholder has made any material misstatement of fact or omitted to state any
material fact necessary or desirable to make complete, accurate and not
misleading the representations, warranties and agreements set forth herein, or
in any exhibit or schedule hereto or certificate or other document furnished in
connection herewith.
x. NO LIMITATION. Notwithstanding any right of Sento to investigate or any
investigation made at any time by or on behalf of Sento or any document,
writing or certificate delivered to Sento by Astron or the Astron Shareholder,
each of Astron and the Astron Shareholder expressly acknowledges and agrees
that (i) Sento is relying solely on the disclosures expressly set forth in this
Agreement and the Astron Disclosure Schedules, (ii) Sento shall be deemed not
to have knowledge of any item or matter unless such item or matter is expressly
set forth in this Agreement or the Astron Disclosure Schedules and (iii) no
representation, warranty, covenant, undertaking or agreement of Astron and/or
the Astron Shareholder shall be modified, qualified or limited except to the
extent that such modification, qualification or limitation is set forth in this
Agreement or in a Schedule of the Astron Disclosure Schedules specifically
identifying each such representation, warranty, covenant, undertaking or
agreement.
4.. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ASTRON SHAREHOLDER. The
consummation of the Acquisition constitutes the offer and sale of securities
under the Securities Act and applicable state statutes. Such transactions
shall be consummated in reliance on exemptions from the registration and
prospectus delivery requirements of such statutes which depend, among other
items, on the circumstances under which the Astron Shareholder acquires such
securities.
a. In order to provide documentation for reliance upon exemptions from the
registration and prospectus delivery requirements for such transactions, the
execution of this Agreement by the Astron Shareholder shall constitute his
affirmation and acceptance of, and concurrence in, the following
representations and warranties:
i. the Astron Shareholder acknowledges that neither the Securities and
Exchange Commission (the "SEC") nor the securities commission of any state or
other federal agency has made any determination as to the merits of acquiring
the Shares, and that this transaction involves certain risks;
ii. the Astron Shareholder (A) has such knowledge and experience in business
and financial matters that he is capable of evaluating Sento and its business
operations and (B) understands the risks related to the consummation of the
transactions contemplated hereby;
iii. the Astron Shareholder has been provided with a copy of this Agreement and
exhibits and schedules attached hereto, plus all materials and information
requested by him or his representative, including any information requested to
verify any information furnished (to the extent such information is available
or can be obtained without unreasonable effort or expense), and the Astron
Shareholder has been provided the opportunity for direct communication between
Sento and its representatives and the Astron Shareholder and his
representatives regarding the transactions contemplated hereby;
iv. all information which the Astron Shareholder has provided to Sento or its
agents or representatives concerning the Astron Shareholder's suitability to
hold shares of Sento Common Stock following the transactions contemplated
hereby is complete, accurate, and correct;
v. the Astron Shareholder has not offered or sold any securities of Sento or
interest in this Agreement and has no present intention of dividing the Shares
or the rights under this Agreement with others or of reselling or otherwise
disposing of any portion of such Shares or rights, either currently or after
the passage of a fixed or determinable period of time or on the occurrence or
nonoccurrence of any predetermined event or circumstance;
vi. the Astron Shareholder was at no time solicited by any leaflet, public
promotional meeting, circular, newspaper or magazine article, radio or
television advertisement or any other form of general advertising or
solicitation in connection with the offer, sale or purchase of the Shares
through this Agreement;
vii. the Astron Shareholder has adequate means of providing for his current
needs and possible personal contingencies and has no need now, and anticipates
no need in the foreseeable future, to sell the Shares that he will receive;
viii. the Astron Shareholder is able to bear the economic risks of this
investment, and consequently, without limiting the generality of the foregoing,
is able to hold the Shares to be received in connection with the Acquisition
for an indefinite period of time and has a sufficient net worth to sustain a
loss of the entire investment, in the event such loss should occur;
ix. the Astron Shareholder is (A) at least 21 years of age and (B) a bona fide
permanent resident of and is domiciled in the state or jurisdiction indicated
on the signature page hereof, and has no present intention of becoming a
resident of any other state or jurisdiction;
x. the Astron Shareholder understands that the Shares have not been
registered, but are being acquired by reason of a specific exemption under the
Securities Act as well as exemptions under certain state statutes and that any
disposition of the Shares acquired in connection with the Acquisition may,
under certain circumstances, be inconsistent with these exemptions and may
cause the undersigned to be deemed an "underwriter" within the meaning of the
Securities Act (the Astron Shareholder understands that the definition of
"underwriter" arises out of the concept of "distribution" and that any
subsequent disposition of the Shares can only be effected in transactions which
are not considered distributions);
xi. the Astron Shareholder acknowledges that the Shares must be held and may
not be sold, transferred, or otherwise disposed of for value unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available (Sento is under no obligation to register the Shares
to be acquired by the Astron Shareholder in connection with the Acquisition
under the Securities Act. Sento's registrar and transfer agent will maintain
stop transfer orders against the transfer of the Shares to be obtained by the
Astron Shareholder in connection with the Acquisition, and the certificates
representing such Shares will bear a legend in substantially the form set forth
in Section 1(e)); and
xii. Sento may refuse to effect transfers of the Shares in the absence of
compliance with Rule 144 promulgated under the Securities Act unless the holder
furnishes Sento with a "no-action" or interpretive letter from the SEC or an
opinion of counsel reasonably acceptable to Sento stating that the transfer is
proper. (Further, unless such interpretive letter or opinion states that the
Shares are free of any restrictions under the Securities Act, Sento may refuse
to transfer the Shares to any transferee who does not furnish in writing to
Sento the same representations and agree to the same conditions with respect to
such Shares as set forth herein. Sento may also refuse to transfer the Shares
if any circumstances are present reasonably indicating that the transferee's
representations are not accurate.)
b. The Astron Shareholder, for the purpose of inducing Sento to enter into
this Agreement, consummate the Acquisition and complete the other transactions
contemplated hereby, represents and warrants to, and covenants with, Sento as
follows:
i. the Astron Shareholder is the legal and beneficial owner of the number of
shares of Astron Common Stock set forth below his name on the signature page
hereof, and all such shares are owned by the Astron Shareholder free and clear
of any lien, security interest, charge, encumbrance, pre-emptive right or other
restriction whatsoever;
ii. the Astron Shareholder has not sold, transferred or delivered any interest
in the shares of Astron Common Stock to be transferred to Sento pursuant to the
terms of this Agreement, there are no outstanding options, warrants or other
rights to purchase, or claims against, such shares of Astron Common Stock to be
transferred by such Astron Shareholder and, upon delivery of such shares of
Astron Common Stock to Sento, Sento will acquire good and marketable title to
such shares, free and clear of any lien, claim, demand, encumbrance, security
interest, community property right or restriction on transfer;
iii. except as disclosed on Schedule 4(b) of the Astron Disclosure Schedules,
the Astron Shareholder is not required to obtain any consent, approval or
authorization or to make any filing with, any governmental authority or any
other person in connection with the execution of this Agreement and the
consummation of the Acquisition and the other transactions contemplated hereby;
and
iv. the execution of this Agreement by the Astron Shareholder and the
consummation of the Acquisition and the other transactions contemplated hereby
will not violate, conflict with, result in a breach of, or constitute a default
under, any order of any governmental authority or any provision of any
indenture, mortgage, contract, instrument or other agreement to which such
Astron Shareholder is a party or by which he is bound.
c. In order to more fully document reliance on the exemptions,
representations, warranties and covenants as provided herein, the Astron
Shareholder shall execute and deliver to Sento such letters of representation,
acknowledgment, suitability or the like, as Sento and its counsel may
reasonably request in connection with reliance on exemptions from registration
under such securities laws and confirmation of the foregoing representation,
warranties and covenants.
d. The Astron Shareholder acknowledges that the basis for relying on
exemptions from registration or qualification under federal and state
securities laws are factual, depending on the conduct of the various parties,
and that no legal opinion or other assurance will be required of or given by
Sento, or counsel to Sento, to the effect that the transactions contemplated
hereby are in fact exempt from registration or qualification.
5.. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SENTO. Sento
represents and warrants that:
a. ORGANIZATION STANDING AND QUALIFICATION. Sento is duly
organized and validly existing and in good standing under the laws of the
State of Utah, and is authorized and qualified to own and operate its
properties and assets and conduct its business in all jurisdictions where
such properties and assets are owned and operated and such business
conducted, except where failure to so qualify would not have a material
adverse effect on the business or financial condition of Sento.
b. AUTHORITY. Sento has full right, power and authority to
execute, deliver and perform the terms of this Agreement. This Agreement
has been duly authorized by Sento and constitutes a binding obligation of
Sento enforceable in accordance with its terms.
c. SENTO COMMON STOCK. The Sento Common Stock issued to pursuant
to this Agreement will be duly authorized, validly issued and fully paid
and non-assessable.
d. SEC DOCUMENTS. To the best knowledge of Sento, Sento has timely
filed with the SEC all required documents, and will timely file all
required SEC documents between the date hereof and the Closing (all such
documents are collectively referred to as the "Sento SEC Documents"). As
of their respective dates, the Sento SEC Documents complied or will comply
in all material respects with the requirements of the Securities Act or
the Securities Exchange Act of 1934, as the case may be, and none of the
Sento SEC Documents contained or will contain any untrue statement of a
material fact or omitted or will omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
consolidated financial statements of Sento included or to be included in
the Sento SEC Documents comply as to form 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 (except, in the case of the unaudited statements, as permitted by
Form 10-QSB of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and
fairly present the consolidated financial position of Sento and its
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and statements of cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described
therein).
6. PRE-CLOSING COVENANTS. Astron, the Astron Shareholder and Sento agree as
follows with respect to the period between the execution of this Agreement and
the Closing:
a. GENERAL. Each of the parties hereto will use his or its reasonable best
efforts to take all action and to do all things necessary in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 7 below).
b. NOTICES AND CONSENTS. The Astron Shareholder and Astron will give any
notices to third parties, and will use their best efforts to obtain any third
party consents, that Sento may request in connection with the matters referred
to in Section 3(d) above. The Astron Shareholder and Astron will give any
notices to, make any filings with, and use its best efforts to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in Section 3(d) and Section
4(b) above.
c. OPERATION OF BUSINESS. Astron will not engage in any practice, take any
action, or enter into any transaction outside the ordinary course of business.
Without limiting the generality of the foregoing Astron will not (i) declare,
set aside, or pay any dividend or make any distribution with respect to its
capital stock or redeem, purchase, or otherwise acquire any of its capital
stock, (ii) impose or permit to exist any security interest on any of Astron's
assets, tangible or intangible, (iii) make any capital expenditure outside the
ordinary course of business, (iv) issue any note, bond, or other debt security,
or create, incur, guarantee, or assume any indebtedness or (v) otherwise engage
in any practice, take any action, enter into or permit to occur any transaction
of the sort described in Section 3(v) above.
d. PRESERVATION OF BUSINESS. Astron will keep its business and properties
substantially intact, including its present operations, physical facilities,
working conditions, and relationships with lessors, licensors, suppliers,
customers, and employees.
e. FULL ACCESS. Astron and the Astron Shareholder will permit
representatives of Sento to have full access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of Astron, to
all premises, properties, personnel, books, records (including tax records),
contracts, and documents of or pertaining to Astron.
f. NOTICE OF DEVELOPMENTS. The Astron Shareholder will give prompt written
notice to Sento of any material adverse development causing a breach of any of
the representations or warranties in Section 3 and Section 4 above. No
disclosure by any party pursuant to this Section 6(f), however, shall be deemed
to amend or supplement the Astron Disclosure Schedules or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
g. EXCLUSIVITY. Neither the Astron Shareholder nor Astron will (i) solicit,
initiate, or encourage the submission of any proposal or offer from any person
relating to the acquisition of any capital stock or other voting securities, or
any substantial portion of the assets of, Astron (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate
in any discussions or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other manner any
effort or attempt by any person to do or seek any of the foregoing. The Astron
Shareholder will not vote (or permit to be voted) any shares of the capital
stock of Astron owned (directly or indirectly) or controlled by him in favor of
any such acquisition structured as a merger, consolidation, or share exchange.
The Astron Shareholder will notify Sento immediately if any person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
7. CONDITIONS OF PERFORMANCE.
a. SENTO'S CONDITIONS. The obligation of Sento to consummate this
Agreement is subject to the satisfaction at the Closing, or waiver by
Sento in writing, of each of the following conditions:
i. At the Closing Date, no governmental agency or body, or other person or
entity, shall have instituted or threatened any action to restrain or prohibit
any of the transactions contemplated by this Agreement;
ii. The representations and warranties of Astron and the Astron Shareholder
contained in this Agreement or in any certificate or document delivered to
Sento pursuant hereto shall be deemed to have been made again at the Closing
and shall then be true in all material respects; Astron and the Astron
Shareholder shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by them
prior to or at the Closing; neither Astron nor the Astron Shareholder shall be
in default under any of the provisions of this Agreement; and Sento shall have
been furnished with one or more closing certificates of Astron and the Astron
Shareholder dated as of the Closing Date, in substantially the form of Exhibit
7(a)(ii) certifying (A) to the fulfillment of the conditions set forth in this
Section 7(a) and the due performance of such covenants and agreements, (B) that
no material change has occurred in the Business or Astron's affairs,
operations, properties, assets or condition since the date of the September 30
Balance Sheet, (C) that the representations and warranties set forth in this
Agreement are true and correct as of Closing, and (D) that neither Astron nor
the Astron Shareholder is a party to any litigation or has knowledge of any
claim, brought or threatened, seeking to recover damages or to prevent Astron
from continuing to use any of Astron's assets (tangible or intangible) or to
conduct business in the manner as the same were used or conducted prior
thereto, and which litigation or claim is likely to result in any judgment,
order, decree or settlement which will materially and adversely affect the
financial condition or business of Astron;
iii. Astron and the Astron Shareholder shall have executed and delivered such
other documents, instruments, certificates or agreements as shall be reasonably
necessary to consummate this transaction, including, without limitation, the
Stock Escrow Agreement, the employment agreement described in Section 2(d) and
the Audited Balance Sheet.
iv. Astron's Board of Directors and the holders of all of the outstanding
shares of Astron Common Stock shall have approved the execution and delivery of
this Agreement and Astron's performance of its obligations under this Agreement
and no holder of outstanding shares of Astron Common Stock shall have asserted
rights to receive payment for his shares pursuant to the provisions of the law
of Utah;
v. Sento's Board of Directors shall have approved the execution and delivery
of this Agreement and the performance of Sento's obligations under this
Agreement;
vi. The Astron Shareholder shall have caused Astron to deliver at the Closing,
with respect to each parcel of real property that Astron owns, an ALTA Owner's
Policy of Title Insurance Form B-1987 (or equivalent policy acceptable to Sento
if the real property is located in a state in which an ALTA Owner's Policy of
Title Insurance Form B-1987 is not available) (each a "Title Insurance Policy")
issued by a title insurer satisfactory to Sento (and, if requested by Sento,
reinsured in whole or in part by one or more insurance companies and pursuant
to a direct access agreement acceptable to Sento), in such amount as Sento may
determine to be the fair market value of such real property (including all
improvements located thereon), insuring title to such real property to be in
Astron as of the Closing (subject only to the title exceptions consented to by
Sento) with the following endorsements: (i) an "extended coverage" endorsement
insuring over the general exceptions contained customarily in such policies
(other than the survey exception), (ii) ALTA Zoning Endorsement 3.1 (or
equivalent), (iii) an inflation endorsement providing for annual adjustments in
the amount of coverage corresponding to the annual percentage increase, if any
in the United States Department of Commerce Composite Construction Cost Index
(Base Year = 1997), (iv) if the real property consists of more than one parcel,
a contiguity endorsement insuring that all of the record parcels are contiguous
to one another, and (v) a "non-imputation" endorsement to the effect that title
defects known to the officers and/or directors of Astron and/or the Astron
Shareholder prior to the Closing shall not be deemed "facts known to the
insured" for purposes of the policy. Any exceptions to coverage raised in the
commitment for the Title Insurance Policy not acceptable to Sento must be cured
by the Astron Shareholder or Sento shall have the right to reduce the Purchase
Price to account for such unacceptable exception; and
vii. All proceedings taken in connection with the transactions contemplated
herein and all instruments and documents required in connection therewith or
incident thereto shall be satisfactory in form to Parr, Waddoups, Brown, Gee &
Loveless legal counsel for Sento.
b. ASTRON CONDITIONS. The obligation of Astron to consummate this
Agreement is subject to the satisfaction at the Closing, or waiver by
Astron in writing, of each of the following conditions:
i. The representations and warranties of Sento contained in this Agreement or
in any closing certificate or document delivered to Astron pursuant hereto
shall be deemed to have been made again at the Closing and shall then be true
in all material respects; Sento shall have performed and complied with all
agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing;
ii. Sento shall have executed and delivered such other documents, instruments,
certificates or agreements as shall be reasonably necessary to consummate this
transaction;
iii. All proceedings taken in connection with the transactions contemplated
herein and all instruments and documents required in connection therewith or
incident thereto shall be satisfactory in form to Callister, Nebeker &
McCullough, legal counsel for Astron.
8.. INDEMNIFICATION.
a. ASTRON AND THE ASTRON SHAREHOLDER'S OBLIGATIONS.
i. Subject to the limitations set forth in Section 8(c) below, Astron and the
Astron Shareholder jointly and severally agree to indemnify, defend and hold
Sento and its officers, directors, employees and agents harmless from any and
all claims, liabilities, lawsuits, demands, actions, damages and expenses
(including reasonable attorneys' fees) arising from or out of any breach of the
agreements, covenants, representations or warranties of Astron and the Astron
Shareholder contained in this Agreement. As security for the obligations of
Astron and the Astron Shareholder pursuant to this Section 8(a), at the Closing
Sento and the Astron Shareholder shall enter into the Stock Escrow Agreement,
pursuant to which the Escrowed Shares shall be held by the escrow agent named
in the Stock Escrow Agreement and shall be made available to Sento for a period
of twelve (12) months for satisfaction of any claims of Sento under this
Section 8(a) (among other sections of this Agreement). For purposes of this
Section 8, the value of each of the Shares shall be the closing sale price for
a share of the Sento Common Stock, as reported by the NASD, on the Closing
Date. Except as provided in Section 8(c) below, this indemnity shall continue
in full force and effect subsequent to and notwithstanding the expiration,
termination or closing of this Agreement or the Stock Escrow Agreement.
ii. In addition to and without limiting the generality of the foregoing, the
Astron Shareholder agrees to indemnify, defend and hold Sento, Astron and their
respective officers, directors, employees and agents harmless from any and all
claims, liabilities, lawsuits, demands, actions, damages and expenses
(including reasonable attorneys' fees) arising from or out of the following,
except to the extent such are specifically set forth on the Audited Balance
Sheet and appropriate reserves for such have been made and reflected on the
Audited Balance Sheet: (A) any tax liability of Astron (including, without
limitation, all fines, penalties and assessments of any kind) or the Astron
Shareholder for periods prior to the Closing Date or (B) any items identified
in Schedules 3(j) or 3(p) of the Astron Disclosure Schedules. The Astron
Shareholder agrees that his obligations hereunder shall be joint and several
with respect to Sento, Astron and their respective officers, directors,
employees and agents.
b. SENTO'S OBLIGATIONS. Subject to the limitations set forth in Section 8(c)
below, Sento agrees to indemnify, defend and hold Astron and the Astron
Shareholder harmless from any claims, liabilities, lawsuits, demands, actions,
damages and expenses (including reasonable attorneys' fees) arising from or out
of any breach of the agreements, covenants, representations or warranties of
Sento contained in this Agreement. This indemnity shall continue in full force
and effect subsequent to and notwithstanding the expiration or termination of
this Agreement.
c. LIMITATIONS. Notwithstanding the provisions of Sections 8(a) and 8(b)
above, Sento, Astron and the Astron Shareholder agree that the following
provisions shall limit the indemnification obligations set forth in Section
8(a) above: (i) except with respect to claims, liabilities, lawsuits, demands,
actions, damages and expenses described in Section 8(c)(iii) below, the maximum
aggregate monetary amount for which the Astron Shareholder shall be liable to
Sento in connection with the indemnification obligations set forth in Section
8(a) shall be limited to the value of the Shares received by the Astron
Shareholder in connection with the Acquisition; (ii) except with respect to
claims, liabilities, lawsuits, demands, actions, damages and expenses described
in Section 8(c)(iii) below, the indemnification obligations of Astron, the
Astron Shareholder and Sento set forth in this Section 8 shall terminate on the
third anniversary of the Closing Date; and (iii) the limitations described in
Sections 8(c)(i) and 8(c)(ii) above shall not apply and, notwithstanding the
occurrence of the third anniversary of the Closing Date, the Astron Shareholder
shall be liable for the full amount of any and all claims, liabilities,
lawsuits, demands, actions, damages and expenses resulting from (A) any
fraudulent conduct of the Astron Shareholder or (B) any representation made by
the Astron Shareholder which the Astron Shareholder knows or has reason to know
is false or misleading at the time such representation is made or at the
Closing Date.
9. RESTRICTIVE COVENANTS.
a. PROPRIETARY INFORMATION. The Astron Shareholder acknowledges
that his relationship with Astron has created and may hereafter create a
relationship of confidence and trust with respect to information of a
confidential or secret nature that may be disclosed to him by Astron that
relates to the business of Astron or to the business of any affiliate,
customer, or supplier of Astron (collectively, the "Proprietary
Information").
Such Proprietary Information includes, but is not limited to, any
information regarding inventions, marketing plans, product plans, business
strategies, financial information, forecasts, personnel information,
customer lists, software, hardware, processes, formulas, development or
experimental work, work in process, business, trade secrets, or any other
secret or confidential matter relating to the Business or any products,
projects, programs, sales, customer lists, price lists, or data of Astron
which is not generally known to the public. At all times hereafter, the
Astron Shareholder will keep all such Proprietary Information in
confidence and trust, and will not use or disclose any of such Proprietary
Information (except as may be required by law or to legal counsel or
accountants) without the prior written consent of Sento, except as may be
necessary to perform any duties he may now or hereafter have as an
employee of Sento. The Astron Shareholder further agrees that at the
Closing, and subsequently upon Sento's request or at the time of the
termination of the Astron Shareholder's employment (if any) with Astron or
Sento, as the case may be, the Astron Shareholder will deliver to Sento,
and shall not retain for his own or others' use, any and all documents and
any other materials and all copies thereof relating to his work, the
Business and Astron's products, projects, programs and prospects of which
the Astron Shareholder had knowledge, or which contain any Proprietary
Information.
b. PUBLICITY. Astron and the Astron Shareholder agree not to
disclose to any person or entity, (except as may be required by law or to
legal counsel or accountants) without the prior written consent of Sento,
any of the terms of this Agreement at any time prior to Closing or
thereafter, except as may be necessary for the performance of their
obligations hereunder or the operation of Astron in the ordinary course of
business. Sento shall disclose and publicize this transaction in a press
release the content of which shall be reasonably satisfactory to Astron
and the Astron Shareholder or as required by law.
c. NON COMPETITION.
i. The Astron Shareholder acknowledges that (A) Astron and Sento (including
certain of their respective subsidiaries and affiliates) are engaged in the
Business; (B) he is one of a limited number of persons who has performed a
significant role in developing the Business; (C) the Business is conducted
inside and outside the United States and can in a short time be conducted from
anywhere in and throughout the world; (D) his work for Astron and Sento has
given him, and will continue to give him, trade secrets of and confidential
information concerning Astron and Sento; (E) the agreements and covenants
contained in this Section 9(c) are essential to protect the Business and the
goodwill of Astron and Sento; and (F) he has means to support himself and his
dependents other than by engaging in the Business and the provisions of this
Section 9(c) will not impair such ability.
ii. Without the prior written consent of Sento, from and after the Closing and
for a period of two (2) years thereafter (the "Restricted Period"), the Astron
Shareholder agrees not to engage in any Competitive Business (as defined below)
anywhere in the world. As used herein, the term "Competitive Business" means
the Business or any other business activity which would compete with the
Business and shall include participation as an owner, shareholder, partner or
in any other capacity or solicitation of any officer or other employee of Sento
to terminate his employment relationship with Sento or solicitation of any
customer of Sento to divert to any entity or person the business of such
customer.
iii. The Astron Shareholder acknowledges and agrees that the covenants in this
Section 9(c) are reasonable and valid in geographical and temporal scope and in
all other respects. If any court determines that any of the covenants in this
Section 9(c), or any part thereof, is invalid or unenforceable, the remainder
of such covenants shall not thereby be affected and shall be given full effect,
without regard to the invalid portions. Without limiting the generality of the
foregoing, if a court determines that the geographic scope of the covenants in
this Section 9(c) is unreasonable, then such scope shall be reduced to the
geographic area where Astron and/or Sento (including their respective
subsidiaries and affiliates) are engaged in the Business or such other
geographic area as the court shall determine to be reasonable in light of the
factors acknowledged by the Astron Shareholder in Section 9(c)(1) above.
d. SECURITY. As security for the obligations of Astron and the Astron
Shareholder pursuant to this Section 9 (among other sections of this
Agreement), at the Closing Sento and the Astron Shareholder shall enter into
the Stock Escrow Agreement, pursuant to which the Shares shall be available for
a period of twelve (12) months for satisfaction of any claims of Sento under
this Section 9. The value of any Shares delivered in satisfaction of such
claims shall be equal to the closing sale price of an equal number of shares of
Sento Common Stock, as reported by the NASD, on the Closing Date.
10.. OTHER COVENANTS OF ASTRON AND THE ASTRON SHAREHOLDER.
a. FURTHER ACTIONS. Astron and the Astron Shareholder warrant and
agree that all present shareholders, directors and officers of Astron will
from time to time hereafter execute whatever minutes of meetings or other
instruments and take whatever actions Sento may reasonably deem necessary
or desirable to effect, or to carry out the intent and purposes of the
transactions contemplated hereby.
b. EXPENSES. All legal, accounting and other transactional fees and expenses
incurred by Astron and the Astron Shareholder in connection with the
negotiation and execution of this Agreement and the consummation of the various
transactions contemplated hereby, including, without limitation, all fees and
expenses relating to the preparation of the Audited Balance Sheet and the
September 30 Balance Sheet and the fees and expenses of the escrow agent under
the Stock Escrow Agreement, shall be paid, promptly upon Sento's request, by
the Astron Shareholder and, to the extent any such fees or expenses are paid by
Sento (whether prior or subsequent to the Closing Date), the Astron Shareholder
shall reimburse Sento for the full amount of such fees and expenses promptly
upon Sento's request. Sento, Astron and the Astron Shareholder agree that, (i)
upon the election of the Astron Shareholder, the number of Shares to be
delivered by Sento at the Closing may be reduced by an amount equal to the
estimated reimbursement amount and (ii) any amounts payable by the Astron
Shareholder pursuant to this Section 10(b) which remain unpaid subsequent to
the Closing Date, as determined by Sento in its reasonable discretion, may be
collected by Sento by instructing the escrow agent acting pursuant to the terms
of the Escrow Agreement to return to Sento a number of Shares equal to the
amount of the unpaid expenses, which Shares shall be canceled by Sento and
shall not be delivered to the Astron Shareholder. In such event, the value of
each of the Shares shall be equal to the closing sale price for a share of
Sento Common Stock, as reported by the NASD, as of the Closing Date.
11. TERMINATION AND AMENDMENT.
a. PRE-CLOSING. This Agreement may be terminated by Sento or
Astron at any time prior to the time fixed for Closing in Section 2 hereof
upon written notice to the other parties:
i. If any material representation, warranty, agreement or condition of this
Agreement to be complied with or performed by Astron or the Astron Shareholder
(in the case of Sento) or Sento (in the case of Astron) on or before the
Closing shall not have then been complied with or performed in some material
respect and such material noncompliance or nonperformance shall not have been
waived by the party giving notice of termination or shall not have been cured
by the defaulting party, or cure thereof commenced and diligently prosecuted
thereafter by such party within ten (10) days after written notice of such
material noncompliance or nonperformance is given by the non-defaulting party;
ii. If any governmental action is commenced to prevent the consummation of the
transactions contemplated hereby; or
iii. By mutual consent of the parties.
b. WAIVER. Any representations, warranties, agreements or
conditions of this Agreement may be waived at any time by the party
entitled to the benefit thereof by action taken and evidenced by a written
waiver executed by any such party.
12.. MISCELLANEOUS.
a. BROKERS. Each of Sento, Astron and the Astron Shareholder agrees that
there were no finders or brokers involved in bringing the parties together or
who were instrumental in the negotiation, execution or consummation of this
Agreement to whom either Sento, Astron or the Astron Shareholder is obligated
to pay any compensation.
b. NO REPRESENTATION REGARDING TAX TREATMENT. No representation or warranty
is being made or legal opinion given by any party to any other regarding the
treatment of this transaction for federal, state or foreign income taxation.
Although this transaction has been structured in an effort to qualify for
treatment under Section 368(a)(1)(B) of the Code, there is no assurance that
any part of this transaction in fact meets the requirements for such
qualification. Each party has relied exclusively on its own legal, accounting,
and other tax advisers regarding the treatment of this transaction for federal,
state and foreign income tax purposes and on no representation, warranty or
assurance from any party hereto that this transaction in fact meets the
requirements for such qualification.
c. GOVERNING LAW. This Agreement shall be governed by, enforced and
construed under and in accordance with the laws of the United States of America
and, with respect to matters of state law, with the laws of the State of Utah,
without reference to conflicts of law.
d. NOTICES. Any notices or other communications to any party required or
permitted hereunder shall be sufficiently given if personally delivered, if
sent by facsimile or telecopy transmission or other electronic communication
confirmed by registered or certified mail, postage prepaid, or if sent by
prepaid overnight courier addressed as follows:
If to Sento, to: Sento Technical Innovations, Inc.
Attn: Robert K. Bench
311 North State Street
P.O. Box 1970
Orem, Utah 84059
If to Astron, to: Astron Incorporated
Attn: Jay Barth
112 South Mountain Way Drive
Orem, Utah 84058
If to the Astron Shareholder, to: Jay Barth
546 South 300 West
Orem, Utah 84058
or such other addresses as shall be furnished in writing by any party in
the manner for giving notices hereunder, and any such notice or
communication shall be deemed to have been given as of the date so
delivered or sent by facsimile or telecopy transmission or other
electronic communication, or one day after the date so sent by overnight
courier.
e. ATTORNEYS' FEES. In the event that any party institutes any action or
suit to enforce this Agreement or to secure relief from any default hereunder
or breach hereof, the breaching party or parties shall reimburse the non-
breaching party or parties for all costs, including reasonable attorneys' fees,
incurred in connection therewith and in enforcing or collecting any judgment
rendered therein.
f. THIRD-PARTY BENEFICIARIES. This contract is solely between Sento, Astron
and the Astron Shareholder and, except as specifically provided in Section 8,
no director, officer, stockholder, employee, agent, independent contractor or
any other person shall be deemed to be a third party beneficiary of this
Agreement.
g. ENTIRE AGREEMENT. This Agreement represents the entire agreement between
the parties relating to the subject matter hereof. All previous agreements
between the parties, whether written or oral, have been merged into this
Agreement. This Agreement alone fully and completely expresses the agreement
of the parties relating to the subject matter hereof. There are no other
courses of dealing, understandings, agreements, representations, or warranties,
written or oral, except as set forth herein.
h. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which taken together shall
be but a single instrument.
i. AMENDMENT OR WAIVER. Every right and remedy provided herein shall be
cumulative with every other right and remedy, whether conferred herein, at law
or in equity, and may be enforced concurrently herewith, and no waiver by any
party of the performance of any obligation by the other shall be construed as a
waiver of the same or any other default then, theretofore or thereafter
occurring or existing. At any time prior to the Closing Date, this Agreement
may be amended by a writing signed by all parties hereto, with respect to any
of the terms contained herein, and any term or condition of this Agreement may
be waived or the time for performance thereof may be extended by a writing
signed by the party or parties for whose benefit the provision is intended.
j. INTERPRETATION: HEADINGS, REFERENCES AND KNOWLEDGE. The article, section
and subsection headings of this Agreement are for convenience only, shall not
be deemed part of this Agreement, and in no way define, limit, augment, extend
or describe the scope, content or intent of any provision of this Agreement.
References in this Agreement to articles, sections and subsections shall refer
to the articles, sections and subsections of this Agreement unless expressly
indicated otherwise. Whenever any representation in this Agreement is made to
the "knowledge" of any party, it shall be deemed to be a representation as to
the actual knowledge of the party and the knowledge reasonably expected to be
possessed by the party. Any provision requiring Astron to take a particular
action and/or to cause a particular condition to exist or event to occur shall
be deemed to provide that the Astron Shareholder shall cause Astron to take
such action and/or cause such condition to exist or event to occur. Any
provision requiring Astron to forebear from taking a particular action and/or
to prevent a particular condition from existing or event from occurring shall
be deemed to provide that the Astron Shareholder shall not permit Astron to
take such action and/or cause such condition to exist or event to occur but
shall cause Astron to forebear from taking such action and/or prevent Astron
from allowing such condition to exist or event to occur.
k. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by Sento, Astron and the Astron Shareholder in this Agreement,
or in any certificate, schedule, exhibit, statement or document or instrument
furnished hereunder or in connection with the negotiation, execution and
performance of this Agreement shall survive the Closing.
l. SEVERABILITY. If any term or provision of this Agreement,
including the schedules and exhibits hereto, or the application thereof to
any person, property or circumstances, shall to any extent be invalid or
unenforceable, the remainder of this Agreement, including the schedules
and exhibits or the application of such term or provision to persons,
property or circumstances other than those as to which it is invalid and
unenforceable, shall not be affected thereby, and each term and provision
of this Agreement and the exhibits shall be valid and enforced to the
fullest extent permitted by law.
m. ASSIGNMENT. Sento, in its absolute discretion, may assign all of its
rights, duties, obligations and interest under this Agreement to any existing
or future affiliate of Sento, including, without limitation, Spire
Technologies, Inc., Dew Point Distributed Solutions Inc. and Spire Systems Inc.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
"Sento"
SENTO TECHNICAL INNOVATIONS
CORPORATION, a Utah corporation
By \S\Robert K. Bench
Its Chief Financial Officer
"Astron"
ASTRON INCORPORATED,
a Utah corporation
By \S\ Jay Barth
Its President
"Astron Shareholder"
\S\ Jay Barth
Jay Barth, an individual
State of Residence: Utah
STOCK ESCROW AGREEMENT
THIS STOCK ESCROW AGREEMENT (the "Agreement") dated December 31, 1997 by
and among SENTO TECHNICAL INNOVATIONS CORPORATION, a Utah corporation
("Sento"), JAY BARTH, an individual (the "Shareholder"), and PARR, WADDOUPS,
BROWN, GEE & LOVELESS, a Utah professional corporation (the "Escrow Agent").
RECITALS
WHEREAS, contemporaneously with the execution of this Agreement, Sento and
the Shareholder are entering into an Acquisition Agreement dated November 19,
1997, as amended by Amendment No.1 to Acquisition Agreement dated December 31,
1997 (as so amended, the "Acquisition Agreement"), pursuant to which, among
other things, Sento has agreed to issue to the Shareholder an aggregate of
180,000 shares of the Common Stock, $.25 par value, of Sento (the "Common
Stock");
WHEREAS, as a condition to the obligations of Sento under the Acquisition
Agreement, the Shareholder has agreed to deposit in escrow 36,000 shares of
Common Stock to be issued to him by Sento under the terms of the Acquisition
Agreement, subject to the terms and conditions set forth in this Agreement; and
WHEREAS, the Escrow Agent has agreed to undertake and perform its duties
and obligations as set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, upon these premises and in consideration of the covenants
and obligations set forth below and other good and valuable consideration, the
receipt, adequacy and legal sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings indicated:
(a) "Astron" shall mean and refer to Astron Incorporated, a Utah
corporation.
(b) "Claims" shall mean and refer collectively to all claims,
liabilities, rights of offset, lawsuits, demands, actions, damages and
expenses payable to Sento by Astron and the Shareholder pursuant to the
provisions of the Acquisition Agreement; without limiting the foregoing,
the failure of Astron or the Shareholder to perform any Obligation shall
constitute a Claim for purposes of this Agreement.
(c) "Closing" and "Closing Date" shall mean and refer to the Closing
and Closing Date, respectively, set forth in the Acquisition Agreement.
(d) "Default" shall have the meaning set forth in Section 4 below.
(e) "Escrow Documents" shall mean and refer to the certificates
evidencing the Escrowed Shares, accompanied by stock powers or other
instruments of assignment duly executed by the Shareholder.
(f) "Escrowed Shares" shall mean and refer to 36,000 shares of
Common Stock to be acquired by the Shareholder pursuant to the terms of
the Acquisition Agreement and to be deposited with the Escrow Agent under
the terms of this Agreement.
(g) "Notice of Default" shall have the meaning set forth in Section
4 below.
(h) "Obligations" shall mean and refer collectively to the
obligations of the Shareholder and Astron under the Acquisition Agreement,
and each such obligation may be referred to individually as an
"Obligation."
2. ESCROW. On the Closing Date, the Shareholder agrees to deposit in
escrow with the Escrow Agent the Escrow Documents. The Escrow Agent shall hold
and maintain the Escrow Documents in a safe and secure manner until it is
authorized to release the Escrow Documents in accordance with the provisions
set forth herein. The Shareholder hereby agrees to pay all charges and fees
reasonably required by the Escrow Agent and any related costs or expenses
thereof.
3. SECURITY FOR PERFORMANCE. This Agreement is executed in connection
with the Acquisition Agreement and is made by the Shareholder as security for
the performance of each of the Obligations. The parties acknowledge and agree
that Astron and the Shareholder have multiple and separate Obligations and that
the transfer to Sento of all or any part of the Escrowed Shares or the
satisfaction of any Claim(s) shall not diminish or alter the liability of
Astron or the Shareholder to satisfy any other Claim relating to any other
breach with respect to the same or any other Obligation.
4. DEFAULT; NOTICE OF DEFAULT. The failure of Astron or the Shareholder
to timely perform any Obligation shall constitute a default under this
Agreement (a "Default"). In the event of any Default, Sento shall have the
right to pursue its remedies pursuant to the terms set forth herein so as to be
compensated for any Claim. Upon the occurrence of any Default, Sento may, in
its discretion, give written notice to the Shareholder (the "Notice of
Default"), stating that a Default has occurred and setting forth a brief
description of the Default.
5. NOTICE TO THE ESCROW AGENT. If Astron and the Shareholder fail to
cure the Default within ten (10) days of receipt of the Notice of y authorized
representative of Sento (the "Default Certificate"), which shall (i) include a
copy of the Notice of Default; (ii) certify that the Notice of Default was
delivered to the Shareholder at least ten (10) days prior to delivery of the
Default Certificate to the Escrow Agent; (iii) certify that Astron and the
Shareholder have failed to cure the Default within such ten (10) days; (iv)
certify that, in light of the foregoing, Sento is entitled to exercise its
right to have transferred to it all or a portion of the Escrowed Shares
pursuant to the terms of this Agreement; and (v) set forth the number of
Escrowed Shares to be transferred in accordance with the provisions of Section
6 below.
6. REMEDIES AND PROCEDURES.
(a) Upon delivery of the Default Certificate to the Escrow Agent,
Sento may require that all or a portion of the Escrowed Shares necessary
to satisfy the aggregate amount of all Claim(s) with respect to each
Default hereunder be transferred to Sento. In such event, the Escrow
Agent shall cause a certificate or certificates representing such Escrowed
Shares to be transferred into the name of Sento and delivered to Sento,
whereupon Sento shall have all of the rights, privileges and powers
appurtenant to and arising from ownership of such Escrowed Shares.
(b) Upon receipt of a Default Certificate, the Escrow Agent, without
independent verification, shall release and deliver to Sento the Escrow
Documents necessary to facilitate Sento's exercise of its remedies under
this Agreement, and shall execute and deliver all such instruments or
certificates and take all such actions as may be requested by Sento to
accomplish Sento's exercise of such remedies.
(c) For purposes of determining the number of Escrowed Shares to be
transferred to Sento pursuant to subsection (a) above, Sento shall divide
the aggregate amount of all Claim(s) described in the applicable Default
Certificate (expressed in dollars) by the closing sale price of the Common
Stock, as reported by the National Association of Securities Dealers or
such other established quotation service as Sento shall reasonably select,
as of the Closing Date.
(d) If any or all of the Escrowed Shares are transferred to Sento
pursuant to the provisions of this Section 6, the Shareholder shall pay
any and all costs and expenses reasonably incurred by the Escrow Agent in
connection with the delivery and transfer of the Escrowed Shares.
7. VOTING RIGHTS AND DIVIDENDS. During the period that any Escrowed
Shares are held by the Escrow Agent pursuant to the provisions hereof, the
Shareholder shall remain the record owner of such Escrowed Shares and shall
possess all voting rights with respect thereto. During such period, all cash
dividends declared with respect to such Escrowed Shares shall be paid or
distributed to the Shareholder. The number of Escrowed Shares held by the
Escrow Agent pursuant to the terms of this Agreement shall be adjusted
proportionately for any increase or decrease in the number of issued shares of
Common Stock resulting from a subdivision or consolidation of shares of Common
Stock or the payment of a stock dividend or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by Sento. Similarly, if Sento is the surviving corporation in
any merger or consolidation, the number of Escrowed Shares held by the Escrow
Agent pursuant to the terms of this Agreement shall be adjusted to reflect the
number of securities to which a holder of the number of Escrowed Shares would
have been entitled as a result of such merger or consolidation.
8. TERMINATION. This Agreement shall expire on the second anniversary
of the Closing Date, provided no uncured Default exists on the second
anniversary of the Closing Date and all Obligations arising during the period
between the Closing Date and the second anniversary of the Closing Date have
been performed or otherwise satisfied. If, on the first anniversary of the
Closing Date, all Obligations arising during the period between the Closing
Date and such first anniversary have been performed shall deliver to the
Shareholder the Escrow Documents relating to 18,000 Escrowed Shares, less the
total number of Escrowed Shares transferred to Sento, as of the first
anniversary of the Closing Date, pursuant to the provisions of Section 6 above.
If, on the second anniversary of the Closing Date, all Obligations arising
during the period between the Closing Date and such second anniversary have
been performed and all Defaults hereunder have been resolved, the Escrow Agent
shall deliver to the Shareholder any Escrow Documents then remaining in escrow.
Otherwise, this Agreement shall continue beyond the applicable expiration date
until all such Defaults have been resolved and all Obligations have been
performed or otherwise satisfied. Expiration of this Agreement and/or release
by the Escrow Agent of all or any part of the Escrowed Shares shall not
otherwise diminish or alter in any way the remaining duties and obligations of
Astron and the Shareholder under the Acquisition Agreement.
9. LIABILITY OF ESCROW AGENT. The following provisions shall control
with respect to the rights, duties, liabilities, privileges and immunities of
the Escrow Agent:
(a) The Escrow Agent shall not be responsible for the genuineness of
any certificate or signature and may rely conclusively upon and shall be
protected when acting upon any notice, affidavit, request, consent,
instruction, check or other instrument believed by it in good faith to be
genuine or to be signed or presented by the proper person, or duly
authorized, or properly made. The Escrow Agent shall have no
responsibility except for the performance of its express duties hereunder
and no additional duties shall be inferred herefrom or implied hereby.
(b) No amendment or modification of this Agreement or waiver of its
terms shall affect the rights and duties of the Escrow Agent unless its
written consent thereto has been obtained.
(c) The Escrow Agent shall not be responsible or liable for any act
or omission on its part in performing its duties as Escrow Agent under
this Agreement unless such act or omission constitutes bad faith, gross
negligence or fraud.
(d) The Escrow Agent shall not be required to institute or defend
any action involving matters referred to herein or which affect it or its
duties or liabilities hereunder unless or until requested to do so by any
party to this Agreement and then only upon receiving full indemnity, in
character satisfactory to the Escrow Agent, against all claims,
liabilities and expenses in relation thereto. In the event of any dispute
among the parties with respect to the Escrow Agent or its duties, (i) the
Escrow Agent may act or refrain from acting in respect of any matter
referred to herein in full reliance upon any by and with the advice of
counsel and shall be fully protected in so acting or in refraining from
acting upon the advice of such counsel, or (ii) the Escrow Agent may
refrain from acting until required to do so by an order of a court of
competent jurisdiction.
10. NOTICES. All notices and other communications given hereunder shall
be deemed to have been given or made when personally delivered or three (3)
days after being sent by registered or certified mail, return receipt
requested, postage prepaid, to the parties at the following addresses or at
such other addresses as the parties may hereafter designate in writing:
To Sento: Sento Technical Innovations Corporation
Attn: Robert K. Bench
311 North State Street
P.O. Box 1970
Orem, Utah 84059
To the Shareholder: Jay Barth
546 South 300 West
Orem, Utah 84058
To the Escrow Agent: Parr, Waddoups, Brown, Gee & Loveless
Attn: Brian G. Lloyd
185 South State Street, Suite 1300
Salt Lake City, Utah 84111
11. COSTS AND ATTORNEY'S FEES. In the event there is a breach of this
Agreement, the party in breach shall pay all costs, expenses and attorney's
fees incurred by the other party in enforcing its rights hereunder.
12. SEVERABILITY. In the event that any condition, covenant or other
provision contained herein is held by a court of competent jurisdiction to be
invalid or void, the same shall be deemed severable from the remainder of this
Agreement and shall in no way affect any other covenant, condition or provision
contained herein. If such condition, covenant or other provision shall be
deemed invalid due to its scope or breadth, such shall be deemed valid to the
extent of the scope or breadth permitted by law.
13. ENTIRE AGREEMENT. This Agreement and the Acquisition Agreement
constitute the entire agreement among the parties pertaining to the Escrowed
Shares, and supersede all prior agreements and understandings pertaining
thereto; provided, however, that nothing herein shall in any way limit the
Acquisition Agreement or any agreement or transaction described therein.
14. WAIVER. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach hereof shall
constitute a waiver of any such breach or of such or any other covenant,
agreement, term or condition.
15. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah without reference to choice of law
rules.
16. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
heirs, representatives, successors and assigns of the parties hereto.
17. INTERPRETATION. The captions which precede the sections of this
Agreement are for convenience only and shall in no way affect the manner in
which any provision hereof is construed. Whenever the context requires, the
singular shall include the plural, the plural shall include the singular, the
whole shall include any part thereof, and any gender shall include both genders.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
"SENTO"
SENTO TECHNICAL INNOVATIONS CORPORATION,
a Utah corporation
By: \S\ Robert K. Bench
Its: Chief Financial Officer
"SHAREHOLDER"
\S\ Jay Barth
Jay Barth, an individual
"ESCROW AGENT"
PARR, WADDOUPS, BROWN, GEE & LOVELESS,
a Utah professional corporation
By: \S\ Brian G. Lloyd
Its: Escrow Agent
STOCK ESCROW AGREEMENT
THIS STOCK ESCROW AGREEMENT (the "Agreement") dated December 31, 1997 by
and among SENTO TECHNICAL INNOVATIONS CORPORATION, a Utah corporation
("Sento"), JAY BARTH, an individual (the "Shareholder"), and PARR, WADDOUPS,
BROWN, GEE & LOVELESS, a Utah professional corporation (the "Escrow Agent").
RECITALS
WHEREAS, contemporaneously with the execution of this Agreement, Sento and
the Shareholder are entering into an Acquisition Agreement dated November 19,
1997, as amended by Amendment No.1 to Acquisition Agreement dated December 31,
1997 (as so amended, the "Acquisition Agreement"), pursuant to which, among
other things, Sento has agreed to issue to the Shareholder an aggregate of
180,000 shares of the Common Stock, $.25 par value, of Sento (the "Common
Stock");
WHEREAS, as a condition to the obligations of Sento under the Acquisition
Agreement, the Shareholder has agreed to deposit in escrow 36,000 shares of
Common Stock to be issued to him by Sento under the terms of the Acquisition
Agreement, subject to the terms and conditions set forth in this Agreement; and
WHEREAS, the Escrow Agent has agreed to undertake and perform its duties
and obligations as set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, upon these premises and in consideration of the covenants
and obligations set forth below and other good and valuable consideration, the
receipt, adequacy and legal sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings indicated:
(a) "Astron" shall mean and refer to Astron Incorporated, a Utah
corporation.
(b) "Claims" shall mean and refer collectively to all claims,
liabilities, rights of offset, lawsuits, demands, actions, damages and
expenses payable to Sento by Astron and the Shareholder pursuant to the
provisions of the Acquisition Agreement; without limiting the foregoing,
the failure of Astron or the Shareholder to perform any Obligation shall
constitute a Claim for purposes of this Agreement.
(c) "Closing" and "Closing Date" shall mean and refer to the Closing
and Closing Date, respectively, set forth in the Acquisition Agreement.
(d) "Default" shall have the meaning set forth in Section 4 below.
(e) "Escrow Documents" shall mean and refer to the certificates
evidencing the Escrowed Shares, accompanied by stock powers or other
instruments of assignment duly executed by the Shareholder.
(f) "Escrowed Shares" shall mean and refer to 36,000 shares of
Common Stock to be acquired by the Shareholder pursuant to the terms of
the Acquisition Agreement and to be deposited with the Escrow Agent under
the terms of this Agreement.
(g) "Notice of Default" shall have the meaning set forth in Section
4 below.
(h) "Obligations" shall mean and refer collectively to the
obligations of the Shareholder and Astron under the Acquisition Agreement,
and each such obligation may be referred to individually as an
"Obligation."
2. ESCROW. On the Closing Date, the Shareholder agrees to deposit in
escrow with the Escrow Agent the Escrow Documents. The Escrow Agent shall hold
and maintain the Escrow Documents in a safe and secure manner until it is
authorized to release the Escrow Documents in accordance with the provisions
set forth herein. The Shareholder hereby agrees to pay all charges and fees
reasonably required by the Escrow Agent and any related costs or expenses
thereof.
3. SECURITY FOR PERFORMANCE. This Agreement is executed in connection
with the Acquisition Agreement and is made by the Shareholder as security for
the performance of each of the Obligations. The parties acknowledge and agree
that Astron and the Shareholder have multiple and separate Obligations and that
the transfer to Sento of all or any part of the Escrowed Shares or the
satisfaction of any Claim(s) shall not diminish or alter the liability of
Astron or the Shareholder to satisfy any other Claim relating to any other
breach with respect to the same or any other Obligation.
4. DEFAULT; NOTICE OF DEFAULT. The failure of Astron or the Shareholder
to timely perform any Obligation shall constitute a default under this
Agreement (a "Default"). In the event of any Default, Sento shall have the
right to pursue its remedies pursuant to the terms set forth herein so as to be
compensated for any Claim. Upon the occurrence of any Default, Sento may, in
its discretion, give written notice to the Shareholder (the "Notice of
Default"), stating that a Default has occurred and setting forth a brief
description of the Default.
5. NOTICE TO THE ESCROW AGENT. If Astron and the Shareholder fail to
cure the Default within ten (10) days of receipt of the Notice of y authorized
representative of Sento (the "Default Certificate"), which shall (i) include a
copy of the Notice of Default; (ii) certify that the Notice of Default was
delivered to the Shareholder at least ten (10) days prior to delivery of the
Default Certificate to the Escrow Agent; (iii) certify that Astron and the
Shareholder have failed to cure the Default within such ten (10) days; (iv)
certify that, in light of the foregoing, Sento is entitled to exercise its
right to have transferred to it all or a portion of the Escrowed Shares
pursuant to the terms of this Agreement; and (v) set forth the number of
Escrowed Shares to be transferred in accordance with the provisions of Section
6 below.
6. REMEDIES AND PROCEDURES.
(a) Upon delivery of the Default Certificate to the Escrow Agent,
Sento may require that all or a portion of the Escrowed Shares necessary
to satisfy the aggregate amount of all Claim(s) with respect to each
Default hereunder be transferred to Sento. In such event, the Escrow
Agent shall cause a certificate or certificates representing such Escrowed
Shares to be transferred into the name of Sento and delivered to Sento,
whereupon Sento shall have all of the rights, privileges and powers
appurtenant to and arising from ownership of such Escrowed Shares.
(b) Upon receipt of a Default Certificate, the Escrow Agent, without
independent verification, shall release and deliver to Sento the Escrow
Documents necessary to facilitate Sento's exercise of its remedies under
this Agreement, and shall execute and deliver all such instruments or
certificates and take all such actions as may be requested by Sento to
accomplish Sento's exercise of such remedies.
(c) For purposes of determining the number of Escrowed Shares to be
transferred to Sento pursuant to subsection (a) above, Sento shall divide
the aggregate amount of all Claim(s) described in the applicable Default
Certificate (expressed in dollars) by the closing sale price of the Common
Stock, as reported by the National Association of Securities Dealers or
such other established quotation service as Sento shall reasonably select,
as of the Closing Date.
(d) If any or all of the Escrowed Shares are transferred to Sento
pursuant to the provisions of this Section 6, the Shareholder shall pay
any and all costs and expenses reasonably incurred by the Escrow Agent in
connection with the delivery and transfer of the Escrowed Shares.
7. VOTING RIGHTS AND DIVIDENDS. During the period that any Escrowed
Shares are held by the Escrow Agent pursuant to the provisions hereof, the
Shareholder shall remain the record owner of such Escrowed Shares and shall
possess all voting rights with respect thereto. During such period, all cash
dividends declared with respect to such Escrowed Shares shall be paid or
distributed to the Shareholder. The number of Escrowed Shares held by the
Escrow Agent pursuant to the terms of this Agreement shall be adjusted
proportionately for any increase or decrease in the number of issued shares of
Common Stock resulting from a subdivision or consolidation of shares of Common
Stock or the payment of a stock dividend or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by Sento. Similarly, if Sento is the surviving corporation in
any merger or consolidation, the number of Escrowed Shares held by the Escrow
Agent pursuant to the terms of this Agreement shall be adjusted to reflect the
number of securities to which a holder of the number of Escrowed Shares would
have been entitled as a result of such merger or consolidation.
8. TERMINATION. This Agreement shall expire on the second anniversary
of the Closing Date, provided no uncured Default exists on the second
anniversary of the Closing Date and all Obligations arising during the period
between the Closing Date and the second anniversary of the Closing Date have
been performed or otherwise satisfied. If, on the first anniversary of the
Closing Date, all Obligations arising during the period between the Closing
Date and such first anniversary have been performed shall deliver to the
Shareholder the Escrow Documents relating to 18,000 Escrowed Shares, less the
total number of Escrowed Shares transferred to Sento, as of the first
anniversary of the Closing Date, pursuant to the provisions of Section 6 above.
If, on the second anniversary of the Closing Date, all Obligations arising
during the period between the Closing Date and such second anniversary have
been performed and all Defaults hereunder have been resolved, the Escrow Agent
shall deliver to the Shareholder any Escrow Documents then remaining in escrow.
Otherwise, this Agreement shall continue beyond the applicable expiration date
until all such Defaults have been resolved and all Obligations have been
performed or otherwise satisfied. Expiration of this Agreement and/or release
by the Escrow Agent of all or any part of the Escrowed Shares shall not
otherwise diminish or alter in any way the remaining duties and obligations of
Astron and the Shareholder under the Acquisition Agreement.
9. LIABILITY OF ESCROW AGENT. The following provisions shall control
with respect to the rights, duties, liabilities, privileges and immunities of
the Escrow Agent:
(a) The Escrow Agent shall not be responsible for the genuineness of
any certificate or signature and may rely conclusively upon and shall be
protected when acting upon any notice, affidavit, request, consent,
instruction, check or other instrument believed by it in good faith to be
genuine or to be signed or presented by the proper person, or duly
authorized, or properly made. The Escrow Agent shall have no
responsibility except for the performance of its express duties hereunder
and no additional duties shall be inferred herefrom or implied hereby.
(b) No amendment or modification of this Agreement or waiver of its
terms shall affect the rights and duties of the Escrow Agent unless its
written consent thereto has been obtained.
(c) The Escrow Agent shall not be responsible or liable for any act
or omission on its part in performing its duties as Escrow Agent under
this Agreement unless such act or omission constitutes bad faith, gross
negligence or fraud.
(d) The Escrow Agent shall not be required to institute or defend
any action involving matters referred to herein or which affect it or its
duties or liabilities hereunder unless or until requested to do so by any
party to this Agreement and then only upon receiving full indemnity, in
character satisfactory to the Escrow Agent, against all claims,
liabilities and expenses in relation thereto. In the event of any dispute
among the parties with respect to the Escrow Agent or its duties, (i) the
Escrow Agent may act or refrain from acting in respect of any matter
referred to herein in full reliance upon any by and with the advice of
counsel and shall be fully protected in so acting or in refraining from
acting upon the advice of such counsel, or (ii) the Escrow Agent may
refrain from acting until required to do so by an order of a court of
competent jurisdiction.
10. NOTICES. All notices and other communications given hereunder shall
be deemed to have been given or made when personally delivered or three (3)
days after being sent by registered or certified mail, return receipt
requested, postage prepaid, to the parties at the following addresses or at
such other addresses as the parties may hereafter designate in writing:
To Sento: Sento Technical Innovations Corporation
Attn: Robert K. Bench
311 North State Street
P.O. Box 1970
Orem, Utah 84059
To the Shareholder: Jay Barth
546 South 300 West
Orem, Utah 84058
To the Escrow Agent: Parr, Waddoups, Brown, Gee & Loveless
Attn: Brian G. Lloyd
185 South State Street, Suite 1300
Salt Lake City, Utah 84111
11. COSTS AND ATTORNEY'S FEES. In the event there is a breach of this
Agreement, the party in breach shall pay all costs, expenses and attorney's
fees incurred by the other party in enforcing its rights hereunder.
12. SEVERABILITY. In the event that any condition, covenant or other
provision contained herein is held by a court of competent jurisdiction to be
invalid or void, the same shall be deemed severable from the remainder of this
Agreement and shall in no way affect any other covenant, condition or provision
contained herein. If such condition, covenant or other provision shall be
deemed invalid due to its scope or breadth, such shall be deemed valid to the
extent of the scope or breadth permitted by law.
13. ENTIRE AGREEMENT. This Agreement and the Acquisition Agreement
constitute the entire agreement among the parties pertaining to the Escrowed
Shares, and supersede all prior agreements and understandings pertaining
thereto; provided, however, that nothing herein shall in any way limit the
Acquisition Agreement or any agreement or transaction described therein.
14. WAIVER. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach hereof shall
constitute a waiver of any such breach or of such or any other covenant,
agreement, term or condition.
15. APPLICABLE LAW. This Agreement shall be govery and shall in no way
affect the manner in which any provision hereof is construed. Whenever the
context requires, the singular shall include the plural, the plural shall
include the singular, the whole shall include any part thereof, and any gender
shall include both genders.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
"SENTO"
SENTO TECHNICAL INNOVATIONS CORPORATION,
a Utah corporation
By: \S\ Robert K. Bench
Its: Chief Financial Officer
"SHAREHOLDER"
\S\ Jay Barth
Jay Barth, an individual
"ESCROW AGENT"
PARR, WADDOUPS, BROWN, GEE & LOVELESS,
a Utah professional corporation
By: \S\ Brian G. Lloyd
Its: Escrow Agent
ARTICLES OF MERGER
OF
SENTO ACQUISITION, INC.
(A Utah Corporation)
WITH AND INTO
ASTRON INCORPORATED
(A Utah Corporation)
THESE ARTICLES OF MERGER (these "Articles of Merger") are executed and
entered into as of this 31st day of December, 1997, by and between Astron
Incorporated, a Utah corporation (hereinafter referred to as "Astron" or the
"Surviving Corporation") and Sento Acquisition, Inc., a Utah corporation
(hereinafter referred to as "Sento Acquisition").
WITNESSETH:
I. PLAN OF MERGER
Pursuant to these Articles of Merger, it is intended and agreed that Sento
Acquisition will be merged with and into Astron and that Astron shall be the
Surviving Corporation with the name of Astron Incorporated, as provided below
(the "Merger"). The terms, conditions, and understandings of the Merger are
set forth in the Plan of Merger between Sento Technical Innovations
Corporation, a Utah corporation, Astron and Sento Acquisition dated as of
December 31, 1997, a copy of which is attached hereto as Exhibit A and
incorporated herein by this reference (the "Plan of Merger").
II. ARTICLES OF INCORPORATION AND BYLAWS
On the Effective Date, the articles of incorporation and bylaws of Sento
Acquisition shall be the articles of incorporation and bylaws of the Surviving
Corporation.
III. NAME OF SURVIVING CORPORATION
The name of the Surviving Corporation, which will continue in existence
after the merger, shall remain Astron Incorporated.
IV. AUTHORIZED AND OUTSTANDING SHARES OF SENTO ACQUISITION
Sento Acquisition is authorized to issue 1,000 shares of common stock, no
par value, of which 1,000 shares are issued and outstanding as of the date
hereof.
V. AUTHORIZED AND OUTSTANDING SHARES OF ASTRON
Astron is authorized to issue 100,000 shares of voting common stock, no
par value, of which 50,000 shares are issued and outstanding as of the date
hereof.
VI. APPROVAL BY SHAREHOLDER OF SENTO ACQUISITION
All of the 1,000 shares of voting common stock of Sento Acquisition issued
and outstanding were voted in favor of entering into the Plan of Merger in
accordance with the provisions of the Utah Revised Business Corporations Act.
Such shares were voted as a class; no shares of any other class of stock were
issued and outstanding and entitled to vote thereon.
VII. APPROVAL BY SHAREHOLDER OF ASTRON
All of the 50,000 shares of voting common stock of Astron issued and
outstanding were voted in favor of entering into the Plan of Merger, all in
accordance with the provisions of the Utah Revised Business Corporations Act.
Such shares were voted as a class; no shares of any other class of stock were
issued or entitled to vote thereon.
VIII. EFFECTIVE DATE OF MERGER
The merger shall be effective upon the Effective Date (as defined in the
Plan of Merger).
IN WITNESS WHEREOF, the undersigned corporations, acting by their
respective officers have executed these Articles of Merger as of the date first
above written.
ASTRON INCORPORATED,
a Utah corporation
By: \S\ Robert K. Bench
Name: Robert K. Bench
Title: Chief Financial Officer
SENTO ACQUISITION, INC.,
a Utah corporation
By: \S\ Jay Barth
Name: Jay Barth
Title: President
PLAN OF MERGER
THIS PLAN OF MERGER (this "Plan") dated as of the 31st day of December,
1997, is entered into by and among Sento Technical Innovations Corporation, a
Utah corporation ("Sento"), Astron Incorporated, a Utah corporation ("Astron"),
and Sento Acquisition, Inc., a Utah corporation, which is a wholly-owned
subsidiary of Sento ("Sento Acquisition"). (Astron and Sento Acquisition are
sometimes referred to hereinafter, collectively, as the "Constituent
Corporations.")
Recitals
WHEREAS, Sento Acquisition is a corporation duly organized and existing
under the laws of the State of Utah, having an authorized capital of 1,000
shares of common stock, no par value per share (the "Common Stock of Sento
Acquisition"), of which 1,000 shares are issued and outstanding as of the date
hereof; and
WHEREAS, Astron is a corporation duly organized and existing under the
laws of the State of Utah, having an authorized capital of 100,000 shares of
voting common stock, no par value (the "Common Stock of Astron"), of which
50,000 shares are issued and outstanding as of the date hereof; and
WHEREAS, Astron, Astron's sole shareholder (the "Astron Shareholder"),
Sento Acquisition and Sento have entered into an Acquisition Agreement, dated
as of November 19, 1997, as amended by that certain Amendment to Acquisition
Agreement, dated as of December 31, 1997, among Astron, the Astron Shareholder,
Sento Acquisition and Sento (the "Acquisition Agreement") setting forth certain
representations, warranties, covenants, agreements and conditions in connection
with the proposed merger of Sento Acquisition with and into Astron, with Astron
as the Surviving Corporation, all as authorized by the statutes of the State of
Utah (the "Merger"); and
WHEREAS, the respective boards of directors of Sento and the Constituent
Corporations have each duly approved this Plan providing for the Merger on the
terms and subject to the conditions set forth herein; and
WHEREAS, Sento owns all the issued and outstanding voting stock of Sento
Acquisition;
Agreement
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and for the purpose of setting forth the terms
and conditions of the Merger and the manner and basis of causing the shares of
Astron to be converted into shares of Sento common stock, par value $.25 per
share (the "Shares"), and such other provisions as are deemed necessary or
desirable, the parties hereto have agreed and do hereby agree, subject to the
approval and adoption of this Plan by the requisite vote of the stockholders of
each Constituent Corporation, and subject to the conditions hereinafter set
forth, as follows:
Article I
Merger and Name of Surviving Corporation
On the Effective Date (as defined below), Astron and Sento Acquisition
shall cease to exist separately and Sento Acquisition shall be merged with and
into Astron, which is hereby designated as the "Surviving Corporation," the
name of which on and after the Effective Date shall remain "Astron
Incorporated."
Article II
Terms and Conditions of Merger
The terms and conditions of the Merger (in addition to those set forth
elsewhere in this Plan) are as follows:
(a) On the Effective Date:
(1) Sento Acquisition shall be merged into Astron to form a
single corporation, and Astron shall be designated as the
Surviving Corporation.
(2) The separate existence of Sento Acquisition shall cease.
(3) The Surviving Corporation shall have all the rights,
privileges, immunities, and powers and shall be subject to
all duties and liabilities of a corporation incorporated
under the laws of the State of Utah.
(4) The Surviving Corporation shall thereupon and thereafter
possess all the rights, privileges, immunities, and
franchises, of a public as well as of a private nature, of
each of the Constituent Corporations; all property, real,
personal, and mixed, and all debts due of whatever account,
including subscriptions to shares, and all other choses in
action, and all and every other interest, of or belonging
to or due to each of the Constituent Corporations, shall be
taken and deemed to be transferred to and vested in the
Surviving Corporation without further act or deed; the
title to any real estate, or any interest therein, vested
in either Constituent Corporation shall not revert or be in
any way impaired by reason of the Merger; the Surviving
Corporation shall thenceforth be responsible and liable for
all the liabilities and obligations of each of the
Constituent Corporations; any claim existing or action or
proceeding pending by or against either of such Constituent
Corporations may be prosecuted as if the Merger had not
taken place, or the Surviving Corporation may be
substituted in place of the Constituent Corporations; and
neither the rights of creditors nor any liens on the
property of either of the Constituent Corporations shall be
impaired by the Merger.
(b) On the Effective Date, the board of directors of the Surviving
Corporation shall consist of the members of the board of
directors of Sento Acquisition immediately prior to the Merger,
to serve thereafter in accordance with the Bylaws of the
Surviving Corporation and until their respective successors
shall have been duly elected and qualified in accordance with
such Bylaws and the laws of the State of Utah.
(c) On the Effective Date, the officers of the Surviving Corporation
shall be the officers of Sento Acquisition immediately prior to
the Merger, with such officers to serve thereafter in accordance
with the Bylaws of the Surviving Corporation and until their
respective successors shall have been duly elected and qualified
in accordance with such Bylaws and the laws of the State of
Utah.
Article III
Manner and Basis of Converting Shares
The manner and basis of converting shares of the common stock of the
Constituent Corporations and the mode of carrying the Merger into effect are as
follows:
(a) Each share of Common Stock of Astron outstanding on the
Effective Date shall, without any action on the part of the
holder thereof, be converted into the right to receive Three and
60/100 (3.60) Shares which shall, on such conversion, be validly
issued and outstanding, fully paid and nonassessable, and shall
not be liable to any further call, nor shall the holder thereof
be liable for any further payments with respect thereto. After
the Effective Date, each holder of an outstanding certificate
which prior thereto represented shares of Common Stock of Astron
shall be entitled, on surrender thereof to Sento, to receive in
exchange therefor a certificate or certificates representing the
number of whole Shares into which the shares of Common Stock of
Astron so surrendered shall be converted as aforesaid. Until so
surrendered, each such outstanding certificate (which prior to
the Effective Date represented shares of Common Stock of Astron)
shall for all purposes evidence the ownership of the Shares into
which such shares of Common Stock of Sento shall have been
converted; PROVIDED, that dividends or other distributions which
are payable in respect of Shares into which shares of Common
Stock of Astron shall have been converted shall be set aside by
Sento and shall not be paid to any holder of certificates
representing such shares of Common Stock of Astron until such
certificates shall have been surrendered in exchange for
certificates representing the Shares. On such surrender, each
holder that so surrenders such shares of Astron Common Stock
shall be entitled to receive such dividends or other
distributions without interest. Sento shall not issue any
fractional interest in any Shares in connection with the
aforesaid conversion, and the aggregate number of Shares that
each holder of shares of Common Stock of Astron shall be
entitled to receive shall be rounded to the nearest whole number
in the event of fractions (with 0.5 being rounded up); PROVIDED,
FURTHER, that the number of Shares which the Astron Shareholder
shall be required to deposit with Parr, Waddoups, Brown, Gee &
Loveless, as escrow agent (the "Escrow Agent") pursuant to that
certain Escrow Agreement, dated December 31, 1997, among the Astron
Shareholder, Sento and the Escrow Agent (the "Escrow Agreement")
shall be withheld by Sento and issued to the Escrow Agent, to be
later released to the Astron Shareholder pursuant to and in
accordance with the Escrow Agreement and to the extent such
Shares have not been made subject to claims of Sento against the
Company and/or the Astron Shareholder pursuant to and in
accordance with the Acquisition Agreement and the Escrow
Agreement.
(b) All Shares into which shares of the Common Stock of Astron shall
have been converted pursuant to this Article III shall be issued
in full satisfaction of all rights pertaining to the shares of
Common Stock of Astron, as applicable, and all shares of Common
Stock of Astron shall be canceled.
(c) If any certificate for Shares is to be reissued in a name other
than that in which the certificate surrendered in exchange
therefor is registered, it shall be a condition of the issuance
thereof that the certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer and that the
transfer be in compliance with applicable federal and state
securities laws.
(d) On the Effective Date, the issued and outstanding shares of
Common Stock of Sento Acquisition shall automatically be
converted into 1,000 shares of the Surviving Corporation's
common stock, no par value.
Article IV
Certificate of Incorporation and Bylaws
1. The Articles of Incorporation of Sento Acquisition shall, on the
Effective Date, be and constitute the Articles of Incorporation of the
Surviving Corporation until amended in the manner provided by law.
1. The Bylaws of Sento Acquisition shall, on the Effective Date, be and
constitute the Bylaws of the Surviving Corporation until amended in the manner
provided by law.
Article V
Shareholder Approval
This Plan shall be submitted to the stockholders of each of the
Constituent Corporations as provided by the laws of the State of Utah. After
the approval or adoption thereof by the stockholders of each Constituent
Corporation in accordance with the requirements of the applicable laws, all
required documents shall be executed, filed, and recorded, and all required
acts shall be done in order to accomplish the Merger under the provisions of
the laws of the State of Utah, subject to the terms of the Acquisition
Agreement.
Article VI
Approval and Effective Date of the Merger;
Miscellaneous Matters
1. The Merger shall become effective when all the following actions
shall have been taken:
(a) This Plan shall be authorized, adopted, and approved by and on
behalf of each Constituent Corporation in accordance with the
laws of the State of Utah; and
(b) This Plan, or Articles of Merger in the form required, executed
and verified in accordance with the laws of the State of Utah,
shall be filed with the Utah Department of Commerce, Division of
Corporations and Commercial Code.
The date on which such actions are completed and the Merger is effected is
herein referred to as the "Effective Date."
1. If at any time the Surviving Corporation shall deem or be advised
that any further grants, assignments, confirmations, or assurances are
necessary or desirable to vest, perfect, or confirm title in the Surviving
Corporation, of record or otherwise, to any property of Sento Acquisition
acquired or to be acquired by, or as a result of, the Merger, the officers and
directors of Sento Acquisition or any of them shall be severally and fully
authorized to execute and deliver any and all such deeds, assignments,
confirmations, and assurances and to do all things necessary or proper so as to
best prove, confirm, and ratify title to such property in the Surviving
Corporation and otherwise carry out the purposes of the Merger and the terms of
this Plan.
1. For the convenience of the parties and to facilitate the filing and
recording of this Plan, any number of counterparts hereof may be executed, each
such counterpart shall be deemed to be an original instrument, and all such
counterparts together shall be considered one instrument.
1. This Plan shall be governed by and construed in accordance with the
laws of the State of Utah.
1. This Plan cannot be altered or amended, except pursuant to an
instrument in writing signed on behalf of the parties hereto.
The foregoing Plan of Merger, having been approved by the board of
directors of Sento and each Constituent Corporation, and having been adopted
separately by the stockholders of each Constituent Corporation thereto in
accordance with the laws of the State of Utah, an authorized officer of each of
Sento, Astron and Sento Acquisition do hereby execute this Plan of Merger as of
the date first above written, declaring and certifying that this is our act and
deed and the facts herein stated are true.
SENTO TECHNICAL INNOVATIONS CORPORATION, a Utah
corporation
By: \S\ Robert K. Bench
Name: Robert K. Bench
Title: Chief Financial Officer
ASTRON INCORPORATED,
a Utah corporation
By: \S\ Jay Barth
Name: Jay Barth
Title: President
SENTO ACQUISITION, INC.,
a Utah corporation
By: \S\ Robert K. Bench
Name: Robert K. Bench
Title: Chief Financial Officer
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into effective as
of the 31st day of December, 1997 by and between SENTO TECHNICAL INNOVATIONS
CORPORATION, a Utah corporation (the "Company"), and Jay Barth, an individual
(the "Employee").
R E C I T A L S
WHEREAS, the Company is engaged in the business of hardware and software
distribution, service, training and support; and
WHEREAS, contemporaneously with the execution of this Agreement, the
Company and the Employee, among others, have entered into an Acquisition
Agreement dated November 19, 1997, as amended by an Amendment to Acquisition
Agreement dated December 31, 1997 (as amended, the "Acquisition Agreement"),
pursuant to which Astron Incorporated, a Utah corporation ("Astron"), will
merge with Sento Acquisition, Inc. and pursuant to which Astron will become a
wholly-owned subsidiary of Sento; and
WHEREAS, the Employee is the founder of, and has served as the President
of, Astron; and
WHEREAS, in connection with the consummation of the transactions described
in the Acquisition Agreement, the Company desires to retain and employ the
Employee as an employee of Spire Technologies, Inc., a wholly-owned subsidiary
of the Company ("Spire"), and the Employee desires to accept such employment,
on the terms and conditions of this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of Spire employing the Employee, of the
mutual promises and covenants set forth herein, and for other good and valuable
consideration, the receipt, adequacy and legal sufficiency of which are hereby
acknowledged, the Company and the Employee mutually agree as follows:
1. EMPLOYMENT, DUTIES AND ACCEPTANCE.
1.1 EMPLOYMENT BY SPIRE. The Company hereby agrees to employ the
Employee during the Term (as hereinafter defined) as a full-time employee of
Spire, in the position of Director of Training & Education, to render such
services and to perform such duties as required by the Bylaws of Spire and as
the Board of Directors of Spire (the "Board of Directors") shall reasonably
request.
1.2 ACCEPTANCE OF EMPLOYMENT BY THE EMPLOYEE. The Employee hereby
accepts such employment and shall render the services required by the Bylaws of
Spire and as requested by Spire's Board of Directors. If appointed or elected,
as applicable, the Employee also shall serve during all or any part of the Term
as any other officer and/or as a director of Spire or any of its affiliates
without any additional compensation therefor other than that specified in this
Agreement.
1.3 TERMINATION OF EXISTING CONTRACTS. The Employee hereby agrees
that all agreements and contracts, whether written or oral, relating to the
current employment of the Employee by Astron, or any of its affiliates, will be
terminated as of the commencement of the Term (as defined in Section 2 below).
2. TERM OF EMPLOYMENT. The term of the Employee's employment under this
Agreement (the "Term") shall commence on the first day of January, 1998 (the
"Commencement Date") and shall continue through and expire on the first
anniversary thereof (the "First Anniversary"), unless earlier terminated as
herein provided. Upon the First Anniversary and each subsequent anniversary
thereof, the Term shall be automatically renewed for an additional period of
one (1) year, except that the Term may be terminated by either the Employee or
the Company at any time and for any reason or no reason following the First
Anniversary upon thirty (30) days written notice.
3. COMPENSATION AND OTHER BENEFITS.
3.1 COMPENSATION.
3.1.1 ANNUAL SALARY. As compensation for services to be
rendered pursuant to this Agreement, the Company shall cause Spire to pay the
Employee, during the Term, a salary of One Hundred Thousand and No/100 Dollars
($100,000) per annum (the "Annual Salary"), subject to such increases as the
Board of Directors may, in its discretion, approve.
3.1.2 SIGNING BONUS. Upon execution hereof, subject to the
terms and conditions set forth in this Agreement, the Company shall pay to the
Employee Seventy Thousand and No/100 Dollars ($70,000) in cash and issue to the
Employee Forty Thousand (40,000) shares of the common stock, par value $.25, of
the Company (the "Shares" and collectively with such cash, the "Signing
Bonus"); provided, however, that if the Employee resigns or is terminated for
Cause (as defined below) prior to the first anniversary of the Commencement
Date, then the Employee shall refund to the Company the full amount of the
Signing Bonus and for purposes of Section 6.2 hereof the Signing Bonus shall be
deemed not to be accrued as of the effective date specified in the termination
notice contemplated by such Section 6.2.
The Employee shall also be eligible, during the Term, to receive such other
compensation, whether in the form of cash bonuses, stock options, stock
appreciation rights, restricted stock awards or otherwise, (collectively, with
the Signing Bonus, the "Additional Compensation"), as the Boards of Directors
of the Company and/or Spire (or any committee thereof) may, at their
discretion, approve. The Annual Salary and the Additional Compensation shall
be payable in accordance with the applicable payroll and/or other compensation
policies and plans of the Company or Spire, as applicable, as from time to time
in effect, less such deductions as shall be required to be withheld by
applicable law and regulations. In consideration of the Employee agreeing to
the terms of Article 4 hereof, the parties agree that the Employee shall be
entitled to receive his full Annual Salary for the remainder of the Term if,
during the Term, his employment with Spire is terminated by Spire or the
Company other than pursuant to Article 6 hereof; provided, however, that if
the Employee's employment with Spire is terminated by the Employee or for any
reason beyond the control of Spire or the Company, neither the Company nor
Spire shall have any obligation to pay to the Employee any compensation or other
remuneration for any period subsequent to the date of such termination.
3.2 MID-TERM TERMINATION. If (i) the Employee's employment with
Spire is terminated by Spire prior to the first anniversary of the Commencement
date, other than pursuant to Section 6.2 hereof, (ii) the Employee is not in
breach of any of the representations, warranties, covenants or obligations set
forth in Articles 4 and 5 hereof, and (iii) the termination of the Employee's
employment occurs other than at the conclusion of a calendar year during the
Term, Spire shall pay to the Employee, within sixty (60) days from the
Employee's termination date, a portion of the Additional Compensation as
determined by the Board of Directors in its discretion. Except as set forth in
this Section 3.2, upon the termination of the Employee's employment prior to
the completion of any calendar year during the Term, the Employee shall not be
entitled to any portion of the Additional Compensation for such year.
3.3 PARTICIPATION IN EMPLOYEE BENEFIT PLANS. The Employee shall be
permitted, during the Term, if and to the extent eligible, to participate in
any group life, hospitalization or disability insurance plan, health program,
pension plan, similar benefit plan or other "fringe benefits" of Spire which
may be available to all other employees of Spire generally on the same terms as
such other employees.
3.4 EXECUTIVE SUPPORT. Spire shall provide to the Employee office
facilities, furniture, fixtures and equipment, secretarial and support
personnel and other executive support services as reasonably necessary for the
Employee to perform his obligations under this Agreement.
3.5 REIMBURSEMENT OF BUSINESS EXPENSES. The Employee may incur
reasonable, ordinary and necessary business expenses in the course of
performing his obligations under this Agreement, including expenses for travel,
food, lodging and entertainment. Spire shall reimburse the Employee for all
such business expenses if (i) such expenses are incurred by the Employee in
accordance with Spire's business expense reimbursement policy, if any, as may
be established and modified by Spire from time to time and (ii) the Employee
provides to Spire a record of (A) the amount of the expense, (B) the date,
place and nature of the expense, (C) the business reason for the expense and
(D) the names, occupations and other data concerning individuals entertained
sufficient to establish their business relationship to Spire. Spire shall have
no obligation to reimburse the Employee for expenses that are not incurred and
substantiated as required pursuant to this Section 3.5.
3.6 RESTRICTIONS ON TRANSFER. The Shares will not be registered
under the Securities Act of 1933, as amended (the "Securities Act"), and may
not be sold, transferred, or otherwise disposed of for value unless they are
subsequently registered under the Securities Act or an exemptioned to and
reasonably satisfactory to the Company. The certificates, if any, evidencing
the Shares shall be stamped or otherwise imprinted with a legend substantially
in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND ARE "RESTRICTED SECURITIES" WITHIN THE
MEANING OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT ( RULE
144"). THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLYING WITH RULE 144
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR OTHER
COMPLIANCE UNDER THE SECURITIES ACT. THE SECURITIES ARE SUBJECT
TO ADDITIONAL RESTRICTIONS AS SET FORTH IN THAT CERTAIN
EMPLOYMENT AGREEMENT, DATED DECEMBER 31, 1997, BETWEEN SENTO
TECHNICAL INNOVATIONS CORPORATION, A UTAH CORPORATION AND JAY
BARTH.
Nothing herein shall create any obligation on the part of the Company, Spire or
any of their respective directors, officers or employees to cause the Shares to
be registered under the Securities Act.
4. NON-COMPETITION.
4.1 COVENANTS AGAINST COMPETITION. The Employee acknowledges that
(i) the Company, which for purposes of this Article 4 includes all of the
Company's subsidiaries, including, without limitation, Spire and Astron, and
all of the Company's present and future subsidiaries and affiliates, including
such subsidiaries and affiliates as may be formed or incorporated during the
Restricted Period (as defined in Section 4.1.1), is engaged in the business
described in the Recitals set forth on the first page hereof (the "Business");
(ii) the Employee is one of a limited number of persons who has performed a
significant role in developing the business and operations of Astron; (iii)
the Business is conducted throughout the United States and internationally;
(iv) the Employee's work for Astron has given him, and his work for Spire and
the Company will continue to give him, trade secrets of and confidential
information concerning the Company; (v) the agreements and covenants contained
in this Article 4 are essential to protect the Business and the goodwill of the
Company; and (vi) the Employee has means to support himself and his dependents
other than by engaging in the Business and the provisions of this Article 4
will not impair such ability. Accordingly, the Employee covenants and agrees
as follows:
4.1.1 NON-COMPETE. For a period commencing on the
Commencement Date hereof and terminating on the second anniversary of the
termination of this Agreement (the "Restricted Period"), the Employee shall
not, within the United States or any other place where the Company conducts the
Business, directly or indirectly, (i) engage in the Business or any aspect of
the Business for the Employee's own account in competition with the Company;
(ii) enter the employ of, or render any services to, any person engaged in
competition with the Company; or (iii) become interested in any such person in
any capacity, including, without limitation, as an individual, partner, member,
manager, shareholder, officer, director, principal, agent or trustee; provided,
however, that the Employee may own, directly or indirectly, solely as an
investment, securities of any person traded on any national securities exchange
or over-the-counter market if the Employee is not an affiliate (as defined in
the Securities Act) of such person and does not, directly or indirectly, own
five percent or more of any class of securities of such person.
4.1.2 CONFIDENTIAL INFORMATION; PERSONAL RELATIONSHIPS.
During the Restricted Period and thereafter, the Employee shall keep secret and
retain in strict confidence, and shall not use for the benefit of himself or
others, all confidential matters of the Company including, without limitation,
"know-how," trade secrets, customer lists, details of client or consultant
contracts, pricing policies, operational methods, marketing plans or
strategies, product development techniques or plans, business acquisition
plans, new personnel acquisition plans, methods of production and distribution,
technical processes, designs and design projects, inventions and research
projects of the Company learned by the Employee heretofore or during the
Restricted Period; nor may the Employee exploit for his own benefit, or the
benefit of others, personal relationships with customers, suppliers or agents
of the Company in connection with or adversely affecting the Business formed
heretofore or during the Restricted Period.
4.1.3 PROPERTY OF THE COMPANY. All memoranda, notes, lists,
records and other documents or papers (and all copies thereof), including such
items stored in computer memories, on microfiche or by any other means, made or
compiled by or on behalf of the Employee, or made available to the Employee
relating to the Company, other than purely personal matters, are and shall be
the property of the Company, and shall be delivered to the Company promptly
upon the termination of the Employee's employment (whether such termination is
for Cause or otherwise) or at any other time on request of the Company.
4.1.4 EMPLOYEES OF COMPANY. During the Restricted Period
and thereafter for as long as the Employee shall remain an employee of or
consultant to the Company, Employee shall not, directly or indirectly, hire or
solicit any employee of the Company away from the Company or encourage any such
employee to leave such employment.
4.1.5 CONSULTANTS OF THE COMPANY. During the Restricted
Period and thereafter for as long as the Employee shall remain an employee of
or consultant to the Company, the Employee shall not, directly or indirectly,
hire or solicit any consultant then under contract with the Company or
encourage such consultant to terminate such relationship.
4.2 RIGHTS AND REMEDIES UPON BREACH. If the Employee breaches, or
threatens to commit a breach of, any of the provisions of Section 4.1 (the
"Restrictive Covenants"), the Company shall have the following rights and
remedies, each of which rights and remedies shall be independent of the others
and severally enforceable, and each of which is in addition to, and not in lieu
of, any other rights and remedies available to the Company under law or in
equity:
4.2.1 SPECIFIC PERFORMANCE. The right and remedy to have
the Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company.
4.2.2 ACCOUNTING. The right and remedy to require the
Employee to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or other benefits derived or received by the
Employee as the result of any transactions constituting a breach of the
Restrictive Covenants.
4.3 SEVERABILITY OF COVENANTS. The Employee acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in geographical and
temporal scope and in all other respects. If any court determines that any of
the Restrictive Covenants, or any part thereof, is invalid or unenforceable,
the remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect, without regard to the invalid portions.
4.4 BLUE-PENCILING. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographic scope of such provision, such court shall have the power
to reduce the duration or scope of such provision, as the case may be, and, in
its reduced form, such provision shall then be enforceable.
4.5 ENFORCEABILITY in Jurisdictions. The Company and the Employee
intend to and hereby confer jurisdiction to enforce the Restrictive Covenants
upon the courts of any jurisdiction within the geographical scope of the
Restrictive Covenants. If the courts of any one or more of such jurisdictions
hold the Restrictive Covenants unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the Company and the Employee that
such determination not bar or in any way affect the Company's right to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of the Restrictive Covenants, as to breaches of such
covenants in such other respective jurisdictions, such covenants as they relate
to each jurisdiction being, for this purpose, severable into diverse and
independent covenants.
5. REPRESENTATIONS AND WARRANTIES. In order to induce the Company to
enter into this Agreement and perform the Company's obligations contemplated
hereby, including, without limitation, the Company's obligation to issue the
Shares to the Employee pursuant to Section 3.1.2, the Employee hereby
acknowledges, represents, warrants and agrees that:
5.1 The Company has previously made available for inspection by the
Employee financial statements and other financial, corporate and business
information and records with respect to the Company.
5.2 The Employee may have to bear the economic risk of any
investment related to the Shares for an indefinite period of time.
5.3 No representations, promises or agreements have been made
concerning the marketability or value of the Shares or that any of the Shares
will be registered under the Securities Act or any state securities or blue sky
laws at any time in the future or will otherwise be qualified for sale under
the applicable securities laws.
5.4 No representations, warranties, promises or agreements have been
made to the Employee with respect to any of the following:
5.4.1 The approximate or exact length of time the Employee
will be required to remain an owner of the Shares;
5.4.2 The percentage of profit and/or the amount or type of
consideration (including dividends), profit or loss (including tax write-offs
and/or tax benefits) to be realized, if any, as a result of an investment in
the Shares; and/or
5.4.3 That the past performance or experience of the Company
will in any way indicate the results of future operations of the Company, the
results of the ownership of the Shares, or the likelihood of achievement of the
overall objectives of the Company.
5.5 The Employee is able to bear the substantial economic risks of
an investment in the Company, including but not limited to the possibility of
the complete loss of the Employee's investment in the Shares, the lack of a
public market, and the limited transferability of the Shares which may make the
liquidation of this investment impossible for the indefinite future. The
Employee has no need for liquidity in such investment, and could afford a
complete loss of such investment. The Employee has reached the age of majority
and has adequate means of providing for the Employee's current needs and
personal contingencies.
5.6 The Employee is an "accredited investor" as that term is defined
in Regulation D promulgated under the Securities Act. The Employee is familiar
with such Regulation D and the terms and conditions thereof.
5.7 The Employee has such knowledge and experience in financial and
business matters that the Employee is capable of evaluating the merits and
risks of the investment in the Company and of protecting his own interests.
5.8 The Shares will be acquired for the Employee's own account for
investment and not with a view toward resale or distribution thereof, and the
Employee does not now have any reason to anticipate any change in the
Employee's circumstances or other particular occasion or event which would
cause the Employee to sell any of the Shares or any interest therein.
5.9 The Employee has received and reviewed all business, corporate
and financial documents and records concerning the Company that the Employee
wishes to receive and review.
5.10 The Employee has been given an opportunity to discuss the
history, business, corporate matters and prospects of the Company and the
management thereof with the officers and directors of the Company. The
Employee is fully informed with respect to the merits and risks associated
with the Shares and with the history, management business, prospects and
corporate matters of the Company.
5.11 Neither the Employee's execution and delivery of this Agreement
nor the performance of his obligations hereunder will (i) violate any
restriction of any government, governmental agency or court to which the
Employee is subject, (ii) conflict with, result in a breach of, constitute a
default under or require any notice under any agreement, arrangement or
contract to which Employee is a party or by which the Employee is bound or
(iii) be limited or restricted by any such agreement, arrangement or contract.
5.12 All representations and warranties set forth above or in any
other written statement or document delivered by the Employee in connection
with the transactions contemplated hereby will be true and correct in all
respects on and as of the date of the sale of any of the Shares as if made on
and as of such date and will survive such sale and/or exercise.
5.13 The Employee understands the meaning and legal consequences of
the representations and warranties contained in this Agreement and agrees to
indemnify and hold harmless the Company and its directors, officers, agents and
representatives from and against any and all loss, damage or liability due to
or arising out of a breach of or the inaccuracy of any representation or
warranty of the Employee in this Agreement. Notwithstanding any of the
representations, warranties, acknowledgments or arrangements made herein by the
Employee, the Employee does not hereby or in any manner waive any right granted
to the Employee under federal or state securities laws.
6. TERMINATION.
6.1 TERMINATION UPON DEATH. If the Employee dies during the Term,
this Agreement shall terminate, except that the Employee's legal
representatives, successors, heirs or assigns shall be entitled to receive the
Annual Salary, the Additional Compensation and other accrued benefits, if any,
earned up to the date of the Employee's death; provided, however, if any
Additional Compensation or other benefits are governed by the provisions of any
written employee benefit plan or policy of the Company or any of its
subsidiaries, any written agreement contemplated thereunder or any other
separate written agreement entered into between the Employee and the Company or
any of its subsidiaries, the terms and conditions of such plan, policy or
agreement shall control in the event of any discrepancy or conflict with the
provisions of this Agreement regarding such Additional Compensation or other
benefit upon the death, termination or disability of the Employee pursuant to
Article 6 hereof.
6.2 TERMINATION FOR CAUSE. The Company or Spire has the right, at
any time during the Term, subject to all of the provisions hereof, exercisable
by serving notice, effective in accordance with its terms, to terminate the
Employee's employment under this Agreement and discharge the Employee for
"Cause" (as hereinafter defined). If such right is exercised, the total
obligation of the Company and Spire to the Employee shall be limited to the
payment of any unpaid Annual Salary, Additional Compensation (subject to the
provisions of Section 3.1.2 hereof) and other benefits, if any, accrued up to
the effective date (which shall not be retroactive) specified in the notice of
termination delivered by the Company or Spire. As used in this Section 6.2,
the term "Cause" shall mean and include (i) a material breach by the Employee
of the terms of this Agreement, (ii) wrongful misappropriation of any money or
other assets or properties of the Company or any subsidiary or affiliate of the
Company, (iii) the conviction of the Employee for any felony or other serious
crime, (iv) chronic alcoholism or drug addiction, or (v) the Employee's gross
moral turpitude relevant to his office or employment with the Company or any
subsidiary or affiliate of the Company.
6.3 SUSPENSION UPON DISABILITY. If during the Term the Employee
becomes physically or mentally disabled, whether totally or partially, as
evidenced by the written statement of two competent physicians licensed to
practice medicine in the United States, so that the Employee is unable to
substantially perform his services hereunder for (i) a period of six
consecutive months, or (ii) for shorter periods aggregating six months during
any twelve-month period, Spire may at any time after the last day of the six
consecutive months of disability or the day on which the shorter periods of
disability equal an aggregate of six months, by written notice to the Employee,
suspend the Term of the Employee's employment hereunder and discontinue
payments of the Annual Salary, Additional Compensation and other benefits. If
at any time the Employee shall no longer be disabled, as evidenced by the
written statement of a competent physician licensed to practice medicine in the
United Sates, Spire may at its election fully reinstate, and if such disability
was for a period of not more than twelve consecutive months Spire shall fully
reinstate the employment of the Employee pursuant to this Agreement and shall
commence payment of the Annual Salary and all of the terms of this Agreement
shall resume in full force for the balance of the Term. Nothing in this
Section 6.3 shall be deemed to extend the Term.
7. INSURANCE. The Company or Spire may, from time to time, apply for
and take out, in its own name and at its own expense, naming itself or others
as the designated beneficiary (which it may change from time to time), policies
for health, accident, disability or other insurance upon the Employee in any
amount or amounts that it may deem necessary or appropriate to protect its
interest. The Employee agrees to aid the Company an/or Spire in procuring such
insurance by submitting to reasonable medical examinations and by filling out,
executing and delivering such applications and other instruments in writing as
may reasonably be required by an insurance company or companies to which any
application or applications for insurance may be made by or for the Company or
Spire.
8. OTHER PROVISIONS.
8.1 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, five days after the date of deposit in the United
States mail, as follows:
(i) if to the Company or Spire, to:
Sento Technical Innovations, Inc.
Attn: Robert K. Bench
311 North State Street
P.O. Box 1970
Orem, Utah 84059
(ii) if to the Employee, to:
Jay Barth
546 South 300 West
Orem, Utah 84058
Any party may change its address for notice hereunder by notice to
the other parties hereto.
8.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect thereto;
provided, however, that nothing herein shall in any way limit the obligation,
rights or liabilities of the parties under any written stock option agreement
separately entered into by the parties.
8.3 WAIVERS AND AMENDMENTS. This Agreement may be amended,
modified, superseded, cancelled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any
party of any right, power or privilege hereunder, nor any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder.
8.4 GOVERNING LAW; VENUE. This Agreement, except as set forth in
Section 4.5 hereof, shall be governed by, and construed in accordance with, the
laws of the State of Utah, without reference to principles governing choice or
conflicts of law.
8.5 ASSIGNMENT. This Agreement, and any rights and obligations
hereunder, may not be assigned by any party hereto without the prior written
consent of the other party, except that the Company may assign this Agreement
to any of its subsidiaries or affiliates, in its discretion.
8.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.7 HEADINGS. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
SENTO TECHNICAL INNOVATIONS CORPORATION,
a Utah corporation
By: \S\ Robert K. Bench
Its: Chief Financial Officer
\S\ Jay Barth
Jay Barth, an individual
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into effective as
of the 31st day of December, 1997 by and between SENTO TECHNICAL INNOVATIONS
CORPORATION, a Utah corporation (the "Company"), and Joseph J. Bunker, an
individual (the "Employee").
R E C I T A L S
WHEREAS, the Company is engaged in the business of hardware and software
distribution, service, training and support; and
WHEREAS, contemporaneously with the execution of this Agreement, the
Company and Astron Incorporated, a Utah corporation ("Astron"), among others,
have entered into an Acquisition Agreement dated November 19, 1997, as amended
by an Amendment to Acquisition Agreement dated December 31, 1997 (as amended,
the "Acquisition Agreement"), pursuant to which Astron, will merge with Sento
Acquisition, Inc. and pursuant to which Astron will become a wholly-owned
subsidiary of Sento; and
WHEREAS, the Employee has served as an employee of Astron; and
WHEREAS, in connection with the consummation of the transactions described
in the Acquisition Agreement, the Company desires to retain and employ the
Employee as an employee of Spire Technologies, Inc., a wholly-owned subsidiary
of the Company ("Spire"), and the Employee desires to accept such employment,
on the terms and conditions of this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of Spire employing the Employee, of the
mutual promises and covenants set forth herein, and for other good and valuable
consideration, the receipt, adequacy and legal sufficiency of which are hereby
acknowledged, the Company and the Employee mutually agree as follows:
i. EMPLOYMENT, DUTIES AND ACCEPTANCE.
1.1 EMPLOYMENT BY SPIRE. The Company hereby agrees to employ the
Employee during the Term (as hereinafter defined) as a full-time employee of
Spire, in the position of Manager of Training & Education, to render such
services and to perform such duties as required by the Bylaws of Spire and as
the Board of Directors of Spire (the "Board of Directors") shall reasonably
request.
1.2 ACCEPTANCE OF EMPLOYMENT BY THE EMPLOYEE. The Employee hereby
accepts such employment and shall render the services required by the Bylaws of
Spire and as requested by Spire's Board of Directors. If appointed or elected,
as applicable, the Employee also shall serve during all or any part of the Term
as any other officer and/or as a director of Spire or any of its affiliates
without any additional compensation therefor other than that specified in this
Agreement.
1.3 TERMINATION OF EXISTING CONTRACTS. The Employee hereby agrees
that all agreements and contracts, whether written or oral, relating to the
current employment of the Employee by Astron, or any of its affiliates, will be
terminated as of the commencement of the Term (as defined in Section 2 below).
ii. TERM OF EMPLOYMENT. The term of the Employee's employment
under this Agreement (the "Term") shall commence on the first
day of January, 1998 (the "Commencement Date") and shall
continue through and expire on the first anniversary thereof
(the "First Anniversary"), unless earlier terminated as herein
provided. Upon the First Anniversary and each subsequent
anniversary thereof, the Term shall be automatically renewed for
an additional period of one (1) year, except that the Term may
be terminated by either the Employee or the Company at any time
and for any reason or no reason following the First Anniversary
upon thirty (30) days written notice.
iii. COMPENSATION AND OTHER BENEFITS.
3.1 COMPENSATION.
3.1.1 ANNUAL SALARY. As compensation for services to be
rendered pursuant to this Agreement, the Company shall cause Spire to pay the
Employee, during the Term, a salary of Sixty Thousand and No/100 Dollars
($60,000) per annum (the "Annual Salary"), subject to such increases as the
Board of Directors may, in its discretion, approve.
3.1.2 SIGNING BONUS. Upon execution hereof, subject to the
terms and conditions set forth in this Agreement, the Company shall pay to the
Employee Forty Thousand and No/100 Dollars ($40,000) in cash and issue to the
Employee Twenty-Five Thousand (25,000) shares of the common stock, par value
$.25, of the Company (the "Shares" and collectively with such cash, the
"Signing Bonus").
The Employee shall also be eligible, during the Term, to receive such other
compensation, whether in the form of cash bonuses, stock options, stock
appreciation rights, restricted stock awards or otherwise, (collectively, with
the Signing Bonus, the "Additional Compensation"), as the Boards of Directors
of the Company and/or Spire (or any committee thereof) may, at their
discretion, approve. The Annual Salary and the Additional Compensation shall
be payable in accordance with the applicable payroll and/or other compensation
policies and plans of the Company or Spire, as applicable, as from time to time
in effect, less such deductions as shall be required to be withheld by
applicable law and regulations. In consideration of the Employee agreeing to
the terms of Article 4 hereof, the parties agree that the Employee shall be
entitled to receive his full Annual Salary for the remainder of the Term if,
during the Term, his employment with Spire is terminated by Spire or the
Company other than pursuant to Article 6 hereof; provided, however, that if the
Employee's employment with Spire is terminated by the Employee or for any
reason beyond the control of Spire or the Company, neither the Company nor
Spire shall have any obligation to pay to the Employee any compensation or
other remuneration for any period subsequent to the date of such termination.
3.2 MID-TERM TERMINATION. If (i) the Employee's employment with
Spire is terminated by Spire prior to the first anniversary of the Commencement
date, other than pursuant to Section 6.2 hereof, (ii) the Employee is not in
breach of any of the representations, warranties, covenants or obligations set
forth in Articles 4 and 5 hereof, and (iii) the termination of the Employee's
employment occurs other than at the conclusion of a calendar year during the
Term, Spire shall pay to the Employee, within sixty (60) days from the
Employee's termination date, a portion of the Additional Compensation as
determined by the Board of Directors in its discretion. Except as set forth in
this Section 3.2, upon the termination of the Employee's employment prior to
the completion of any calendar year during the Term, the Employee shall not be
entitled to any portion of the Additional Compensation for such year.
3.3 PARTICIPATION IN EMPLOYEE BENEFIT PLANS. The Employee shall be
permitted, during the Term, if and to the extent eligible, to participate in
any group life, hospitalization or disability insurance plan, health program,
pension plan, similar benefit plan or other "fringe benefits" of Spire which
may be available to all other employees of Spire generally on the same terms as
such other employees.
3.4 EXECUTIVE SUPPORT. Spire shall provide to the Employee office
facilities, furniture, fixtures and equipment, secretarial and support
personnel and other executive support services as reasonably necessary for the
Employee to perform his obligations under this Agreement.
3.5 REIMBURSEMENT OF BUSINESS EXPENSES. The Employee may incur
reasonable, ordinary and necessary business expenses in the course of
performing his obligations under this Agreement, including expenses for travel,
food, lodging and entertainment. Spire shall reimburse the Employee for all
such business expenses if (i) such expenses are incurred by the Employee in
accordance with Spire's business expense reimbursement policy, if any, as may
be established and modified by Spire from time to time and (ii) the Employee
provides to Spire a record of (A) the amount of the expense, (B) the date, place
and nature of the expense, (C) the business reason for the expense and (D) the
names, occupations and other data concerning individuals entertained sufficient
to establish their business relationship to Spire. Spire shall have no
obligation to reimburse the Employee for expenses that are not incurred and
substantiated as required pursuant to this Section 3.5.
3.6 RESTRICTIONS ON TRANSFER. The Shares will not be registered
under the Securities Act of 1933, as amended (the "Securities Act"), and may
not be sold, transferred, or otherwise disposed of for value unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available, as evidenced by an opinion of counsel retained by
the Employee and addressed to and reasonably satisfactory to the Company. The
certificates, if any, evidencing the Shares shall be stamped or otherwise
imprinted with a legend substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND ARE "RESTRICTED SECURITIES" WITHIN THE
MEANING OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT ( RULE
144"). THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLYING WITH RULE 144
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR OTHER
COMPLIANCE UNDER THE SECURITIES ACT. THE SECURITIES ARE SUBJECT
TO ADDITIONAL RESTRICTIONS AS SET FORTH IN THAT CERTAIN
EMPLOYMENT AGREEMENT, DATED DECEMBER 31, 1997, BETWEEN SENTO
TECHNICAL INNOVATIONS CORPORATION, A UTAH CORPORATION AND JOSEPH
J. BUNKER.
Nothing herein shall create any obligation on the part of the Company, Spire or
any of their respective directors, officers or employees to cause the Shares to
be registered under the Securities Act.
iv. NON-COMPETITION.
4.1 COVENANTS AGAINST COMPETITION. The Employee acknowledges that
(i) the Company, which for purposes of this Article 4 includes all of the
Company's subsidiaries, including, without limitation, Spire and Astron, and
all of the Company's present and future subsidiaries and affiliates, including
such subsidiaries and affiliates as may be formed or incorporated during the
Restricted Period (as defined in Section 4.1.1), is engaged in the business
described in the Recitals set forth on the first page hereof (the "Business");
(ii) the Employee is one of a limited number of persons who has performed a
significant role in developing the business and operations of Astron; (iii)
the Business is conducted throughout the United States and internationally;
(iv) the Employee's work for Astron has given him, and his work for Spire and
the Company will continue to give him, trade secrets of and confidential
information concerning the Company; (v) the agreements and covenants contained
in this Article 4 are essential to protect the Business and the goodwill of the
Company; and (vi) the Employee has means to support himself and his dependents
other than by engaging in the Business and the provisions of this Article 4
will not impair such ability. Accordingly, the Employee covenants and agrees
as follows:
4.1.1 NON-COMPETE. For a period commencing on the
Commencement Date hereof and terminating on the date that is three (3) months
following the termination of this Agreement (the "Restricted Period"), the
Employee shall not, within the United States or any other place where the
Company conducts the Business, directly or indirectly, (i) engage in the
Business or any aspect of the Business for the Employee's own account in
competition with the Company; (ii) enter the employ of, or render any services
to, any person engaged in competition with the Company; or (iii) become
interested in any such person in any capacity, including, without limitation,
as an individual, partner, member, manager, shareholder, officer, director,
principal, agent or trustee; provided, however, that the Employee may own,
directly or indirectly, solely as an investment, securities of any person
traded on any national securities exchange or over-the-counter market if the
Employee is not an affiliate (as defined in the Securities Act) of such person
and does not, directly or indirectly, own five percent or more of any class of
securities of such person.
4.1.2 CONFIDENTIAL INFORMATION; PERSONAL RELATIONSHIPS.
During the Restricted Period and thereafter, the Employee shall keep secret and
retain in strict confidence, and shall not use for the benefit of himself or
others, all confidential matters of the Company including, without limitation,
"know-how," trade secrets, customer lists, details of client or consultant
contracts, pricing policies, operational methods, marketing plans or
strategies, product development techniques or plans, business acquisition
plans, new personnel acquisition plans, methods of production and distribution,
technical processes, designs and design projects, inventions and research
projects of the Company learned by the Employee heretofore or during the
Restricted Period; nor may the Employee exploit for his own benefit, or the
benefit of others, personal relationships with customers, suppliers or agents
of the Company in connection with or adversely affecting the Business formed
heretofore or during the Restricted Period.
4.1.3 PROPERTY OF THE COMPANY. All memoranda, notes, lists,
records and other documents or papers (and all copies thereof), including such
items stored in computer memories, on microfiche or by any other means, made or
compiled by or on behalf of the Employee, or made available to the Employee
relating to the Company, other than purely personal matters, are and shall be
the property of the Company, and shall be delivered to the Company promptly
upon the termination of the Employee's employment (whether such termination is
for Cause or otherwise) or at any other time on request of the Company.
4.1.4 EMPLOYEES OF COMPANY. During the Restricted Period
and thereafter for as long as the Employee shall remain an employee of or
consultant to the Company, Employee shall not, directly or indirectly, hire or
solicit any employee of the Company away from the Company or encourage any such
employee to leave such employment.
4.1.5 CONSULTANTS OF THE COMPANY. During the Restricted
Period and thereafter for as long as the Employee shall remain an employee of
or consultant to the Company, the Employee shall not, directly or indirectly,
hire or solicit any consultant then under contract with the Company or
encourage such consultant to terminate such relationship.
4.2 RIGHTS AND REMEDIES UPON BREACH. If the Employee breaches, or
threatens to commit a breach of, any of the provisions of Section 4.1 (the
"Restrictive Covenants"), the Company shall have the following rights and
remedies, each of which rights and remedies shall be independent of the others
and severally enforceable, and each of which is in addition to, and not in lieu
of, any other rights and remedies available to the Company under law or in
equity:
4.2.1 SPECIFIC PERFORMANCE. The right and remedy to have
the Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company.
4.2.2 ACCOUNTING. The right and remedy to require the
Employee to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or other benefits derived or received by the
Employee as the result of any transactions constituting a breach of the
Restrictive Covenants.
4.3 SEVERABILITY OF COVENANTS. The Employee acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in geographical and
temporal scope and in all other respects. If any court determines that any of
the Restrictive Covenants, or any part thereof, is invalid or unenforceable,
the remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect, without regard to the invalid portions.
4.4 BLUE-PENCILING. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographic scope of such provision, such court shall have the power
to reduce the duration or scope of such provision, as the case may be, and, in
its reduced form, such provision shall then be enforceable.
4.5 ENFORCEABILITY IN JURISDICTIONS. The Company and the Employee
intend to and hereby confer jurisdiction to enforce the Restrictive Covenants
upon the courts of any jurisdiction within the geographical scope of the
Restrictive Covenants. If the courts of any one or more of such jurisdictions
hold the Restrictive Covenants unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the Company and the Employee that
such determination not bar or in any way affect the Company's right to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of the Restrictive Covenants, as to breaches of such
covenants in such other respective jurisdictions, such covenants as they relate
to each jurisdiction being, for this purpose, severable into diverse and
independent covenants.
v. Representations and Warranties. In order to induce the
Company to enter into this Agreement and perform the Company's
obligations contemplated hereby, including, without limitation,
the Company's obligation to issue the Shares to the Employee
pursuant to Section 3.1.2, the Employee hereby acknowledges,
represents, warrants and agrees that:
5.1 The Company has previously made available for inspection by the
Employee financial statements and other financial, corporate and business
information and records with respect to the Company.
5.2 The Employee may have to bear the economic risk of any
investment related to the Shares for an indefinite period of time.
5.3 No representations, promises or agreements have been made
concerning the marketability or value of the Shares or that any of the Shares
will be registered under the Securities Act or any state securities or blue sky
laws at any time in the future or will otherwise be qualified for sale under
the applicable securities laws.
5.4 No representations, warranties, promises or agreements have been
made to the Employee with respect to any of the following:
5.4.1 The approximate or exact length of time the Employee
will be required to remain an owner of the Shares;
5.4.2 The percentage of profit and/or the amount or type of
consideration (including dividends), profit or loss (including tax write-offs
and/or tax benefits) to be realized, if any, as a result of an investment in
the Shares; and/or
5.4.3 That the past performance or experience of the Company
will in any way indicate the results of future operations of the Company, the
results of the ownership of the Shares, or the likelihood of achievement of the
overall objectives of the Company.
5.5 The Employee is able to bear the substantial economic risks of
an investment in the Company, including but not limited to the possibility of
the complete loss of the Employee's investment in the Shares, the lack of a
public market, and the limited transferability of the Shares which may make the
liquidation of this investment impossible for the indefinite future. The
Employee has no need for liquidity in such investment, and could afford a
complete loss of such investment. The Employee has reached the age of majority
and has adequate means of providing for the Employee's current needs and
personal contingencies.
5.6 [Omitted]
5.7 The Employee has such knowledge and experience in financial and
business matters that the Employee is capable of evaluating the merits and
risks of the investment in the Company and of protecting his own interests.
5.8 The Shares will be acquired for the Employee's own account for
investment and not with a view toward resale or distribution thereof, and the
Employee does not now have any reason to anticipate any change in the
Employee's circumstances or other particular occasion or event which would
cause the Employee to sell any of the Shares or any interest therein.
5.9 The Employee has received and reviewed all business, corporate
and financial documents and records concerning the Company that the Employee
wishes to receive and review.
5.10 The Employee has been given an opportunity to discuss the
history, business, corporate matters and prospects of the Company and the
management thereof with the officers and directors of the Company. The
Employee is fully informed with respect to the merits and risks associated
with the Shares and with the history, management business, prospects and
corporate matters of the Company.
5.11 Neither the Employee's execution and delivery of this Agreement
nor the performance of his obligations hereunder will (i) violate any
restriction of any government, governmental agency or court to which the
Employee is subject, (ii) conflict with, result in a breach of, constitute a
default under or require any notice under any agreement, arrangement or
contract to which Employee is a party or by which the Employee is bound or
(iii) be limited or restricted by any such agreement, arrangement or contract.
5.12 All representations and warranties set forth above or in any
other written statement or document delivered by the Employee in connection
with the transactions contemplated hereby will be true and correct in all
respects on and as of the date of the sale of any of the Shares as if made on
and as of such date and will survive such sale and/or exercise.
5.13 The Employee understands the meaning and legal consequences of
the representations and warranties contained in this Agreement and agrees to
indemnify and hold harmless the Company and its directors, officers, agents and
representatives from and against any and all loss, damage or liability due to
or arising out of a breach of or the inaccuracy of any representation or
warranty of the Employee in this Agreement. Notwithstanding any of the
representations, warranties, acknowledgments or arrangements made herein by the
Employee, the Employee does not hereby or in any manner waive any right granted
to the Employee under federal or state securities laws.
vi. TERMINATION.
6.1 TERMINATION UPON DEATH. If the Employee dies during the Term,
this Agreement shall terminate, except that the Employee's legal
representatives, successors, heirs or assigns shall be entitled to receive the
Annual Salary, the Additional Compensation and other accrued benefits, if any,
earned up to the date of the Employee's death; provided, however, if any
Additional Compensation or other benefits are governed by the provisions of any
written employee benefit plan or policy of the Company or any of its
subsidiaries, any written agreement contemplated thereunder or any other
separate written agreement entered into between the Employee and the Company or
any of its subsidiaries, the terms and conditions of such plan, policy or
agreement shall control in the event of any discrepancy or conflict with the
provisions of this Agreement regarding such Additional Compensation or other
benefit upon the death, termination or disability of the Employee pursuant to
Article 6 hereof.
6.2 TERMINATION FOR CAUSE. The Company or Spire has the right, at
any time during the Term, subject to all of the provisions hereof, exercisable
by serving notice, effective in accordance with its terms, to terminate the
Employee's employment under this Agreement and discharge the Employee for
"Cause" (as hereinafter defined). If such right is exercised, the total
obligation of the Company and Spire to the Employee shall be limited to the
payment of any unpaid Annual Salary, Additional Compensation and other
benefits, if any, accrued up to the effective date (which shall not be
retroactive) specified in the notice of termination delivered by the Company or
Spire. As used in this Section 6.2, the term "Cause" shall mean and include
(i) a material breach by the Employee of the terms of this Agreement, (ii)
wrongful misappropriation of any money or other assets or properties of the
Company or any subsidiary or affiliate of the Company, (iii) the conviction of
the Employee for any felony or other serious crime, (iv) chronic alcoholism or
drug addiction, or (v) the Employee's gross moral turpitude relevant to his
office or employment with the Company or any subsidiary or affiliate of the
Company.
6.3 SUSPENSION UPON DISABILITY. If during the Term the Employee
becomes physically or mentally disabled, whether totally or partially, as
evidenced by the written statement of two competent physicians licensed to
practice medicine in the United States, so that the Employee is unable to
substantially perform his services hereunder for (i) a period of six
consecutive months, or (ii) for shorter periods aggregating six months during
any twelve-month period, Spire may at any time after the last day of the six
consecutive months of disability or the day on which the shorter periods of
disability equal an aggregate of six months, by written notice to the Employee,
suspend the Term of the Employee's employment hereunder and discontinue
payments of the Annual Salary, Additional Compensation and other benefits. If
at any time the Employee shall no longer be disabled, as evidenced by the
written statement of a competent physician licensed to practice medicine in the
United Sates, Spire may at its election fully reinstate, and if such disability
was for a period of not more than twelve consecutive months Spire shall fully
reinstate the employment of the Employee pursuant to this Agreement and shall
commence payment of the Annual Salary and all of the terms of this Agreement
shall resume in full force for the balance of the Term. Nothing in this
Section 6.3 shall be deemed to extend the Term.
vii. INSURANCE. The Company or Spire may, from time to time,
apply for and take out, in its own name and at its own expense,
naming itself or others as the designated beneficiary (which it
may change from time to time), policies for health, accident,
disability or other insurance upon the Employee in any amount or
amounts that it may deem necessary or appropriate to protect its
interest. The Employee agrees to aid the Company an/or Spire in
procuring such insurance by submitting to reasonable medical
examinations and by filling out, executing and delivering such
applications and other instruments in writing as may reasonably
be required by an insurance company or companies to which any
application or applications for insurance may be made by or for
the Company or Spire.
viii. OTHER PROVISIONS.
8.1 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, five days after the date of deposit in the United
States mail, as follows:
(i) if to the Company or Spire, to:
Sento Technical Innovations, Inc.
Attn: Robert K. Bench
311 North State Street
P.O. Box 1970
Orem, Utah 84059
(ii) if to the Employee, to:
Joseph J. Bunker
112 South 1230 North #106
Provo, UT 84604
Any party may change its address for notice hereunder by notice to
the other parties hereto.
8.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect thereto;
provided, however, that nothing herein shall in any way limit the obligation,
rights or liabilities of the parties under any written stock option agreement
separately entered into by the parties.
8.3 WAIVERS AND AMENDMENTS. This Agreement may be amended,
modified, superseded, cancelled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any
party of any right, power or privilege hereunder, nor any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder.
8.4 GOVERNING LAW; VENUE. This Agreement, except as set forth in
Section 4.5 hereof, shall be governed by, and construed in accordance with, the
laws of the State of Utah, without reference to principles governing choice or
conflicts of law.
8.5 ASSIGNMENT. This Agreement, and any rights and obligations
hereunder, may not be assigned by any party hereto without the prior written
consent of the other party, except that the Company may assign this Agreement
to any of its subsidiaries or affiliates, in its discretion.
8.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.7 HEADINGS. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
SENTO TECHNICAL INNOVATIONS CORPORATION,
a Utah corporation
By: \S\ Robert K. Bench
Its: Chief Financial Officer
\S\ Joseph J. Bunker
Joseph J. Bunker, an individual
PRESS RELEASE
For Immediate Release
SENTO ANNOUNCES AGREEMENT TO ACQUIRE NATIONWIDE TECHNICAL TRAINING ORGANIZATION
OREM, Utah, November 20, 1997 Sento Technical Innovations Corporation (NASDAQ
Symbol: SNTO) today announced an agreement to acquire Astron Incorporated., a
privately-held company. Astron is a recognized provider of computer training
and education courses delivered nationwide to such organizations as Intel,
American Airlines, IBM, AT&T, U.S. Navy, Microsoft, and General Motors.
Astron's certification training courses include Microsoft MCSE (Microsoft
Certified System Engineer) for Windows NT, Novell CNE (Certified Novell
Engineer), and Citrix CWA (Certified WinFrame Administrator). Astron is
headquartered in Orem, Utah.
According to the terms of the Acquisition Agreement signed November 19, 1997,
Sento has agreed to acquire all of the capital stock of Astron in exchange for
the issuance of 400,000 shares of Sento common stock to Mr. Jay Barth, the sole
shareholder, founder, and President of Astron. Subject to customary closing
conditions, including a financial audit, to be completed on or before January
2, 1998, Sento will combine Astron's operations with Spire Technologies, Inc.,
a wholly-owned subsidiary of Sento Technical Innovations Corporation. Mr. Jay
Barth will serve as the Vice President of Spire's new Astron Training and
Education Services division.
"This acquisition is extremely beneficial to our current growth strategy," said
Gary Godfrey, President and CEO of Sento Technical Innovations. "Sento is a
respected service and consulting center for the Windows NT and UNIX
marketplace. The addition of Astron's skill and national reputation as a
premiere training and education provider strongly complements our other
consultation and customer service offerings, including Microsoft Windows NT
migration, help desk, systems integration, and network and financial systems
consulting."
Jay Barth, President of Astron Incorporated, said, "This acquisition brings
Sento's offerings to our clientele, allowing us to provide a much more robust
and comprehensive array of services and support. At the same time, we can now
provide critical training and education services to Sento's growing base of
customers migrating into Windows NT and other networked environments from their
existing legacy systems."
Founded in 1992, privately held Astron Incorporated provides some of the most
sought after Microsoft, Novell, and Citrix network training services in the
nation. Utilizing such benefits as open enrollment and portable networks for
hands-on training, Astron's customized courses provide weekly training for
organizations and individuals in cities from coast to coast. Astron courses
include CNE, MCSE, and CWA certification preparation courses, and Microsoft
Windows NT, Windows 95, and Exchange Overview implementation and support
training courses.
Sento Technical Innovations Corporation provides a wide range of technical
services and products for organizations of all sizes using Windows NT , UNIX,
and OpenVMS client-server computing environments. These services include
Network Consulting, Systems Integration, Training and Education, Help Desk
Services, and Financial Systems Consulting. Sento also sells and distributes
leading Inter/intranet, systems security, PC network management, systems
configuration, help desk, and office automation software solutions.
Sento conducts its business through wholly-owned subsidiaries, including: Spire
Technologies, Inc., DewPoint Distributed Solutions, Inc., and Australian
Software Innovations, Pty., Ltd. For more information visit Sento's home page
at www.sento.com.
####
PRESS CONTACTS:
Sento Technical Innovations Corporation
311 North State Street
Orem, UT 84057
(801) 226-6222
Kathy Allred
Investor Relations Coordinator
PRESS RELEASE
For Immediate Release
SENTO ANNOUNCES FINALIZATION OF ASTRON ACQUISITION
Orem, Utah, January 6, 1998 Sento Technical Innovations Corporation (NASDAQ
Symbol: SNTO) announced today that it has restructured and finalized its
acquisition of Astron Incorporated. Astron is a provider of computer training
and education courses delivered nationwide to such organizations as Intel,
American Airlines, IBM, AT&T, U.S. Navy, Microsoft, and General Motors.
Astron's courses include Microsoft MCSE (Microsoft Certified System Engineer)
for Windows NT, Novell CNE (Certified Novell Engineer), and Citrix CWA
(Certified WinFrame Administrator) certification training courses.
The revised structure and terms of the acquisition were agreed to by Sento and
Astron following completion of a financial audit of Astron. The restructured
acquisition consisted of a merger of Sento Acquisition, Inc., a wholly-owned
subsidiary of Sento, with and into Astron, with Jay Barth, the sole
shareholder, founder and President of Astron, receiving 180,000 shares of Sento
Common Stock in exchange for his ownership of all of the shares of capital
stock of Astron. As a result of the transaction, Astron became a wholly-owned
subsidiary of Sento. In addition, Sento agreed to employ Mr. Barth as Director
of Training and Education of Spire Technologies, Inc., another wholly-owned
subsidiary of Sento.
"We are very excited to have completed this acquisition," said Kieth Sorenson,
CEO of Sento. "Astron provides us with a critical set of tools as we continue
to expand into the growing computer systems education and services industry.
Astron's national reputation for premiere training and education programs is an
excellent complement to our existing solutions offerings."
"I believe that combining Astron with Sento's other product and service
offerings allows us to maximize our opportunity to provide service and support
to our customer base," said Jay Barth. "We can now bring to our customers a
complete solutions set, from systems design and implementation, to product
licensing and integration, to training, education, and support services. It's
an exciting opportunity for both Sento and Astron."
Sento provides a wide range of technical services and products for
organizations of all sizes using Windows NT, UNIX, and OpenVMS client-server
computing environments. These services include Network Consulting, Systems
Integration, Training and Education, Help Desk Services, and Financial Systems
Consulting. Sento also sells and distributes leading Inter/intranet, systems
security, PC network management, systems configuration, help desk, and office
automation software solutions.
Sento conducts its business through wholly-owned subsidiaries, including: Spire
Technologies, Inc., DewPoint Distributed Solutions, Inc., and Australian
Software Innovations, Pty., Ltd. For more information, visit Sento's home page
at www. sento.com.
####
PRESS CONTACT:
Sento Technical Innovations Corporation
311 North State Street
Orem, UT 84057
(801) 226-6222
Kathy Allred
Investor Relations
