<PAGE>
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 30, 1997
SEGUE SOFTWARE, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 0-27794 95-4188982
(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification No.)
1320 Centre Street, Newton Centre, Massachusetts 02159
(Address of Principal Executive Offices and Zip Code)
(617) 796-1000
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
- ------- ------------------------------------
On December 30, 1997, Segue Software, Inc. (the "Company") entered into an
Asset Purchase Agreement, attached as Exhibit 2.1 to this Current Report on Form
8-K, with Segue Software Entwicklung GmbH ("Austrian Sub") (a wholly-owned
subsidiary of the Company), ARC - Dr. Ambichl & Dr. Reindl Communication GmbH
("ARC") and the Stockholders of ARC pursuant to which certain ARC intellectual
property assets, consisting primarily of web-based load testing software, were
acquired by the Company and certain non-intellectual property assets of ARC were
acquired by the Austrian Sub. The consideration paid for the intellectual
property consisted of cash in the amount of $3,707,800 and a junior subordinated
promissory note in the principal amount of $3,718,800, payable over the next
three years. The consideration paid for the non-intellectual property assets
consisted of $11,000 in cash.
Also on December 30, 1997, the Company entered into an Agreement and Plan
of Merger, attached as Exhibit 2.2 to this Current Report on Form 8-K, with SGE
Merger Corp. ("SGE") (a wholly-owned subsidiary of the Company), SQLBench
International, Inc. ("SQLBench") and the Stockholders of SQLBench pursuant to
which SQLBench was merged with and into SGE (the "Merger"). Prior to the
Merger, SQLBench owned distribution rights to certain products of ARC. The
aggregate Merger consideration consisted of cash in the amount of $696,200 paid
at closing, a subordinated promissory note in the principal amount of $696,200,
payable over the next three years, and 143,885 shares of common stock, $.01 par
value, of the Company.
Each of the acquisitions were funded out of the Company's existing cash and
short-term investments, and as described above, the issuance of promissory notes
and shares of the Company's common stock.
Item 5. Other Events
- ------- ------------
On December 30, 1997, the Company issued the press release attached as
Exhibit 99 to this Current Report on Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- ------- ------------------------------------------------------------------
(a) Financial Statements of Business Acquired
The Company has determined that it is impracticable to file the financial
statements as prescribed by Rule 3-05 of Regulation S-X. Such statements will
be filed by amendment as soon as practicable, but in any event not later than
March 16, 1998.
(b) Pro Forma Financial Information
The Company has determined that it is impracticable to file pro forma
financial information for the Company prescribed by Article 11 of
<PAGE>
Regulation S-X. Such information will be filed by amendment as soon as
practicable, but in any event not later than March 16, 1998.
(c) Exhibits
Exhibit No. Description
- ----------- -----------
2.1 Asset Purchase Agreement by and among the Segue Software, Inc.,
Segue Software Entwicklung GmbH, ARC - Dr. Ambichl & Dr. Reindl
Communication GmbH and the Stockholders of ARC - Dr. Ambichl &
Dr. Reindl Communication GmbH.
2.2 Agreement and Plan of Merger by and among Segue Software, Inc.,
SGE Merger Corp., SQLBench International, Inc. and the
Stockholders of SQLBench International, Inc.
99 Press release of Segue Software, Inc. dated December 30, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 14, 1998 SEGUE SOFTWARE, INC.
/s/ J. Jeffrey Bingenheimer
--------------------------------------
J. Jeffrey Bingenheimer
Chief Financial Officer
<PAGE>
Exhibit Index
-------------
Exhibit No. Description
- ----------- -----------
2.1 Asset Purchase Agreement by and among Segue Software, Inc., Segue
Software Entwicklung GmbH, ARC - Dr. Ambichl & Dr. Reindl
Communication GmbH and the Stockholders of ARC - Dr. Ambichl &
Dr. Reindl Communication GmbH.
2.2 Agreement and Plan of Merger by and among Segue Software, Inc.,
SGE Merger Corp., SQLBench International, Inc. and the
Stockholders of SQLBench International, Inc.
99 Press release of Segue Software, Inc. dated December 30, 1997.
<PAGE>
Exhibit 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
December 30, 1997 by and among Segue Software, Inc., a Delaware corporation
("Buyer USA"), Segue Software Entwicklung GmbH, an Austrian corporation, ("Buyer
Austria") (Buyer USA and Buyer Austria are sometimes collectively referred to
hereinafter as the "Buyer" or the "Buyers") and ARC - Dr. Ambichl & Dr. Reindl
Communication GmbH, an Austrian corporation ("ARC"), and each holder of the
share capital of ARC, which include Ernst Ambichl, Manfred Reindl and Bernd
Greifeneder (the "Stockholders" and, together with ARC, the "Sellers").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, subject to the terms and conditions hereof, ARC desires to sell to
Buyer USA all of its intellectual property and related assets as set forth
herein; and
WHEREAS, subject to the terms and conditions hereof, Buyer USA desires to
purchase from ARC all of ARC's intellectual property and related assets for the
consideration applicable thereto as specified herein; and
WHEREAS, subject to the terms and conditions hereof, ARC desires to sell to
Buyer Austria certain of its assets as set forth herein; and
WHEREAS, subject to the terms and conditions hereof, Buyer Austria desires
to purchase certain of the assets of ARC for the consideration applicable
thereto as specified herein;
NOW, THEREFORE, in order to consummate said purchases and sales and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
SECTION 1. PURCHASE AND SALE.
--------- -----------------
1.1 Sale of ARC Assets and Purchase Price.
-------------------------------------------
1.1.1 Sale of Intellectual Property. Subject to the provisions
-----------------------------
of this Agreement, Buyer USA agrees to purchase from ARC and the Stockholders,
and ARC and the Stockholders agree to sell, convey, transfer, assign and deliver
to Buyer USA, on the Closing Date (as defined in Section 1.8 hereof) the
Intellectual Property Assets owned or used by ARC as of the close of business on
the Closing Date which are used in the conduct of ARC's
<PAGE>
business and operations, other than the Excluded Assets (as defined in Section
1.1.3). The Intellectual Property Assets shall include, without limitation, the
following:
(i) the business of ARC, as a going concern,
including all of ARC's goodwill therein, as well as ARC's website (including the
domain name "______________" and any similar domain name related to, or
contemplated for use by, ARC or any of the products or services offered by ARC);
(ii) all claims, rights (and benefits arising
therefrom), causes of action, rights of recovery, set-offs or defenses of any
kind pertaining to, or arising out of, ARC's business and operations, and all
rights of ARC against suppliers under warranties covering the Intellectual
Property Assets and all non-compete agreements with any current or former
employees of ARC, copies of which non-compete agreements have been delivered to
Buyer by ARC prior to the date hereof;
(iii) all computer programs, databases, software
and software licenses owned or licensed by ARC used by ARC in the operation of
ARC's business, all of which are listed on Schedule 1.1.1(iii) hereto;
-------------------
(iv) all of ARC's right, title and interest in
all copyrights (registered and unregistered) and applications, if any, therefor,
patents, patent applications, patent rights, trade secrets, trade secret rights,
trademarks (registered and unregistered), service marks (registered and
unregistered), technology, know-how, techniques, processes, all documents of ARC
embodying proprietary information and copyright protected material, all evidence
of ownership of any of the foregoing, and all other intellectual property
developed by or on behalf of ARC or to which ARC have rights, including, without
limitation, the copyrights, patents, trademarks, service marks, software, and
technology listed on Schedule 1.1.1(iv) hereto;
------------------
(v) all of the Stockholders' right, title and
interest in the Intellectual Property Assets owned or used by ARC as of the
close of business on the Closing Date which are used in the conduct of ARC's
business and operations, other than the Excluded Assets, including without
limitation, the following rights embodied in such Intellectual Property Assets:
all copyrights (registered and unregistered) and applications, if any, therefor,
patents, patent applications, patent rights, trade secrets, trade secret rights,
trademarks (registered and unregistered), service marks (registered and
unregistered), trade names, trade name rights, trade style, logos, technology,
know-how, techniques, processes, all documents embodying proprietary information
and copyright protected material, all evidence of ownership of any of the
foregoing, and all other intellectual property;
(vi) the trade names, trade name rights, trade
style, or other similar rights owned or licensed by ARC, including,
specifically, the names, any similar name, any logo or mark used in connection
with ARC's business, including, without limitation, the trade names listed on
Schedule 1.1.1(v) hereto, and any goodwill associated therewith;
- -----------------
<PAGE>
(vii) all mailing lists, subscriber lists,
advertiser lists, and subscriptions or processes of ARC; and
(viii) all advertising and promotional material, a
customer list which shall consist of an electronic and a hard copy list of all
of ARC's customers as of the Closing Date, customer information, a supplier list
which shall consist of an electronic and hard copy list of all of ARC's
suppliers as of the Closing Date, supplier information owned or licenses by ARC
or the Stockholders, market surveys, marketing know-how, and information
pertaining to planned products or services (if any).
1.1.2 Sale of Non-Intellectual Property Assets. Subject to
----------------------------------------
the provisions of this Agreement, Buyer Austria agrees to purchase from ARC, and
ARC agrees to sell, convey, transfer, assign and deliver to Buyer Austria, on
the Closing Date (as defined in Section 1.8 hereof) the Non-Intellectual
Property Assets. The term "Non-Intellectual Property Assets" shall mean the
assets, properties and business (other than the Intellectual Property Assets)
that are owned or used by ARC as of the close of business on the Closing Date
which are used in the conduct of ARC's business and operations, other than the
Excluded Assets (as defined in Section 1.1.3). The Intellectual Property Assets
and the Non-Intellectual Property Assets are referred to herein together to as
the "Subject Assets." The Non-Intellectual Property Assets shall include,
without limitation, the following:
(i) all inventories, office supplies,
maintenance supplies, spare parts and similar items used by ARC in the conduct
of its business;
(ii) all machinery, equipment (including office
equipment, computers and computer hardware and peripherals), furniture,
furnishings and other fixed assets (including leasehold interests therein) of
ARC listed on Schedule 1.1.2(ii) hereto;
------------------
(iii) all leases and contracts of ARC used in or
related to its business, including, without limitation, all leases of real or
personal property, all contracts for services and supplies, all contracts to
sell products or services, all purchase orders, and all other agreements,
commitments and personal property leases (whether written or oral) to which ARC
is a party or under which ARC receives benefit arising out of or related to its
business (collectively, the "Assigned Contracts"), which Assigned Contracts
shall include, without limitation, all existing and pending sales contracts and
sales commission agreements or arrangements, including orders, offers and
proposals, all of which Assigned Contracts are listed on Schedule 1.1.2(iii)
-------------------
hereto;
(iv) all Federal, state, local, foreign or other
governmental and other third party permits (including occupancy permits),
certificates, licenses, consents and authorizations held by ARC that are used in
or related to its business to the extent assignable (the "Assigned Permits"),
including, without limitation, all permits, certificates, licenses and
authorizations listed on Schedule 1.1.2(iv) hereto;
------------------
(v) all files, documents, records (other than
ARC's Corporate
<PAGE>
Records (as defined in Section 1.1.3), employee files, data and books of account
maintained in connection with ARC's business;
(vi) all memberships in trade associations of ARC
to the extent assignable;
(vii) all raw materials and inventories, including
inventories of works-in-process and supplies, owned by ARC; and
(viii) all intangible rights relating to any of the
foregoing.
1.1.3 Excluded Assets. Notwithstanding the foregoing, the
---------------
Subject Assets shall not include the following items owned, leased or used by
ARC (the "Excluded Assets"):
(i) Assets and property disposed of since the
date of the Base Balance Sheet in the ordinary course of business and such other
assets as have been or are disposed of pursuant to this Agreement;
(ii) ARC's corporate franchise, stock record
books, corporate record books containing minutes of meetings of directors and
stockholders and such other records as have to do exclusively with ARC's
organization or stock capitalization (collectively, the "Corporate Records");
provided, however, that ARC shall provide Buyer prior to the Closing with copies
of each of the foregoing, certified by ARC to be true and correct copies;
(iii) ARC's rights under this Agreement and the
agreements and instruments delivered to Buyer pursuant hereto; and
(iv) ARC's rights, title and interest in and to
assets of, and obligations under, any pension funds, profit sharing, 401(k) or
similar plans maintained by or on behalf of ARC for the benefit of its
employees.
1.2 Assumption of Liabilities. Except for the Assumed
-------------------------
Liabilities (as defined below), Buyer shall not assume or be bound by any
obligations or liabilities of any Seller, accrued, absolute, contingent or
otherwise, whether or not existing or hereafter arising whatsoever. Upon the
sale and purchase of the Subject Assets, Buyer agrees to perform in accordance
with their respective terms the obligations of ARC (other than obligations
described in Section 1.3(vi)) under all Assigned Contracts and Assigned Permits
and other grants of rights assigned to Buyer pursuant to Section 1.1.1 arising
or to be performed after the Closing Date (the "Assumed Liabilities"). The
assumption of said liabilities by Buyer hereunder shall not enlarge any rights
of third parties under contracts or arrangements with Buyer or ARC and nothing
herein shall prevent any party from contesting in good faith with any third
party any of said liabilities.
1.3 Retained Liabilities. Buyer and ARC agree that, except for
--------------------
the Assumed Liabilities, Buyer is not assuming, and ARC shall remain fully
liable for, all of its liabilities
<PAGE>
and obligations relating to the property, assets, business and operations of ARC
(collectively, the "Retained Liabilities"), including, without limitation, the
following:
(i) all liabilities for any income, gain, profit
or similar tax arising out of or resulting from the sale, conveyance, transfer,
assignment and delivery of the Subject Assets provided for in this Agreement;
(ii) all Taxes (as defined in Section 2.8(a))
imposed on, or with respect to, the business of ARC;
(iii) all liabilities and obligations of ARC in
respect of accounts payable, accrued expenses, accrued employee obligations and
other current liabilities arising out of the operation of ARC's business;
(iv) all liabilities and obligations of ARC for
indebtedness for borrowed money;
(v) all liabilities and obligations of ARC in
connection with or relating to any of ARC's existing or former employees,
employee benefit plans, employee insurance policies, severance or other
termination obligations, accrued vacations, accrued and unpaid wages, salaries,
bonuses, commissions and sick pay or other employment related matters,
including, without limitation, all liabilities and obligations (whether fixed or
contingent) with respect to any employment benefit program or plan as a result
of the consummation of the transactions contemplated by this Agreement, as
required by Austrian law or otherwise, and all liabilities of ARC under sales
representative or similar agreements or arrangements pursuant to which any
person or entity may be entitled to a commission on account of revenues booked
or earned prior to the Closing Date; provided, however, that in no event is
-------- -------
Buyer assuming any liabilities with respect to any employees terminated prior to
the Closing Date or any severance or other termination obligations or any
liability under any pension, profit sharing, 401(k) or similar employee benefit
plan;
(vi) all liabilities and obligations of ARC to
third parties arising out of any breach by ARC prior to the Closing Date of any
representation, warranty, covenant or indemnification obligation of ARC under
any Assigned Contract or Assigned Permitted or other right assigned hereunder;
(vii) all liabilities and obligations arising in
respect of the Excluded Assets;
(viii) all liabilities for retrospective or similar
insurance premium adjustments and all claims for injury or sickness compensable
under ARC's insurance plans arising prior to the Closing Date; and
(ix) all other liabilities of ARC that are
attributable to or arise from facts, events or conditions that occurred or came
into existence prior to the Closing Date,
<PAGE>
including without limitation, any intellectual property indemnification
obligations.
1.4 Purchase Price and Payment.
--------------------------
1.4.1 Intellectual Property Assets. In consideration of the
----------------------------
sale by ARC to Buyer USA of the Intellectual Property Assets and upon the
assumption by Buyer of the Assumed Liabilities, Buyer USA agrees that at the
First Closing (as hereinafter defined) it will deliver to ARC (a) Three Million
Seven Hundred Seven Thousand Eight Hundred Dollars ($3,707,800) by bank cashiers
check in Boston Clearing House Funds or by wire transfer of immediately
available funds and (b) a junior subordinated promissory note in the principal
amount of Three Million Seven Hundred Eighteen Thousand Eight Hundred Dollars
($3,718,800) (the "ARC Note") substantially in the form attached hereto as
Exhibit 1.4.
- -----------
1.4.2 Non-Intellectual Property Assets. In consideration of
--------------------------------
the sale by ARC to Buyer Austria of the Non-Intellectual Property Assets, and
upon the assumption by Buyer of the Assumed Liabilities, Buyer Austria agrees
that at the Second Closing (as hereinafter defined) it will deliver to ARC
Eleven Thousand Dollars ($11,000) by bank cashiers check in Boston Clearing
House Funds or by wire transfer of immediately available funds.
1.5 Transfer of Subject Assets. At the First Closing, ARC shall
--------------------------
deliver or cause to be delivered to Buyer USA good and sufficient instruments of
transfer transferring to Buyer USA title to all of the Intellectual Property
Assets as provided herein and at the Second Closing, ARC shall deliver or cause
to be delivered to Buyer Austria good and sufficient instruments of transfer
transferring to Buyer Austria title to all of the Non-Intellectual Property
Assets as provided herein. Such instruments of transfer (a) shall be in the form
and will contain the warranties, covenants and other provisions (not
inconsistent with the provisions hereof) which are usual and customary for
transferring the type of property involved under the laws of the jurisdictions
applicable to such transfers, (b) shall be in form and substance satisfactory to
Buyer and its counsel, (c) shall effectively vest in Buyer good and marketable
title to all the Subject Assets free and clear of all liens, restrictions and
encumbrances except the Assumed Liabilities, and (d) shall include, without
limitation, (i) the Bill of Sale in the form of Exhibit 1.5(a) hereto, (ii) the
--------------
Assignment and Assumption of Contracts Agreement in the form of Exhibit 1.5(b)
--------------
hereto, (iii) the Assignment and Assumption of Leases Agreement in the form of
Exhibit 1.5(c) hereto, and (iv) the Assignment and Assumption of Intellectual
- --------------
Property in the form of Exhibit 1.5(d) hereto.
--------------
1.6 Delivery of Records and Contracts. At or prior to the First
---------------------------------
Closing, ARC shall deliver or cause to be delivered to Buyer all of ARC's
leases, contracts, commitments, agreements (including without limitation non-
competition agreements) and rights that are included in the Subject Assets, with
such assignments thereof and consents to assignments as are necessary to assure
Buyer the full benefit of the same. ARC shall also deliver to Buyer at the First
Closing all business records, tax returns, books and other data relating to ARC
and the Subject Assets, and ARC shall take all requisite steps to put Buyer in
actual possession and operating control of the Subject Assets. After the First
Closing, Buyer shall afford to ARC and its accountants and attorneys, for the
purpose of preparing such tax returns of ARC as may
<PAGE>
be required after the First Closing, reasonable access to the books and records
of ARC delivered to Buyer under this Section and shall permit ARC, at ARC's
expense, to make extracts and copies therefrom. After the First Closing, ARC
shall afford to Buyer and its accountants and attorneys, for the purpose of
preparing and supporting such tax returns of Buyer as may be required after the
First Closing, reasonable access to the relevant books and records of ARC
retained by ARC and shall permit Buyer, at Buyer's expense, to make extracts and
copies therefrom. ARC and Buyer each agree to retain any such books and records
for a period of seven years or, in the event either party elects to dispose of
such books and records in any manner, such party shall notify the other party of
its intent to do so and shall offer the other party the opportunity to receive
such books and records or, at the other party's expense, full and complete
copies thereof.
1.7 Allocation of Purchase Price. ARC and Buyer agree to
----------------------------
allocate the Asset Purchase Price and the Assumed Liabilities (and all other
capitalized costs) among the Subject Assets in accordance with the provisions of
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"), and
such allocation shall be binding upon Buyer and ARC for all purposes (including
financial accounting purposes, financial and regulatory reporting purposes and
tax purposes).
1.8 Closing.
-------
(a) The transactions contemplated by this Agreement
shall be consummated at the closing (the "First Closing") which will take place
at the offices of Goodwin, Procter & Hoar LLP, Exchange Place, Boston,
Massachusetts on December 30, 1997, or at such other place or earlier or later
date or time as may be fixed by mutual agreement of Buyer and the Sellers (the
"First Closing Date").
(b) Notwithstanding the foregoing, the closing in
respect of and the physical transfer of the Non-Intellectual Property Assets
(the "Second Closing") shall occur on January 9, 1998 or on such earlier or
later date as may be fixed by mutual agreement of Buyer and the Sellers (the
"Second Closing Date").
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.
- --------- ---------------------------------------------
2.1 Making of Representations and Warranties. As a material
----------------------------------------
inducement to Buyer to enter into this Agreement and consummate the transactions
contemplated hereby, ARC and the Stockholders hereby jointly and severally make
to Buyer the representations and warranties contained in this Section 2.
2.2 Organization and Qualifications of ARC. ARC is a
--------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of Austria with full corporate power and authority to own or lease its
properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is currently conducted or
proposed to be conducted. The copies of ARC's Certificate of Incorporation (or
similar organizational document) as amended to date, certified by a notary
public or the appropriate
<PAGE>
governmental officer, and By-laws (or similar document), as amended to date,
certified by ARC's General Manager, and heretofore delivered to Buyer's counsel,
are complete and correct, and no amendments thereto are pending. ARC is not in
violation of any provision of its Certificate of Incorporation (or similar
organizational document) or By-laws (or similar document). ARC is not qualified
to do business as a foreign corporation in any state or jurisdiction.
2.3 Subsidiaries. ARC has no subsidiaries, and does not own any
------------
securities issued by any other business organization or governmental authority.
ARC does not own and does not have any direct or indirect interest in or control
over any corporation, partnership, joint venture or entity of any kind.
2.4 Capital Stock; Beneficial Ownership. The authorized share
-----------------------------------
capital of ARC consists of ATS 500,000 of which ATS 250,000 has been
contributed. The equity of ARC is owned 39% by Ernst Ambichl, 39% by Manfred
Reindl and 22% by Bernd Greifeneder. There are no outstanding options, warrants,
rights, commitments, preemptive rights or agreements of any kind for the
issuance or sale of, or outstanding securities convertible into, any additional
share capital of ARC. None of the share capital of ARC has been issued in
violation of any federal or state law. There are no voting agreements, trusts,
proxies or other agreements, instruments or undertakings with respect to the
voting of the share capital of ARC to which ARC or any Stockholder is a party.
2.5 Authority of ARC. ARC has full right, authority and power
----------------
to enter into this Agreement and each agreement, document and instrument to be
executed and delivered by ARC pursuant to this Agreement and to carry out the
transactions contemplated hereby. The execution, delivery and performance by ARC
of this Agreement and each such other agreement, document and instrument have
been duly authorized by all necessary action of ARC and its stockholders (as the
case may be) and no other action on the part of ARC or its stockholders or
otherwise is required in connection therewith. This Agreement and each
agreement, document and instrument executed and delivered by ARC pursuant to
this Agreement constitutes, or when executed and delivered will constitute,
valid and binding obligations of ARC enforceable in accordance with their terms.
The execution, delivery and performance by ARC of this Agreement and each such
agreement, document and instrument:
(i) do not and will not violate any provision of the
Certificate of Incorporation (or similar organizational document) or By-laws of
ARC;
(ii) do not and will not violate any laws of the
United States, or any state or other jurisdiction (domestic or foreign)
applicable to ARC or require such Seller to obtain any approval, consent or
waiver of, or make any filing with, any person or entity (governmental or
otherwise) that has not been obtained or made, except where the failure of which
will, individually or in the aggregate, not result in a material adverse affect
on the business or prospects of ARC; and
(iii) except as described in Section 2.6(b)(vii)
hereof, do not
<PAGE>
and will not result in a breach of, constitute a default under, accelerate any
obligation under, or give rise to a right of termination of any indenture or
loan or credit agreement or any other agreement, contract, instrument, mortgage,
lien, lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which ARC is a party or by which the
property of ARC is bound or affected, or result in the creation or imposition of
any mortgage, pledge, lien, security interest or other charge or encumbrance on
any of ARC's assets or property.
2.6 Real and Personal Property.
--------------------------
(a) Owned Real Property. ARC does not own any real property.
-------------------
(b) Leased Real Property. All of the real property leased by
--------------------
ARC, as tenant or lessee, is identified on Schedule 2.6(b) hereto
---------------
(collectively referred to herein as the "Leased Real Property"). The Sellers
hereby make the following representations and warranties with respect to the
Leased Real Property:
(i) ARC holds a good, clear, marketable, valid and
enforceable leasehold interest in the Leased Real Property;
(ii) None of the Sellers is aware of any material defects
in the physical condition of any improvements constituting a part of the Leased
Real Property, including, without limitation, structural elements, mechanical
systems, roofs or parking and loading areas, and to the knowledge of the
Sellers, all of such improvements are in reasonable operating condition and
repair, have been maintained in accordance with past practice and are free from
material infestation by rodents or insects;
(iii) The copies of the lease for the Leased Real Property
(the "Lease") delivered by ARC to Buyer pursuant to this Agreement is complete,
accurate, true and correct;
(iv) The Lease is in full force and effect and has not
been modified, amended, or altered, in writing or otherwise;
(v) All obligations of the landlord or lessor under the
Lease which have accrued have been performed, and to the best of the knowledge
of the Sellers, no landlord or lessor is in default under the Lease;
(vi) All obligations of the ARC under the Lease which have
accrued have been performed, and ARC is not in default under the Lease, and no
circumstance presently exists which, with notice or the passage of time, or
both, would give rise to a default by ARC; and
(vii) ARC will not have obtained prior to the Closing the
consent of the landlord or lessor under the Lease, and the failure to obtain
such consent shall
<PAGE>
not constitute a default hereunder. On or before the Closing Date, ARC will have
notified in writing the landlord under the Lease that the Lease is being
assigned to Buyer hereunder.
(c) Personal Property. A complete description of ARC's fixtures,
-----------------
machinery, equipment and other tangible personal property is contained in
Schedule 2.6(c) hereto. ARC has good and marketable title to all of its
- ---------------
personal property. None of such personal property or assets is subject to any
mortgage, pledge, lien, conditional sale agreement, security agreement,
encumbrance or other charge. All leasehold improvements, furnishings,
machinery, equipment and other tangible personal property of ARC have been
maintained consistent with past practice, are suitable for the purposes for
which they are intended and are in good repair.
2.7 Financial Statements.
--------------------
(a) Sellers have delivered to Buyer the following financial
statements, copies of which are attached hereto as Schedule 2.7:
------------
(i) A balance sheet of ARC (including for purposes of this
Section 2.7 any predecessor entity of ARC) for its fiscal year ending on
December 31, 1996 and a statement of income for the year then ended, with
appropriate footnotes, certified by ARC's chief financial officer.
(ii) A balance sheet of ARC (including for purposes of this
Section 2.7 any predecessor entity of ARC) as of October 31, 1997 (the "Base
Balance Sheet") and a statement of income for the period then ended, with
appropriate footnotes, certified by ARC's chief financial officer.
Said financial statements have been prepared in accordance with generally
accepted accounting principles in force in Austria applied consistently during
the periods covered thereby, are complete and correct in all material respects,
and present fairly in all material respects the financial condition of ARC at
the dates of said statements and the results of its operations and its cash
flows for the periods covered thereby.
(b) Except as reflected on the Base Balance Sheet, as of the date
of the Base Balance Sheet, ARC had no liabilities of any nature, whether
accrued, absolute, contingent or otherwise, asserted or unasserted, known or
unknown (including without limitation liabilities as guarantor or otherwise with
respect to obligations of others, or liabilities for taxes due or then accrued
or to become due or contingent or potential liabilities relating to activities
of ARC or the conduct of its business prior to the date of the Base Balance
Sheet regardless of whether claims in respect thereof had been asserted as of
such date).
(c) As of the date hereof and as of the Closing, ARC does not and
will not have liabilities of any nature, whether accrued, absolute, contingent
or otherwise, asserted or unasserted, known or unknown (including without
limitation liabilities as guarantor or otherwise with respect to obligations or
others, or liabilities for taxes due or then accrued or
<PAGE>
to become due or contingent or potential liabilities relating to activities of
ARC or the conduct of its business prior to the date hereof or the Closing, as
the case may be, regardless of whether claims in respect thereof had been
asserted as of such date), which Buyer Austria or Buyer USA will be legally
obligated to pay under any theory of successor liability or otherwise.
2.8 Taxes.
-----
(a) ARC has paid or caused to be paid all federal, state,
local, foreign and other taxes, including, without limitation, income taxes,
estimated taxes, alternative minimum taxes, excise taxes, sales taxes, use
taxes, value-added taxes, gross receipts taxes, franchise taxes, capital stock
taxes, employment and payroll-related taxes, withholding taxes, stamp taxes,
transfer taxes, windfall profit taxes, environmental taxes and property taxes,
whether or not measured in whole or in part by net income, and all deficiencies,
or other additions to tax, interest, fines and penalties owed by it
(collectively, "Taxes"), required to be paid by ARC through the date hereof
whether disputed or not.
(b) ARC has in accordance with applicable law filed all
federal, state, local and foreign tax returns required to be filed by it through
the date hereof, and all such returns correctly and accurately set forth the
amount of any Taxes relating to the applicable period. A list of all federal,
state, local and foreign income tax returns filed with respect to ARC for
taxable periods ended on or after December 31, 1992, are set forth in Schedule
--------
2.8 hereto, and said Schedule indicates those returns that have been audited or
- ---
currently are the subject of an audit. ARC has delivered to Buyer correct and
complete copies of all federal, state, local and foreign income tax returns
listed on said Schedule, and of all examination reports and statements of
deficiencies assessed against or agreed to by ARC with respect to said returns.
(c) Neither the Internal Revenue Service nor any other
governmental authority is now asserting or, to the knowledge of the Sellers,
threatening to assert against ARC any deficiency or claim for additional Taxes.
No claim has ever been made by an authority in a jurisdiction where ARC does not
file reports and returns that ARC is or may be subject to taxation by that
jurisdiction. There are no security interests on any of the assets of ARC that
arose in connection with any failure (or alleged failure) to pay any Taxes.
(d) No extension of time with respect to any date on which a
tax return was or is to be filed by ARC is in force, and no waiver or agreement
by ARC is in force for the extension of time for the assessment or payment of
any Taxes.
(e) None of the Sellers has been (and has no liability for
unpaid Taxes because it once was) a member of an "affiliated group." ARC has
never filed, nor has it been required to file, a consolidated, combined or
unitary tax return with any other entity. ARC does not own, nor has it ever
owned, a direct or indirect interest in any trust, partnership, corporation or
other entity, nor is any such interest necessary to conduct the business of ARC,
and Buyer is not acquiring from any Seller an interest in any such entity.
<PAGE>
No such entity is a party to any tax sharing agreement.
(f) ARC has made all necessary and required contributions under
applicable social security systems with respect to employees of ARC and non-
employee contractors of ARC.
2.9 Accounts Receivable. All of the accounts receivable of ARC (less the
-------------------
reserve for bad debts set forth on the Base Balance Sheet) are or will be at the
Closing valid and enforceable claims, fully collectible and subject to no setoff
or counterclaim. ARC does not have any accounts or loans receivable from any
person, firm or corporation which is affiliated with either ARC or from any
director, officer or employee of ARC, and all accounts and loans receivable from
any such person, firm or corporation shall be paid in cash prior to the Closing.
2.1 Absence of Certain Changes. Other than the conversion of ARC from an
--------------------------
OEG to a GmbH, since the date of the Base Balance Sheet, there has not been:
(i) any change in the financial condition, properties, assets,
liabilities, business or operations of ARC which change by itself or in
conjunction with all other such changes, has been materially adverse with
respect to ARC;
(ii) any contingent liability incurred by ARC as guarantor
or otherwise with respect to the obligations of others or any cancellation of
any debt or claim owing to, or waiver of any material right of, ARC;
(iii) any mortgage, encumbrance or lien placed on any of the
assets or properties of ARC which remain in existence on the date hereof or will
remain on the Closing Date;
(iv) any obligation or liability of any nature incurred by
ARC whether accrued, absolute, contingent or otherwise, asserted or unasserted
(including without limitation liabilities for Taxes due or to become due or
contingent or potential liabilities relating to products or services provided by
ARC or the conduct of ARC's business since the date of the Base Balance Sheet
regardless of whether claims in respect thereof have been asserted), other than
obligations and liabilities incurred in the ordinary course of business
consistent with the terms of this Agreement (it being understood that product or
service liability claims shall not be deemed to be incurred in the ordinary
course of business);
(v) any purchase, sale or other disposition, or any agreement
or other arrangement for the purchase, sale or other disposition, of any of the
properties or assets of ARC other than in the ordinary course of business;
(vi) any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the properties, assets or
business of ARC;
(vii) any other transaction entered into by ARC other than
<PAGE>
transactions in the ordinary course of business; or
(viii) any agreement or understanding whether in writing or
otherwise, for ARC to take any of the actions specified in paragraphs (i)
through (viii) above.
2.11 Ordinary Course. Other than the conversion of ARC from an OEG to
---------------
a GmbH, since the date of the Base Balance Sheet, ARC has conducted its business
and operations only in the ordinary course and consistently with its prior
practices.
2.12 Banking Relations. All of the arrangements which ARC has with any
-----------------
banking institution are completely and accurately described in Schedule 2.12
-------------
hereto, indicating with respect to each of such arrangements the type of
arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.) and the person or persons authorized in respect thereof.
2.13 Proprietary Rights.
------------------
(a) Except as set forth in Schedule 2.13, ARC owns all right,
title and interest in and to all patents, copyrights, technology, software,
software tools, know-how, processes, trade secrets, trademarks, service marks,
trade names and other proprietary rights used in or necessary for the conduct of
ARC's business as conducted to the date hereof or contemplated, including,
without limitation, the technology and all proprietary rights developed or
discovered in connection with or contained in ARC's products (the "ARC
Products"), free and clear of all liens, claims and encumbrances (including
without limitation distribution rights) (all of which are referred to as
"Proprietary Rights"). The foregoing representation as it relates to Third Party
Technology (as hereinafter defined) is limited to ARC's interest pursuant to the
Third Party Licenses (as hereinafter defined), all of which are valid and
enforceable and in full force and effect and which grant ARC such right to Third
Party Technology as are employed in or necessary to the business of ARC as
conducted or proposed to be conducted prior to the Closing Date.
(b) Schedule 2.13 hereto contains an accurate and complete
-------------
description of (i) all patents, trademarks (with separate listings of registered
and unregistered trademarks), trade names, and registered and unregistered
copyrights in or related to the ARC Products, all applications and registration
statements therefor, and a list of all licenses and other agreements relating
thereto, and (ii) a list of all licenses and other agreements with third parties
(the "Third Party Licenses") relating to any software, technology, know-how, or
processes that ARC is licensed or otherwise authorized by such third parties to
use, market, distribute or incorporate into products distributed by ARC (such
software, technology, know-how and processes are collectively referred to as the
"Third Party Technology"). All of ARC's trademark or trade name registrations
related to the ARC Products and all of ARC's copyrights in any of the ARC
Products are valid and in full force and effect; and consummation of the
transactions contemplate hereby will not alter or impair any such rights. There
is no material default by any party to any Third Party License and all of ARC's
rights thereunder are freely assignable. To the knowledge of the Sellers, the
licensors under such
<PAGE>
Third Party Licenses have and had all requisite power and authority to grant the
rights purported to be conferred thereby. True and complete copies of such Third
Party Licenses, and any amendments thereto, have been provided to Buyer.
(c) No claims have been asserted against ARC or any of the
Stockholders (and neither ARC nor any of the Stockholders is aware of any claims
which are likely to be asserted against ARC or any of the Stockholders or which
have been asserted against others) by any person challenging ARC's use or
distribution of any patents, trademarks, trade names, copyrights, trade secrets,
software, technology, know-how or processes utilized by ARC (including, without
limitation, the Third Party Technology) or challenging or questioning the
validity or effectiveness of any license or agreement relating thereto
(including, without limitation, the Third Party Licenses). To the Sellers'
knowledge, there is no valid basis for any claim of the type specified in the
immediately preceding sentence which could in any way relate to or interfere
with the continued enhancement and exploitation by ARC of any of the ARC
Products. None of the ARC Products nor the use of any patents, trademarks, trade
names, copyrights, software, technology, know-how or processes by ARC in its
current business infringes on the rights of, constitutes misappropriation of, or
in any way involves unfair competition with respect to, any proprietary
information or intangible property right of any third person or entity,
including without limitation any trade secret, copyright, trademark or trade
name, or, to the knowledge of the Sellers, any patent.
(d) All licenses or other agreements pursuant to which the
Sellers have granted rights to others in Proprietary Rights owned or licensed by
the Sellers are listed on Schedule 2.13. All of such licenses or agreements are
in full force and effect, there is no default by any party thereto and all of
Sellers' rights thereunder are freely assignable. True and complete copies of
all such licenses or other agreements, and any amendments thereto, have been
provided to Buyer. Except as set forth in Schedule 2.13, the Sellers have not
-------------
granted any third party any right to manufacture, reproduce, distribute, market
or exploit any of the ARC Products or any adaptations, translations, or
derivative works based on the ARC Products or any portion thereof, including,
without limitation, as a value added reseller. Except with respect to the rights
of third parties to the Third Party Technology, no third party has any right to
manufacture, reproduce, distribute, market or exploit any underlying works or
materials of which any of the ARC Products are a "derivative work" as that term
is defined in the United States Copyright Act, Title 17, U.S.C. Section 101.
(e) Except as set forth on Schedule 2.13, all designs, drawings,
-------------
specifications, source code, object code, documentation, flow charts and
diagrams incorporating, embodying or reflecting any of the ARC Products at any
stage of their development (the "ARC Components") were written, developed and
created solely and exclusively by employees of ARC without the assistance of any
third party or entity or were created by third parties (including, without
limitation, each of the Stockholders), who assigned ownership of their rights to
ARC in valid and enforceable consultant confidentiality and invention assignment
agreements. All such employees and third parties have executed waivers of any
right, title or interest in the ARC Products and ARC Components pursuant to
documents prepared by Buyer's counsel. The Sellers have at all times used
commercially
<PAGE>
reasonable efforts to treat the ARC Products and the ARC Components as
containing trade secrets and has not disclosed or otherwise dealt with such
items in such a manner as to cause the loss of such trade secrets by release
into the public domain.
(f) To the Sellers' knowledge, no employee of ARC is in violation
of any term of any employment contract, patent disclosure agreement or any other
contract or agreement relating to the relationship of any such employee with ARC
or, to the best of the Sellers' knowledge, any other party, including, without
limitation, any previous employer, because of the nature of the business
conducted by ARC or proposed to be conducted by ARC.
(g) Each person presently or previously employed by ARC
(including independent contractors, if any) employed in a research and
development or other technical position has executed a confidentiality and non-
disclosure agreement previously provided to Purchaser or its representatives.
Such confidentiality and non-disclosure agreements constitute valid and binding
obligations of ARC and such person, enforceable in accordance with their
respective terms. To the best of ARC's and each of the Stockholder's knowledge,
neither the execution or delivery of such agreements, nor the carrying on of
ARC's business as employees by such persons, nor the conduct of ARC's business
as currently anticipated, will conflict with or result in a breach of the terms,
conditions or provisions of or constitute a default under any contract, covenant
or instrument under which any of such persons is obligated. ARC is not making
unauthorized use of any confidential information or trade secrets of any person,
including, without limitation, any former employer or any past or present
employee of ARC. Neither ARC nor, to the knowledge of the Sellers, any of ARC's
employees have any agreements or arrangements with any persons other than ARC
related to confidential information or trade secrets of such persons or
restricting any such employee's ability to engage in business activities of any
nature.
(h) No product liability or warranty claims which individually or
in the aggregate could exceed Five Thousand Dollars ($5,000) have been
communicated to or threatened against ARC nor, to the best of the Sellers'
knowledge, is there any specific situation, set of facts or occurrence that
provides a basis for such claim. ARC has provided to Buyer an accurate list of
all errors or "bugs" in the ARC Products which are contained in the computer
databases which ARC maintains for the purpose of tracking errors and "bugs" in
its software. Such list is set forth as Schedule 2.13 (h).
-----------------
(i) Prior to the date hereof, the Stockholders transferred all
rights, title and interest of the Stockholders in the ARC Products to ARC, and
the Stockholders have no rights, title or interest in the ARC Products.
2.14 Contracts. Except for contracts, commitments, plans, agreements and
---------
licenses (true and complete copies of which have been delivered to Buyer)
described in Schedule 2.14 hereto, ARC is not a party to or subject to:
-------------
(i) any plan or contract providing for bonuses, pensions,
options, stock purchases, deferred compensation, retirement payments, profit
sharing,
<PAGE>
collective bargaining or the like, or any contract or agreement with any labor
union;
(ii) any employment contract or contract for personal
services;
(iii) any contract or agreement relating to capital
expenditures in excess of $5,000 per annum;
(iv) any other contracts or agreements creating any
obligations of ARC of $5,000 or more per annum with respect to any such contract
or agreement not specifically disclosed elsewhere in this Agreement;
(v) any contract or agreement providing for the purchase of all
or substantially all of its requirements of a particular product from a
supplier;
(vi) any contract or agreement which by its terms does not
terminate or is not terminable without penalty by such entity or any successor
or assignee on not more than one month's notice.
(vii) any contract not made in the ordinary course of business;
(viii) any contract or agreement for the purchase of any fixed
asset for a price in excess of $5,000 whether or not such purchase is in the
ordinary course of business;
(ix) no agreements, contracts or commitments that provide
for the sale, licensing or distribution by ARC of any of its products,
technology, know-how, trademarks or trade names. Section 2.14 hereof sets forth
------------
all of the maintenance obligations of ARC without regard to the dollar amount of
such obligation;
(x) any contract containing covenants limiting the freedom of
such entity to compete in any line of business or with any person or entity;
(xi) any license agreement (as licensor or licensee);
(xii) any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money; or
(xiii) any contract or agreement with any officer, employee,
director or stockholder of ARC or with any persons or organizations controlled
by or affiliated with any of them.
ARC is not in default under any such contracts, commitments, plans, agreements
or licenses described in said Schedule, and none of the Sellers have any
knowledge of conditions or facts which with notice or passage of time, or both,
would constitute a default.
<PAGE>
Without limiting the provisions of Section 2.13, except for the License and
Distribution Agreement between ARC and SQLBench International, Inc., ARC has not
granted to any third party (including, without limitation, OEMs and site license
customers) any rights to reproduce or manufacture any of the ARC Products, nor
has ARC granted to any third party any exclusive rights of any kind with respect
to any of the ARC Products, including, without limitation, territorial
exclusivity or exclusivity with respect to particular versions, implementations
or translations of any of the ARC Products, nor has ARC granted any third party
any right to market any of the ARC Products under any "private label"
arrangements pursuant to which ARC is not identified as the source of such
goods.
2.15 Litigation. There is no litigation or governmental or
----------
administrative proceeding or investigation pending or, to the Sellers'
knowledge, threatened against ARC or any affiliate of ARC which may have an
adverse effect on ARC's properties, assets, prospects, financial condition or
business or which would prevent or hinder the consummation of the transactions
contemplated by this Agreement.
2.16 Compliance with Laws. ARC is in compliance with all applicable
--------------------
statutes, ordinances, orders, judgments, decrees and rules and regulations
promulgated by any federal, state, municipal or other governmental authority
which apply to ARC or to the conduct of its business, and ARC has not received
notice of a violation or alleged violation of any such statue, ordinance, order,
rule or regulation.
2.17 Insurance. The only insurance maintained by the Company is
---------
disclosed on Schedule 2.17 hereto, and if any insurance is disclosed on said
-------------
Schedule, then any such insurance policy is in full force and effect, all
premiums with respect thereto are currently paid, and ARC is in compliance in
all material respects with the terms thereof. Said insurance is adequate and
customary for the business engaged in by ARC and is sufficient for compliance by
ARC with all requirements of law and all agreements and leases to which ARC is a
party.
2.18 Warranty or Other Claims. There are no existing or threatened
------------------------
product liability, warranty or other similar claims, or any facts upon which a
material claim of such nature could be based, against ARC for products or
services which are defective or fail to meet any product or service warranties.
No claim has been asserted against ARC for renegotiation or price
redetermination of any business transaction, and there are no facts upon which
any such claim could be based.
2.19 Powers of Attorney. Except for the power of attorney granted to
------------------
Meyndt, Ransmayr, Schweiger & Partner with respect to the transactions
contemplated by this Agreement, ARC has not granted powers of attorney which are
presently outstanding.
2.20 Finder's Fee. None of the Sellers has incurred or become liable
------------
for any broker's commission or finder's fee relating to or in connection with
the transactions contemplated by this Agreement.
2.21 Corporate Records; Copies of Documents. The corporate record
--------------------------------------
books of ARC
<PAGE>
accurately record all corporate action taken by its stockholders and board of
directors and committees thereof. The copies of the corporate records of ARC, as
delivered to Buyer pursuant to this Agreement, are true and complete copies of
the originals of such documents. ARC has made available for inspection and
copying by Buyer and its counsel complete and correct copies of all documents
referred to in this Section or in the Schedules delivered to Buyer pursuant to
this Agreement.
2.22 Employee Benefit Programs; Employees; Labor Relations.
-----------------------------------------------------
(a) Except as set forth on Schedule 2.22(a) or as provided under
----------------
the laws of Austria, ARC does not have any employment contract, collective
bargaining or other labor agreement, any agreement containing severance or
termination pay arrangements, deferred compensation agreement, pension or
retirement plan, bonus or profit-sharing plan, stock option or purchase plan or
other non-terminable (with or without penalty) arrangement, group insurance,
group hospitalization or other employee benefit plan, in each case relating to
its employees.
(b) Upon termination of the employment of any of ARC's employees,
Buyer will not by reason of the transactions contemplated by this Agreement, or
anything done prior to or on the Closing Date be liable to any of said employees
for so-called "severance pay" or any other payments other than as provided by
mandatory provisions of Austrian law.
2.23 Disclosure. The representations, warranties and statements
----------
contained in this Agreement and in the certificates, exhibits and schedules
delivered to Buyer do not contain any untrue statement of a material fact, and,
do not omit to state a material fact required to be stated therein or necessary
in order to make such representations, warranties or statements not misleading
in light of the circumstances under which they were made. To the knowledge of
the Sellers, there are no facts which presently or may in the future have a
material adverse affect on the business, properties, prospects, operations or
condition of ARC which have not been specifically disclosed herein or in a
Schedule furnished herewith, other than general economic conditions affecting
ARC's industry.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS.
- ---------- ----------------------------------------------
As a material inducement to Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, each Stockholder hereby
severally makes to Buyer each of the representations and warranties set forth in
this Section 3 with respect to such Stockholder. No Stockholder shall have any
right of indemnity or contribution from ARC with respect to the breach of any
representation or warranty hereunder.
3.1 Authority. Such Stockholder has full right, authority, power and
---------
capacity to enter into this Agreement and such agreement, document and
instrument to be executed and delivered by or on behalf of him or her pursuant
to this Agreement and to carry out the transactions contemplated hereby and
thereby. This Agreement and each agreement, document
<PAGE>
and instrument executed and delivered by such Stockholder pursuant to this
Agreement constitutes, or when executed and delivered will constitute, valid and
binding obligations of such Stockholder enforceable in accordance with their
respective terms. The execution, delivery and performance by such Stockholder of
this Agreement and each such agreement, document and instrument:
(i) does not and will not violate any laws of the United
States, or any state or other jurisdiction (domestic or foreign) applicable to
such Stockholder or require such Stockholder to obtain any approval, consent or
waiver of, or make any filing with, any person or entity (governmental or
otherwise) that has not been obtained or made; and
(ii) does not and will not result in a breach of, constitute
a default under, accelerate any obligation under, or give rise to a right of
termination of, any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit, authorization,
order, writ, judgment, injunction, decree, determination or arbitration award to
which such Stockholder is a party or by which the property of such Stockholder
is bound or affected, or result in the creation or imposition of any mortgage,
pledge, lien, security interest or other charge or encumbrance on any of the
Subject Assets.
3.2 Finder's Fee. Such Stockholder has not incurred or become liable for
------------
any broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
3.3 Agreements. Each such Stockholder who is employed by ARC is not a
----------
party to any non-competition, trade secret or confidentiality agreement with any
party other than ARC. There are no agreements or arrangements not contained
herein or disclosed in a Schedule hereto, to which such Stockholder is a party
relating to the business of ARC or to such Stockholder's rights and obligations
as a stockholder, director or officer of ARC. Such Stockholder does not own,
directly or indirectly, on an individual or joint basis, any material interest
in, or serve as an officer or director of, any customer, competitor or supplier
of ARC, or any organization which has a contract or arrangement with ARC. Such
Stockholder has not at any time transferred any of the stock of ARC held by or
for such holder to any employee of ARC, which transfer constituted or could be
viewed as compensation for services rendered to ARC by said employee. The
execution, delivery and performance of this Agreement will not violate or result
in a default or acceleration of any obligation under any contract, agreement,
indenture or other instrument involving ARC to which such Stockholder is a
party. Notwithstanding the foregoing, the continued ownership of interests in
ARC by the Stockholders will not constitute a violation of this Section 3.3,
provided that ARC, on and after the Closing, (i) does not, directly or
indirectly, whether as owner, partner, shareholder, consultant, agent, employee,
co-venturer or otherwise, engage, participate, assist or invest in any Competing
Business (as hereinafter defined), (ii) refrains from directly or indirectly
employing, attempting to employ, recruiting or otherwise soliciting, inducing or
influencing any person to leave employment with the Buyer or Merger Sub, and
(iii) refrains from soliciting or encouraging any customer or supplier to
terminate or otherwise modify adversely its business relationship with the Buyer
or Merger Sub. For purposes of this Agreement, the
<PAGE>
term "Competing Business" shall mean a business conducted anywhere in the United
States, Europe or any other place in the world which is engaged in the business
of designing, developing, marketing, selling, distributing and/or consulting
with respect to software testing products.
SECTION 4. COVENANTS OF THE SELLERS.
- ---------- ------------------------
4.1 Making of Covenants and Agreements. Sellers hereby make their
----------------------------------
respective covenants and agreements set forth in this Section 4.
4.2 Conduct of Business. Between the date of this Agreement and the
-------------------
Second Closing Date, ARC will, and the Stockholders will cause ARC to, conduct
its business only in the ordinary course and refrain from changing or
introducing any method of management or operations except in the ordinary course
of business and consistent with prior practices.
4.3 Due Diligence; Production of Documents. ARC shall provide and
--------------------------------------
the Stockholders shall cause ARC to provide Buyer with full access to its books,
properties, management and employees so as to enable Buyer to conduct such
review of the business, assets and property of ARC as Buyer shall deem necessary
or appropriate in connection with the consummation of the transactions
contemplated by this Agreement.
4.4 Authorization from Others. Prior to the First Closing Date, ARC
-------------------------
shall obtain and the Stockholders shall use their reasonable best efforts to
cause ARC to obtain all authorizations, consents and permits of others required
to permit the consummation by it of the transactions contemplated by this
Agreement.
4.5 Notice of Default. Promptly upon the occurrence of, or promptly
-----------------
upon any Seller becoming aware of the impending or threatened occurrence of, any
event which would cause or constitute a breach or default, or would have caused
or constituted a breach or default had such event occurred or been known to such
Seller prior to the date hereof, of any of the representations, warranties or
covenants of any Seller contained in or referred to in this Agreement or in any
Schedule or Exhibit referred to in this Agreement, such Seller shall give
detailed written notice thereof to Buyer and shall use its best efforts to
prevent or promptly remedy the same.
4.6 Cooperation; Consummation of Agreement; Books and Records. Each
---------------------------------------------------------
Seller shall cooperate with all reasonable requests of Buyer and Buyer's counsel
in connection with the consummation of the transactions contemplated hereby, and
each Seller shall use its best efforts to perform and fulfill all conditions and
obligations on its part to be performed and fulfilled under this Agreement, to
the end that the transactions contemplated by this Agreement shall be fully
carried out. ARC shall maintain its books and records in accordance with good
business practices, on a basis consistent with past practices, and such entity
shall promptly make available to Buyer such books and records, any other
material or information regarding ARC as Buyer or its counsel, accountants or
other advisors may from time to time reasonably request.
<PAGE>
4.7 Tax Returns. ARC, with the approval of Buyer and in accordance
-----------
with applicable law, shall (i) promptly prepare and file on or before the due
date or any extension thereof all federal, state, local and foreign tax returns
required to be filed by ARC with respect to taxable periods of ARC that include
any period ending on or before the Second Closing Date and (ii) pay all Taxes of
ARC attributable to periods ending on or before the Second Closing Date.
4.8 Satisfaction of Indebtedness. At or prior to the First Closing,
----------------------------
ARC shall, and the Stockholders shall cause ARC to, cause all mortgages,
security interests, pledges and other arrangements securing indebtedness or
other encumbrances upon the Subject Assets to be extinguished.
4.9 1997 Financial Statements. Each Seller shall cooperate with
-------------------------
Buyer and shall promptly provide to Buyer all necessary information and
documentation requested by Buyer in connection with the preparation of any
audited financial statements required to be prepared under applicable U.S.
securities laws.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER.
- ---------- ---------------------------------------
5.1 Making of Representations and Warranties. As a material
----------------------------------------
inducement to the Sellers to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer hereby makes the representations and
warranties to the Sellers contained in this Section 5.
5.2 Organization of Buyer. Buyer is a corporation duly organized,
---------------------
validly existing and in good standing under the laws of the State of Delaware
with full corporate power to own or lease its properties and to conduct its
business in the manner and in the places where such properties are owned or
leased or such business is conducted by it.
5.3 Authority of Buyer. Buyer has full right, authority and power to
------------------
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by Buyer pursuant to this Agreement and to carry out the
transactions contemplated hereby. The execution, delivery and performance by
Buyer of this Agreement and each such other agreement, document and instrument
have been duly authorized by all necessary corporate action of Buyer and no
other action on the part of Buyer is required in connection therewith. This
Agreement and each other agreement, document and instrument executed and
delivered by Buyer pursuant to this Agreement constitute, or when executed and
delivered will constitute, valid and binding obligations of Buyer enforceable in
accordance with their terms. The execution, delivery and performance by Buyer of
this Agreement and each such agreement, document and instrument:
(i) does not and will not violate any provision of the
Certificate of Incorporation or by-laws of Buyer;
<PAGE>
(ii) does not and will not violate any laws of the United
States or of any state or any other jurisdiction applicable to Buyer or,
assuming no breach in the representations set forth in Sections 2.5 and 2.24
hereof, require Buyer to obtain any approval, consent or waiver of, or make any
filing with, any person or entity (governmental or otherwise) which has not been
obtained or made; and
(iii) does not and will not result in a breach of, constitute
a default under, accelerate any obligation under, or give rise to a right of
termination of any indenture, loan or credit agreement, or any other agreement,
mortgage, lease, permit, order, judgment or decree to which Buyer is a party and
which is material to the business and financial condition of Buyer and its
parent and affiliated organizations on a consolidated basis.
5.4 Litigation. There is no litigation or governmental or
----------
administrative proceeding or investigation pending or, to its knowledge,
threatened against Buyer which would prevent or hinder the consummation of the
transactions contemplated by this Agreement.
5.5 Finder's Fee. Buyer has not incurred or become liable for any
------------
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
5.6 Buyer USA Public Information. Buyer USA has heretofore
----------------------------
furnished the Stockholders with information regarding Buyer USA, including its
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and its
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997, each as
filed with the Securities and Exchange Commission ("SEC"), and will provide to
the Stockholders any Current, Annual or Quarterly Report filed by Buyer USA with
the SEC at or prior to the Closing Date (as any such documents have been amended
since their original filing, the "Buyer USA SEC Documents"). As of their
respective filing dates, the Buyer USA SEC Documents did not or will not contain
any untrue statements of material fact or omit to state material facts required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective filing dates, the Buyer USA SEC Documents complied or will comply in
all material respects with the applicable requirements of the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated under such statutes.
5.7 Buyer USA Indebtedness. Buyer USA has no material indebtedness or
----------------------
other obligations not reflected on the face of the Buyer USA SEC Documents.
SECTION 6. COVENANTS OF BUYER.
- ---------- ------------------
6.1 Authorization from Others. Prior to the First Closing Date, Buyer
-------------------------
shall obtain all authorizations, consents and permits of others required to
permit the consummation by it of the transactions contemplated by this
Agreement.
<PAGE>
6.2 Cooperation; Consummation of Agreement; Books and Records. Buyer
---------------------------------------------------------
shall cooperate with all reasonable requests of Sellers' counsel in connection
with the consummation of the transactions contemplated hereby, and Buyer shall
use its best efforts to perform and fulfill all conditions and obligations on
its part to be performed and fulfilled under this Agreement, to the end that the
transactions contemplated by this Agreement shall be fully carried out.
6.3 Notice of Default. Promptly upon the occurrence of, or promptly
-----------------
upon the Buyer becoming aware of the impending or threatened occurrence of, any
event which would cause or constitute a breach or default, or would have caused
or constituted a breach or default had such event occurred or been known to the
Buyer prior to the date hereof, of any of the representations, warranties or
covenants of the Buyer contained in or referred to in this Agreement or in any
Schedule or Exhibit referred to in this Agreement, the Buyer shall give detailed
written notice thereof to the Sellers and shall use its best efforts to prevent
or promptly remedy the same.
SECTION 7. CONDITIONS.
- ---------- ----------
7.1 Conditions to the Obligations of Buyer.
--------------------------------------
7.1.1 Conditions to Obligations of Buyer at First Closing. The
---------------------------------------------------
obligation of Buyer to consummate this Agreement and the transactions
contemplated hereby to be consummated at the First Closing are subject to the
fulfillment, prior to or at the First Closing, of the following conditions
precedent:
(a) Representations; Warranties; Covenants. Each of the
--------------------------------------
representations and warranties of the Sellers contained in Section 2 and of the
Stockholders in Section 3 shall be true and correct in all material respects as
though made on and as of the First Closing Date; and the Sellers shall, on or
before the First Closing, have performed all of their obligations hereunder
which by the terms hereof are to be performed on or before the First Closing.
(b) No Material Change. There shall have been no
------------------
material adverse change in the financial condition, prospects, properties,
assets, liabilities, business or operations of ARC since the date hereof.
(c) Certificate from Officers. ARC shall have delivered
-------------------------
to Buyer a certificate of the General Manager of ARC and each Stockholder shall
have delivered a certificate dated as of the First Closing Date to the effect
that the statements set forth in paragraphs (a) and (b) above in this Section
7.1 are true and correct.
<PAGE>
(d) Opinion of Counsel. At the First Closing, Buyer
------------------
shall have received from Meyndt, Ransmayr, Schweiger & Partner, counsel for ARC
and the Stockholders, an opinion as of said date, in the form attached hereto as
Exhibit 7.1(d).
- ---------------
(e) No Litigation. There shall have been no
-------------
determination by Buyer, acting in good faith, that the consummation of the
transactions contemplated by this Agreement has become inadvisable or
impracticable by reason of the institution or threat by any person or any
federal, state, foreign or other governmental authority of litigation,
proceedings or other action against Buyer or any Seller.
(f) Consents. ARC shall have made, and the
--------
Stockholders shall have caused ARC to make, all filings with and notifications
of governmental authorities, regulatory agencies and other entities required to
be made by such entity in connection with the execution and delivery of this
Agreement, the performance of the transactions contemplated hereby and the
continued operation of the businesses of such entity to be acquired by Buyer
subsequent to the First Closing; and the Sellers shall have received all
authorizations, waivers, consents and permits, in form and substance reasonably
satisfactory to Buyer, from all third parties, including, without limitation,
applicable governmental authorities, regulatory agencies, lessors, lenders and
contract parties required to permit the continuation of the business of such
entity by Buyer and the consummation of the transactions contemplated by this
Agreement, and in connection with the transfer of the Subject Assets.
(g) Employment Agreements. Each of Ernst Ambichl,
---------------------
Manfred Reindl and Bernd Greifeneder shall have executed and delivered to Buyer
an Employment Agreement in substantially the forms of Exhibit 7.1(g).
--------------
(h) Cancellation of OEM Agreement. All parties to that
-----------------------------
certain Software OEM Agreement, dated as of November 11, 1996, among, inter
-----
alia, Buyer and ARC (as amended or modified to date, the "OEM Agreement") shall
- -----
have been terminated effective October 1, 1997.
(i) Closing of Beta Transaction. All conditions to the
---------------------------
closing of the transactions contemplated by that certain Agreement and Plan of
Merger, dated as of the date hereof, among the Buyer USA, Beta and the
stockholders of Beta (the "Merger") shall have been satisfied or waived and the
Merger (as defined therein) shall have been consummated.
7.1.2 Conditions to the Obligations of Buyer at the Second Closing.
------------------------------------------------------------
The obligations of Buyer to consummate this Agreement and the transactions
contemplated hereby to be consummated at the Second Closing are subject to the
fulfillment , prior to the Second closing, of the following conditions
precedent:
(a) Representations; Warranties; Covenants. Each of the
--------------------------------------
representations and warranties of the Sellers contained in Section 2 and of the
Stockholders in Section 3 shall be true and correct in all material respects as
though made on and as of the Second Closing Date; and the Sellers shall, on or
before the Second Closing, have performed all of their obligations hereunder
which by the terms hereof are to be performed on or before the Closing.
<PAGE>
(b) No Material Change. There shall have been no
------------------
material adverse change in the financial condition, prospects, properties,
assets, liabilities, business or operations of ARC since the date hereof.
(c) Certificate from Officers. ARC shall have delivered
-------------------------
to Buyer a certificate of the President and Chief Financial Officer of ARC and
each Stockholder shall have delivered a certificate dated as of the Second
Closing Date to the effect that the statements set forth in paragraphs (a) and
(b) above in this Section 7.1.2 are true and correct.
7.2 Conditions to Obligations of the Sellers.
----------------------------------------
7.2.1 The Sellers' obligations to consummate this Agreement and
the transactions contemplated hereby is subject to the fulfillment, prior to or
at the First Closing, of the following conditions precedent:
(a) Representations; Warranties; Covenants. Each of the
--------------------------------------
representations and warranties of Buyer contained in Section 5 shall be true and
correct as though made on and as of the First Closing Date; Buyer shall, on or
before the Closing, have performed all of its obligations hereunder which by the
terms hereof are to be performed on or before the First Closing; and Buyer shall
have delivered to the Sellers a certificate of the Chief Executive Officer,
President or Treasurer of Buyer dated as of the First Closing Date to such
effect.
(b) No Material Change. There shall have been no material
------------------
adverse change in the financial condition, prospects, properties, assets,
liabilities, business or operations of the Buyer since the date hereof.
(c) Opinion of Counsel. At the First Closing, the
------------------
Sellers shall have received from Goodwin, Procter & Hoar LLP, counsel for Buyer,
an opinion as of said date, in the form attached hereto as Exhibit 7.2(b).
--------------
(d) No Litigation. There shall have been no
-------------
determination by the Sellers, acting in good faith, that the consummation of the
transactions contemplated by this Agreement has become inadvisable or
impracticable by reason of the institution or threat by any person or any
federal, state, foreign or other governmental authority of litigation,
proceedings or other action against Buyer or any Seller.
(e) Consents. The Buyer shall have made all filings with
--------
and notifications of governmental authorities, regulatory agencies and other
entities required to be made by such entity in connection with the execution and
delivery of this Agreement, the performance of the transactions contemplated
hereby and the continued operation of the business of Beta to be acquired by
Buyer subsequent to the First Closing; and the Buyer shall have received all
authorizations, waivers, consents and permits, in form and substance
<PAGE>
reasonably satisfactory to the Sellers, from all third parties, including,
without limitation, applicable governmental authorities, regulatory agencies,
lessors, lenders and contract parties required to permit the continuation of the
business of ARC by Buyer and the consummation of the transactions contemplated
by this Agreement.
(f) Employment Agreements. The Buyer shall have executed
---------------------
and delivered to each of Ernst Ambichl, Manfred Reindl and Bernd Greifeneder an
Employment Agreement in substantially the form of Exhibit 7.1(g) attached
--------------
hereto.
(g) Closing of Beta Transaction. All conditions to the
---------------------------
closing of the transactions contemplated by that certain Agreement and Plan of
Merger, dated as of the date hereof, among Buyer USA, Beta and the stockholders
of Beta (the "Merger Agreement") shall have been satisfied or waived and the
transactions contemplated by the Merger Agreement shall have been consummated.
7.2.2 Conditions to the Obligations of Sellers at the Second Closing.
--------------------------------------------------------------
The obligations of the Sellers to consummate this Agreement and the transactions
contemplated hereby to be consummated at the Second Closing are subject to the
fulfillment, prior to or at the Second closing, of the following conditions
precedent:
(a) Representations; Warranties; Covenants. Each of the
--------------------------------------
representations and warranties of Buyer contained in Section 5 shall be true and
correct as though made on and as of the Second Closing Date; Buyer shall, on or
before the Second Closing, have performed all of its obligations hereunder which
by the terms hereof are to be performed on or before the Second Closing; and
Buyer shall have delivered to the Sellers a certificate of the Chief Executive
Officer, President or Treasurer of Buyer dated as of the Second Closing Date to
such effect.
(b) No Material Change. There shall have been no material
------------------
adverse change in the financial condition, prospects, properties, assets,
liabilities, business or operations of the Buyer since the date hereof.
SECTION 8. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED.
- ---------- -------------------------------------------
8.1 Termination. At any time prior to the Closing, this Agreement
-----------
may be terminated as follows:
(i) by mutual written consent of all of the parties
to this Agreement;
(ii) by Buyer, pursuant to written notice by Buyer to
the Sellers, if any of the conditions set forth in Section 7.1 of this Agreement
have not been satisfied at or prior to the First Closing Date and Buyer is not
then in default hereunder; and
<PAGE>
(iii) by the Sellers, pursuant to written notice by
Sellers to Buyer, if any of the conditions set forth in Section 7.2 of this
Agreement have not been satisfied at or prior to the First Closing Date and the
Sellers are not then in default hereunder.
8.2 Effect of Termination. All obligations of the parties hereunder
---------------------
shall cease upon any termination pursuant to Section 8.1; provided, however,
-------- -------
that the provisions of this Section 8, Section 10.2 and Section 10.10 hereof
shall survive any termination of this Agreement.
SECTION 9. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
---------- --------------------------------------------
9.1 Survival of Warranties; Setoff.
------------------------------
(a) Each of the representations, warranties, agreements,
covenants and obligations herein or in any schedule, exhibit, certificate or
financial statement delivered by any party to the other party incident to the
transactions contemplated hereby are material, shall be deemed to have been
relied upon by the other party and shall survive the Closing regardless of any
investigation and shall not merge in the performance of any obligation by either
party hereto. Subject to Section 9.1(c) below, each party shall be liable to any
other party for all damages, liabilities, losses, taxes, fines, penalties,
expenses or costs (including reasonable attorneys fees and expenses) of any kind
or nature whatsoever (collectively "Losses") which may be sustained, suffered or
incurred by or against such party as a result of any breach of this Agreement or
any document or instrument related hereto or in any Schedule, exhibit or
certificate delivered pursuant hereto.
(b) Subject to Section 9.1(c) below, any breach by the Sellers
of a representation, covenant or obligation contained in this Agreement, in any
agreement or document related hereto (other than any Employment Agreement) or in
any Schedule, exhibit or certificate delivered pursuant hereto shall entitle
Buyer first to set off from any future payment that Buyer is to make pursuant to
the Note, amounts equal to the Losses sustained, suffered or incurred by or made
against the Buyer as a result of such breach and then to collect the balance, if
any, directly from the Sellers.
(c) Notwithstanding the foregoing, the Sellers shall not have
any liability to Buyer for any breach of or noncompliance with this Agreement
(and with any other document executed by any of the Sellers in connection
herewith), including by way of set off from any future payments that Buyer is
required to make pursuant to the Note, unless (a) the aggregate amount of all
Losses shall exceed $25,000, and thereafter, Sellers shall only be liable for
Losses in excess of said $25,000; and (b) such claim, except claims with respect
to Section 2.8 or Section 2.13 which may be asserted until the expiration of the
applicable statue of limitations, is asserted against the Sellers (whether or
not such Losses have actually been incurred) on or before the third anniversary
of the Closing Date. Buyer agrees to reasonably cooperate to minimize Losses.
<PAGE>
(d) Notwithstanding the foregoing, Buyer shall not have any
liability to any Seller for breach of or noncompliance with this Agreement or
with any other document executed by Buyer in connection herewith except the Note
or the Employment Agreements, unless and until (a) the aggregate amount of all
Losses shall exceed $25,000, in which case, Buyer shall thereafter only be
liable for Losses in excess of said $25,000; and (b) such claim is asserted
against Buyer (whether or not such Losses have been actually incurred) on or
before the third anniversary of the Closing Date. The Sellers agree to
reasonably cooperate to minimize Losses.
SECTION 10. MISCELLANEOUS.
- ---------- -------------
10.1 Bulk Sales Law. Buyer waives compliance by the Sellers with the
--------------
provisions of any applicable bulk sales, fraudulent conveyance or other law for
the protection of creditors in connection with the transfer of the Subject
Assets under this Agreement.
10.2 Fees and Expenses.
-----------------
(a) Except as set forth herein, each of the parties will bear
its own expenses in connection with the negotiation and the consummation of the
transactions contemplated by this Agreement, and no expenses of the Sellers or
the Stockholders relating in any way to the purchase and sale of the Subject
Assets hereunder and the transactions contemplated hereby, including without
limitation, legal, accounting or other professional expenses of the Sellers or
the Stockholders, shall be charged to or paid by Buyer or included in any of the
Assumed Liabilities.
(b) ARC will pay all costs incurred, whether at or subsequent to
the Closing, in connection with the transfer of the Subject Assets to Buyer as
contemplated by this Agreement, including without limitation, all sales, use,
excise, real property and other transfer taxes and charges applicable to such
transfer; all recording charges and fees applicable to the recordation of deeds
and mortgages and other instruments of transfer; and all costs of obtaining or
transferring permits, registrations, applications and other tangible and
intangible properties. Notwithstanding the foregoing, the Sellers shall not be
liable for any costs of obtaining or transferring permits, registrations,
applications and other tangible or intangible properties, that would not have
been necessary for the conduct of the business of ARC in the jurisdictions and
in the manner in which ARC did business on the date hereof.
10. Governing Law. This Agreement shall be construed under and
-------------
governed by the internal laws of the Commonwealth of Massachusetts, U.S.A.
without regard to its conflict of laws provisions. Except with respect to
matters as to which injunctive relief is being sought, any dispute arising out
of this Agreement or related to its violation, termination or nullity shall be
finally settled under the Rules of Arbitration and Conciliation of the
International Arbitral Centre of the Austrian Federal Economic Chamber in Vienna
(Vienna Rules) by three arbitrators appointed in accordance with such rules. The
substantive law of the Commonwealth of Massachusetts shall be applicable,
whereby the parties hereto waive the application of the Austrian Conflict of Law
Rules (IPRG) and the application of the Convention
<PAGE>
of International Sales of Goods (CISG). The language to be used in the arbitral
proceeding shall be English. The International Arbitral Centre in Vienna shall
have exclusive jurisdiction, no other forum shall have jurisdiction either for a
request of arbitration or any other means of conducting the arbitral
proceedings. The venue and seat of arbitration shall be in Linz, Austria. Each
of the parties hereto further agrees that service of any process, summons,
notice or document by U.S. registered mail to its address set forth herein shall
be effective service of process for any action, suit or proceeding brought
against it in any such court.
10.4 Notices. Any notice, request, demand or other communication
-------
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon receipt, or if
sent by registered or certified mail, upon the sooner of the date on which
receipt is acknowledged or the expiration of three days after deposit in United
States Post Office facilities properly addressed with postage prepaid. All
notices to a party will be sent to the addresses set forth below or to such
other address or person as such party may designate by notice to each other
party hereunder:
TO BUYER: Segue Software, Inc.
- --------
1320 Centre Street
Newton Centre, MA 02159
Facsimile: 617-796-1621
With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Jeffrey C. Hadden, Esq.
Facsimile: 617-523-1231
TO ARC OR THE
STOCKHOLDERS: ARC - Dr. Ambichl & Dr. Reindl
- -------------
Communication GmbH
Wiener Strasse 131
4020 Linz
With a copy to: Perrie, Buker, Jones & Morton, P.C.
115 Perimeter Center Place, Suite 170
Atlanta, GA 30346
Attn: Charles Buker, Esq.
Facsimile: 770-804-0509
and: Meyndt, Ransmayr, Schweiger &
Partner Rechtsanwalte
A-4020 Linz
Landstrasse 42/Rudigierstrasse
Attn: Thomas Schweiger
Facsimile: 0732/796906
<PAGE>
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
10.5 Entire Agreement. This Agreement, including the Schedules and
----------------
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such Schedules and Exhibits or in such
other writings; and all inducements to the making of this Agreement relied upon
by either party hereto have been expressed herein or in such Schedules or
Exhibits or in such other writings.
10.6 Assignability; Binding Effect. Prior to the Second Closing, this
-----------------------------
Agreement shall only be assignable by Buyer to a corporation, partnership or
limited liability company controlling, controlled by or under common control
with Buyer upon written notice to the Sellers. After the Second Closing,
Buyer's rights and obligations hereunder shall be freely assignable. This
Agreement may not be assigned by the Sellers without the prior written consent
of Buyer. This Agreement shall be binding upon and enforceable by, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns.
10.7 Captions and Gender. The captions in this Agreement are for
-------------------
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
10.8 Execution in Counterparts. For the convenience of the parties
-------------------------
and to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
10.9 Amendments. This Agreement may not be amended or modified, nor
----------
may compliance with any condition or covenant set forth herein be waived, except
by a writing duly and validly executed by each party hereto, or in the case of a
waiver, the party waiving compliance.
10.10 Publicity and Disclosures. No press releases or public
-------------------------
disclosure either written or oral, of the transactions contemplated by this
Agreement, shall be made by a party to this Agreement without the prior
knowledge and written consent of Buyer, ARC and the Stockholders.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
BUYER: SEGUE SOFTWARE, INC.
- -----
By: /s/ J. Jeffrey Bingenheimer
-----------------------------------------
Name:
Title:
SELLERS: ARC - DR. AMBICHL & DR. REINDL
- -------
COMMUNICATION GmbH
By: /s/ Manfred Reindl
-----------------------------------------
Name:
Title:
/s/ Ernst Ambichl
-----------------------------------------
Ernst Ambichl
/s/ Manfred Reindl
-----------------------------------------
Manfred Reindl
/s/ Bernd Griefeneder
-----------------------------------------
Bernd Greifeneder
<PAGE>
Exhibit 2.2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as of
December 30, 1997 by and among Segue Software, Inc., a Delaware corporation
("Buyer"), SGE Merger Corp., a Delaware corporation and a wholly owned
subsidiary of Buyer ("Merger Sub"), SQLBench International, Inc., a Georgia
corporation ("SQLBench"), and each holder of the capital stock of SQLBench,
which include Klaus K. Obermeier and Susan P. Obermeier, (the "Stockholders"
and, together with SQLBench, the "Sellers").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the SQLBench Stockholders own of record and beneficially all of
the issued and outstanding capital stock of SQLBench, consisting of 10,000
shares of SQLBench's Common Stock, $.10 par value per share (said shares being
referred to herein as the "SQLBench Shares"); and
WHEREAS, the SQLBench Stockholders desire to sell all of the SQLBench
Shares to Buyer, and Buyer desires to acquire all of the SQLBench Shares
pursuant to a forward triangular merger.
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
SECTION 1. THE MERGER.
--------- ----------
1.1 The Merger.
----------
1.1.1 The Merger. On the terms and subject to the conditions
----------
set forth in this Agreement, at the Effective Time (as defined in Section 1.1.3
hereof), in accordance with this Agreement, the Delaware General Corporation Law
(the "Delaware Law") and the Georgia Business Corporation Code (the "Georgia
Code"), SQLBench shall merge with and into Merger Sub (the "Merger"), the
separate existence of SQLBench shall cease and Merger Sub shall continue, as a
wholly-owned subsidiary of Buyer, as the surviving corporation under the
corporate name SGE Merger Corp. Merger Sub, in its capacity as the corporation
surviving the Merger, is sometimes referred to herein as the "Surviving
Corporation," and Merger Sub and SQLBench are sometimes referred to collectively
herein as the "Constituent Corporations."
<PAGE>
1.1.2 Effect of the Merger. At and after the Effective Time, the
--------------------
Merger shall have the effects set forth in Sections 259 and 261 of the Delaware
Law and Section 14-2-1106 of the Georgia Code.
1.1.3 Consummation of the Merger. On the Closing Date, the
--------------------------
parties hereto shall cause the Certificate of Merger to be filed with the
Secretary of State of the State of Delaware, in such form as required by, and
executed in accordance with, Section 251 of the Delaware Law. On the Closing
Date, the parties hereto shall cause (a) Articles of Merger to be filed with the
Secretary of State of Georgia, in such form as required by, and executed in
accordance with, Section 14-2-1105 of the Georgia Code and (b) publication of
notice of merger to be made as required by Section 14-2-1105.1 of the Georgia
Code. The Merger shall be effective as of the date of filing of the Certificate
of Merger (the "Effective Time").
1.1.4 Certificate of Incorporation. From and after the
----------------------------
Effective Time, the Certificate of Incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be and become the Certificate of
Incorporation of the Surviving Corporation, and shall thereafter continue in
effect until amended as provided therein and in accordance with the Delaware
Law.
1.1.5 By-Laws. The By-Laws of Merger Sub, as in effect
-------
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation, and shall thereafter continue in effect until amended as provided
therein and in accordance with the Delaware Law.
1.1.6 Directors and Officers. The directors and officers of
----------------------
Merger Sub holding office immediately prior to the Effective Time shall, from
and after the Effective Time, be the directors and officers of the Surviving
Corporation, until their respective successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of Incorporation and By-
Laws.
1.1.7 Conversion of Shares. At the Effective Time, by virtue of
--------------------
the Merger, the manner and the basis of converting the shares of capital stock
of SQLBench and Merger Sub shall be as follows:
(a) each share of SQLBench Common Stock (without regard to
class) issued and outstanding at the Effective Time (the "SQLBench Shares" or
the "Shares") shall, by virtue of the Merger and without any action on the part
of the Stockholders or SQLBench, be converted into the right to receive the
following consideration (the "Merger Consideration"):
(i) $1,392,400 (the "Aggregate Cash Consideration
Amount") divided by 10,000 (the "Per Share Cash Consideration Amount"); and
(ii) that fraction of Buyer Common Stock, the
numerator of which equals 143,885 and the denominator of which equals 10,000.
The aggregate number of shares of Buyer's Common Stock deliverable pursuant to
this Section 1.1.7(a)(ii) shall be hereinafter referred to as the "Buyer
Shares;" and
<PAGE>
(b) all of the certificates representing the SQLBench
Shares, by virtue of the Merger and without any action on the part of the
Stockholders or SQLBench, shall be deemed to be no longer outstanding, shall not
be transferable on the books of the Surviving Corporation, and shall represent
solely the right to receive the amount determined pursuant to Section 1.1.7(a)
hereof.
1.1.8 Manner of Payment. At the Effective Time, Buyer shall (i)
-----------------
pay by wire transfer to an account designated by the Stockholders'
Representative (as defined below) for the account of the Stockholders an amount,
in immediately available funds, equal to one-half ( 1/2) of the Aggregate Cash
Consideration Amount, (ii) deliver to the Stockholders' Representative for the
account of the Stockholders, the Note (as defined below) and (iii) deliver to
the Stockholders' Representative for the account of the Stockholders, the Buyer
Shares.
1.2 Promissory Note. At the Effective Time, Buyer shall execute and
---------------
deliver to the Stockholders' Representative on behalf of the Stockholders a
subordinated promissory note of Buyer (the "Note") in a principal amount equal
to $696,200, such Note to be dated the date of the Closing and to be in
substantially the form of Exhibit 1.2 attached hereto. At such time or times as
-----------
any amounts become due and payable under the Note in accordance with the terms
thereof, Buyer shall pay or cause to be paid to the Stockholders'
Representative, as paying agent, in immediately available funds, the amounts
then due and payable under the Note, such amounts so deposited with
Stockholders' Representative to be distributed by the Stockholders'
Representative in the manner provided in, and otherwise to be subject to the
terms of, this Agreement. At such time as all obligations under the Note are
satisfied in full, the Stockholders' Representative shall deliver to Buyer the
Note marked "CANCELED."
1.3 Lock-up Agreement. Each Stockholder agrees not to sell, pledge,
-----------------
encumber or otherwise transfer or dispose of all or any portion of the Buyer
Shares issued to such Stockholder hereunder during the two (2) year period
following the Closing Date. Buyer may impose stop-transfer instructions with
respect to the Buyer Shares subject to the foregoing restriction until the end
of such two (2) year period.
1.4 Stockholders' Representative.
----------------------------
(a) In order to administer efficiently (i) the
implementation of the Agreement by the Stockholders, (ii) the waiver of any
condition to the obligations of the Stockholders to consummate the transactions
contemplated hereby and (iii) the settlement of any dispute with respect to the
Agreement, the Stockholders hereby designate Mr. Klaus Obermeier as their
representative (the "Stockholders' Representative").
(b) The Stockholders hereby authorize the Stockholders'
Representative (i) to take all action necessary in connection with the
implementation of the Agreement on behalf of the Stockholders, the waiver of any
condition to the obligations of the Stockholders to consummate the transactions
contemplated hereby or the settlement of any
<PAGE>
dispute, (ii) to give and receive all notices required to be given under the
Agreement and (iii) to take any and all additional action as is contemplated to
be taken by or on behalf of the Stockholders by the terms of this Agreement.
(c) In the event that the Stockholders' Representative dies,
becomes legally incapacitated or resigns from such position, Susan P. Obermeier
shall fill such vacancy and shall be deemed to be the Stockholders'
Representative for all purposes of this Agreement; however, no change in the
Stockholders' Representative shall be effective until Buyer is given notice of
it by the Stockholders.
(d) All decisions and actions by the Stockholders'
Representative shall be binding upon all of the Stockholders, and no Stockholder
shall have the right to object, dissent, protest or otherwise contest the same.
(e) By their execution of this Agreement, the Stockholders
agree that:
(i) Buyer shall be able to rely conclusively on the
instructions and decisions of the Stockholders' Representative as to any actions
required or permitted to be taken by the Stockholders or the Stockholders'
Representative hereunder, and no party hereunder shall have any cause of action
against Buyer for any action taken by Buyer in reliance upon the instructions or
decisions of the Stockholders' Representative;
(ii) all actions, decisions and instructions of the
Stockholders' Representative shall be conclusive and binding upon all of the
Stockholders and no Stockholder shall have any cause of action against the
Stockholders' Representative for any action taken, decision made or instruction
given by the Stockholders' Representative under this Agreement, except for fraud
or willful breach of this Agreement by the Stockholders' Representative;
(iii) remedies available at law for any breach of the
provisions of this Section 1.4 are inadequate; therefore, Buyer shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving damages if Buyer brings an action to enforce the provisions of this
Section 1.4; and
(iv) the provisions of this Section 1.4 are
independent and severable, shall constitute an irrevocable power of attorney,
coupled with an interest and surviving death, granted by the Stockholders to the
Stockholders' Representative and shall be binding upon the executors, heirs,
legal representatives and successors of each Stockholder.
(f) All fees and expenses incurred by the Stockholders'
Representative shall be paid by the Stockholders.
1.5 Closing. The transactions contemplated by this Agreement shall be
-------
consummated at the closing (the "Closing") which will take place at the offices
of Goodwin, Procter & Hoar LLP, Exchange Place, Boston, Massachusetts on
December 30, 1997, or at such other place or earlier or later date or time as
may be fixed by mutual agreement of Buyer and the Sellers (the "Closing Date").
<PAGE>
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.
- --------- --------------------------------------------------
2.1 Making of Representations and Warranties. As a material
----------------------------------------
inducement to Buyer to enter into this Agreement and consummate the transactions
contemplated hereby, each of the Stockholders jointly and severally hereby makes
to Buyer the representations and warranties contained in this Section 2.
2.2 Organization and Qualifications of SQLBench. SQLBench is a
-------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the state of Georgia with full corporate power and authority to own or lease
its properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is currently conducted or
proposed to be conducted. The copies of SQLBench's Certificate of Incorporation
as amended to date, certified by the appropriate governmental officer, and By-
laws, as amended to date, certified by SQLBench's Clerk or Secretary, and
heretofore delivered to Buyer's counsel, are complete and correct, and no
amendments thereto are pending. SQLBench is not in violation of any provision
of its Certificate of Incorporation or By-laws. SQLBench is not qualified to do
business as a foreign corporation in any state or jurisdiction.
2.3 Subsidiaries. SQLBench has no subsidiaries and does not own any
------------
securities issued by any other business organization or governmental authority.
SQLBench does not own and does not have any direct or indirect interest in or
control over any corporation, partnership, joint venture or entity of any kind.
2.4 Capital Stock; Beneficial Ownership. The authorized capital
-----------------------------------
stock of SQLBench consists of 1,000,000 shares of common stock, $.10 par value
per share, of which 10,000 shares are duly and validly issued, outstanding,
fully paid and non-assessable and of which 990,000 shares are authorized but
unissued. There are no outstanding options, warrants, rights, commitments,
preemptive rights or agreements of any kind for the issuance or sale of, or
outstanding securities convertible into, any additional shares of capital stock
of any class of SQLBench. None of the capital stock of SQLBench has been issued
in violation of any federal or state law. There are no voting agreements,
trusts, proxies or other agreements, instruments or undertakings with respect to
the voting of the capital stock of SQLBench to which SQLBench or any Stockholder
is a party. The Stockholders own beneficially and of record all of the
outstanding shares of capital stock of SQLBench which consists solely of the
SQLBench Shares set forth on Schedule 2.4 hereto.
------------
2.5 Authority of SQLBench. SQLBench has full right, authority and
---------------------
power to enter into this Agreement and each agreement, document and instrument
to be executed and delivered by SQLBench pursuant to this Agreement and to carry
out the transactions contemplated hereby. The execution, delivery and
performance by SQLBench of this
<PAGE>
Agreement and each such other agreement, document and instrument have been duly
authorized by all necessary action of SQLBench and its stockholders and no other
action on the part of SQLBench or its stockholders or otherwise is required in
connection therewith. This Agreement and each agreement, document and instrument
executed and delivered by SQLBench pursuant to this Agreement constitutes, or
when executed and delivered will constitute, valid and binding obligations of
SQLBench enforceable in accordance with their terms. The execution, delivery and
performance by SQLBench of this Agreement and each such agreement, document and
instrument:
(i) do not and will not violate any provision of the
Certificate of Incorporation (or similar organizational document) or By-laws of
SQLBench;
(ii) do not and will not violate any laws of the United
States, or any state or other jurisdiction (domestic or foreign) applicable to
SQLBench or require SQLBench to obtain any approval, consent or waiver of, or
make any filing with, any person or entity (governmental or otherwise) that has
not been obtained or made, except where the failure of which will, individually
or in the aggregate, not result in a material adverse affect on the business or
prospects of SQLBench; and
(iii) do not and will not result in a breach of, constitute
a default under, accelerate any obligation under, or give rise to a right of
termination of any indenture or loan or credit agreement or any other agreement,
contract, instrument, mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award to which
SQLBench is a party or by which the property of SQLBench is bound or affected,
or result in the creation or imposition of any mortgage, pledge, lien, security
interest or other charge or encumbrance on any of SQLBench's assets or property
or on the SQLBench Shares.
2.6 Real and Personal Property.
--------------------------
(a) Owned Real Property. SQLBench does not own any real
-------------------
property.
(b) Leased Real Property. All of the real property leased by
--------------------
SQLBench, as tenant or lessee, is identified on Schedule 2.6(b) hereto
---------------
(collectively referred to herein as the "Leased Real Property"). The
Stockholders hereby make the following representations and warranties with
respect to the Leased Real Property:
(i) SQLBench holds a good, clear, marketable, valid and
enforceable leasehold interest in the Leased Real Property;
(ii) None of the Sellers is aware of any material defects
in the physical condition of any improvements constituting a part of the Leased
Real Property, including, without limitation, structural elements, mechanical
systems, roofs or parking and loading areas, and, to the knowledge of the
Sellers, all of such improvements are in reasonable
<PAGE>
operating condition and repair, have been maintained in accordance with past
practice and are free from material infestation by rodents or insects;
(iii) The copies of the lease (the "Lease") for the Lease
Real Property delivered by SQLBench to Buyer is complete, accurate, true and
correct;
(iv) The Lease is in full force and effect and has not been
modified, amended, or altered, in writing or otherwise;
(v) All obligations of the landlord or lessor under the
Lease which have accrued have been performed, and to the best of the knowledge
of the Stockholders, no landlord or lessor is in default under the Lease;
(vi) All obligations of SQLBench under the Lease which have
accrued have been performed, and SQLBench is not in default under the Lease, and
no circumstance presently exists which, with notice or the passage of time, or
both, would give rise to a default by SQLBench; and
(vi) SQLBench has obtained or will obtain prior to the
Closing the consent of the landlord or lessor under the Lease whose consent is
required to the transfer of the Leased Real Property to Buyer, and such transfer
will not give the landlord or lessor under the Lease any remedy, including,
without limitation, any right to declare a default under the Lease.
(c) Personal Property. A complete description of SQLBench's
-----------------
fixtures, machinery, equipment and other tangible personal property is
contained in Schedule 2.6(c) hereto. SQLBench has good and marketable title
---------------
to all of its personal property. None of such personal property or assets is
subject to any mortgage, pledge, lien, conditional sale agreement, security
agreement, encumbrance or other charge. All leasehold improvements, furnishings,
machinery, equipment and other tangible personal property of SQLBench have been
maintained consistent with past practice, are suitable for the purposes for
which they are intended and are in good repair.
(d) No Third Party Rights. Neither TEK Channels
---------------------
International Inc. nor any other person or entity has any right, title or
interest in any assets or property used in the operation of the business of
SQLBench.
2.7 Financial Statements.
--------------------
(a) Sellers have delivered to Buyer the following financial
statements, copies of which are attached hereto as Schedule 2.7:
------------
(i) Unaudited Balance sheet of SQLBench for the fiscal
year ending on December 31, 1996 and statements of income and retained earnings
for the year then ended, with appropriate footnotes, certified by SQLBench's
chief financial officer.
<PAGE>
(ii) A balance sheet of SQLBench as of December 19, 1997
(the "Base Balance Sheet") and statements of income and retained earnings for
the period then ended, with appropriate footnotes, certified by SQLBench's chief
financial officer.
Except as set forth on Schedule 2.7 hereto, said financial statements have been
------------
prepared in accordance with generally accepted accounting principles applied
consistently during the periods covered thereby, are complete and correct in all
material respects, and present fairly in all material respects the financial
condition of SQLBench at the dates of said statements and the results of its
operations and its cash flows for the periods covered thereby.
(b) Except as reflected on the Base Balance Sheet or
Schedule 2.7 hereto, as of the date of the Base Balance Sheet, SQLBench had no
- ------------
liabilities ofany nature, whether accrued, absolute, contingent or otherwise,
asserted or unasserted, known or unknown (including without limitation
liabilities as guarantor or otherwise with respect to obligations of others, or
liabilities for taxes due or then accrued or to become due or contingent or
potential liabilities relating to activities of SQLBench or the conduct of its
business prior to the date of the Base Balance Sheet regardless of whether
claims in respect thereof had been asserted as of such date).
(c) Except as reflected on the Base Balance Sheet or
Schedule 2.7 hereto, as of the date hereof and as of the Closing, SQLBench does
- ------------
not and will not have liabilities of any nature, whether accrued, absolute,
contingent or otherwise, asserted or unasserted, known or unknown (including
without limitation liabilities as guarantor or otherwise with respect to
obligations or others, or liabilities for taxes due or then accrued or to become
due or contingent or potential liabilities relating to activities of SQLBench or
the conduct of its business prior to the date hereof or the Closing, regardless
of whether claims in respect thereof had been asserted as of such date).
2.8 Taxes.
-----
(a) Except as set forth on Schedule 2.8 hereto, SQLBench has
------------
paid or caused to be paid all federal, state, local, foreign and other taxes,
including, without limitation, income taxes, estimated taxes, alternative
minimum taxes, excise taxes, sales taxes, use taxes, value-added taxes, gross
receipts taxes, franchise taxes, capital stock taxes, employment and payroll-
related taxes, withholding taxes, stamp taxes, transfer taxes, windfall profit
taxes, environmental taxes and property taxes, whether or not measured in whole
or in part by net income, and all deficiencies, or other additions to tax,
interest, fines and penalties owed by it (collectively, "Taxes"), required to be
paid by SQLBench through the date hereof whether disputed or not.
(b) Except as set forth on Schedule 2.8 hereto, SQLBench has
------------
in accordance with applicable law filed all federal, state, local and foreign
tax returns required to be filed by it through the date hereof, and all such
returns correctly and accurately set forth the amount of any Taxes relating to
the applicable period. A list of all federal, state, local and foreign income
tax returns filed with respect to SQLBench for taxable periods ended on or
<PAGE>
after October 22, 1996, are set forth in Schedule 2.8 hereto, and said Schedule
------------
indicates those returns that have been audited or currently are the subject of
an audit. SQLBench has delivered to Buyer correct and complete copies of all
federal, state, local and foreign income tax returns listed on said Schedule,
and of all examination reports and statements of deficiencies assessed against
or agreed to by SQLBench with respect to said returns. SQLBench is not required
to file a foreign tax return, or to pay any Stockholders' foreign taxes, in
connection with the business conducted by SQLBench.
(c) Neither the Internal Revenue Service nor any other
governmental authority is now asserting or, to the knowledge of the
Stockholders, threatening to assert against SQLBench any deficiency or claim for
additional Taxes. No claim has ever been made by an authority in a jurisdiction
where SQLBench does not file reports and returns that SQLBench is or may be
subject to taxation by that jurisdiction. There are no security interests on any
of the assets of SQLBench that arose in connection with any failure (or alleged
failure) to pay any Taxes. None of the Sellers has entered into a closing
agreement pursuant to Section 7121 of the Internal Revenue Code of 1986, as
amended, (the "Code").
(d) There has not been any audit of any tax return filed by
SQLBench for any tax period, no audit of any tax return of SQLBench is in
progress, and SQLBench has not been notified by any tax authority that any such
audit is contemplated or pending. No extension of time with respect to any date
on which a tax return was or is to be filed by SQLBench is in force, and no
waiver or agreement by SQLBench is in force for the extension of time for the
assessment or payment of any Taxes.
(e) None of the Sellers has been (and has no liability for
unpaid Taxes because it once was) a member of an "affiliated group" (as defined
in Section 1504(a) of the Code). SQLBench has never filed, nor has it been
required to file, a consolidated, combined or unitary tax return with any other
entity. SQLBench does not own, nor has it ever owned, a direct or indirect
interest in any trust, partnership, corporation or other entity, nor is any such
interest necessary to conduct the business of SQLBench, and Buyer is not
acquiring from any Seller an interest in any such entity (except for the capital
stock of SQLBench). No such entity is a party to any tax sharing agreement.
(f) None of the Sellers is a "foreign person" within the
meaning of Section 1445 of the Code and Treasury Regulations Section 1.1445-2.
(g) For purposes of this Agreement, all references to
Sections of the Code shall include any predecessor provisions to such Sections.
2.9 Accounts Receivable. All of the accounts receivable of SQLBench
-------------------
the reserve for bad debts set forth on the Base Balance Sheet) are or will be at
the Closing valid and enforceable claims, fully collectible and subject to no
setoff or counterclaim. SQLBench does not have any accounts or loans receivable
from any person, firm or corporation which is affiliated with SQLBench or from
any director, officer or employee of SQLBench, and all accounts and loans
receivable from any such person, firm or corporation shall be paid in cash
<PAGE>
prior to the Closing.
2.1 Absence of Certain Changes. Since the date of the Base Balance
--------------------------
Sheet, there has not been:
(i) any change in the financial condition, properties,
assets, liabilities, business or operations of SQLBench which change by itself
or in conjunction with all other such changes, has been materially adverse with
respect to SQLBench;
(ii) any contingent liability incurred by SQLBench as
guarantor or otherwise with respect to the obligations of others or any
cancellation of any debt or claim owing to, or waiver of any material right of,
SQLBench;
(iii) any mortgage, encumbrance or lien placed on any of the
assets or properties of SQLBench which remain in existence on the date hereof or
will remain on the Closing Date;
(iv) any obligation or liability of any nature incurred by
SQLBench whether accrued, absolute, contingent or otherwise, asserted or
unasserted (including without limitation liabilities for Taxes due or to become
due or contingent or potential liabilities relating to products or services
provided by SQLBench or the conduct of SQLBench's business since the date of the
Base Balance Sheet regardless of whether claims in respect thereof have been
asserted), other than obligations and liabilities incurred in the ordinary
course of business consistent with the terms of this Agreement (it being
understood that product or service liability claims shall not be deemed to be
incurred in the ordinary course of business);
(v) any purchase, sale or other disposition, or any
agreement or other arrangement for the purchase, sale or other disposition, of
any of the properties or assets of SQLBench other than in the ordinary course of
business;
(vi) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties, assets
or business of SQLBench;
(vii) any other transaction entered into by SQLBench other
than transactions in the ordinary course of business; or
(viii) any agreement or understanding whether in writing or
otherwise, for SQLBench to take any of the actions specified in paragraphs (i)
through (vii) above.
2.1 Ordinary Course. Since the date of the Base Balance Sheet,
---------------
SQLBench has conducted its business and operations only in the ordinary course
and consistently with its prior practices. Seller has transferred and disposed
of the assets identified on Schedule 2.11 hereto
-------------
<PAGE>
outside of the ordinary course of business prior to the date of the Base Balance
Sheet, which transfer is reflected in the Base Balance Sheet. Buyer and Merger
Sub consent to such transfer.
2.12 Banking Relations. All of the arrangements which SQLBench has
-----------------
with any banking institution are completely and accurately described in
Schedule 2.12 hereto, indicating with respect to each of such arrangements the
- -------------
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
2.13 Intellectual Property.
---------------------
(a) Except as set forth in the License and Distribution
Agreement between SQLBench and ARC - Dr. Ambichl & Dr. Reindl Communication GmbH
dated November 1, 1996, SQLBench owns no right, title or interest in or to any
patents, copyrights, technology, software, software tools, know-how, processes,
trade secrets, trademarks, service marks, trade names and other technology or
proprietary rights developed or discovered in connection with or contained in
the SQLBench and SQLBench.web products (the "SQLBench Products"). Except as set
forth in Schedule 2.13, SQLBench owns all right, title and interest in and to
-------------
all patents, copyrights, technology, software, software tools, know-how,
processes, trade secrets, trademarks, service marks, trade names and other
proprietary rights used in or necessary for the conduct of SQLBench's business
as conducted to the date hereof or contemplated, free and clear of all liens,
claims and encumbrances (including without limitation distribution rights) (all
of which are referred to as "Proprietary Rights"). The foregoing representation
as it relates to Third Party Technology (as hereinafter defined) is limited to
SQLBench's interest pursuant to the Third Party Licenses (as hereinafter
defined), all of which are valid and enforceable and in full force and effect
and which grant SQLBench such right to Third Party Technology as are employed in
or necessary to the business of SQLBench as conducted or proposed to be
conducted prior to the Closing Date.
(b) Schedule 2.13 hereto contains an accurate and complete
-------------
description of (i) all patents, trademarks (with separate listings of registered
and unregistered trademarks), trade names, and registered and unregistered
copyrights in or related to the SQLBench Products owned by SQLBench, all
applications and registration statements therefor, and a list of all licenses
and other agreements relating thereto, and (ii) a list of all licenses and other
agreements with third parties (the "Third Party Licenses") relating to any
software, technology, know-how, or processes that SQLBench is licensed or
otherwise authorized by such third parties to use, market, distribute or
incorporate into products distributed by SQLBench (such software, technology,
know-how and processes are collectively referred to as the "Third Party
Technology"). All of SQLBench's trademark or trade name registrations related to
the SQLBench Products and all of SQLBench's copyrights in any of the SQLBench
Products are valid and in full force and effect; and consummation of the
transactions contemplate hereby will not alter or impair any such rights. There
is no material default by any party to any Third Party License and all of
SQLBench's rights thereunder are freely assignable. To the knowledge of the
Sellers, the licensors under such Third Party Licenses
<PAGE>
have and had all requisite power and authority to grant the rights purported to
be conferred thereby. True and complete copies of such Third Party Licenses, and
any amendments thereto, have been provided to Buyer.
(c) No claims have been asserted against SQLBench or any of
the Stockholders (and neither SQLBench nor any of the Stockholders is aware of
any claims which are likely to be asserted against SQLBench or any of the
Stockholders or which have been asserted against others) by any person
challenging SQLBench's use or distribution of any patents, trademarks, trade
names, copyrights, trade secrets, software, technology, know-how or processes
utilized by SQLBench (including, without limitation, the Third Party Technology)
or challenging or questioning the validity or effectiveness of any license or
agreement relating thereto (including, without limitation, the Third Party
Licenses). To the Sellers' knowledge, there is no valid basis for any claim of
the type specified in the immediately preceding sentence which could in any way
relate to or interfere with the continued enhancement and exploitation by
SQLBench of any of the SQLBench Products. None of the SQLBench Products nor the
use of any patents, trademarks, trade names, copyrights, software, technology,
know-how or processes by SQLBench in its current business infringes on the
rights of, constitutes misappropriation of, or in any way involves unfair
competition with respect to, any proprietary information or intangible property
right of any third person or entity, including without limitation any trade
secret, copyright, trademark or trade name, or, to the knowledge of the Sellers,
any patent.
(d) All licenses or other agreements pursuant to which the
Sellers have granted rights to others in Proprietary Rights owned or licensed
by the Sellers are listed on Schedule 2.13. All of such licenses or agreements
-------------
are in full force and effect, there is no default by any party thereto and all
of Sellers' rights thereunder are freely assignable. True and complete copies of
all such licenses or other agreements, and any amendments thereto, have been
provided to Buyer. Except as set forth in Schedule 2.13, the Sellers have not
-------------
granted any third party any right to manufacture, reproduce, distribute, market
or exploit any of the SQLBench Products or any adaptations, translations, or
derivative works based on the SQLBench Products or any portion thereof,
including, without limitation, as a value added reseller. Except with respect to
the rights of third parties to the Third Party Technology, no third party has
any right to manufacture, reproduce, distribute, market or exploit any
underlying works or materials of which any of the SQLBench Products are a
"derivative work" as that term is defined in the United States Copyright Act,
Title 17, U.S.C. Section 101.
(e) Except as set forth on Schedule 2.13, no designs, drawings,
-------------
specifications, source code, object code, documentation, flow charts or diagrams
incorporating, embodying or reflecting any of the SQLBench Products at any stage
of their development (the "SQLBench Components") were written, developed and
created in whole or in part by any employee of SQLBench with or without the
assistance of any third party or entity or were created by third parties
(including, without limitation, each of the Stockholders), who assigned
ownership of their rights to SQLBench in any manner. The Sellers have at all
times used commercially reasonable efforts to treat the SQLBench Products and
the SQLBench
<PAGE>
Components as containing trade secrets and have not disclosed or otherwise dealt
with such items in such a manner as to cause the loss of such trade secrets by
release into the public domain.
(f) To the Sellers' knowledge, no employee of SQLBench is in
violation of any term of any employment contract, patent disclosure agreement or
any other contract or agreement relating to the relationship of any such
employee with SQLBench or, to the best of the Sellers' knowledge, any other
party, including, without limitation, any previous employer, because of the
nature of the business conducted by SQLBench or proposed to be conducted by
SQLBench.
(g) Each person presently or previously employed by SQLBench
(including independent contractors, if any) employed in a research and
development or other technical position has executed a confidentiality and non-
disclosure agreement previously provided to Purchaser or its representatives.
Such confidentiality and non-disclosure agreements constitute valid and binding
obligations of SQLBench and such person, enforceable in accordance with their
respective terms. To the best of SQLBench's and each of the Stockholder's
knowledge, neither the execution or delivery of such agreements, nor the
carrying on of SQLBench's business as employees by such persons, nor the conduct
of SQLBench's business as currently anticipated, will conflict with or result in
a breach of the terms, conditions or provisions of or constitute a default under
any contract, covenant or instrument under which any of such persons is
obligated. SQLBench is not making unauthorized use of any confidential
information or trade secrets of any person, including, without limitation, any
former employer or any past or present employee of SQLBench. Neither SQLBench
nor, to the knowledge of the Sellers, any of SQLBench's employees have any
agreements or arrangements with any persons other than SQLBench related to
confidential information or trade secrets of such persons or restricting any
such employee's ability to engage in business activities of any nature.
(h) No product liability or warranty claims which
individually or in the aggregate could exceed Five Thousand Dollars ($5,000)
have been communicated to or threatened against SQLBench nor, to the best of the
Sellers' knowledge, is there any specific situation, set of facts or occurrence
that provides a basis for such claim. SQLBench has provided to Buyer an accurate
list of all errors or "bugs" in the SQLBench Products which are contained in the
computer databases which SQLBench maintains for the purpose of tracking errors
and "bugs" in its software. Such list is set forth as Schedule 2.13(h).
----------------
2.1 Contracts. Except for contracts, commitments, plans, agreements
---------
and licenses (true and complete copies of which have been delivered to Buyer)
described in Schedule 2.14 hereto, SQLBench is not a party to or subject to:
-------------
(i) any plan or contract providing for bonuses, pensions,
options, stock purchases, deferred compensation, retirement payments, profit
sharing, collective bargaining or the like, or any contract or agreement with
any labor union;
<PAGE>
(ii) any employment contract or contract for personal
services;
(iii) any contract or agreement relating to capital
expenditures in excess of $5,000 per annum;
(iv) any contract or agreement which by its terms does not
terminate or is not terminable without penalty by such entity or any successor
or assignee on not more than one month's notice;
(v) any contract or agreement providing for the purchase
of all or substantially all of its requirements of a particular product from a
supplier;
(vi) any contract or agreement which by its terms does not
terminate or is not terminable without penalty by such entity or any successor
or assignee on or at any time after the Closing Date;
(vi) any contract not made in the ordinary course of
business;
(vii) any contract or agreement for the purchase of any
fixed asset for a price in excess of $5,000 whether or not such purchase is in
the ordinary course of business;
(ix) any contract containing covenants limiting the freedom
of such entity to compete in any line of business or with any person or entity;
(x) any license agreement (as licensor or licensee);
(xi) any indenture, mortgage, promissory note, loan
agreement, guaranty or other agreement or commitment for the borrowing of money;
or
(xii) any contract or agreement with any officer, employee,
director or stockholder of SQLBench or with any persons or organizations
controlled by or affiliated with any of them.
SQLBench is not in default under any such contracts, commitments, plans,
agreements or licenses described in said Schedule, and none of the Stockholders
have any knowledge of conditions or facts which with notice or passage of time,
or both, would constitute a default.
2.15 Litigation. There is no litigation or governmental or administrative
----------
proceeding or investigation pending or, to the knowledge of the Stockholders,
threatened against SQLBench or any affiliate of SQLBench which may have an
adverse effect on SQLBench's properties, assets, prospects, financial condition
or business or which would prevent or hinder the consummation of the
transactions contemplated by this Agreement.
<PAGE>
2.16 Competition. TEK Channels International Inc. does not, directly
-----------
or indirectly, engage in any business which may be competitive with the business
of SQLBench or Buyer as presently conducted. TEK Channels International Inc. has
entered into a Noncompetition Agreement with the Buyer in the form attached
hereto as Exhibit 7.1(k).
--------------
2.17 Compliance with Laws. SQLBench is in compliance with all
--------------------
applicable statutes, ordinances, orders, judgments, decrees and rules and
regulations promulgated by any federal, state, municipal or other governmental
authority which apply to SQLBench or to the conduct of its business, and
SQLBench has not received notice of a violation or alleged violation of any such
statue, ordinance, order, rule or regulation.
2.18 Insurance. The only insurance policy maintained by the Company is
---------
disclosed on Schedule 2.18 hereto, and such insurance policy is in full force
-------------
and effect, all premiums with respect thereto are currently paid, and SQLBench
is in compliance in all material respects with the terms thereof. Said
insurance is adequate and customary for the business engaged in by SQLBench and
is sufficient for compliance by SQLBench with all requirements of law and all
agreements and leases to which SQLBench is a party.
2.19 Warranty or Other Claims. There are no existing or threatened
------------------------
product liability, warranty or other similar claims, or any facts upon which a
material claim of such nature could be based, against SQLBench for products or
services which are defective or fail to meet any product or service warranties.
No claim has been asserted against SQLBench for renegotiation or price
redetermination of any business transaction, and there are no facts upon which
any such claim could be based.
2.20 Powers of Attorney. SQLBench has not granted powers of attorney
------------------
which are presently outstanding.
2.21 Finder's Fee. None of the Sellers has incurred or become liable
------------
for any broker's commission or finder's fee relating to or in connection with
the transactions contemplated by this Agreement.
2.22 Corporate Records; Copies of Documents. The corporate record
--------------------------------------
books of SQLBench accurately record all corporate action taken by its
stockholders and board of directors and committees thereof. The copies of the
corporate records of SQLBench, as delivered to Buyer pursuant to this Agreement,
are true and complete copies of the originals of such documents. SQLBench has
made available for inspection and copying by Buyer and its counsel complete and
correct copies of all documents referred to in this Section or in the Schedules
delivered to Buyer pursuant to this Agreement.
2.23 Employee Benefit Programs; Employees; Labor Relations.
-----------------------------------------------------
(a) SQLBench does not have any employment contract,
collective bargaining or other labor agreement, any agreement containing
severance or termination pay arrangements, deferred compensation agreement,
pension or retirement plan, bonus or profit-
<PAGE>
sharing plan, stock option or purchase plan or other non-terminable (with or
without penalty) arrangement, group insurance, group hospitalization or other
employee benefit plan, in each case relating to its employees.
(b) SQLBench is responsible for and has paid, or will have
paid, in accordance with all applicable laws and current policies of SQLBench
all amounts due to its employees for any salary, bonus, wages, severance,
vacation, sick leave, benefits or other accrued obligations due to its employees
for service through the Closing Date. Buyer shall not have any responsibility or
liability of any kind whatsoever which relate in any way to any services
rendered to SQLBench on or prior to the Closing Date or to any person's status
as an employee of SQLBench on or prior to the Closing Date.
(c) Upon termination of the employment of any of SQLBench's
employees, Buyer will not by reason of the transactions contemplated by this
Agreement, or anything done prior to or on the Closing Date, be liable to any of
said employees for so-called "severance pay" or any other payments.
2.24 Hazardous Waste, Etc. No hazardous wastes, substances or
--------------------
materials or oil or petroleum products have been generated, transported, used,
disposed, stored or treated by SQLBench and no hazardous wastes, substances or
materials, or oil or petroleum products have been released, discharged,
disposed, transported, placed or otherwise caused to enter the soil or water in,
under or upon any real property owned, leased or operated by SQLBench.
2.25 Disclosure. The representations, warranties and statements contained
----------
in this Agreement and in the certificates, exhibits and schedules delivered to
Buyer do not contain any untrue statement of a material fact, and, do not omit
to state a material fact required to be stated therein or necessary in order to
make such representations, warranties or statements not misleading in light of
the circumstances under which they were made. To the knowledge of the Sellers,
there are no facts which presently or may in the future have a material adverse
affect on the business, properties, prospects, operations or condition of
SQLBench which have not been specifically disclosed herein or in a Schedule
furnished herewith, other than general economic conditions affecting SQLBench's
industry.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS.
- ---------- -----------------------------------------------
As a material inducement to Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, each Stockholder hereby
severally makes to Buyer each of the representations and warranties set forth in
this Section 3 with respect to such Stockholder. No Stockholder shall have any
right of indemnity or contribution from SQLBench with respect to the breach of
any representation or warranty hereunder.
3.1 SQLBench Shares. Such Stockholder owns of record and beneficially
---------------
the number of the SQLBench Shares set forth opposite such Stockholder's name in
Schedule 3.1 hereto. Such SQLBench Shares are duly authorized, validly issued,
- ------------
fully paid, non-assessable
<PAGE>
and free and clear of any and all liens, encumbrances, charges or claims.
3.2 Authority. Such Stockholder has full right, authority, power and
---------
capacity to enter into this Agreement and each agreement, document and
instrument to be executed and delivered by or on behalf of such Stockholder
pursuant to this Agreement and to carry out the transactions contemplated hereby
and thereby. This Agreement and each agreement, document and instrument
executed and delivered by such Stockholder pursuant to this Agreement
constitutes a valid and binding obligation of such Stockholder, enforceable in
accordance with their respective terms. The execution, delivery and performance
of this Agreement and each such agreement, document and instrument:
(i) does not and will not violate any laws of the United
States or any state or other jurisdiction applicable to such Stockholder, or
require such Stockholder to obtain any approval, consent or waiver from, or make
any filing with, any person or entity (governmental or otherwise) that has not
been obtained or made; and
(ii) does not and will not result in a breach of,
constitute a default under, accelerate any obligation under, or give rise to a
right of termination of, any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit, authorization,
order, writ, judgment, injunction, decree, determination or arbitration award to
which such Stockholder is a party or by which the property of such Stockholder
is bound or affected, or result in the creation or imposition of any mortgage,
pledge, lien, security interest or other charge or encumbrance on any assets of
SQLBench or on the SQLBench Shares owned by such Stockholder.
3.3 Finder's Fee. Such Stockholder has not incurred or become liable
------------
for any broker's commission or finder's fee relating to or in connection with
the transactions contemplated by this Agreement.
3.4 Agreements. Each such Stockholder who is employed by SQLBench is
----------
not a party to any non-competition, trade secret or confidentiality agreement
with any party other than SQLBench. There are no agreements or arrangements not
contained herein or disclosed in a Schedule hereto, to which such Stockholder is
a party relating to the business of SQLBench or to such Stockholder's rights and
obligations as a stockholder, director or officer of SQLBench. Such Stockholder
does not own, directly or indirectly, on an individual or joint basis, any
material interest in, or serve as an officer or director of, any customer,
competitor or supplier of SQLBench, or any organization which has a contract or
arrangement with SQLBench. Such Stockholder has not at any time transferred any
of the stock of SQLBench held by or for such holder to any employee of SQLBench,
which transfer constituted or could be viewed as compensation for services
rendered to SQLBench by said employee. The execution, delivery and performance
of this Agreement will not violate or result in a default or acceleration of any
obligation under any contract, agreement, indenture or other instrument
involving SQLBench to which such Stockholder is a party.
3.5 Investment Representation.
-------------------------
<PAGE>
(a) Each Stockholder is an "accredited investor" as defined
in Regulation D under the Securities Act of 1933, as amended, (the "Securities
Act").
(b) Each Stockholder has read or reviewed and is familiar
with the Buyer SEC Documents.
(c) Each Stockholder has had an opportunity to ask questions
of and receive answers from Buyer, or a person or persons acting on Buyer's
behalf, concerning the terms and conditions of the Buyer Shares and the Note.
(d) Each Stockholder understands that the Buyer Shares and
the Note have not been registered under the Securities Act or under the
securities laws of any state or other jurisdiction in reliance upon exemptions
for private offerings, and that, while Buyer may in the future register the
Buyer Shares and the Note, it is under no obligation to do so, and each
Stockholder further understands that such Stockholder is acquiring the Buyer
Shares and the Note without being furnished any offering literature or
prospectus other than the Buyer SEC Documents.
(e) Each Stockholder represents that the Buyer Shares and the
Note are being acquired solely for such Stockholder's own account, for
investment and not with a view to or for the resale, distribution, subdivision,
or fractionalization thereof; none of the Stockholders has any present plans to
enter into any contract, undertaking, agreement, or arrangement relating
thereto.
(f) Each Stockholder acknowledges and is aware that there are
substantial restrictions on the transferability of the Buyer Shares and the
Note; the Buyer Shares and the Note cannot be resold unless the Buyer Shares and
the Note are registered under the Securities Act and any applicable securities
law of any state or other jurisdiction, or an exemption from registration is
available; the Stockholders have no rights to require that the Buyer Shares and
the Note be registered under the Securities Act except to the extent expressly
provided herein; and there will be no public market for the Buyer Shares and the
Note.
(g) The Stockholders have such knowledge and experience in financial
and business matters that they are capable of evaluating the relative risks and
merits of the Buyer Shares and the Note.
(h) Each of the Stockholders is a resident of the State of
Georgia.
SEC COVENANTS OF THE SELLERS.
--- ------------------------
4.1 Making of Covenants and Agreements. Sellers hereby make their
-----------------------------------
respective covenants and agreements set forth in this Section 4.
4.2 Conduct of Business. Between the date of this Agreement and the
-------------------
Closing Date,
<PAGE>
SQLBench will, and the Stockholders will cause SQLBench to, conduct its business
only in the ordinary course and refrain from changing or introducing any method
of management or operations except in the ordinary course of business and
consistent with prior practices.
4.3 Due Diligence; Production of Documents. SQLBench shall provide,
--------------------------------------
and the Stockholders shall cause SQLBench to provide, Buyer with full access to
its books, properties, management and employees so as to enable Buyer to conduct
such review of the business, assets and property of SQLBench as Buyer shall deem
necessary or appropriate in connection with the consummation of the transactions
contemplated by this Agreement.
4.4 Authorization from Others. Prior to the Closing Date, SQLBench
-------------------------
shall obtain, and the Stockholders shall use their reasonable best efforts to
cause SQLBench to obtain, all authorizations, consents and permits of others
required to permit the consummation by SQLBench of the transactions contemplated
by this Agreement.
4.5 Notice of Default. Promptly upon the occurrence of, or promptly
-----------------
upon any Seller becoming aware of the impending or threatened occurrence of, any
event which would cause or constitute a breach or default, or would have caused
or constituted a breach or default had such event occurred or been known to such
Seller prior to the date hereof, of any of the representations, warranties or
covenants of any Seller contained in or referred to in this Agreement or in any
Schedule or Exhibit referred to in this Agreement, such Seller shall give
detailed written notice thereof to Buyer and shall use its best efforts to
prevent or promptly remedy the same.
4.6 Cooperation; Consummation of Agreement; Books and Records. Each
----------------------------------------------------------
Seller shall cooperate with all reasonable requests of Buyer and Buyer's counsel
in connection with the consummation of the transactions contemplated hereby, and
each Seller shall use its best efforts to perform and fulfill all conditions and
obligations on its part to be performed and fulfilled under this Agreement, to
the end that the transactions contemplated by this Agreement shall be fully
carried out. SQLBench shall maintain its books and records in accordance with
good business practices, on a basis consistent with past practices, and SQLBench
shall promptly make available to Buyer such books and records, any other
material or information regarding SQLBench as Buyer or its counsel, accountants
or other advisors may from time to time reasonably request.
4.7 Tax Returns. SQLBench, with the approval of Buyer and in
------------
accordance with applicable law, shall (i) promptly prepare and file on or before
the due date or any extension thereof all federal, state, local and foreign tax
returns required to be filed by each SQLBench with respect to taxable periods of
SQLBench that include any period ending on or before the Closing Date and (ii)
pay all Taxes of SQLBench attributable to periods ending on or before the
Closing Date.
4.8 Satisfaction of Indebtedness. At or prior to the Closing, SQLBench
----------------------------
shall, and the Stockholders shall cause SQLBench to, cause all mortgages,
security interests, pledges and other arrangements securing indebtedness or
other encumbrances upon the SQLBench Shares
<PAGE>
or any of SQLBench's properties or assets to be extinguished.
4.9 Cooperation with Respect to 1996 Audited Financial Statements.
-------------------------------------------------------------
Each Stockholder shall cooperate with Buyer and shall promptly provide to Buyer
all necessary information and documentation requested by Buyer in connection
with the preparation of audited financial statements for the period from
inception of SQLBench to December 31, 1996.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER.
- ---------- ----------------------------------------
5.1 Making of Representations and Warranties. As a material
----------------------------------------
inducement to the Sellers to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer hereby makes the representations and
warranties to the Sellers contained in this Section 5.
5.2 Organization. Each of Buyer and Merger Sub is a corporation duly
------------
organized, validly existing and in good standing under the laws of the State of
Delaware with full corporate power to own or lease its properties and to conduct
its business in the manner and in the places where such properties are owned or
leased or such business is conducted by it.
5.3 Authority. Each of Buyer and Merger Sub has full right, authority
---------
and power to enter into this Agreement and each agreement, document and
instrument to be executed and delivered by Buyer or Merger Sub pursuant to this
Agreement and to carry out the transactions contemplated hereby. The execution,
delivery and performance by Buyer and Merger Sub of this Agreement and each such
other agreement, document and instrument have been duly authorized by all
necessary corporate action of Buyer and Merger Sub and no other action on the
part of Buyer or Merger Sub is required in connection therewith. This Agreement
and each other agreement, document and instrument executed and delivered by
Buyer or Merger Sub pursuant to this Agreement constitute, or when executed and
delivered will constitute, valid and binding obligations of Buyer and Merger Sub
(as the case may be) enforceable in accordance with their terms. The execution,
delivery and performance by Buyer and Merger Sub of this Agreement and each such
agreement, document and instrument:
(i) does not and will not violate any provision of the
Certificate of Incorporation or by-laws of Buyer or Merger Sub;
(ii) does not and will not violate any laws of the United
States or of any state or any other jurisdiction applicable to Buyer or Merger
Sub or, assuming no breach in the representations set forth in Sections 2.5 and
2.24 hereof, require Buyer or Merger Sub to obtain any approval, consent or
waiver of, or make any filing with, any person or entity (governmental or
otherwise) which has not been obtained or made; and
(iii) does not and will not result in a breach of,
constitute a default under, accelerate any obligation under, or give rise to a
right of termination of any indenture, loan or credit agreement, or any other
agreement, mortgage, lease, permit, order,
<PAGE>
judgment or decree to which Buyer or Merger Sub is a party and which is material
to the business and financial condition of Buyer, Merger Sub and affiliated
organizations on a consolidated basis.
5.4 Litigation. There is no litigation or governmental or
----------
administrative proceeding or investigation pending or, to its knowledge,
threatened against Buyer or Merger Sub which would prevent or hinder the
consummation of the transactions contemplated by this Agreement.
5.5 Finder's Fee. Neither Buyer nor Merger Sub has incurred or become
------------
liable for any broker's commission or finder's fee relating to or in connection
with the transactions contemplated by this Agreement.
5.6 Buyer's Public Information. Buyer has heretofore furnished the
--------------------------
Stockholders with information regarding Buyer, including its Annual Report on
Form 10-K for the fiscal year ended December 31, 1996 and its Quarterly Report
on Form 10-Q for the quarter ended September 30, 1997, each as filed with the
Securities and Exchange Commission ("SEC"), and will provide to the Stockholders
any Current, Annual or Quarterly Report filed by Buyer with the SEC at or prior
to the Closing Date (as any such documents have been amended since their
original filing, the "Buyer SEC Documents"). As of their respective filing
dates, the Buyer SEC Documents did not or will not contain any untrue statements
of materiel facts or omit to state material facts required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. As of their respective filing dates, the
Buyer SEC Documents complied or will comply in all material respects with the
applicable requirements of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated under such statutes.
5.7 Buyer Common Stock. On the Closing Date, Buyer will have a
------------------
sufficient number of authorized but unissued shares of its Common Stock
available for issuance to the Stockholders in accordance with the provisions of
this Agreement. The Common Stock to be issued pursuant to this Agreement will,
when so delivered, be duly and validly issued, fully paid and nonassessable.
5.8 Buyer Indebtedness. The Buyer has no material indebtedness or
------------------
other obligations not reflected on the face of the Buyer SEC Documents.
SECTION 6. COVENANTS OF BUYER AND MERGER SUB.
- ---------- --------- ------------------------
6.1 Authorization from Others. Prior to the Closing Date, Buyer and
-------------------------
Merger Sub shall obtain all authorizations, consents and permits of others
required to permit the consummation by it of the transactions contemplated by
this Agreement.
6.2 Cooperation; Consummation of Agreement; Books and Records. Buyer
---------------------------------------------------------
and
<PAGE>
Merger Sub shall cooperate with all reasonable requests of Sellers and Sellers'
counsel in connection with the consummation of the transactions contemplated
hereby, and each of Buyer and Merger Sub shall use their respective best efforts
to perform and fulfill all conditions and obligations on its part to be
performed and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement shall be fully carried out.
6.3 Notice of Default. Promptly upon the occurrence of, or promptly
-----------------
upon the Buyer becoming aware of the impending or threatened occurrence of, any
event which would cause or constitute a breach or default, or would have caused
or constituted a breach or default had such event occurred or been known to the
Buyer prior to the date hereof, of any of the representations, warranties or
covenants of the Buyer contained in or referred to in this Agreement or in any
Schedule or Exhibit referred to in this Agreement, the Buyer shall give detailed
written notice thereof to the Sellers and shall use its best efforts to prevent
or promptly remedy the same.
SECTION 7. CONDITIONS.
- ---------- -----------
7.1 Conditions to the Obligations of Buyer and Merger Sub. The
-----------------------------------------------------
obligation of Buyer and Merger Sub to consummate this Agreement and the
transactions contemplated hereby are subject to the fulfillment, prior to or at
the Closing, of the following conditions precedent:
(a) Representations; Warranties; Covenants. Each of the
--------------------------------------
representations and warranties of the Stockholders contained in Section 2 and
Section 3 shall be true and correct as though made on and as of the Closing
Date; and the Sellers shall, on or before the Closing, have performed all of
their obligations hereunder which by the terms hereof are to be performed on or
before the Closing.
(b) No Material Change. There shall have been no material
------------------
adverse change in the financial condition, prospects, properties, assets,
liabilities, business or operations of SQLBench since the date hereof.
(c) Certificate from Officers. SQLBench shall have
-------------------------
delivered to Buyer a certificate of the President and Chief Financial Officer of
SQLBench and each Stockholder shall have delivered a certificate dated as of the
Closing Date to the effect that the statements set forth in paragraphs (a) and
(b) above in this Section 7.1 are true and correct.
(d) Opinion of Counsel. At the Closing, Buyer shall have
------------------
received from Perrie, Buker, Jones & Morton, P.C., counsel for SQLBench and the
Stockholders, an opinion as of said date, in the form attached hereto as
Exhibit7.1(d).
- --------------
(e) No Litigation. There shall have been no determination by
-------------
Buyer, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become inadvisable or impracticable by reason
of the institution or threat by any person or
<PAGE>
any federal, state, foreign or other governmental authority of litigation,
proceedings or other action against Buyer or any Seller.
(f) Consents. SQLBench shall have made, and the
--------
Stockholders shall have caused SQLBench to make, all filings with and
notifications of governmental authorities, regulatory agencies and other
entities required to be made by such entity in connection with the execution and
delivery of this Agreement, the performance of the transactions contemplated
hereby and the continued operation of the business of SQLBench to be acquired by
Buyer subsequent to the Closing; and the Sellers shall have received all
authorizations, waivers, consents and permits, in form and substance reasonably
satisfactory to Buyer, from all third parties, including, without limitation,
applicable governmental authorities, regulatory agencies, lessors, lenders and
contract parties required to permit the continuation of the business of SQLBench
by Buyer and the consummation of the transactions contemplated by this
Agreement.
(g) FIRPTA Withholding. At or prior to the Closing, Buyer
------------------
shall have received from each Stockholder, a "transferor's certificate of non-
foreign status" as provided in the Treasury Regulations under Section 1445 of
the Code substantially in the form attached hereto as Exhibit 7.1(g).
---------------
(h) Employment Agreement. Klaus Obermeier shall have
--------------------
executed and delivered to Buyer an Employment Agreement in substantially the
form of Exhibit 7.1(h) attached hereto.
--------------
(i) Cancellation of OEM Agreement. All parties to that
-----------------------------
certain Software OEM Agreement, dated as of November 11, 1996, among, inter
------ -----
alia, Buyer and SQLBench (as amended or modified to date, the "OEM Agreement")
shall have been terminated effective October 1, 1997 and SQLBench shall have
made a payment in cash to Buyer immediately prior to the Closing in an amount
equal to $630,000 in respect of refunded prepaid royalties under the OEM
Agreement.
(j) Closing of Alpha Transaction. All conditions to the
----------------------------
closing of the transactions contemplated by that certain Asset Purchase
Agreement, dated as of the date hereof, among the Buyer, Alpha and the
stockholders of Alpha (the "Asset Purchase Agreement") shall have been satisfied
or waived and the transactions contemplated by the Asset Purchase Agreement
shall have been consummated.
(k) Noncompete. TEK Channels International Inc. shall have
----------
entered into a Noncompetition Agreement with the Buyer in the form attached
hereto as Exhibit 7.1(k).
---------------
7.2 Conditions to Obligations of the Stockholders. The Stockholders'
---------------------------------------------
obligations to consummate this Agreement and the transactions contemplated
hereby is subject to the fulfillment, prior to or at the Closing, of the
following conditions precedent:
(a) Representations; Warranties; Covenants. Each of the
--------------------------------------
<PAGE>
representations and warranties of Buyer contained in Section 5 shall be true and
correct as though made on and as of the Closing Date; Buyer shall, on or before
the Closing, have performed all of its obligations hereunder which by the terms
hereof are to be performed on or before the Closing; and Buyer shall have
delivered to the Sellers a certificate of the Chief Executive Officer, President
or Treasurer of Buyer dated as of the Closing Date to such effect.
(b) No Material Change. There shall have been no material
------------------
adverse change in the financial condition, prospects, properties, assets,
liabilities, business or operations of the Buyer since the date hereof.
(c) Opinion of Counsel. At the Closing, the Stockholders
------------------
shall have received from Goodwin, Procter & Hoar LLP, counsel for Buyer, an
opinion as of said date, in the form attached hereto as Exhibit 7.2(b).
--------------
(d) No Litigation. There shall have been no determination
-------------
by the Sellers, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become inadvisable or impracticable by reason
of the institution or threat by any person or any federal, state, foreign or
other governmental authority of litigation, proceedings or other action against
Buyer or any Seller.
(e) Consents. The Buyer shall have made all filings with and
--------
notifications of governmental authorities, regulatory agencies and other
entities required to be made by such entity in connection with the execution and
delivery of this Agreement, the performance of the transactions contemplated
hereby and the continued operation of the business of SQLBench to be acquired by
Buyer subsequent to the Closing; and the Buyer shall have received all
authorizations, waivers, consents and permits, in form and substance reasonably
satisfactory to the Sellers, from all third parties, including, without
limitation, applicable governmental authorities, regulatory agencies, lessors,
lenders and contract parties required to permit the continuation of the business
of SQLBench by Buyer and the consummation of the transactions contemplated by
this Agreement.
(f) Employment Agreement. The Buyer shall have executed
--------------------
and delivered to Klaus Obermeier an Employment Agreement in substantially the
form of Exhibit 7.1(h) attached hereto.
--------------
(g) Closing of Alpha Transaction. All conditions to the
-----------------------------
closing of the transactions contemplated by that certain Asset Purchase
Agreement, dated as of the date hereof, among the Buyer, Alpha and the
stockholders of Alpha (the "Asset Purchase Agreement") shall have been satisfied
or waived and the transactions contemplated by the Asset Purchase Agreement
shall have been consummated.
SECTION 8. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED.
- ---------- --------------------------------------------
8.1 Termination. At any time prior to the Closing, this Agreement
-----------
may be
<PAGE>
terminated as follows:
(i) by mutual written consent of all of the parties to
this Agreement;
(ii) by Buyer, pursuant to written notice by Buyer to the
Sellers, if any of the conditions set forth in Section 7.1 of this Agreement
have not been satisfied at or prior to the Closing Date and Buyer is not then in
default hereunder; and
(iii) by the Sellers, pursuant to written notice by Sellers
to Buyer, if any of the conditions set forth in Section 7.2 of this Agreement
have not been satisfied at or prior to the Closing and the Sellers are not then
in default hereunder.
8.2 Effect of Termination. All obligations of the parties hereunder
----------------------
shall cease upon any termination pursuant to Section 8.1; provided, however,
-------- -------
that the provisions of this Section 8, Section 10.1 and Section 10.9 hereof
shall survive any termination of this Agreement.
SECTION 9. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
- ---------- ---------------------------------------------
9.1 Survival of Warranties; Setoff.
-------------------------------
(a) Each of the representations, warranties, agreements,
covenants and obligations herein or in any schedule, exhibit, certificate or
financial statement delivered by any party to the other party incident to the
transactions contemplated hereby are material, shall be deemed to have been
relied upon by the other party and shall survive the Closing regardless of any
investigation and shall not merge in the performance of any obligation by either
party hereto. Subject to Section 9.1(c) below, each party shall be liable to any
other party for all damages, liabilities, losses, taxes, fines, penalties,
expenses or costs (including reasonable attorneys fees and expenses) of any kind
or nature whatsoever (collectively "Losses") which may be sustained, suffered or
incurred by or against such party as a result of any breach of this Agreement or
any document or instrument related hereto or in any Schedule, exhibit or
certificate delivered pursuant hereto.
(b) Subject to Section 9.1(c) below, any breach by the
Stockholders of a representation, covenant or obligation contained in this
Agreement, in any agreement or document related hereto (other than the
employment agreement of Klaus K. Obermeier) or in any Schedule, exhibit or
certificate delivered pursuant hereto shall entitle Buyer first to set off from
any future payment that Buyer is to make pursuant to the Note, amounts equal to
the Losses sustained, suffered or incurred by or made against the Buyer as a
result of such breach and then to collect the balance, if any, directly from the
Stockholders.
(c) Notwithstanding the foregoing, the Stockholders shall not
have any liability to Buyer or Merger Sub for any breach of or noncompliance
with this Agreement
<PAGE>
(and with any other document executed by any of the Sellers in connection
herewith), including by way of set off from any future payments that Buyer is
required to make to Stockholders pursuant to the Note, unless (a) the aggregate
amount of all Losses shall exceed $25,000, and thereafter, Stockholders shall
only be liable for Losses in excess of said $25,000; and (b) such claim, except
claims with respect to Section 2.8 or Section 2.13 which may be asserted until
the expiration of the applicable statue of limitations, is asserted against the
Stockholders (whether or not such Losses have actually been incurred) on or
before the third anniversary of the Closing Date. Buyer and Merger Sub agree to
reasonably cooperate to minimize Losses.
(d) Notwithstanding the foregoing, neither Buyer nor Merger
Sub shall have any liability to any Stockholder for breach of or noncompliance
with this Agreement or with any other document executed by Buyer or Merger Sub
in connection herewith except the Note or the Employment Agreement of Klaus K.
Obermeier, unless and until (a) the aggregate amount of all Losses shall exceed
$25,000, in which case, Buyer and Merger Sub shall thereafter only be liable for
Losses in excess of said $25,000; and (b) such claim is asserted against Buyer
and/or Merger Sub (whether or not such Losses have been actually incurred) on or
before the third anniversary of the Closing Date. The Stockholders agree to
reasonably cooperate to minimize Losses.
SECTION 10. MISCELLANEOUS.
- ----------- --------------
10.1 Fees and Expenses.
-----------------
(a) Except as set forth herein, each of the parties will bear
its own expenses in connection with the negotiation and the consummation of the
transactions contemplated by this Agreement, and no expenses of the Sellers or
the Stockholders relating in any way to the Merger and the transactions
contemplated hereby, including without limitation, legal, accounting or other
professional expenses of SQLBench or the Stockholders, shall be charged to or
paid by Buyer; except that the Buyer expressly agrees to pay all expenses for
and relating to the audit of the financial records of SQLBench that are to be
prepared in accordance with Section 4.9 of this Agreement.
(b) The Stockholders will pay all costs incurred, whether at
or subsequent to the Closing, in connection with the transfer of the SQLBench
Shares to Buyer as contemplated by this Agreement, including without limitation,
all sales, use, excise, real property and other transfer taxes and charges
applicable to such transfer; all recording charges and fees applicable to the
recordation of deeds and mortgages and other instruments of transfer; and all
costs of obtaining or transferring permits, registrations, applications and
other tangible and intangible properties. Notwithstanding the foregoing, the
Stockholders shall not be liable for any costs of obtaining or transferring
permits, registrations, applications and other tangible or intangible
properties, that would not have been necessary for the conduct of business of
SQLBench in the jurisdictions and in the manner in which SQLBench did business
on the date hereof.
<PAGE>
10. Governing Law. This Agreement shall be construed under and
-------------
governed by the internal laws of the Commonwealth of Massachusetts, U.S.A.
without regard to its conflict of laws provisions. For any action, suit or
proceeding arising out of or relating to this Agreement and the transaction
contemplated hereby, the parties hereto hereby irrevocably and unconditionally
consent to the exclusive jurisdiction of the courts of (i) The Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts and (ii) the local, state and federal courts of general
jurisdiction in the jurisdiction of the Stockholders' domicile at the time such
action is initiated provided that the Stockholders are domiciled in the United
States, and the parties further agree not to commence any such action, suit or
proceeding except in such courts. The parties hereto further hereby irrevocably
and unconditionally waive any objection to the laying of venue of any action,
suit or proceeding arising out of or relating to this Agreement and the
transaction contemplated hereby in courts referenced in this Section 10.2 under
the applicable circumstances, and hereby further irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient
forum. Each of the parties hereto further agrees that service of any process,
summons, notice or document by U.S. registered mail to its address set forth
herein shall be effective service of process for any action, suit or proceeding
brought against it in any such court.
10.3 Notices. Any notice, request, demand or other communication
-------
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon receipt, or if
sent by registered or certified mail, upon the sooner of the date on which
receipt is acknowledged or the expiration of three days after deposit in United
States Post Office facilities properly addressed with postage prepaid. All
notices to a party will be sent to the addresses set forth below or to such
other address or person as such party may designate by notice to each other
party hereunder:
TO BUYER OR MERGER SUB: Segue Software, Inc.
- ----------------------
1320 Centre Street
Newton Centre, MA 02159
Attn: J. Jeffrey Bingenheimer
Chief Financial Officer
Facsimile: 617-795-1621
With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Jeffrey C. Hadden, Esq.
Facsimile: 617-523-1231
TO SQLBENCH OR
- --------------
THE STOCKHOLDERS: Klaus K. Obermeier
- ----------------
430 Tenth Street, N.W.
Suite S-103
<PAGE>
Atlanta, Georgia 30318
Facsimile: 770-399-9533
With a copy to: Perrie, Buker, Jones & Morton, P.C.
115 Perimeter Center Place, Suite 170
Atlanta, GA 30346
Attn: Charles E. Buker, III, Esq.
Facsimile: 770-804-0509
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
10.4 Entire Agreement. This Agreement, including the Schedules and
----------------
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such Schedules and Exhibits or in such
other writings; and all inducements to the making of this Agreement relied upon
by either party hereto have been expressed herein or in such Schedules or
Exhibits or in such other writings.
10.5 Assignability; Binding Effect. Prior to the Closing, this Agreement
-----------------------------
shall only be assignable by Buyer and Merger Sub to a corporation, partnership
or limited liability company controlling, controlled by or under common control
with Buyer upon written notice to the Sellers. After the Closing, Buyer's and
Merger Sub's rights and obligations hereunder shall be freely assignable. This
Agreement may not be assigned by the Sellers without the prior written consent
of Buyer. This Agreement shall be binding upon and enforceable by, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns.
10.6 Access to Records. After the Closing, upon the reasonable request of
-----------------
the Stockholders, the Buyer and Merger Sub shall afford to the Stockholders and
their accountants and attorneys, for the purpose of preparing tax returns,
access to the books and records of SQLBench for time periods prior to the
Closing Date which books and records are in the possession of the Buyer or
Merger Sub following the consummation of the transactions contemplated hereby.
Should Buyer or Merger Sub elect to dispose of any such books or records in any
manner prior to the seventh anniversary of the Closing Date, then the disposing
party shall notify the Stockholders of the intent to do so and shall offer the
Stockholders the opportunity to receive such books and records, or at the
Stockholders' expense, full and complete copies thereof; provided that if the
Buyer or Merger Sub, as the case may be, shall so request, the Stockholders
shall first enter into appropriate confidentiality and nondisclosure agreements
with the Buyer or Merger Sub, in a form acceptable to Buyer or Merger Sub, as
the case may be, with regard to such books and records.
10.7 Captions and Gender. The captions in this Agreement are for
-------------------
convenience only
<PAGE>
and shall not affect the construction or interpretation of any term or provision
hereof. The use in this Agreement of the masculine pronoun in reference to a
party hereto shall be deemed to include the feminine or neuter, as the context
may require.
10.8 Execution in Counterparts. For the convenience of the parties and to
-------------------------
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
10.9 Amendments. This Agreement may not be amended or modified, nor may
----------
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by each party hereto, or in the case of a
waiver, the party waiving compliance.
10.10 Publicity and Disclosures. No press releases or public disclosure,
-------------------------
either written or oral, of the transactions contemplated by this Agreement,
shall be made by a party to this Agreement without the prior knowledge and
written consent of Buyer, SQLBench and the Stockholders.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
BUYER: SEGUE SOFTWARE, INC.
- -----
By: /s/ J. Jeffrey Bingenheimer
-----------------------------------------
Name:
Title:
MERGER SUB: SGE MERGER CORP.
- ----------
By: /s/ J. Jeffrey Bingenheimer
-----------------------------------------
Name:
Title:
SELLERS: SQLBENCH INTERNATIONAL, INC.
- -------
By: /s/ Klaus K. Obermeier
-----------------------------------------
Name:
Title:
/s/ Klaus K. Obermeier
-----------------------------------------
Klaus K. Obermeier
/s/ Susan P. Obermeier
-----------------------------------------
Susan P. Obermeier
<PAGE>
Exhibit 99
SEGUE SOFTWARE, INC. ACQUIRES SQLBENCH INTERNATIONAL, INC.
NEW TECHNOLOGY ENHANCES SEGUE'S LEADING-EDGE E-COMMERCE TESTING CAPABILITIES
Newton Centre, MA - December 30, 1997 - Segue Software, Inc., the leader in
automated testing for software reliability, today announced that it has acquired
SQLBench International, Inc. and its affiliate, privately-held developers of
Web-based load testing software with operations in Austria and Atlanta, Ga. The
Company will pay approximately $10,000,000 in cash, notes and stock for the
acquisition. The acquisition will be accounted for as a purchase and it is
expected that a substantial portion of the purchase price will be charged to
operations in the fourth quarter of 1997 as purchased research and development.
With the purchase, which was completed today, Segue acquires technology and
product that will enable it to further differentiate its best-of-breed Web load
testing tool, SilkPerformer, from competitive offerings. SilkPerformer ensures
the performance and capacity of Web servers. SQLBench International technology
focuses on the predictive and design aspects of load testing, which give users
greater ability to perform load testing early in the development phase instead
of waiting until deployment. It is anticipated that the acquired technology will
enable Segue to further develop the predictive and early-testing capabilities of
its load testing tools.
"This is an important acquisition for Segue, because the combination of Segue's
SilkPerformer with SQLBench's developing load testing technology will usher in a
new level of E-commerce software sophistication that will yield benefits to our
current and new customers. The entire business-critical E-commerce software
system hinges on Web server and Web application performance under intense
transaction volumes," said Stephen B. Butler, Segue's CEO. "SQLBench's robust
predictive load testing capabilities and enhanced simulation accuracy offer us a
tremendous opportunity to improve our load testing offering and meet our E-
commerce customers' needs."
Also as part of this acquisition, Klaus Obermeier, current SQLBench
International President and CEO, will become Vice President of European sales
for Segue Software, effective with the closing. Segue Austria, a wholly-owned
subsidiary of Segue Software, Inc., will employ the SQLBench development team.
"This is a good match, both technologically and philosophically," said
Obermeier. "Effective E-commerce testing requires a comprehensive methodology as
well as sound technology in order to deliver robust applications in a timely
fashion. SQLBench developers can also now take advantage of the engineering
resources that have made Segue the leader in automated testing for software
reliability and provide significant engineering value to the Segue engineers in
the future development of load testing products."
<PAGE>
ABOUT SEGUE SOFTWARE
Segue Software, Inc. (NASDAQ:SEGU) creates and delivers breakthrough
technologies that redefine the way companies deliver reliable software. Segue is
committed to providing its customers worldwide with a comprehensive, integrated
solution for automated testing that ensures that their software meets the
expectations of the end-to-end business process it was designed to support.
Built upon a Universal Testing Architecture, Segue's product suites,
QualityWorks for client/server testing and Silk for Web testing, facilitate the
rapid development and re-use of automated software tests across more than 20
platforms and development environments -- from Windows to Web and desktop to
data center. Headquartered in Newton Centre, Mass., with offices across North
America and Europe, Segue can be reached at 1-800-287-1329 or at www.segue.com.
###
The Company notes that each of the above forward-looking statements is subject
to change, based on various important factors, including, without limitation,
changes in the market, new products and announcements from other companies,
changes in technology and industry standards and the Company's ability to
successfully integrate SQLBench's technology and personnel into the Company's
ongoing operations. Additional information on the factors that could affect the
company's business and financial results is included in the company's periodic
reports filed with the Securities and Exchange Commission.
Universal Testing Architecture, QA Organizer, QA Radar, and QA Performer are
trademarks, and Segue, QualityWorks, QA DBTester and QA Partner are registered
trademarks, of Segue Software, Inc. All other product names are properties of
their respective companies.
EDITORIAL CONTACTS
Laura Grimmer J. Jeffrey Bingenheimer
FitzGerald Communications Inc. Segue Software, Inc.
(617) 494-9500 (617) 796-1000
[email protected] [email protected]
