SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): March 8, 2000
STARBASE CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-25612 33-0567363
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
4 Hutton Centre Drive, Suite 800 Santa Ana, CA 92707-8713
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (714) 445-4400
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2.ACQUISITION OF ASSETS.
On March 8, 2000, StarBase Corporation, a Delaware corporation
("StarBase"), acquired (the "Acquisition") all of the outstanding capital
stock of Premia Corporation, an Oregon corporation ("Premia"). The
Acquisition was effected pursuant to a Stock Purchase Agreement, dated as
of March 8, 2000 (the "Stock Purchase Agreement"), among StarBase,
Premia and the three stockholders of Premia (collectively, the "Sellers").
Pursuant to the Acquisition, StarBase acquired all of the issued and
outstanding capital stock of Premia, consisting of 1,002,000 shares of
common stock, in consideration for which StarBase paid to the Sellers
1,869,159 shares of StarBase common stock (the "Shares"). Ten (10%) percent
of the Shares, or 186,916 Shares, are being held in escrow under an escrow
agreement to satisfy indemnification obligations which may arise under the
Stock Purchase Agreement. The foregoing consideration was allocated pro
rata among the Sellers based upon their respective ownership of Premia
prior to the consummation of the Acquisition.
The terms of the Acquisition were determined in accordance with the Stock
Purchase Agreement and were established through arm's-length negotiations
between StarBase and the Sellers.
Pursuant to the Stock Purchase Agreement, StarBase entered into an
employment agreement and non-competition agreement with each of the
Sellers.
The foregoing summary of the terms of the Acquisition and the Stock
Purchase Agreement does not purport to be complete and is qualified in its
entirety by reference to the full text of the Stock Purchase Agreement, a
copy of which is filed as Exhibit 2.1 hereto, and incorporated herein by
reference.
Prior to the consummation of the Acquisition, StarBase did not own,
directly or indirectly, any of the voting securities of Premia.
ITEM 7.FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
To be filed by amendment.
(b) Pro Forma Financial Information.
To be filed by amendment.
(c) Exhibits.
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Exhibit
No. Description
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2.1 Stock Purchase Agreement, dated as of March 8, 2000, among
StarBase, Premia and each of the stockholders of Premia.
99.1 Press Release dated March 9, 2000.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: March 23, 2000
STARBASE CORPORATION
By: /s/ Douglas S. Norman
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Name: Douglas S. Norman
Title: Chief Financial Officer
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EXHIBIT INDEX
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Exhibit
No. Description
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2.1 Stock Purchase Agreement, dated as of March 8, 2000, among
StarBase, Premia and each of the stockholders of Premia.
99.1 Press Release dated March 9, 2000.
EX-2.1
STOCK PURCHASE AGREEMENT
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SCHEDULES
Schedule 2.2 - Premia Options
Schedule 2.10 - Real and Personal Property
Schedule 2.11 - Intellectual Property
Schedule 2.12 - Systems and Software
Schedule 2.13 - Insurance Policies
Schedule 2.14 - Tax Matters
Schedule 2.15(a) - Premia Employment Agreements
Schedule 2.15(b) - Premia Employment Benefit Plans
Schedule 2.16(a) - Premia Business Related Contracts
Schedule 2.16(b) - Premia Business Matters
Schedule 2.17 - Certain Other Contracts of Premia
Schedule 2.18(a) - Premia Customers/Suppliers
Schedule 2.18(b) - Adverse Customer/Supplier Matters
Schedule 2.19 - Consents and Approvals
Schedule 2.20 - Affiliated Transactions
Schedule 2.29 - Premia Conduct of Business
EXHIBITS
Exhibit 1.4 Escrow Agreement
Exhibit 1.6(a) Form of Certificate of Incorporation of Premia
(post closing)
Exhibit 1.6(b) Form of Bylaws of Premia (post closing)
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of March 8, 2000 (the
"Agreement"), by and among STARBASE CORPORATION, a Delaware corporation
("StarBase"); PREMIA CORPORATION, an Oregon corporation ("Premia") and DONALD
KINZER, ERIC JOHNSON, and DOUGLAS ROOT (collectively, the "Sellers").
W I T N E S S E T H :
WHEREAS, Premia is engaged in the business of developing,
publishing, marketing and supporting software tools for professional software
development (the "Business");
WHEREAS, the Sellers own all of the issued and outstanding
capital stock (the "Stock") of Premia;
WHEREAS, it is intended that this transaction will qualify as
a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended, and
WHEREAS, Sellers desire to sell, and StarBase desires to
purchase, the Stock on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, the parties hereto do hereby agree as follows:
1. PURCHASE AND SALE OF STOCK.
1.1 Transfer of the Stock by the Sellers. Subject to the terms
and conditions of this Agreement, the Sellers agree to sell, assign and transfer
good and valid title and interest in and to the Stock free and clear of any
charge, encumbrance, security interest, lien, pledge, or similar restriction,
whether imposed by agreement, understanding, law, equity or otherwise
("Encumbrances"), and to deliver the certificates representing the Stock, to
StarBase at the Closing. The certificates shall be properly endorsed for
transfer to, or accompanied by a duly executed stock power in favor of,
StarBase.
1.2 Purchase of the Stock by StarBase. Subject to the terms and
conditions of this Agreement, StarBase agrees to purchase all of the right,
title and interest in and to the Stock from the Sellers and to deliver to the
Sellers the Purchase Price at the Closing. The "Purchase Price" shall be One
Million Eight Hundred Sixty Nine Thousand One Hundred Fifty Nine (1,869,159)
unregistered shares of StarBase common stock (the "StarBase Common Stock").
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1.3 Closing. The purchase and sale of the Stock shall take place
at the offices of StarBase on March 8, 2000 (which time and place are designated
as the "Closing").
1.4 Escrow. Ten percent (10%) of the shares of StarBase Common
Stock constituting the Purchase Price (the "Indemnity Escrow Shares") shall be
held in escrow as collateral for the indemnification obligations of the Sellers
pursuant to this Agreement and the provisions of an escrow agreement ("Escrow
Agreement") in the form attached hereto as Exhibit 1.4. The Indemnity Escrow
Shares shall be withheld from the shares of StarBase Common Stock to be
delivered to the Sellers at the Closing, as provided for in the Escrow
Agreement. The Indemnity Escrow shares shall be returned to the Sellers,minus
amounts to cover claims, upon the termination of the indemnification period set
forth in Section 6.1 below.
1.5 Assumption of Premia Plan.
(a) StarBase shall assume the Premia 1998 Stock Option Plan
(the "Premia Plan"), effective as of the Closing. Each unexpired and unexercised
option to purchase shares of Premia common stock (a "Premia Option") granted
under the stock option plans of Premia outstanding immediately prior to the
Closing shall be maintained as an option under the Premia Plan (an "Assumed
Premia Option"). Each Premia Option so assumed by StarBase will continue to
have, and be subject to, substantially the same terms and conditions set forth
in the documents governing such Premia Option immediately prior to the Closing,
except that (i) such Assumed Premia Option will be exercisable for that number
of whole shares of common stock equal to the number of shares of Premia common
stock that were purchasable under such Assumed Premia Option immediately prior
to the Closing multiplied by 1.8654 (the "Exchange Ratio,") rounded down to the
nearest whole number of shares of StarBase's Common Stock, and (ii) the per
share exercise price for the shares of StarBase's common stock issuable upon
exercise of such assumed Premia Option will be equal to the quotient obtained by
dividing the exercise price per shares of Premia common stock at which such
Premia Option was exercisable immediately prior to the closing by the Exchange
Ratio, rounded up to the nearest whole cent. Consistent with the terms of the
Premia Options and the documents governing such Premia Options and provided
StarBase assumes such Premia Options in accordance with this Agreement, the
Sellers represent and warrant that the Closing will not terminate or accelerate
any Assumed Premia Option or any right of exercise, vesting or repurchase
relating thereto with respect to shares of StarBase common stock acquired upon
exercise of such Premia Option, other than the options issued to John Robertson,
which vest in accordance with his option agreement.
(b) As soon as practicable after the Closing, StarBase shall
issue to each holder of an Assumed Premia Option a document evidencing the stock
option under the Premia Plan assumed by StarBase within thirty (30) days of the
closing date. The right to receive an Assumed Premia Option may not be assigned
or transferred, except to the extent the predecessor Premia Option was
assignable or transferable. Any attempted assignment contrary to this Section
1.5 shall be null and void.
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1.6 Certificate of Incorporation; Bylaws, Officers and Directors.
(a) The Articles of Incorporation annexed hereto as Exhibit
1.6(a), shall be the Articles of Incorporation of Premia on the Closing Date
until thereafter amended as provided by law or such Articles of Incorporation.
(b) The By-Laws annexed hereto as Exhibit 1.6(b), shall be the
By-Laws of Premia on the Closing Date until thereafter amended as provided by
law, the Articles of Incorporation of Premia or the By-Laws.
1.7 Directors and Officers of Premia. The officers and directors
of Premia within five (5) days after the Closing Date, which directors and
officers shall serve as such in accordance with applicable law, the Articles of
Incorporation and By-Laws of Premia until their resignation, removal or
replacement shall be as follows: Bill Stow, director and Chief Executive
Officer, Doug Norman, director, Chief Financial Officer and Secretary.
2. REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers jointly and
severally represent and warrant to StarBase and Premia that the statements
contained in this Section 2 are correct and complete as of the date of this
Agreement, except as set forth in the Disclosure Schedule accompanying this
Agreement and initialed by the parties (the "Disclosure Schedule"). The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Section 2.
2.1 Organization, Standing and Power. Premia is a corporation
duly organized and validly existing under the laws of the state of its
incorporation, with full corporate power and authority to own, lease and operate
its properties and to carry on the Business, as presently conducted by it.
Premia is duly qualified and is in good standing as a foreign corporation in all
states or jurisdictions in which the character and location of any of the
properties owned or leased by Premia, or the conduct of its Business, makes it
necessary for it to qualify to do business as a foreign corporation and where it
has not so qualified, except for those jurisdictions in which the failure to so
qualify would not have a Material Adverse Effect (as defined in Section 2.5
hereof) on the Business or operations of Premia. Copies of the Articles of
Incorporation of Premia and all amendments thereof and the By-laws of Premia, as
amended to date, have been made available to StarBase and are complete and
correct. Premia's minute books heretofore made available to StarBase contain
complete and accurate records of all meetings and other corporate actions of its
stockholders and board of directors (including committees of its Board of
Directors).
2.2 Capitalization. The authorized capital stock of Premia
consists of 5,000,000 shares of common stock, no par value per share (the
"Premia Stock"), of which 1,002,000 shares of Premia Stock are issued and
outstanding, as of the date hereof. Except for 145,795 shares of Premia Stock
reserved for issuance upon the exercise of the Premia Stock Options, there are
no outstanding options, warrants, rights, calls, commitments, conversion rights,
puts, plans or other agreements of any character to which Premia is a party or
otherwise bound which provide for the acquisition or disposition of any of the
Premia Stock or any of the
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securities of Premia. A true and complete list of the holders of all outstanding
Premia Options, and breakdown as between vested and unvested options, the
exercise price per share and the terms of such options, as of the date hereof
has previously been delivered to StarBase. Except as listed on Schedule 2.2
there are (a) no options, warrants or other rights, agreements, arrangements or
commitments of any character obligating Premia to issue or sell any shares of
capital stock of or other equity interests in Premia, (b) no outstanding
contractual obligations or other commitments or arrangements of Premia to: (i)
repurchase, redeem or otherwise acquire any shares of the capital stock of
Premia (or any interest therein) or (ii) provide funds to or make any investment
(in the form of a loan, capital contribution or otherwise) in any other entity,
or (iii) issue or distribute to any person any capital stock of Premia, or (iv)
issue or distribute to holders of any of the capital stock of Premia any
evidences of indebtedness or assets of Premia, and (c) no preemptive rights with
regard to the capital stock of Premia, and no right-of-first refusal or similar
catch-up rights with regard to such capital stock. All of the outstanding
securities of Premia have been issued and sold by Premia in full compliance with
applicable federal and state securities laws. All of the outstanding Premia
Stock has been duly and validly issued and is fully paid and nonassessable.
2.3 Interests in Other Entities. Premia does not: (a) own,
directly or indirectly, of record or beneficially, any shares of voting stock or
other equity securities of any other entity; (b) have any ownership interest,
direct or indirect, of record or beneficially, in any unincorporated entity; or
(c) have any obligation, direct or indirect, present or contingent, (i) to
purchase or subscribe for any interest in, advance or loan moneys to, or in any
way make investments in, any person or entity, or (ii) to share any profits or
capital investments or both from any entity.
2.4 Authority.
(a) The execution and delivery by Premia and Sellers of this
Agreement and of all of the agreements to be executed and delivered by it and
them pursuant hereto (the "Premia Documents"), the performance by Premia and
Sellers of their obligations hereunder and thereunder, and the consummation of
the transactions contemplated hereby and thereby, have been duly and validly
authorized by Premia's Board of Directors and no other corporate or other
proceedings on the part of Premia or its stockholders, or by Sellers, are
necessary to authorize the execution and delivery of this Agreement by Premia
and Sellers or the consummation of the transactions contemplated hereby.
(b) This Agreement and the Premia documents are the valid and
binding obligation of Premia and the Sellers and are enforceable in accordance
with their respective terms, subject to the effect of applicable bankruptcy,
reorganization, insolvency, moratorium and other similar laws of general
application relating to, limiting or affecting the enforcement of creditors'
rights generally and general principles of equity that may limit the
enforceability of the remedies, covenants or other provisions of this Agreement
or the Premia Documents and the availability of injunctive relief or other
equitable remedies.
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2.5 Noncontravention. Neither the execution and delivery by
Premia and the Sellers of this Agreement or the Premia Documents pursuant
hereto, nor the consummation of any of the transactions contemplated hereby or
thereby, nor the performance by Premia of its obligations hereunder or
thereunder, will (nor with the giving of notice or the lapse of time or both
would): (a) conflict with or result in a breach of any provision of the Articles
of Incorporation or By-laws of Premia; or (b) in any manner which would
materially affect the ability of Premia to consummate or perform the
transactions contemplated hereby or have a material adverse effect on the
business, assets, liabilities, properties, results of operations or financial
condition of Premia (hereinafter, a "Material Adverse Effect"), (i) give rise to
a default, or any right of termination, cancellation or acceleration, or
otherwise be in conflict with or result in a loss of contractual benefits to
either Premia or under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement or other instrument or obligation
to which Premia is a party or by which Premia may be bound or to which Premia,
or the Business may be subject, or require any consent, approval or notice under
the terms of any such document or instrument, or (ii) violate any order, writ,
injunction, decree, law, statute, rule or regulation of any court or
governmental authority which is applicable to Premia, or the Business, or (iii)
result in the creation or imposition of any lien, adverse claim, security
interest, pledge, mortgage, charge or encumbrance, of any nature whatsoever (a
"Lien"), upon any of the properties or assets of Premia; or (c) interfere with
or otherwise adversely affect the ability of Premia to carry on the Business
after the Effective Date on substantially the same basis as is now conducted; or
(d) require the consent, waiver, approval, authorization, license, certificate
or franchise, of or any filing by Premia.
2.6 Litigation. There are no suits or actions, or administrative,
arbitration or other proceedings or governmental investigations, pending or, to
the knowledge of Sellers, threatened, against or relating to Premia, or the
Business. There are no judgments, orders, stipulations, injunctions, decrees or
awards in effect which relate to Premia, the Business or the operation of
Premia, which if decided against Premia would have a Material Adverse Effect.
There has been no products liability claims made or threatened against Premia.
2.7 Compliance with Law. To the best of Premia's and each
Seller's knowledge, Premia is not engaging in any activity or omitting to take
any action as a result of which it is in violation of any law, rule, regulation,
zoning or other ordinance, statute, order, injunction or decree, or any other
requirement of any court or governmental or administrative body or agency,
applicable to Premia, its assets or the Business ("Laws"), which Laws include,
but are not limited to, those relating to: the use, storage, handling, transport
or disposal of pollutants, contaminants, pesticides, petroleum or petroleum
product, asbestos, hazardous or toxic materials or wastes, or any substance,
whether solid, liquid or gaseous, that is listed, defined or regulated as a
"hazardous substance", "hazardous waste" or "solid waste" or otherwise
classified as hazardous or toxic, in or pursuant to any Environmental Law (as
defined herein), causing or posing a threat to cause contamination or adverse
effect to the environment ("Hazardous Substances"); occupational safety and
health; business practices and operations; labor practices; employee benefits;
and zoning and other land use. For purposes hereof, "Environmental Laws" means
all federal, state and local laws, rules, regulations, permits, orders,
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judgments, injunctions and decrees relating to Hazardous Substances applicable
to the Business and the facilities of Premia (whether or not owned by them).
2.8 Financial Statements; SEC Filings; Books and Records.
(a) Premia has delivered or made available to StarBase an
audited balance sheet at December 31, 1999 and December 31, 1998, and the
related audited statements of cash flow and income for the twelve (12) months
then ended, and an unaudited balance sheet at January 31, 2000 (collectively,
the "Premia Reports").
(b) Each of the financial statements contained in the Premia
Reports, together with the notes thereto, has been prepared in accordance with
generally accepted accounting principles ("GAAP"), applied on a consistent basis
throughout the periods indicated, except as disclosed therein, and each presents
fairly the financial condition and position of Premia as at the dates thereof
and the results of operations and the cash flow for the periods indicated,
except that the unaudited interim financial statements are subject to normal
recurring year-end adjustments and do not contain all footnotes required under
GAAP.
(c) The books and records of Premia are materially complete
and correct, have been maintained in accordance with good business practices,
and accurately reflect the basis for the financial condition, results of
operations and cash flow of Premia as set forth in the financial statements
contained in the Premia Reports.
2.9 Accounts Receivables; Inventories. The accounts receivable,
net of the allowance for doubtful accounts applicable thereto (which allowance
is established on a basis consistent with GAAP) included in the January 31, 2000
Balance Sheet, represent bona fide transactions made in the ordinary course of
business of Premia and, in the aggregate, to Premia's knowledge, are collectible
in the ordinary course of business consistent with past practices of Premia,
subject to applicable reserves. Premia has performed all obligations with
respect thereto which it was obligated to perform to the date hereof.
2.10 Properties. Premia has good and valid title to all of the
properties and assets that are necessary for the conduct of the Business free
and clear of any and all Liens (including liens for current Taxes (as defined in
Section 2.14 hereof)), of any nature whatsoever. All plants, structures and
equipment which are utilized in the Business, or are material to the condition
(financial or otherwise) of Premia are owned or leased by Premia. Schedule 2.10
sets forth all (1) real property which is owned, leased (whether as lessor or
lessee) or subject to contract or commitment of purchase or sale or lease
(whether as lessor or lessee) by Premia, or which is subject to a title
retention or conditional sales agreement or other security device, and (2)
tangible personal property which is owned, leased (whether as lessor or lessee)
or subject to contract or commitment of purchase or sale or lease (whether as
lessor or lessee) by Premia .
2.11 Intellectual Property.
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(a) Schedule 2.11 identifies (by a summary description) the
Intellectual Property (as defined below) of Premia which Schedule encompasses:
(i) all United States and foreign patents, trademark and trade name
registrations, trademarks and tradenames, brandmarks and brand name
registrations, servicemarks and servicemark registrations, assumed names and
copyrights and copyright registrations, owned in whole or in part or used by
Premia, and all applications therefor, (ii) all material inventions,
discoveries, improvements, processes, formulae, technology, know-how, processes
and other intellectual property, proprietary rights and trade secrets relating
to the Business and (iii) all licenses and other agreements (the "Licenses") to
which Premia is a party or otherwise bound which relate to any of the
Intellectual Property or the use thereof by Premia in connection with the
Business (collectively, the "Intellectual Property"). No violations of the
material terms of any of the aforesaid licenses and/or agreements have occurred.
It is understood that the term "Intellectual property" shall not include Systems
(as defined below) and that no representations or warranties are made in this
Section 2.11 with respect to Systems.
(b) Except as disclosed on Schedule 2.11, (i) Premia owns or
is authorized to use in connection with the Business all of the Intellectual
Property; (ii) no proceedings have been instituted, are pending, or to the
knowledge of Sellers, are threatened which challenge the rights of Premia with
respect to the Intellectual Property or its use thereof in connection with the
Business and/or the assets and properties of Premia or the validity thereof and,
to the knowledge of Sellers, there is no valid basis for any such proceedings;
(iii) Premia's ownership of the Intellectual Property nor its use thereof in
connection with the Business and/or the assets and properties of Premia does not
violate any Laws, or has at any time infringed upon or violated any rights of
others or is being infringed by others; (iv) none of the Intellectual Property,
or use thereof by Premia in connection with the Business and/or the assets and
properties of Premia is subject to any outstanding order, decree, judgment,
stipulation or any Lien except as set forth on Schedule 2.11; and (v) Premia has
not granted any license to third parties with regard to the Intellectual
Property.
2.12 Systems and Software. Premia owns or has the right to use
pursuant to lease, license, sublicense, agreement, or permission all computer
hardware, software and information systems necessary for the operation of the
Business as presently conducted (collectively, "Systems"), all of which is
listed on Schedule 2.12. Each System owned by Premia immediately prior to the
Effective Date will be owned by Premia on identical terms and conditions
immediately subsequent to the Effective Date. With respect to each System owned
by a third party and used by Premia pursuant to lease, license, sublicense,
agreement or permission: (a) the lease, license, sublicense agreement or
permission covering the System is legal, valid, binding, enforceable, and in
full force and effect with regard to Premia , and with regard to the other party
thereto; (b) the lease, license, sublicense, agreement or permission will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the Effective Date with regard to Premia, and with
regard to the other party thereto; (c) Premia nor any party to any such lease,
license, sublicense, agreement or permission is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default, and permit termination, modification or acceleration thereunder; (d)
Premia nor any
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party or any such lease, license, sublicense, agreement or permission has
repudiated any provision thereof; (e) Premia has not granted any sublicense,
sublease or similar right with respect to any such lease, license, sublicense,
agreement or permission; (f) Premia's use and continued use by Premia of such
System does not and will not interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any intellectual property rights of third
parties as a result of the continued operation of the Business.
2.13 Insurance. Annexed hereto as Schedule 2.13 is a complete and
correct list and summary description of all material policies of insurance
relating to the Business or in which Premia is an insured party, beneficiary or
loss payable payee, including without limitation any products liability
insurance. Such policies are in full force and effect, all premiums due and
payable with respect thereto have been paid, and no notice of cancellation or
termination has been received by Premia with respect to any such policy.
2.14 Tax Matters.
(a) Except as set forth in Schedule 2.14:
(i) Premia has (A) duly and timely filed or caused to be
filed with the appropriate branch, office, department, agency or other
instrumentality engaged in the monitoring, collection and enforcement of Taxes
(as defined below) (the "Tax Authority") each return, declaration or statement,
and any amendment thereto (the "Tax Return") that is required to be filed by or
on behalf of the Premia or that includes or relates to Premia's income, sales,
assets or business, which Tax Return is true, correct and complete in all
material respects, (B) duly and timely paid in full, caused to be paid in full,
all Taxes due and payable in respect of all Tax periods up to and including the
date of this Agreement, and (C) has properly accrued on the books and records of
Premia in accordance with GAAP a provision for the payment of all Taxes due or
which will be due or for which Premia otherwise is or may be liable;
(ii) Premia has complied in all respects with all
applicable material laws relating to the payment, collection or withholding of
any Tax, and the remittance thereof to any and all Tax Authorities;
(iii) There is no Lien for Taxes upon any of the assets or
properties of Premia;
(iv) No Tax Return filed by or on behalf of Premia has ever
been examined, audited or reviewed by any Tax Authority;
(v) No audit, examination, investigation, reassessment or
other administrative or court proceeding is pending, proposed, or to the
knowledge of Premia, threatened with regard to any Tax or Tax Return or the
payment, collection or withholding of any Tax;
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(vi) Premia has not received a ruling from any Tax
Authority or signed an agreement with any Tax Authority or has requested a
ruling from or an agreement with any Tax Authority, and there is no outstanding
subpoena or request for information or documents from any Tax Authority, with
respect to any Tax for which Premia is or may be liable or with respect to
Premia's income, sales, assets or the Business;
(vii) Schedule 2.14 sets forth a list of all jurisdictions
(both foreign and domestic) in which any Tax Returns have been filed by or on
behalf of Premia, respectively, or with respect to Premia's income, sales,
assets or the Business and Premia has provided to StarBase (A) a copy of all Tax
Returns for the past five (5) years, and (B) all audit reports, closing
agreements, letter rulings, or technical advice memoranda relating to any Tax
for which Premia is or may be liable with respect to Premia's income, sales,
assets or the Business.
(b) For purposes hereof, "Code" or "IRC" shall mean the
Internal Revenue Code of 1986, as amended, and "Tax" or "Taxes" shall mean any
tax, charge, fee, levy, deficiency or other assessment of whatever kind or
nature including, without limitation, any net income, gross income, profits,
gross receipts, excise, real or personal property, sales, ad valorem,
withholding, social security, retirement, excise, employment, unemployment,
minimum, estimated, severance, stamp, property, occupation, environmental,
windfall profits, use, service, net worth, payroll, franchise, license, gains,
customs, transfer, recording and other tax, customs duty, fee assessment or
charge of any kind whatsoever, imposed by any Tax Authority, including any
liability therefor as a transferee (including without limitation under section
6901 of the Code or any similar provision of applicable law), as a result of
Treasury Regulation ss.1.1502-6 or any similar provision of applicable law, or
as a result of any tax sharing or similar agreement, together with any interest,
penalties or additions to tax relating thereto.
2.15 Employee Arrangements.
(a) Except as disclosed on Schedule 2.15(a), Premia has no
outstanding employment agreement with any officer or employee of Premia or any
bonus, incentive compensation, deferred compensation, profit sharing, stock
option, stock bonus, stock purchase, savings, severance, salary continuation,
consulting, retirement (including health and life insurance benefits provided
after retirement) or pension plan (including Employee Benefit Plans as defined
in Section 2.15(b) hereof) or arrangement with or for the benefit of any
officer, employee or other person, or for the benefit of any group of officers,
employees or other persons. Premia has not made, or entered into any agreement
to make, any payment that becomes payable as a result of the consummation of
this transaction which would be treated as an "excess parachute payment" as
defined in Section 280G of the Code. There are no such agreements, plans or
other arrangements entered into with or provided for any independent contractors
with whom Premia has a business relationship.
(b) Set forth on Schedule 2.15(b) are all of the employee
benefit plans as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), but without regard to whether any
such plan is in fact subject to ERISA, that is sponsored, or is being maintained
or contributed to, by Premia (the "Employee Benefit Plan").
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None of the Employee Benefit Plans are "multiemployer plans" as defined in
Section 3(37) of ERISA. Premia has furnished or made available or will promptly
after the date hereof make available to Subsidiary and StarBase (i) a true and
complete copy of the plan document and summary plan description for each
Employee Benefit Plan, (ii) a true and complete copy of the most recently filed
Form 5500 (including the related schedules) with respect to Employee Benefit
Plan for which such form is required to be filed, (iii) a true and complete copy
of any trust agreement, insurance contract or other agreement or arrangement
serving as source of funding any benefits payable under any Employee Benefit
Plan, and (iv) the most recently issued financial statement and actuarial
report, if any, for each Employee Benefit Plan. No "prohibited transactions" (as
such term is defined in Section 4975 of the IRC, or in Part 4 of Subtitle B of
Title I of ERISA) have occurred with respect to any Employee Benefit Plan that
could result in the imposition of taxes or penalties. With respect to each of
the Employee Benefit Plans that is intended to qualify for favorable income tax
treatment under Section 401(a) of the IRC, (x) the Internal Revenue Service
("IRS") has issued a favorable determination letter with respect to such plan;
(y) except as set forth on Schedule 2.15, Premia has furnished StarBase with a
copy of the determination letter most recently issued by the IRS with respect to
such plan and the application filed with the IRS for such determination letter;
and (z) to the knowledge of Premia, no event has occurred from the date of each
such favorable determination letter that would adversely effect the
tax-qualified status of the plan in question. Each Employee Benefit Plan has
been administered in compliance with the applicable requirements of ERISA and
the IRC, and in compliance with all other applicable provisions of law. With
respect to each Employee Benefit Plan, Premia has not incurred liabilities as a
result of the violation of or the failure to comply with any applicable
provision of ERISA, the IRC, any other applicable provision of law, or any
provision of such plan. None of the Employee Benefit Plans which is an "employee
pension benefit plan", as that term is defined in Section 3(2) of ERISA (a
"Premia Employee Pension Benefit Plan"), has not incurred an "accumulated
funding deficiency," within the meaning of Section 302 of ERISA or Section 412
of the IRC. Premia has not failed to make any contribution to, or to make any
payment under, any Employee Benefit Plan that it was required to make pursuant
to the terms of the plan or pursuant to applicable law in any amount. No
"reportable events," with respect to which a notice must be filed with the
Pension Benefit Guaranty Corporation ("PBGC"), has occurred with respect to any
Employee Pension Benefit Plan subject to Title IV of the ERISA. No proceedings
by the PBGC to terminate any Employee Pension Benefit Plan pursuant to Subtitle
C of Title IV of ERISA have been instituted or threatened. Premia (1) has not
incurred any liability to the PBGC in connection with any Employee Pension
Benefit Plan, including any liability under Section 4069 of ERISA and any
penalty imposed under Section 4071 of ERISA, (2) has not terminated any Employee
Pension Benefit Plan, or ceased operations at any facility or withdrawn from any
Employee Pension Benefit Plan, in a manner that could subject it to liability or
any liens under Section 4062, 4063, 4064 or 4068 of ERISA or (3) has no
knowledge as to the existence of any state of facts, or as to the occurrence of
any transactions, that might reasonably be anticipated to result in any
liability of Premia to the PBGC under any other provision of Title IV of ERISA.
There is no pending or, to the knowledge of Premia, threatened legal action,
proceeding or investigation against or involving any Employee Benefit Plan which
could result in liabilities to the Plan or Premia. Except as disclosed on
Schedule 2.15, the present value of accrued benefits of each Employee Benefit
that is a defined benefit plan as defined in Section
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3(35) of ERISA does not exceed the value of the assets of such plan available to
pay such benefits.
(c) There are no pending, or to the best of the knowledge of
Sellers, threatened, labor negotiations, work stoppages or work slowdowns
involving or affecting the Business, and no union representation questions
exist, and there are no organizing activities, in respect of any of the
employees of Premia.
2.16 Certain Business Matters and Practices.
(a) Except as set forth on Schedule 2.16(a), Premia is not a
party to or bound by any material distributorship, dealership, sales agency,
franchise or similar agreement which relates to the Business. Premia has not
provided any warranties on its respective products and has no greater
obligations than to replace the product sold or as is otherwise customary in the
industry.
(b) A description of (i) the rebate and volume discount
practices and obligations of Premia, (ii) the allowance and customer return
practices and obligations of Premia, (iii) the co-op advertising and other
promotional practices of Premia, (iv) price protection agreements, and (v)
return policies and historical return rates, as each of the foregoing relate to
the customers and suppliers of Premia, has previously been supplied to StarBase.
2.17 Certain Contracts.
(a) Set forth on Schedule 2.17 is a complete and correct list
of all material contracts, commitments, obligations and understandings to which
Premia is a party or otherwise bound, except for each of those which (a) was
made in the ordinary course of business, and (b) either (i) is terminable by
Premia without liability, expense or other obligation in excess of $5,000 on
thirty (30) days' notice or less, or (ii) may be anticipated to involve
aggregate payments to or by Premia of $5,000 (or the equivalent) or less
calculated over the full term thereof, and (c) is not otherwise material to the
Business. Except as set forth in the immediately preceding sentence, there are
no agreements or arrangements in effect with respect to the Business entered
into by Premia with any independent salesperson, distributor, sublicensor or
other remarketer or sales organization.
(b) Complete and correct copies of all contracts, commitments,
obligations and undertakings set forth on any of the Schedules delivered
pursuant to this Agreement have been furnished or made available by Premia to
StarBase, and (i) each of them is in full force and effect, no person or entity
which is a party thereto or otherwise bound thereby is in default thereunder,
and no event, occurrence, condition or act exists which does (or which with the
giving of notice or the lapse of time or both would) give rise to a default or
right of cancellation, acceleration or loss of contractual benefits thereunder;
(ii) there has been no threatened cancellations thereof, and (iii) there are no
outstanding disputes thereunder.
2.18 Customers and Suppliers.
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(a) A complete and correct list, as of January 31, 2000, of
(i) the 10 largest customers of the Business and the amount for which each such
customer is invoiced, and (ii) the 10 largest suppliers of the Business and the
amount of goods and services purchased from each such supplier has previously
been supplied to StarBase.
(b) Except as set forth on Schedule 2.18(b), Premia has not
received any notice that any of the suppliers or customers listed on Schedule
2.18(a) have any disputes with Premia, or the Business or intend to cease
selling or rendering services to, or dealing with, Premia on substantially the
same basis as of the date hereof, nor has any information been brought to its
attention which might reasonably lead it to believe any such suppliers or
customers intend to alter in any material respect the amount of sales or
services or the extent of dealings with Premia, or would alter in any material
respect the sales or services or dealings in the event of the consummation of
the sale under this Agreement. Premia has no information which might reasonably
indicate, nor has any information been brought to any of their attention which
might reasonably lead any of them to believe, that any supplier of Premia will
not be able to fulfill outstanding or currently anticipated purchase orders
placed by, or service obligations to, Premia.
2.19 Approvals/Consents. Except as set forth on Schedule 2.19, no
governmental, administrative or third-party consents, permits, appointments,
approvals, licenses, certificates or franchises are necessary for the operation
of the Business (the "Permits"). All such Permits are in full force and effect
and will, remain in full force and effect without the payment of any penalty,
the incurrence of any additional debt or liability or the change of any term. No
material violations of the terms thereof have heretofore occurred or are known
by Premia to exist as of the date hereof. There are no proceedings pending or,
to the knowledge of Premia, threatened, or any basis therefor, seeking to
cancel, terminate or limit such Permits.
2.20 Transactions with Affiliated Parties. Schedule 2.20 sets
forth a true and complete list and description of all transactions engaged in
between Premia and any director, officer, employee, stockholder, partner or
agent of Premia, or any of its respective spouses or children, any trust of
which any such person is the grantor, trustee or beneficiary, any corporation of
which any such person or party is a stockholder, employee, officer or director,
or any partnership or other person in which any such person or party owns an
interest (each such person, trust, corporation and partnership, an "Affiliated
Party"). No Affiliated Party is a party to any agreement, contract or commitment
with Premia except as set forth in Schedule 2.20.
2.21 Purchase Entirely for Own Account. This Agreement is made
with each Seller in reliance upon such representation to StarBase, which by such
Seller's execution of this Agreement such Seller hereby confirms, that the
StarBase's Common Stock to be received by such Seller will be acquired for
investment for such Seller's own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and that such
Seller has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, such Seller
further represents that such does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant
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participations to such person or to any third person with respect to any of
StarBase's Common Stock.
2.22 Disclosure of Information. Each Seller believes he has
received all the information he considers necessary or appropriate for deciding
whether to purchase Buyer's Common Stock. Each Seller further represents that he
has had an opportunity to ask questions and receive answers from StarBase
regarding the terms and conditions of the Stock and the business, properties,
prospects and financial condition of StarBase.
2.23 Investment Experience. Each Seller acknowledges that he is
able to fend for himself, can bear the economic risk of his investment, and has
such knowledge and experience in financial or business matters that he is
capable of evaluating the merits and risks of the investment in StarBase's
Common Stock.
2.24 Accredited Investor. Each Seller is an "accredited investor"
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
2.25 Restricted Securities. Each Seller understands that the
securities he is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from StarBase in
a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be sold without registration under
the Act only in certain limited circumstances and in accordance with the terms
and conditions set forth in the legend described in Section 2.26 below. In this
connection such Seller represents that he is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
2.26 Legends. It is understood that the certificates evidencing
StarBase's Common Stock may bear the following legend:
"These securities have not been registered under the Securities
Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration
statement in effect with respect to the securities under such Act
or an opinion of counsel satisfactory to the company that such
registration is not required or unless sold pursuant to Rule 144
of such Act."
2.27 Information as to Premia. None of the representations or
warranties made by Sellers in this Agreement or in any agreement executed and
delivered by or on behalf of it pursuant hereto contain any untrue statement of
a material fact, or omit to state any material fact necessary in order to make
the statements therein contained, in light of the circumstances under which they
were made, not misleading.
2.28 Conduct of the Business Since Balance Sheet Date. Except as
previously disclosed to StarBase in writing, since the January 31, 2000 Balance
Sheet date:
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(a) The Business has been conducted only in the ordinary
course and consistent with past practice;
(b) Premia has not (i) amended its Articles of Incorporation
or By-Laws, (ii) changed the number of authorized, issued or outstanding shares
of its capital stock, (iii) declared, set aside or paid any dividend or other
distribution or payment in cash, stock or property in respect of shares of its
capital stock, (iv) made any direct or indirect redemption, retirement, purchase
or other acquisition of any of its capital stock, or (v) split, combined or
reclassified its outstanding shares of capital stock;
(c) Premia has not, directly or indirectly, (i) issued,
granted, sold or pledged or agreed or proposed to issue, grant, sell or pledge
any shares of, or rights of any kind to acquire any shares of the capital stock
of Premia, (ii) other than in the ordinary course of business and consistent
with past practice, incurred any indebtedness for borrowed money, (iii) waived,
released, granted or transferred any rights of material value, except in the
ordinary course of business consistent with past practices or (iv) transferred,
leased, licensed, sold, mortgaged, pledged, disposed of or encumbered any
material assets of Premia other than in the ordinary course of business and
consistent with past practice;
(d) There has been no change in any of Premia's material
personnel or business relationships, including, without limitation, suppliers
and customers;
(e) Premia has not, directly or indirectly, (i) increased the
compensation payable or to become payable by any of them to any of their
respective employees, officers or directors, (ii) adopted additional terms or
requirements, or made any bonus or unique payment or provision, under any stock
option, bonus, profit sharing, pension, retirement, deferred compensation,
employment or other payment or employee compensation plan, agreement or
arrangement for the benefit of employees of Premia or otherwise, (iii) entered
into or amended any employment or severance agreement or arrangement or (iv)
made any loan or advance to, or enter into any written contract, lease or
commitment with, any officer, director or employee of Premia;
(f) Premia has not, directly or indirectly, assumed,
guaranteed, endorsed or otherwise become responsible for the obligations of any
other individual, firm or corporation or make any loans or advances to any
individual, firm or corporation;
(g) Premia has not made any investment of a capital nature
either by purchase of stock or securities, contributions to capital, property
transfers, acquisition or financing of equipment or otherwise, other than in the
ordinary course of business, or the purchase of any property or assets of any
other individual, firm or corporation;
(h) Premia has not entered into, modified or amended in any
material respect or take any action to terminate any of its material contracts;
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(i) Premia has not taken any action, other than reasonable and
usual actions in the ordinary course of business and consistent with past
practice, with respect to accounting policies or procedures;
(j) Premia has not entered into an agreement or arrangement to
do any of the foregoing actions.
3. REPRESENTATIONS AND WARRANTIES AS TO STARBASE.
StarBase hereby represents and warrants to Sellers as
follows:
3.1 Organization, Standing and Power. StarBase is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation, with full corporate power and authority to own,
lease and operate its respective properties and to carry on its respective
business as presently conducted by it.
3.2 Capitalization. The authorized capital stock of StarBase
consists of 80,000,000 shares of common stock, $.01 par value (the "StarBase
Common Stock") and 10,000,000 shares of blanket preferred stock, par value of
$.01 per share. As of February 29, 2000: (1) 42,402,314 shares of StarBase
Common Stock are issued and outstanding, all of which are duly authorized,
validly issued, fully paid and nonassessable; (2) 9,119,869 shares of StarBase
Common Stock are reserved for future issuance upon exercise of options granted
by StarBase; and (3) 251,519 shares of StarBase Stock are reserved for future
issuance upon exercise of warrants granted by StarBase.
3.3 Purchase Consideration. The StarBase Common Stock, when
issued and delivered in accordance with the terms and provisions of this
Agreement, will be duly authorized and validly issued, fully paid and
non-assessable, and issued in compliance with all applicable federal and state
securities laws.
3.4 Authority.
(a) The execution and delivery by StarBase of this Agreement
and of each agreement, document and instrument to be executed and delivered by
StarBase pursuant hereto (the "StarBase Documents"), the performance by StarBase
of its obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by its Board of Directors and no other corporate proceedings on the
part of StarBase (or its stockholders) are necessary to authorize the execution
and delivery of this Agreement by StarBase or the consummation of the
transactions contemplated hereby.
(b) This Agreement is, and when executed and delivered by
StarBase, the StarBase Documents to be executed and delivered by StarBase
pursuant hereto will be, the valid and binding obligation of StarBase,
enforceable in accordance with their respective terms, subject to the effect of
applicable bankruptcy, reorganization, insolvency, moratorium and
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other similar laws of general application relating to, limiting or affecting the
enforcement of creditors' rights generally and general principles of equity that
may limit the enforceability of the remedies, covenants or other provisions of
this Agreement or the StarBase Documents and the availability of injunctive
relief or other equitable remedies.
3.5 Securities and Exchange Commission Filings; Financials.
(a) Since January 1, 1998, StarBase has timely filed on EDGAR
all forms, reports, statements and documents required to be filed with the SEC
(collectively, the "StarBase SEC Reports"), each of which has complied in form
in all material respects with the applicable requirements of the Securities Act
or the Exchange Act, as applicable, each as in effect on the date so filed.
(b) Each of the financial statements contained in the StarBase
SEC Reports has been prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may otherwise be indicated in
the notes thereto) and each presents fairly, in all material respects, the
financial position of StarBase as at the respective dates thereof and the
results of its operations and cash flow position for the periods indicated.
3.6 Full Disclosure. The information furnished by StarBase to
each Seller or its representatives in connection with this Agreement (including,
without limitation, the information contained in the StarBase SEC Reports, as
the same may have been updated by filings by StarBase with the Securities and
Exchange Commission after the date hereof but prior to the Closing), when taken
together, does not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements so made or
information so delivered, in light of the circumstances under which they were
made, not misleading.
4. COVENANTS.
4.1 Cooperation/Further Assurances.
(a) Each of the parties hereto hereby agrees to fully
cooperate with the other parties hereto in preparing and filing any notices,
applications, reports and other instruments and documents which are required by,
or which are desirable in the reasonable opinion of any of the parties hereto,
or their respective legal counsel, in respect of, any statute, rule, regulation
or order of any governmental or administrative body in connection with the
transactions contemplated by this Agreement.
(b) Each of the parties hereto hereby further agrees to
execute, acknowledge, deliver, file and/or record, or cause such other parties
to the extent permitted by law to execute, acknowledge, deliver, file and/or
record such other documents as may be required by this Agreement and as StarBase
may reasonably require in order to document and carry out the transactions
contemplated by this Agreement.
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4.2 Registration Statement; Rule 144 Reporting.
(a) StarBase will use its reasonable best efforts to register
all shares issued to the Sellers with the SEC as quickly as possible following
July 15, 2000. All registration obligations of StarBase under this Agreement are
limited to registrations permitted on Form S-3, if available. All registration
expenses, including, without limitation, all registration and filing fees,
printing expenses, reasonable fees and disbursements of a single special counsel
for the Sellers, blue sky fees and expenses and the expense of any special
audits incident to or required by any such registration, shall be paid by
StarBase. Each Seller shall pay all underwriting discounts and selling
commissions applicable to the sale of his shares pursuant to any such
registration.
(b) With a view to making available to the Sellers the
benefits of certain rules and regulations of the SEC which may permit the sale
of the shares of StarBase Common Stock acquired under this Agreement to the
public without registration, StarBase agrees to use its reasonable best efforts
to:
(i) Make and keep public information available, as those
terms are understood and defined in SEC Rule 144 or any similar or analogous
rule promulgated under the Securities Act; and
(ii) File with the SEC, in a timely manner, all reports and
other documents required of StarBase under the Exchange Act.
4.3 Premia Subsidiaries' Bank Accounts and Corporate Books and
Records. At the Effective Date, certain senior management of StarBase shall be
designated or appointed pursuant to applicable law (contractual or otherwise) as
"authorized signatories" to execute and deliver on behalf of their respective
bank accounts and other institutional or custodial arrangements, together with
all rights associated therewith.
4.4 Employee Options. StarBase, in accordance with its normal
procedures and policies for new employees, shall grant to the employees of
Premia stock options to purchase an aggregate of 1,700,000 shares of StarBase
Common Stock under StarBase's stock option plan, based on their accepting
employment with StarBase. These option grants will be subject to the terms and
conditions of StarBase's stock option plan as currently in effect. These option
shall be in addition to any options granted to the Seller's in their respective
Employment Agreements contemplated by this Agreement.
4.5 401(k) Contribution. StarBase agrees and acknowledges that,
prior to the Closing, Premia may make a 1999 401(k) employer match payment of
approximately $169,000.
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5. CLOSING CONDITIONS.
5.1 StarBase's Deliveries. StarBase shall execute and/or deliver,
or cause to be executed and delivered to Sellers within five (5) days after the
Closing all of the following:
(a) Stock certificates representing the StarBase Common Stock,
as follows:
Name Escrow Shares Remaining Shares Total
---- ------------- ---------------- -----
Donald Kinzer 100,733 906,598 1,007,331
Eric Johnson 40,293 362,640 402,933
Douglas Root 45,890 413,005 458,895
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(b) A certified copy of resolutions of StarBase's board of
directors authorizing the execution, delivery and performance of this Agreement,
the other agreements referenced herein to be executed by StarBase, and the
transactions contemplated hereby and thereby.
(c) Employment Agreement with each of the Sellers.
(d) Noncompetition Agreement with each of the Sellers.
(e) Escrow Agreement among StarBase, the Sellers and Greater
Bay Trust Company.
(f) Omitted.
(g) Opinion of counsel from Counsel to StarBase in form
approved by the Sellers.
(h) Without limitation by specific enumeration of the
foregoing, all other documents reasonably required to consummate the
transactions contemplated herein.
5.2 Sellers' Deliveries. Sellers shall deliver to StarBase within
five (5) days after the Closing, and shall execute and/or delivery to StarBase
the following:
(a) Stock certificates representing 1,002,000 shares of Common
Stock of Premia, duly endorsed in blank and accompanied by duly executed
in-blank stock transfer powers.
(b) A Certificate of Good Standing for the Company issued by
the Secretary of State of Oregon, and by the Secretary of State of each state in
which the company is qualified to transact business, such certificates to be
issued at a date not earlier than seven (7) days prior to the Closing Date.
(c) A Tax Clearance Certificate for the Company issued by the
Oregon Department of Revenue, and by the taxing authority of each state in which
the company does business, evidencing the filing of all tax reports and the
payment in full by the Company of income, sales and use taxes imposed by such
states as of the date of the applicable tax good standing certificate.
(d) The stock books, stock ledgers, minute books for the
Company; and
(e) A Secretary's Certificate certifying as to a true and
correct copy of the Articles and Bylaws of Premia.
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(f) All necessary consents, approvals and estoppel letters or
acceptable alternate arrangements with respect thereto.
(g) A certified copy of resolutions of Premia's board of
directors authorizing the execution, delivery and performance of this Agreement,
the other agreements referenced herein to be executed by Premia, and the
transactions contemplated hereby and thereby.
(h) Employment Agreement from each of the Sellers.
(i) Noncompetition Agreement from each of the Sellers.
(j) Opinion of counsel from Counsel to Sellers in form
approved by StarBase.
(k) Omitted.
(l) Escrow Agreement among the Company, the Sellers and
Greater Bay Trust Company.
(m) Without limitation by specific enumeration of the
foregoing, all other documents reasonably required to consummate the
transactions contemplated herein.
5.3 Effect of Non-Delivery. Notwithstanding anything herein to
the contrary, no party shall have the right to unwind this transaction as a
result of a late delivery of any item under this Agreement.
6. INDEMNIFICATION PROVISIONS.
6.1 Survival; Right to Indemnification Not Affected By Knowledge.
All representations, warranties, covenants, and obligations of Sellers or Premia
in this Agreement, the Disclosure Letter, and any certificate or document
delivered pursuant to this Agreement will survive the Closing for a period of
the earlier of twelve (12) months or the date of the issuance of the combined
audited financial statements of Premia and StarBase. The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, by StarBase with respect to
the accuracy or
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inaccuracy of or compliance with, any such representation, warranty, covenant,
or obligation. The waiver by Starbase of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants,
and obligations. Anything in this Section 6 to the contrary notwithstanding, no
claim may be asserted nor any action commenced against any party to this
Agreement for breach of any representation, warranty, covenant or agreement
contained herein, unless written notice of such claim or action is received by
such party, describing in detail the facts and circumstances with respect to the
subject matter of such claim or action on or prior to the date on which the
representation, warranty, covenant or agreement on which such claim or action is
based ceases to survive as set forth in this Section, irrespective of whether
the subject matter of such claim or action shall have occurred before or after
such date.
6.2 Indemnification and Payment of Damages By Sellers. Sellers,
jointly and severally, will indemnify and hold harmless Starbase and its
representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons" ) for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage (including incidental
and consequential damages), expense (including costs of investigation and
defense and reasonable attorneys' fees) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with any breach of any representation,
warranty, covenant, or obligation made by Premia or Sellers in this Agreement,
the Disclosure Letter, or any other certificate or document delivered by Premia
or Sellers pursuant to this Agreement.
6.3 Indemnification and Payment of Damages by StarBase. StarBase
will indemnify and hold harmless each Seller and its representatives,
stockholders, controlling persons, and affiliates (collectively, the "Seller
Indemnified Persons") for, and will pay to the Seller Indemnified Persons the
amount of any Damages, arising, directly or indirectly, from or in connection
with any breach of any representation, warranty, covenant, or obligation made by
StarBase in this Agreement, or any other certificate or document delivered by
StarBase pursuant to this Agreement. The indemnification period applicable to
StarBase for indemnification to Sellers shall terminate on the same date
provided in the first sentence of Section 6.1 as it applies to the Sellers for
indemnification to StarBase.
6.4 Limitations on Amount.
(a) Sellers will have no liability under this Section 6 until
the total of all Damages with respect to such matters exceeds $25,000, after
which StarBase may recover the amount of damages from the first dollar of
damages incurred by StarBase and/or Premia. The total amount of indemnification
permitted under this Section 6 shall be limited to $7.5 million.
(b) StarBase will have no liability under this Section 6 until
the total of all Damages with respect to such matters exceeds $25,000, after
which the Sellers may
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recover the amount of damages from the first dollar of damages incurred by any
Seller. The total amount of indemnification permitted under this Section 6 shall
be limited to $7.5 million.
6.5 Procedure for Indemnification - Third-Party Claims.
(a) Promptly after receipt by a Seller Indemnified Person or a
StarBase Indemnified Person, as the case may be, (an "Indemnified Party") of
notice of any Threatened Proceeding against it or the commencement of any
Proceeding against it, such indemnified party will, if a claim is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is prejudiced by
the indemnifying party's failure to give such notice. A claim, Proceeding,
dispute, action, or other matter will be deemed to have been "Threatened" if any
demand or statement has been made (orally or in writing) or any notice has been
given (orally or in writing), or if any other event has occurred or any other
circumstances exist, that would lead a prudent person to conclude that such a
claim, Proceeding, dispute, action, or other matter is likely to be asserted,
commenced, taken, or otherwise pursued in the future. For purposes of this
agreement, "Proceeding" shall mean Any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any governmental body or arbitrator.
(b) If any Proceeding referred to in Section 6.4(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will be entitled to
participate in such Proceeding and, to the extent that it wishes (unless (i) the
indemnifying party is also a party to such Proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate, or
(ii) the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such Proceeding and
provide indemnification with respect to such Proceeding), unless the claim
involves Taxes, to assume the defense of such Proceeding with counsel
satisfactory to the indemnified party and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently conducts
such defense, be liable to the indemnified party under this Section 6 for any
fees of other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the indemnified party in
connection with the defense of such Proceeding, other than reasonable costs of
investigation. If the indemnifying party assumes the defense of a Proceeding,
(i) it will be conclusively established for purposes of this Agreement that the
claims made in that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be effected
by the indemnifying party without the indemnified party's consent unless (A)
there is no finding or admission of any violation of any law, regulation or
statute or any violation of the rights of any person or entity and no effect on
any other claims that may be made against the indemnified party, and (B) the
sole relief provided is monetary damages that are paid in full by
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<PAGE>
the indemnifying party; and (iii) the indemnified party will have no liability
with respect to any compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the commencement of any
Proceeding and the indemnifying party does not, within ten days after the
indemnified party's notice is given, give notice to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party will
be bound by any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld or delayed).
(d) Sellers hereby consent to the non-exclusive jurisdiction
of any court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on Sellers with respect to such a claim anywhere in the
world.
6.6 Procedure for Indemnification Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
6.7 Exclusive Remedy. Each of the Sellers, StarBase and Premia,
hereby acknowledges and agrees that its sole and exclusive remedy with respect
to any and all claims (other than claims arising in connection with the
termination of this Agreement or claims based solely upon fraud) relating to the
subject matter of this Agreement shall be pursuant to the indemnification
provisions set forth in this Section 6. In furtherance of the foregoing, each of
the Sellers, StarBase and Premia hereby waives, to the fullest extent permitted
under applicable law (except as provided above), any and all rights, claims and
causes of action it may have against the other party hereto arising under or
based upon any federal, state or local statute, law, ordinance, rule or
regulation (including, without limitation, any such rights, claims or causes of
action arising under or based upon common law or otherwise).
7. GENERAL PROVISIONS.
7.1 Broker. Each of the parties hereto represents and warrants to
the other parties that no broker or finder was engaged or dealt with in
connection with any of the transactions contemplated by this Agreement, and each
of the parties shall indemnify and hold
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<PAGE>
the other harmless from and against any and all claims or liabilities asserted
by or on behalf of any alleged broker or finder for broker's fees, finder's
fees, commissions or like payments.
7.2 Publicity. StarBase and Premia shall consult with each other
prior to issuing any press release or otherwise making any public statement with
respect to the contents of this Agreement or the transactions contemplated
hereby, and none of the parties hereto shall issue any such press release or
make any such public statement prior to having such consultation and using the
best efforts to obtaining the consent of the other parties hereto, except as may
be required by law or applicable stock exchange or NASDAQ regulations. It is
understood that this Section 7.2 shall not restrict any party's ability to
communicate with its employees with respect to this transaction and its effects
upon them.
7.3 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date received. Notices shall be either delivered personally,
deposited with courier, sent by telecopy, or mailed by registered or certified
mail (postage prepaid, return receipt requested), to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
If to StarBase : StarBase Corporate
4 Hutton Drive, Suite 800
Santa Ana, CA 92707
Attn: Doug Norman
Fax: (714) 445-4482
with a copy to: Arter & Hadden, LLP
5 Park Plaza, Suite 1000
Irvine, California 92614
Attn: Christopher J. Kilpatrick, Esq.
Fax: (949) 252-7500
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<PAGE>
If to Premia or the Sellers:
Don K. Kinzer: 9355 SW 166th Ave.,
Beaverton, OR 97007 Eric L. Johnson: 14130
SW Fern St., Tigard, OR 97223 Douglas W.
Root: 6401 Meridian Way, Tualatin, OR 97068
with a copy to:
Perkins Coie LLP
1211 SW Fifth Avenue, 15th Flr.
Portland, Oregon 92709
Attn: Patrick J. Simpson, Esq.
7.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the greatest extent
possible.
7.5 Specific Performance. Each of the parties hereto acknowledges
and agrees that the other parties hereto would be irreparably damaged in the
event any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, each of the
parties hereto agrees that they each shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and conditions hereof in any
action instituted in any court of the United States or any state having
competent jurisdiction, in addition to any other remedy to which such party may
be entitled, at law or in equity.
7.6 Definition of Knowledge. As used in this Agreement,
"knowledge" with respect to Sellers or Premia shall mean the knowledge, after
due inquiry, of the officers and directors of Premia.
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<PAGE>
7.7 Entire Agreement. This Agreement and the agreements referred
to herein constitute the entire agreement, and supersede all prior agreements,
representations and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof.
7.8 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
7.9 No Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefits of the parties hereto and
their respective successors and permitted assigns. Neither this Agreement nor
any of the rights, interests or obligations shall be assigned by any of the
parties hereto without the prior written consent of the other parties, provided
that the rights, but not the obligations, of StarBase hereunder may be assigned
to a wholly-owned subsidiary of StarBase. This Agreement is not intended to
confer upon any other person any rights or remedies hereunder.
7.10 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of Delaware, without regard
to its choice of law principles.
7.11 Fees and Expenses. StarBase, on the one hand, and Sellers,
on the other hand, shall be responsible for, and shall pay, the fees and
expenses incurred by each of StarBase, and Sellers, respectively, in connection
with the transactions contemplated by this Agreement.
7.12 Headings. The headings contained are for convenience of
reference only and shall in no way be deemed to limit or affect the meaning or
interpretation of any of the terms or provisions hereof.
7.13 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
7.14 Attorney-Client Privilege. StarBase and Premia each agrees
and acknowledges that the attorney-client privilege applicable to the legal
counsel and representation received by Premia prior to the Closing Date will be
preserved by the Sellers. In this regard, StarBase and Premia each agrees and
acknowledges that the legal counsel and representation provided to Premia prior
to the Closing Date was provided to the Sellers as shareholders of a
closely-held corporation. StarBase and Premia each agrees not to challenge the
assertion of attorney-client privilege with respect to the legal counsel and
representation of Premia prior to the Closing Date.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto, have caused
this Agreement to be executed as of the date first written above.
STARBASE CORPORATION
By: /s/ Donald R. Farrow
------------------------------
Name: Donald R. Farrow
------------------------------
Title: EVP, Administration
------------------------------
PREMIA CORPORATION
By: /s/ Donald Kinzer
------------------------------
Name: Donald Kinzer
------------------------------
Title: President
------------------------------
/s/ Donald Kinzer
----------------------------------
Donald Kinzer
/s/ Eric Johnson
----------------------------------
Eric Johnson
/s/ Douglas Root
---------------------------------
Douglas Root
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EX-99.1
PRESS RELEASE
[STARBASE LOGO]
COMPANY CONTACT:
Lydia Patterson Ann Jones
VICE PRESIDENT DIRECTOR
PRODUCTS GROUP INVESTOR RELATIONS
714.445.4401 714.445.4440
[email protected] [email protected]
STARBASE SIGNS DEFINITIVE AGREEMENT TO ACQUIRE
PREMIA CORPORATION
Market-Leading Software Company Brings Experienced Sales and Engineering
Professionals, Market Expertise, New Technologies and Extensive Customer Base
SANTA ANA, CALIF., - MARCH 9, 2000 - StarBase Corporation (NASDAQ: SBAS), a
leading provider of eCollaboration solutions for the development and management
of eBusiness applications, today announced it has signed a definitive agreement
to acquire Premia Corporation of Beaverton, Oregon. The all-stock transaction
for approximately 1.9 million shares of StarBase common stock is worth an
estimated $24.7 million. The transaction is expected to close within one week.
Premia, which has been profitable since 1992, is a privately held corporation
with extensive experience, technology and products that integrate naturally into
StarBase's family of eBusiness life cycle management solutions for the
enterprise.
"Through the acquisition of Premia, we are gaining a wide range of sales,
marketing, and engineering resources to strengthen our corporate infrastructure
and to accelerate our growth on a profitable basis," commented William Stow,
president and chief executive officer of StarBase. "Furthermore, we are adding a
broad spectrum of products and technology that will integrate well into
StarBase's family of eBusiness solutions. With Premia's extensive customer base,
we expect this acquisition to fuel the efforts of our combined sales teams.
StarBase will have access to Premia's customer list, comprised of more than
20,000 unique customer organizations, providing significant revenue growth
opportunities for StarBase. Premia's superb direct marketing and telesales
organizations will now aggressively market StarBase's products to the Premia
customer base. Premia's customer base includes Fortune 500 companies, as well as
those companies focused on e-commerce, web development, and Internet-based
information systems, representing some of the fastest-growing segments of the
Internet market today."
"Very significantly, the acquisition brings outstanding personnel with extensive
experience in our target markets," continued Stow. "Both Don Kinzer and Doug
Root, the president and director of sales and marketing of Premia, respectively,
were founders of another company that pioneered an industry leading enabling
technology more than 10 years ago. That technology has now lead to our emerging
eBusiness application development market. We welcome their expertise as a
significant contribution to our mission of creating the best collaborative
environment for the development and management of eBusiness applications."
Premia's award-winning software products will further strengthen StarBase's
digital asset management solutions. StarBase technology currently enables
collaboration between all team members, from project leaders to programmers, and
from graphic designers to content writers. CodeWright is Premia's leading
product and is one of the most widely used development environments in the
market today. Developers use CodeWright for projects written in multiple
languages, which is increasingly common in Internet development. For example, a
team of developers could use CodeWright to develop C/C++, Java, HTML and XML
parts of an eBusiness application. With the combined technologies, teams of
developers can collaborate, create, share and manage digital assets in the
production of e-commerce and web applications. The transparent intelligence
engine in Premia's technology will enable current and future customers to
achieve a higher level of collaboration and understanding of digital assets in
the StarBase repository.
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<PAGE>
PREMIA
PAGE 2
Doug Root, director of sales and marketing at Premia said, "As our customers
develop more and more applications for the Internet, they are faced with ever
more complex projects. The increasing number of contributors, the diversity of
skills and the frequent changes to web applications, often several per day, have
resulted in an acute need for a flexible way to quickly manage changes to and
track all of the diverse project components. Our customers, 40% of which are
project leaders and managers, will be able to achieve significant benefits from
StarBase's StarTeam solution, especially so with the recently announced
expansion of StarTeam from Windows to the Linux and Solaris operating platforms.
Premia and StarBase together will provide our customers with a best-of-breed
solution for the creation and management of their critical eBusiness
applications."
"StarBase will double its engineering resources with the addition of Premia's
experienced technology team," said Alan Kucheck, vice president of engineering
at StarBase. "We are aggressively enhancing StarTeam's capabilities and
scalability with new innovative solutions for web applications. The combined
StarBase and Premia's engineering talent will permit us to deliver these planned
innovations to market more quickly than previously anticipated."
Douglas Norman, StarBase chief financial officer said, "We believe the
acquisition will enhance shareholder value as it is expected to be accretive to
StarBase's projected earnings per share on a go forward basis."
ABOUT PREMIA'S MANAGEMENT TEAM
Two of the founders of Premia, Don Kinzer and Eric Johnson, have joined StarBase
as chief architects; Premia partner Doug Root joins as vice president of
marketing communications. Kinzer and Root were co-founders of POLYTRON where
they developed and marketed PVCS Configuration Manager and PVCS Builder,
products that have lead the Software Configuration Management (SCM) market for
over 10 years. Doug Root served as director of marketing for Sage Software, the
company that acquired POLYTRON and subsequently became Intersolv. Eric Johnson
was with Intersolv as a developer. Eric and Don are the creators of CodeWright,
the most widely used, stand-alone development environment for Windows and new
products and technologies that will be integrated with StarBase's family of
eBusiness life cycle management solutions for the enterprise. CodeWright is
widely used by developers who add in their preferred compilers and other
development tools. CodeWright is also popular among developers using Microsoft's
Visual Studio, Borland's C++ and J Builder and IBM's Visual Age environments.
ABOUT STARBASE
StarBase Corporation is a leading provider of eBusiness Life Cycle Management
Solutions for the enterprise. The StarBase eCycle technology offers a complete
family of user-friendly software products that enable teams of people to
collaborate in the production of Web sites, e-commerce and business critical
applications. StarTeam, a prime component of eCycle, received "Two Thumbs Up"
from New Media in May 1999, Four Stars from Software Development in August 1999,
was named the 25th fastest growing ISV for Windows by Microsoft and CMP Media in
April 1999, and "Best of the Test Center" by InfoWorld in January 1998. Leading
organizations such as Bank of America, Boeing, Dell Corporation, Intel
Corporation, Hollywood Entertainment, Sprint, and Xerox have chosen StarTeam to
aid in their development projects. StarBase is located at 4 Hutton Centre Drive,
Suite 800, Santa Ana, CA 92707. Tel: 714.445.4400. Fax: 714.445.4404. Visit
StarBase's Web site at www.starbase.com.
StarBase and its product names are trademarks of StarBase Corporation. All other
product and company names herein are trademarks of their respective owners.
FORWARD LOOKING STATEMENTS
When used in the preceding discussion, the words "believes, expects, or intend
to" and similar conditional expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks and uncertainties and
actual results could differ materially from those expressed in any of the
forward-looking statements. Such risks and uncertainties include, but are not
limited to, (i) conditions in the general economy or the software industry, (ii)
the timely development and market acceptance of products and technologies, (iii)
competitive factors, (iv) demand for team productivity software products, (v)
sell-through of products in the sales channel, and (vi) other risks described in
StarBase Corporation's SEC reports and filings.
###
