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EXHIBIT 2.01
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AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF DECEMBER 10, 1998
AMONG
NIKU CORPORATION,
NIKU ACQUISITION CORP.,
ALYANZA SOFTWARE CORPORATION
AND
XXXXXX XXXXXXX, AS AN INDIVIDUAL
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ARTICLE I - THE MERGER................................................................... 1
Section 1.1 Effective Time of the Merge........................................ 1
Section 1.2 Closing............................................................ 2
Section 1.3 Effects of the Merger.............................................. 2
Section 1.4 Directors and Officers............................................. 2
ARTICLE II - CONVERSIONS OF SECURITIES AND OTHER CONSIDERATION........................... 2
Section 2.1 Conversion of Capital Stock........................................ 2
Section 2.2 Payment Terms...................................................... 4
Section 2.3 Escrow Agreement................................................... 4
Section 2.4 Dissenting Shares.................................................. 4
Section 2.5 Exchange of Certificates........................................... 5
Section 2.6 Distributions with Respect to Unexchanged Shares................... 6
Section 2.7 Tax Consequences................................................... 6
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF ALYANZA AND XXXXXX XXXXXXX............... 6
Section 3.1 Organization of Alyanza............................................ 7
Section 3.2 Alyanza Capital Structure.......................................... 7
Section 3.3 Authority; No Conflict; Required Filings and Consents.............. 8
Section 3.4 Financial Statements; Absence of Undisclosed Liabilities........... 9
Section 3.5 Tax Matters........................................................ 9
Section 3.6 Absence of Certain Changes or Events............................... 11
Section 3.7 Title and Related Matters.......................................... 13
Section 3.8 Proprietary Rights................................................. 13
Section 3.9 Employee Benefit Plans............................................. 15
Section 3.10 Bank Accounts...................................................... 17
Section 3.11 Contracts.......................................................... 17
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TABLE OF CONTENTS (CONTINUED)
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Section 3.12 Orders, Commitments and Returns.................................... 18
Section 3.13 Compliance With Law................................................ 19
Section 3.14 Labor Difficulties; No Discrimination.............................. 19
Section 3.15 Trade Regulation................................................... 19
Section 3.16 Insider Transactions............................................... 20
Section 3.17 Employees, Independent Contractors and Consultants................. 20
Section 3.18 Insurance.......................................................... 20
Section 3.19 Accounts Receivable................................................ 20
Section 3.20 Inventory.......................................................... 21
Section 3.21 Product Warranty................................................... 21
Section 3.22 Permits/Product Liability.......................................... 21
Section 3.23 Litigation......................................................... 21
Section 3.24 Governmental Authorizations and Regulations........................ 22
Section 3.25 Subsidiaries....................................................... 22
Section 3.26 Compliance with Environmental Requirements......................... 22
Section 3.27 Corporate Documents................................................ 22
Section 3.29 Offers............................................................. 23
Section 3.30 No Brokers......................................................... 23
Section 3.31 No Commitments Regarding Future Products........................... 23
Section 3.32 Disclosure......................................................... 23
Section 3.33 LLC Conversion..................................................... 23
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF NIKU AND SUB.............................. 24
Section 4.1 Organization of Niku and Sub....................................... 24
Section 4.2 Niku Capital Structure............................................. 24
Section 4.3 Authority; No Conflict; Required Filings and Consents.............. 25
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TABLE OF CONTENTS (CONTINUED)
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Section 4.4 Interim Operations of Sub.......................................... 26
Section 4.5 Disclosure......................................................... 26
ARTICLE V - PRECLOSING COVENANTS OF ALYANZA.............................................. 26
Section 5.1 Approval of Alyanza Shareholders................................... 26
Section 5.2 Advise of Changes.................................................. 26
Section 5.3 Operation of Business.............................................. 26
Section 5.4 Access to Information.............................................. 29
Section 5.5 Satisfaction of Conditions Precedent............................... 29
Section 5.6 Other Negotiations................................................. 29
ARTICLE VI - PRECLOSING AND OTHER COVENANTS OF NIKU AND SUB.............................. 29
Section 6.1 Advise of Changes.................................................. 30
Section 6.2 Access to Information.............................................. 30
Section 6.3 Satisfaction of Conditions Precedent............................... 30
Section 6.4 Other Consideration................................................ 30
ARTICLE VII - OTHER AGREEMENTS........................................................... 30
Section 7.1 No Public Announcement............................................. 30
Section 7.2 Regulatory Filings; Consents; Reasonable Efforts................... 30
Section 7.3 Further Assurances................................................. 31
Section 7.4 Escrow Agreement................................................... 31
Section 7.5 Blue Sky Laws...................................................... 31
ARTICLE VIII - CONDITIONS TO MERGER...................................................... 31
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger......... 31
Section 8.2 Additional Conditions to Obligations of Niku and Sub............... 32
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TABLE OF CONTENTS (CONTINUED)
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Section 8.3 Additional Conditions to Obligations of Alyanza.................... 33
ARTICLE IX - TERMINATION AND AMENDMENT................................................... 34
Section 9.1 Termination........................................................ 34
Section 9.2 Effect of Termination.............................................. 35
Section 9.3 Fees, Expenses and Other Payments.................................. 35
ARTICLE X - ESCROW AND INDEMNIFICATION................................................... 35
Section 10.1 Indemnification; Limitation on Liability........................... 35
Section 10.2 Escrow Fund........................................................ 35
Section 10.3 Escrow Period...................................................... 36
Section 10.4 Claims Upon Escrow Fund............................................ 37
Section 10.5 Valuation.......................................................... 37
Section 10.6 Objections to Claims............................................... 37
Section 10.7 Resolution of Conflicts............................................ 37
Section 10.8 Shareholders' Agent................................................ 38
Section 10.9 Actions of the Shareholders' Agent................................. 39
Section 10.10 Claims............................................................. 39
ARTICLE XI - MISCELLANEOUS............................................................... 39
Section 11.1 Survival of Representations and Covenants.......................... 39
Section 11.2 Notices............................................................ 40
Section 11.3 Interpretation..................................................... 41
Section 11.4 Counterparts....................................................... 41
Section 11.5 Entire Agreement; No Third Party Beneficiaries..................... 41
Section 11.6 Governing Law...................................................... 41
Section 11.7 Assignment......................................................... 41
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TABLE OF CONTENTS (CONTINUED)
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Section 11.8 Amendment.......................................................... 41
Section 11.9 Extension; Waiver.................................................. 42
Section 11.10 Specific Performance............................................... 42
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of December 10, 1998
(this "AGREEMENT"), is entered into by and among Niku Corporation, a Delaware
corporation ("NIKU"), Niku Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Niku ("SUB"), Alyanza Software Corporation, a
California corporation ("ALYANZA") and Xxxxxx Xxxxxxx, as an individual.
RECITALS:
A. The Boards of Directors of Niku, Sub and Alyanza deem it advisable
and in the best interests of each corporation and their respective stockholders
that Niku and Alyanza enter into a transaction pursuant to which Niku would
acquire all of the outstanding equity interests in Alyanza;
B. It is intended that such acquisition of Alyanza by Niku be effected
pursuant to the terms of this Agreement through a transaction in which Sub would
merge with and into Alyanza (the "MERGER"), and, among other things, the
outstanding shares of Preferred Stock of Alyanza ("Alyanza Preferred Stock")
shall be converted to Common Stock at the time the transaction is closed, the
outstanding shares of Common Stock (including the shares issued upon the
conversion of the Preferred Stock), no par value, of Alyanza ("ALYANZA COMMON
STOCK"), (and collectively, with Alyanza Preferred Stock, the "ALYANZA CAPITAL
STOCK") would be converted into the right to receive certain mixed consideration
in the amounts and on the terms set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Effective Time of the Merge . Subject to the provisions of
this Agreement, an agreement of merger (the "AGREEMENT OF MERGER") in such
mutually acceptable form as is required by the relevant provisions of the
California Corporations Code ("CALIFORNIA LAW") shall be duly executed and
delivered by the parties hereto and thereafter delivered to the Secretary of
State of the State of California for filing on the Closing Date (as defined in
Section 1.2) and a certificate of merger (the "CERTIFICATE OF MERGER") in such
mutually acceptable form as is required by the relevant provisions of the
Delaware General Corporation Law ("DELAWARE LAW") shall be duly executed and
delivered by the parties hereto and thereafter delivered to the Secretary of
State of the State of Delaware for filing on the Closing Date. The Merger shall
become effective upon the due and valid filing of the Agreement of Merger with
the Secretary of State of the State of California and the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware or at
such later time as is provided in the Agreement of Merger and the Certificate of
Merger (the "EFFECTIVE TIME").
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Section 1.2 Closing. Provided that all of the conditions set forth in
Article VIII hereof shall have been satisfied, the closing of the Merger (the
"CLOSING") shall take place at 2:00 p.m., California time, on December 14, 1998.
In the event that such conditions shall not have been satisfied on or prior to
such date, the Closing shall take place at 10:00 a.m., California time, on a
later date to be specified by Niku and Alyanza, which shall be no later than the
second business day after satisfaction or waiver of the latest to occur of the
conditions set forth in Article VIII. The Closing shall take place at the
offices of Venture Law Group, A Professional Corporation, 0000 Xxxx Xxxx Xxxx,
Xxxxx Xxxx, Xxxxxxxxxx unless another place is agreed to in writing by Niku and
Alyanza. The date on which the Closing shall actually occur is referred to
herein as the "CLOSING DATE."
Section 1.3 Effects of the Merger.
(a) At the Effective Time (i) the separate existence of Sub shall
cease and Sub shall be merged with and into Alyanza. (Sub and Alyanza are
sometimes referred to herein as the "CONSTITUENT CORPORATIONS" and Alyanza
following consummation of the Merger is sometimes referred to herein as the
"SURVIVING CORPORATION"), (ii) the Articles of Incorporation of Alyanza shall be
the Articles of Incorporation of the Surviving Corporation and (iii) the Bylaws
of Alyanza as in effect immediately prior to the Effective Time shall be the
Bylaws of the Surviving Corporation.
(b) At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of California Law and Delaware Law.
Without limiting the generality of the foregoing, at and after the Effective
Time, the Surviving Corporation shall possess all the rights, privileges, powers
and franchises of a public as well as of a private nature, and be subject to all
the restrictions, disabilities and duties of each of the Constituent
Corporations.
Section 1.4 Directors and Officers. The directors of Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, and the officers of Sub immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed.
ARTICLE II
CONVERSION OF SECURITIES AND OTHER CONSIDERATION
Section 2.1 Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Alyanza Capital Stock or capital Stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
the capital stock of Sub shall be converted into one share of the Common Stock
of Alyanza.
(b) Cancellation of Niku-Owned and Alyanza-Owned Stock. Any
shares of Alyanza Capital Stock that are owned by Niku, Sub, Alyanza or any
other direct or indirect wholly-owned Subsidiary (as defined below) of Niku or
Alyanza shall be canceled and retired and shall cease to exist and no stock of
Niku or other consideration shall be delivered in exchange. As used in this
Agreement, the word "SUBSIDIARY" means, with respect to any other
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party, any corporation or other organization, whether incorporated or
unincorporated, of which (i) such party or any other Subsidiary of such party is
a general partner (excluding partnerships, the general partnership interests of
which held by such party or any Subsidiary of such party do not have a majority
of the voting interest in such partnership) or (ii) at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization or a majority
of the profit interests tin such other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries.
(c) Conversion of Alyanza Capital Stock.
(i) Each issued and outstanding share of Alyanza Common
Stock, including Alyanza Common Stock that at the time of the Closing is subject
to repurchase by Alyanza, (other than shares to be canceled in accordance with
Section 2.1(b), if any, and any Dissenting Shares as defined in and to the
extent provided in Section 2.4) shall be converted into the right to receive the
following consideration (the "MERGER CONSIDERATION"):
(x) that fraction of a share of Niku Common Stock as
shall equal the Stock Exchange Ratio (as defined below) ("SHARE CONSIDERATION");
and
(y) an amount of cash equal to the quotient obtained
by dividing (1) $200,000 by (2) the total number of shares of outstanding
Alyanza Common Stock ("CASH CONSIDERATION"). All such shares of Alyanza Common
Stock, when so converted, shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration.
(ii) For purposes of this Agreement, the terms set forth
below shall be defined as
follows:
(x) The "STOCK EXCHANGE RATIO" for the conversion of
the Alyanza Common Stock shall be determined by dividing (A) 525,000 shares by
(B) the total number of shares of outstanding Alyanza Common Stock.
(iii) If, between the date of this Agreement and the
Effective Time, the outstanding shares of Niku Common Stock shall have been
changed into a different number of shares or a different class by reason of any
reclassification, split-up, stock dividend or stock combination, then the Stock
Exchange Ratio shall be correspondingly adjusted.
(iv) No fractional shares of Niku Common Stock shall be
issued in connection with the Merger to the holders of Alyanza Common Stock, but
instead the aggregate number of shares of Niku Common Stock to be issued to each
such holder pursuant this subsection (c) shall be rounded downwards to the
nearest whole share.
(d) Alyanza Stock Option. At or prior to the Effective Time, all
then outstanding options ("ALYANZA OPTIONS"), whether vested or unvested, to
purchase Alyanza Common Stock issued under Alyanza's 1998 Stock Option Plan (the
"OPTION PLAN") shall have
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been, accelerated to fully vested status and exercised, in accordance with the
Option Plan and, no such options shall be outstanding.
(e) Alyanza Preferred Stock. At the Effective Time, all issued
and outstanding shares of Alyanza Preferred Stock shall be converted into
Alyanza Common Stock and thereafter no shares of Alyanza Preferred Stock shall
be outstanding.
Section 2.2 Payment Terms.
(a) Fifty-percent (50%) of the Cash Consideration payable
pursuant to Section 2.1(c)(i)(y) shall be payable upon the Closing and the
remaining fifty-percent (50%) shall be payable on the six (6) month anniversary
of the Closing; and
(b) Niku shall pay all of Alyanza's liabilities at the Closing,
up to One Hundred Forty-Two Thousand Five Hundred Dollars ($142,500), inclusive
of legal fees for all matters and any other Merger-related expenses, up to
Forty-Two Thousand Five Hundred Dollars ($42,500). Any amounts in excess of One
Hundred Forty-Two Thousand Five Hundred Dollars ($142,500) and any legal fees or
Merger-related expenses in excess of Forty-Two Thousand Five Hundred Dollars
($42,500) shall be payable at the closing by Niku but shall be deducted on a
dollar-for-dollar basis from the Cash Consideration payable on the six month
anniversary of the Closing. Any deduction pursuant to the foregoing sentence
that are in dispute shall be held by Niku pending a resolution.
Section 2.3 Escrow Agreement. At the Effective Time, Niku will deposit
into escrow cash in an aggregate amount of $20,000 (the "ESCROW CASH") and
52,500 shares of Niku Capital Stock (the "ESCROW SHARES"). Such Escrow Cash and
Escrow Shares shall be held in escrow on behalf of the persons who are the
holders of Alyanza Capital Stock immediately prior to the Effective Time (the
"FORMER ALYANZA SHAREHOLDERS"), on a pro rata basis, in accordance with each
such Former Alyanza Shareholders' percentage interest ("PRO RATA PORTION") in
the aggregate Merger Consideration to be issued to all Former Alyanza
Shareholders in the Merger and shall be held as security for the Former Alyanza
Shareholders' indemnification obligations under Article X and pursuant to the
provisions of the escrow agreement (the "ESCROW AGREEMENT") to be executed
pursuant to Section 7.4.
Section 2.4 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Alyanza Capital Stock held by a holder who has exercised
such holder's dissenters' rights in accordance with California Law, and who, as
of the Effective Time, has not effectively withdrawn or lost such dissenters'
rights ("DISSENTING SHARES"), shall not be converted into or represent a right
to receive Merger Consideration pursuant to Section 2.1, but the holder of the
Dissenting Shares shall only be entitled to such rights as are granted by of
California Law.
(b) Notwithstanding the provisions of subsection (a) above, if
any holder of shares of Alyanza Capital Stock who demands dissenters' rights
with respect to such shares shall effectively withdraw or lose (through failure
to perfect or otherwise) such holder's dissenters' rights under California Law,
then, as of the later of the Effective Time or the occurrence of such event,
such holder's shares shall automatically be converted into and represent only
the right to
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receive the Merger Consideration upon surrender of the certificate or
certificates representing such shares; provided that if such holder effectively
withdraws or loses his or her dissenters' rights after the Effective Time, then,
at such time Niku will deposit in escrow cash representing such holder's Pro
Rata Portion of the Escrow Cash and certificates representing such holder's Pro
Rata Portion of the Escrow Shares.
(c) Alyanza shall give Niku (i) prompt notice of any written
demands for payment with respect to any shares of capital stock of Alyanza
pursuant to Chapter 13 of California Law, withdrawals of such demands, and any
other instruments served pursuant to California Law and received by the Alyanza
and (ii) the opportunity to participate in all negotiations and proceedings with
respect to demands for dissenters' rights under California Law. Alyanza shall
not, except with the prior written consent of Niku, voluntarily make any payment
with respect to any demands for dissenters' rights with respect to Alyanza
Capital Stock or offer to settle or settle any such demands.
Section 2.5 Exchange of Certificates.
(a) From and after the Effective Time, each holder of an
outstanding certificate or certificates ("CERTIFICATES") which represented
shares of Alyanza Capital Stock immediately prior to the Effective Time shall
have the right to surrender each Certificate to Niku (or at Niku's option, an
exchange agent to be appointed by Niku), and receive in exchange for all
Certificates held by such holder (i) a certificate representing the number of
whole shares of Niku Common Stock (other than the Escrow Shares) and (ii) that
amount of cash into which the Alyanza Capital Stock, as the case may be,
evidenced by the Certificates so surrendered shall have been converted pursuant
to the provisions of Article II of this Agreement. The surrender of Certificates
shall be accompanied by duly completed and executed Letters of Transmittal in
such form as may be reasonably specified by Niku. Until surrendered, each
outstanding Certificate which prior to the Effective Time represented shares of
Alyanza Capital Stock shall be deemed for all corporate purposes to evidence
ownership of the Merger Consideration into which the shares of Alyanza Capital
Stock have been converted but shall have no other rights. From and after the
Effective Time, there shall be no further registration of transfers on the
records of Alyanza of shares of Alyanza Capital Stock outstanding immediately
prior to the Effective Time.
(b) If any shares of Niku Common Stock to be issued as Merger
Consideration are to be issued in the name of a person other than the person in
whose name the Certificate(s) surrendered in exchange therefor is registered, it
shall be a condition to the issuance of such shares that (i) the Certificate(s)
so surrendered shall be transferable, and shall be properly assigned, endorsed
or accompanied by appropriate stock powers, (ii) such transfer shall otherwise
be proper and (iii) the person requesting such transfer shall pay Niku, or its
exchange agent, any transfer or other taxes payable by reason of the foregoing
or establish to the satisfaction of Niku that such taxes have been paid or are
not required to be paid. Notwithstanding the foregoing, neither Niku nor Alyanza
shall be liable to a holder of shares of Alyanza Capital Stock for any Merger
Consideration issuable to such holder pursuant to the provisions of Article II
of the Agreement that is delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
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(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed, Niku shall issue in exchange
for such lost, stolen or destroyed Certificate the Merger Consideration issuable
in exchange therefor pursuant to the provisions of Article II of the Agreement.
Niku may in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed Certificate to provide to
Niku a bond or an indemnity agreement against any claim that may be made against
Niku with respect to the Certificate alleged to have been lost, stolen or
destroyed.
Section 2.6 Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Niku Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Niku Common Stock represented thereby until the holder of record of
such Certificate shall surrender such Certificate. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of Niku
Common Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions with a record
date after the Effective Time previously paid with respect to such whole shares
of Niku Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of Niku Common Stock, as the case may be.
Section 2.7 Tax Consequences. It is intended by the parties hereto that
the Merger shall not constitute a "reorganization" within the meaning of Section
368 of the Code and that each party (and each Shareholder of Alyanza) shall
consult its own tax advisors and is solely responsible for tax consequences to
it.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ALYANZA AND XXXXXX XXXXXXX
Alyanza and Xxxxxx Xxxxxxx, jointly and severally, represent and warrant
to Niku and Sub that the statements contained in this Article III are true and
correct, except as set forth in the disclosure schedule delivered by Alyanza to
Niku on or before the date of this Agreement (the "ALYANZA DISCLOSURE
SCHEDULE"). All representations and warranties regarding Alyanza pertain to the
C Corporation and all predecessors, including the limited liability company. The
Alyanza Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article III. As used in this
Agreement the term "knowledge of Alyanza" or "to Alyanza's knowledge" means such
party's actual knowledge after due and diligent inquiry of officers, directors
or other employees of such party.
Section 3.1 Organization of Alyanza. Alyanza is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, has all requisite corporate power to own, lease and operate its
property and to carry on its business as now being conducted, and is duly
qualified or licensed to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of its business or
ownership or leasing of properties
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makes such qualification or licensing necessary and where the failure to be so
qualified or licensed could result in a material adverse effect on the business,
assets (including intangible assets), liabilities, condition (financial or
otherwise), results of operations or prospects (a "MATERIAL ADVERSE EFFECT") of
Alyanza. The Alyanza Disclosure Schedule contains a true and complete listing of
the locations of all sales offices, manufacturing facilities, and any other
offices or facilities of Alyanza and a true and complete list of all states in
which Alyanza maintains any employees. The Alyanza Disclosure Schedule contains
a true and complete list of all states in which Alyanza is duly qualified or
licensed to transact business as a foreign corporation.
Section 3.2 Alyanza Capital Structure.
(a) The authorized capital stock of Alyanza consists of
20,000,000 shares of Alyanza Common Stock and 5,550,000 shares of Alyanza
Preferred Stock all of which are designated as Series A Preferred Stock. As of
the date of this Agreement, there are (i) 2,107,474 shares of Alyanza Common
Stock issued and outstanding, all of which are validly issued, fully paid and
nonassessable and 120,363 of which are subject to repurchase rights under the
Alyanza Option Plan and the agreements thereunder, (ii) 5,445,956 shares of
Series A Preferred Stock are issued and outstanding, all of which are validly
issued, fully paid and non-assessable, and (iii) all options granted have
terminated or been exercised and no shares of Alyanza Common Stock reserved for
future issuance pursuant to outstanding options under the Option Plan. The
issued and outstanding shares of Alyanza Capital Stock are held of record by the
shareholders of Alyanza as set forth and identified in the shareholder list
attached as Schedule 3.2(a) to the Alyanza Disclosure Schedule. Effective upon
the Closing, all the holders of Preferred Stock, Xxxxxx Xxxxxxx and Xxxxxxx
Xxxxxx, have elected to convert their shares of Preferred Stock at the current
conversion ratio of one share of Preferred Stock for one share of Common Stock.
All outstanding shares of Alyanza Capital Stock, when issued, (collectively
"ALYANZA SECURITIES") were issued in compliance with applicable federal and
state securities laws. Except as set forth in the Alyanza Disclosure Schedule,
there are no obligations, contingent or otherwise, of Alyanza to repurchase,
redeem or otherwise acquire any shares of Alyanza Capital Stock or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other entity. An updated Schedule 3.2(a) reflecting changes permitted by this
Agreement in the capitalization of Alyanza between the date hereof and the
Effective Time shall be delivered by Alyanza to Niku on the Closing Date.
(b) Except as set forth in this Section 3.2, there are no equity
securities of any class or series of Alyanza, or any security exchangeable into
or exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except as set forth in this Section 3.2, there are no options,
warrants, equity securities, calls, rights, commitments or agreements of any
character to which Alyanza is a party or by which it is bound obligating Alyanza
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of Alyanza or obligating Alyanza to grant, extend,
accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement. Alyanza is not in discussion,
formal or informal, with any person or entity regarding the issuance of any form
of additional Alyanza equity that has not been issued or committed to prior to
the date of this Agreement. Except as provided in this Agreement and the other
Transaction Documents (as defined in Section 3.3(a)) or Investment Agreements
(as defined in 8.2(f)) or any transaction contemplated
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hereby or thereby, there are no voting trusts, proxies or other agreements or
understandings with respect to the voting of the shares of capital stock of
Alyanza.
Section 3.3 Authority; No Conflict; Required Filings and Consents.
(a) Alyanza has all requisite corporate power and authority to
enter into this Agreement and all Transaction Documents to which it is or will
become a party and to consummate the transactions contemplated by this Agreement
and such Transaction Documents. The execution and delivery of this Agreement and
such Transaction Documents and the consummation of the transactions contemplated
by this Agreement and such Transaction Documents have been duly authorized by
all necessary corporate action on the part of Alyanza, subject only to the
approval of the Merger by Alyanza's shareholders under the provisions of
California Law and Alyanza's Amended and Restated Articles of Incorporation.
This Agreement has been and such Transaction Documents have been duly executed
and delivered by Alyanza. This Agreement and each of the Transaction Documents
to which Alyanza is a party constitutes, and each of the Transaction Documents
to which Alyanza will become a party when executed and delivered by Alyanza will
constitute, assuming the due authorization, execution and delivery by the other
parties hereto and thereto, the valid and binding obligation of Alyanza,
enforceable against Alyanza in accordance with their respective terms (except to
the extent that enforcement is affected by laws pertaining to bankruptcy,
reorganization, insolvency and creditors' rights and by the availability of
injunctive relief, specific performance and other equitable remedies). For
purposes of this Agreement, "TRANSACTION DOCUMENTS" means the Agreement of
Merger, the Certificate of Merger, and the Escrow Agreement.
(b) The execution and delivery by Alyanza of this Agreement and
the Transaction Documents to which it is or will become a party does not, and
the consummation of the transactions contemplated by this Agreement and the
Transaction Documents to which it is or will become a party will not, (i)
conflict with, or result in any violation or breach of any provision of the
Articles of Incorporation or Bylaws of Alyanza, (ii) result in any violation or
breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any benefit) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or obligation to which Alyanza is a party or by which it
or any of its properties or assets may be bound, or (iii) conflict or violate
any permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Alyanza or any of its
properties or assets, except in the case of (ii) and (iii) for any such
conflicts, violations, breaches, defaults, terminations, cancellations or
accelerations which would not have a Material Adverse Effect on Alyanza.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("GOVERNMENTAL
ENTITY") is required by or with respect to Alyanza in connection with the
execution and delivery of this Agreement or of any other Transaction Document to
which it is or will become a party or the consummation of the transactions
contemplated by this Agreement or such Transaction Document or the continuation
of the business activities of Alyanza following consummation of the Merger
without a Material Adverse Effect except for (i) the filing of the Agreement of
Merger with the California Xxxxxxxxx
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xx Xxxxx, (xx) the filing of the Certificate of Merger with the Delaware
Secretary of State, (iii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and (iv) such other consents, authorizations,
filings, approvals and registrations which, if not obtained or made, could be
expected to have a Material Adverse Effect on Alyanza.
Section 3.4 Financial Statements; Absence of Undisclosed Liabilities.
(a) Alyanza has delivered to Niku copies of Alyanza's unaudited
balance sheet (the "MOST RECENT BALANCE SHEET") and list of liabilities as of
November 25, 1998, (the "ALYANZA FINANCIAL STATEMENTS").
(b) The Alyanza Financial Statements are complete and in
accordance with the books and records of Alyanza and present fairly in all
material respects the financial position, results of operations and cash flows
of Alyanza as of their historical dates and for the periods indicated.
(c) Alyanza has no material debt, liability, or obligation of any
nature, whether accrued, absolute, contingent, or otherwise, and whether due or
to become due, that is not reflected or reserved against in the Most Recent
Balance Sheet. All debts, liabilities, and obligations incurred after the date
of the Most Recent Balance Sheet were incurred in the ordinary course of
business, and are usual and normal in amount and not material both individually
and in the aggregate to Alyanza or its business.
Section 3.5 Tax Matters.
(a) For purposes of this Section 3.5 and other provisions of this
Agreement relating to Taxes, the following definitions shall apply:
(i) The term "TAXES" shall mean all taxes, however
denominated, including any interest, penalties or other additions to tax that
may become payable in respect thereof, (A) imposed by any federal, territorial,
state, local or foreign government or any agency or political subdivision of any
such government, which taxes shall include, without limiting the generality of
the foregoing, all income or profits taxes (including but not limited to,
federal income taxes and state income taxes), payroll and employee withholding
taxes, unemployment insurance, social security taxes, sales and use taxes, ad
valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, ozone depleting chemicals taxes, transfer taxes, workers'
compensation, Pension Benefit Guaranty Corporation premiums and other
governmental charges, and other obligations of the same or of a similar nature
to any of the foregoing, which are required to be paid, withheld or collected,
(B) any liability for the payment of amounts referred to in (A) as a result of
being a member of any affiliated, consolidated, combined or unitary group, or
(C) any liability for amounts referred to in (A) or (B) as a result of any
obligations to indemnify another person.
(ii) The term "RETURNS" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns relating to,
or required to be filed in
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connection with, any Taxes, including information returns or reports with
respect to backup withholding and other payments to third parties.
(b) All Returns required to be filed by or on behalf of Alyanza
have been duly filed on a timely basis and such Returns are true, complete and
correct in all respects. All Taxes shown to be payable on such Returns or on
subsequent assessments with respect thereto, and all payments of estimated Taxes
required to be made by or on behalf of Alyanza under Section 6655 of the Code or
comparable provisions of state, local or foreign law, have been paid in full on
a timely basis or have been accrued on the Most Recent Balance Sheet, and no
other Taxes are payable by Alyanza with respect to items or periods covered by
such Returns (whether or not shown on or reportable on such Returns). Alyanza
has withheld and paid over all Taxes required to have been withheld and paid
over, and compiled with all information reporting and backup withholding
requirements, including maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, creditor, independent
contractor, or other third party. There are no liens on any of the assets of
Alyanza with respect to Taxes, other than liens for Taxes not yet due and
payable or for Taxes that Alyanza is contesting in good faith through
appropriate proceedings and for which appropriate reserves have been established
on the Most Recent Balance Sheet. Alyanza has not at any time been (i) a member
of an affiliated group of corporations filing consolidated, combined or unitary
income or franchise tax returns, or (ii) a member of any partnership or joint
venture for a period for which the statue of limitations for any Tax potentially
applicable as a result of such membership has not expired.
(c) The amount of Alyanza's liability for unpaid Taxes (whether
actual or contingent) for all periods through the date of the Most Recent
Balance Sheet does not, in the aggregate, exceed the amount of the current
liability accruals for Taxes reflected on the Most Recent Balance Sheet, and the
Most Recent Balance Sheet reflects proper accrual in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods
of all liabilities for Taxes payable after the date of the Most Recent Balance
Sheet attributable to transactions and events occurring prior to such date. No
liability for Taxes has been incurred (or prior to Closing will be incurred)
since such date other than in the ordinary course of business.
(d) Niku has been furnished by Alyanza with true and complete
copies of (i) relevant portions of income tax audit reports, statements of
deficiencies, closing or other agreements received by or on behalf of Alyanza
relating to Taxes, and (ii) all federal and state income or franchise tax
Returns and state sales and use tax Returns for or including Alyanza for all
periods since the inception of Alyanza. Alyanza does not do business in or
derive income from any state other than states for which Returns have been duly
filed and furnished to Niku.
(e) The Returns of or including Alyanza have never been audited
by a government or taxing authority, nor is any such audit in process, pending
or, to Alyanza's knowledge, threatened (either in writing or verbally, formally
or informally). No deficiencies exist or have been asserted (either in writing
or verbally, formally or informally), and Alyanza has not received notice
(either in writing or verbally, formally or informally) that it has not filed a
Return or paid Taxes required to be filed or paid. Alyanza is neither a party to
any action or proceeding for assessment or collection of Taxes, nor has such
event been asserted or threatened (either in writing or verbally, formally or
informally) against Alyanza or any of its assets. No waiver or extension of any
statute of limitations is in effect with respect to Taxes or Returns of
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Alyanza. Alyanza has disclosed on its federal and state income and franchise tax
Returns all positions taken therein that could give rise to a substantial
understatement penalty within the meaning of Code Section 6662 or comparable
provisions of applicable state tax laws.
(f) Alyanza is not, nor has it ever been, a party to any tax
sharing agreement.
(g) Alyanza is not, nor has it been, a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified Section 897(c)(1)(A)(ii) of the Code, and
Niku is not required to withhold tax by reason of Section 1445 of the Code.
Alyanza is not a "consenting corporation" under Section 341(f) of the Code.
Alyanza has not entered into any compensatory agreements with respect to the
performance of services which payment thereunder would result in a nondeductible
expense to Alyanza pursuant to Section 28OG of the Code or an excise tax to the
recipient of such payment pursuant to Section 4999 of the Code. Alyanza has not
agreed to, nor is it required to make any adjustment under Code Section 481(a)
by reason of, a change in accounting method. Alyanza is not, nor has it been, a
reporting corporation" subject to the information reporting and record
maintenance requirements of Section 6038A and the regulations thereunder.
Alyanza is in compliance with the terms and conditions of any applicable tax
exemptions, agreements or orders of any foreign government to which it may be
subject or which it may have claimed, and the transactions contemplated by this
Agreement will not have any adverse effect on such compliance.
(h) The Alyanza Disclosure Schedule sets forth accurate and
complete information regarding Alyanza's net operating losses for federal and
each applicable state tax purposes. Alyanza has no net operating losses and
credit carryovers or other tax attributes currently subject to limitation under
Sections 382, 383, or 384 of the Code.
Section 3.6 Absence of Certain Changes or Events. Since November 25,
1998, Alyanza has not:
(a) suffered any material adverse effect on its business, assets
(including intangible assets), liabilities, condition (financial or otherwise),
results of operations or prospects;
(b) suffered any damage, destruction or loss, whether covered by
insurance or not, that has resulted, or could be reasonably expected to result,
in a Material Adverse Effect on Alyanza;
(c) granted or agreed to make any increase in the compensation
payable or to become payable by Alyanza to its officers or employees except, in
the case of non-officer employees, in the ordinary course of business consistent
with past practice;
(d) declared, set aside or paid any dividend or made any other
distribution on or in respect of the shares of the capital stock of Alyanza or
declared any direct or indirect redemption, retirement, purchase or other
acquisition by Alyanza of such shares;
(e) issued any shares of capital stock of Alyanza or any
warrants, rights, options or entered into any commitment relating to the shares
of Alyanza, except for the issuance
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of shares of Alyanza capital stock pursuant to the exercise of Alyanza Options
listed in the Alyanza Disclosure Schedule and the conversion of outstanding
Alyanza Preferred Stock;
(f) made any change in the accounting methods or practices it
follows, whether for general financial or tax purposes, or any change in
depreciation or amortization policies or rates adopted therein;
(g) except for the sale of products by Alyanza in the ordinary
course of its business consistent with its past practice, sold, leased,
abandoned or otherwise disposed of any real property or any machinery, equipment
or other operating property with a net book value at the time of sale or
disposition on an individual basis in excess of $5,000;
(h) sold, assigned, transferred, licensed or otherwise disposed
of any patent, trademark, trade name, brand name, copyright (or pending
application for any patent, trademark or copyright) invention, work of
authorship, process, know-how, formula or trade secret or interest thereunder or
other intangible asset;
(i) permitted or allowed any of its property or assets to be
subjected to any mortgage, deed of trust, pledge, lien, security interest or
other encumbrance of any kind securing any obligation in excess of $5,000
(except those permitted under Section 3.7);
(j) made any capital expenditure or commitment individually in
excess of $5,000 or in the aggregate in excess of $15,000;
(k) paid, loaned or advanced any amount to, or sold, transferred
or leased any properties or assets to, or entered into any agreement or
arrangement with, any of its Affiliates (as defined in Section 3.16), officers,
directors or shareholders or any affiliate or associate of any of the foregoing;
(1) made any amendment to or terminated any agreement which, if
not so amended or terminated, would be required to be disclosed on Schedule 3.11
of the Alyanza Disclosure Schedule; or
(m) agreed to take any action described in this Section 3.6 or
outside of its ordinary course of business or which would constitute a material
breach of any of the representations contained in this Agreement.
Section 3.7 Title and Related Matters. Alyanza has good and valid title
to all the properties, interests in properties and assets, real and personal,
used in or necessary for the operation of the business of Alyanza, free and
clear of all mortgages, liens, pledges, charges or encumbrances of any kind or
character, except the lien of current Taxes not yet due and payable. The
equipment of Alyanza used in the operation of its business is, taken as a whole,
(i) adequate for the business conducted by Alyanza and (ii) in good operating
condition and repair, ordinary wear and tear excepted. All real or personal
property leases to which Alyanza is a party are valid, binding, enforceable
against Alyanza and effective in accordance with their respective terms. To the
knowledge of Alyanza, there is not under any of such leases any existing default
or event of default or event which, with notice or lapse of time or both, would
constitute a default that would have a Material Adverse Effect on Alyanza. The
Alyanza Disclosure Schedule contains a
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description of all personal property with an individual net book value in excess
of $5,000 and a description of all real property leased or owned by Alyanza,
describing its interest in said property. True and correct copies of Alyanza's
real property and personal property leases have been provided to Niku.
Section 3.8 Proprietary Rights.
(a) Alyanza owns all right, title and interest in and to, or
otherwise possesses legally enforceable rights, or is licensed to use, 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 Alyanza's business as conducted
to the date of this Agreement and proposed by Alyanza to be conducted,
including, without limitation, the technology, information, databases, data
lists, data compilations, and all proprietary rights developed or discovered or
used in connection with or contained in all versions and implementations of any
product which has been or is being distributed or sold by Alyanza or currently
is under development by Alyanza or has previously been under development by
Alyanza (collectively, the "ALYANZA PRODUCTS"), free and clear of all liens,
claims and encumbrances (including without limitation I inking, licensing and
distribution rights) (all of which are referred to as "ALYANZA PROPRIETARY
RIGHTS"). The Alyanza Disclosure Schedule contains an accurate and complete (i)
description of all patents, trademarks (with separate listings of registered and
unregistered trademarks), trade names, and registered copyrights in or related
to the Alyanza Products or otherwise included in the Alyanza Proprietary Rights
and all applications and registration statements therefor, including the
jurisdictions in which each such Alyanza Proprietary Right has been issued or
registered or in which any such application of such issuance and registration
has been filed, (ii) list of all licenses and other agreements with third
parties (the "THIRD PARTY LICENSES") relating to any material patents,
copyrights, trade secrets, software, inventions, technology, know-how, processes
or other proprietary rights that Alyanza is licensed or otherwise authorized by
such third parties to use, market, distribute or incorporate in Alyanza Products
(other than standard off-the-shelf license) (such patents, copyrights, trade
secrets, software, inventions, technology, know-how, processes or other
proprietary rights are collectively referred to as the "THIRD PARTY TECHNOLOGY")
and (iii) list of all licenses and other agreements with third parties relating
to any material information, compilations, data lists or databases that Alyanza
is licensed or otherwise authorized by such third parties to use, market,
disseminate, distribute or incorporate in Alyanza Products (other than standard
off-the-shelf licenses). All of Alyanza's patents, copyrights, trademark or
trade name registrations related to or in the Alyanza Products are valid and In
full force and effect; and consummation of the transactions contemplated by this
Agreement will not alter or impair any such rights. No claims have been asserted
or threatened against Alyanza (and Alyanza is not aware of any claims which are
likely to be asserted or threatened against Alyanza or which have been asserted
or threatened against others relating to Alyanza Proprietary Rights or Alyanza
Products) by any person challenging Alyanza's use, possession, development,
manufacture, sale or distribution of Alyanza Products under any Alyanza
Proprietary Rights (including, without limitation, the Third Party Technology)
or challenging or questioning the validity or effectiveness of any material
license or agreement relating thereto (including, without limitation, the Third
Party Licenses). Alyanza is not aware of any valid basis for any claim of the
type specified in the immediately preceding sentence which could in any material
way relate to or interfere with the continued enhancement and exploitation by
Alyanza of any of the Alyanza Products. To the best of
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Alyanza's knowledge, none of the Alyanza Products nor the use or exploitation of
any Alyanza Proprietary Rights in Alyanza's current business infringes on the
rights of or constitutes misappropriation of any proprietary information or
intangible property right of any third person or entity, including without
limitation any patent, trade secret, copyright, trademark or trade name, and
Alyanza has not been sued or named in any suit, action or proceeding which
involves a claim of such infringement, misappropriation or unfair competition.
(b) Except as set forth in the Alyanza Disclosure Schedule,
Alyanza has not granted any third party any right to reproduce, distribute,
market or exploit any of the Alyanza Products or any adaptations, translations,
or derivative works based on the Alyanza Products or any portion thereof Except
with respect to the rights of third parties to the Third Party Technology, no
third party has any express right to reproduce, distribute, market or exploit
any works or materials of which any of the Alyanza Products are a "derivative
work" as that term is defined in the United States Copyright Act, Title 17,
U.S.C. Section 101.
(c) All material designs. drawings, specifications, source code,
object code, scripts, documentation, flow charts, diagrams, data lists,
databases, compilations and information incorporating, embodying or reflecting
any of the Alyanza Products at any stage of their development (the "ALYANZA
COMPONENTS") were written, developed and created solely and exclusively by
employees of Alyanza without the assistance of any third party or entity or were
created by third parties who assigned ownership of their rights to Alyanza by
means of valid and enforceable consultant confidentiality and invention
assignment agreements, copies of which have been delivered to Niku. Alyanza has
at all times used commercially reasonable efforts customary in its industry to
treat the Alyanza Proprietary Rights related to Alyanza Products and Alyanza
Components as containing trade secrets and has not disclosed or otherwise dealt
with such items in such a manner as intended or reasonably likely to cause the
loss of such trade secrets by release into the public domain.
(d) To Alyanza's knowledge, no employee, contractor or consultant
of Alyanza is in violation in any material respect of any term of any written
employment contract, patent disclosure agreement or any other written contract
or agreement relating to the relationship of any such employee, consultant or
contractor with Alyanza or, to Alyanza's knowledge, any other party because of
the nature of the business conducted by Alyanza or proposed to be conducted by
Alyanza. The Alyanza Disclosure Schedule lists all employee, contractors and
consultants who have participated in any way in the development of the Alyanza
Products or the Alyanza Proprietary Rights.
(e) Each person presently or previously employed by Alyanza
(including independent contractors, if any) with access authorized by Alyanza to
confidential information has executed a confidentiality and non-disclosure
agreement pursuant to the form of agreement previously provided to Niku. Such
confidentiality and non-disclosure agreements constitute valid and binding
obligations of Alyanza and such person, enforceable in accordance with their
respective terms.
(f) To Alyanza's knowledge, there is no material unauthorized
use, disclosure, infringement or misappropriation of any Alyanza Proprietary
Rights, or any Third Party Technology to the extent licensed by or through
Alyanza, by any third party, including any
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employee or former employee of Alyanza. Alyanza has not entered into any
agreement to indemnify any other person against any charge of infringement of
any Alyanza Proprietary Rights.
(g) Alyanza has taken all steps customary and reasonable in the
industry to protect and preserve the confidentiality and proprietary nature of
all Intellectual Property and other confidential information not otherwise
protected by patents, patent applications or copyright ("CONFIDENTIAL
INFORMATION"). All use, disclosure or appropriation of Confidential Information
owned by Alyanza by or to a third party has been pursuant to the terms of a
written agreement between Alyanza and such third party. All use, disclosure or
appropriation of Confidential Information not owned by Alyanza has been pursuant
to the terms of a written agreement between, Alyanza and the owner of such
Confidential Information, or is otherwise lawful.
Section 3.9 Employee Benefit Plans.
(a) The Alyanza Disclosure Schedule lists, with respect to
Alyanza and any trade or business (whether or not incorporated) which is treated
as a single employer with Alyanza (an "ERISA AFFILIATE") within the meaning of
Section 414(b), (c), (m) or (o) of the Code, (i) all material employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), (ii) each loan to a non-officer employee, loans
to officers and directors and any stock option, stock purchase, phantom stock,
stock appreciation right, supplemental retirement, severance, sabbatical,
medical, dental, vision care, disability, employee relocation, cafeteria benefit
(Code Section 125) or dependent care (Code Section 129), life insurance or
accident insurance plans, programs or arrangements, (iii) all bonus, pension,
profit sharing, savings, deferred compensation or incentive plans, programs or
arrangements, (iv) other fringe or employee benefit plans, programs or
arrangements that apply to senior management of Alyanza and that do not
generally apply to all employees, and (v) any current or former employment or
executive compensation or severance agreements, written or otherwise, for the
benefit of, or relating to, any present or former employee, consultant or
director of Alyanza as to which (with respect to any of items (i) through (v)
above) any potential liability is borne by Alyanza (together, the "ALYANZA
EMPLOYEE PLANS").
(b) Alyanza has delivered to Niku a copy of each of the Alyanza
Employee Plans and related plan documents (including trust documents, insurance
policies or contracts, employee booklets, summary plan descriptions and other
authorizing documents, and, to the extent still in its possession, any material
employee communications relating thereto) and has, with respect to each Alyanza
Employee Plan which is subject to ERISA reporting requirements, provided copies
of any Form 5500 reports filed for the last three plan years. Any Alyanza
Employee Plan intended to be qualified under Section 401(a) of the Code has
either obtained from the Internal Revenue Service a favorable determination
letter as to its qualified status under the Code, including all amendments to
the Code effected by the Tax Reform Act of 1986 and subsequent legislation, or
has applied to the Internal Revenue Service for such a determination letter
prior to the expiration of the requisite period under applicable Treasury
Regulations or Internal Revenue Service pronouncements in which to apply for
such determination letter and to make any amendments necessary to obtain a
favorable determination. Alyanza has also furnished Niku with the most recent
Internal Revenue Service determination letter issued with respect to
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each such Alyanza Employee Plan, and nothing has occurred since the issuance of
each such letter which could reasonably be expected to cause the loss of the
tax-qualified status of any Alyanza Employee Plan subject to Code Section
401(a).
(c) (i) None of the Alyanza Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person; (ii) there has
been no "prohibited transaction," as such term is defined in Section 406 of
ERISA and Section 4975 of the Code, with respect to any Alyanza Employee Plan;
(iii) each Alyanza Employee Plan has been administered in accordance with its
terms and in compliance with the requirements prescribed by any and all
statutes, rules and regulations (including ERISA and the Code), and Alyanza and
each subsidiary or ERISA Affiliate have performed all material obligations
required to be performed by them under, are not in any material respect in
default, under or violation of, and have no knowledge of any material default or
violation by any other party to, any of the Alyanza Employee Plans; (iv) neither
Alyanza nor any subsidiary or ERISA Affiliate is subject to any liability or
penalty under Sections 4976 through 4980 of the Code or Title I of ERISA with
respect to any of the Alyanza Employee Plans; (v) all contributions required to
be made by Alyanza or any subsidiary or ERISA Affiliate to any Alyanza Employee
Plan have been made on or before their due dates and a reasonable amount has
been accrued for contributions to each Alyanza Employee Plan for the current
plan years; (vi) with respect to each Alyanza Employee Plan, no "reportable
event" within the meaning of Section 4043 of ERISA (excluding any such event for
which the thirty (30) day notice requirement has been waived under the
regulations to Section 4043 of ERISA) nor any event described in Section 4062,
4063 or 4041 of ERISA has occurred; and (vii) no Alyanza Employee Plan is
covered by, and neither Alyanza nor any subsidiary or ERISA Affiliate has
incurred or expects to incur any material liability under Title IV of ERISA or
Section 412 of the Code. With respect to each Alyanza Employee Plan subject to
ERISA as either an employee pension plan within the meaning of Section 3(2) of
ERISA or an employee welfare benefit plan within the meaning of Section 3(1) of
ERISA, Alyanza has prepared in good faith and timely filed all requisite
governmental reports (which were true and correct as of the date filed) and has
properly and timely filed and distributed or posted all notices and reports to
employees required to be filed, distributed or posted with respect to each such
Alyanza Employee Plan. No suit, administrative proceeding, action or other
litigation has been brought, or to the knowledge of Alyanza is threatened,
against or with respect to any such Alyanza Employee Plan, including any audit
or inquiry by the IRS or United States Department of Labor. Neither Alyanza nor
any ERISA Affiliate is a party to, or has made any contribution to or otherwise
incurred any obligation under, any "multi-employer plan" as defined in Section
3(37) of ERISA.
(d) With respect to each Alyanza Employee Plan, Alyanza has
complied with (i) the applicable health care continuation and notice provisions
of the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the
proposed regulations thereunder and (ii) the applicable requirements of the
Family Leave Act of 1993 and the regulations thereunder.
(e) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or other service
provider of Alyanza or any other ERISA Affiliate to severance benefits or any
other payment (including, without limitation, unemployment compensation, golden
parachute or bonus), except as expressly provided in this Agreement, or (ii)
accelerate the time of payment or vesting of any such benefits, or (iii)
increase
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or accelerate any benefits or the amount of compensation due any such
employee or service provider.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by Alyanza or other ERISA Affiliate
relating to, or change in participation or coverage under, any Alyanza Employee
Plan which would materially increase the expense of maintaining such Plan above
the level of expense incurred with respect to that Plan for the most recent
fiscal year included in the Alyanza Financial Statements.
Section 3.10 Bank Accounts. The Alyanza Disclosure Schedule sets forth
the names and locations of all banks, trusts, companies, savings and loan
associations, and other financial institutions at which Alyanza maintains
accounts of any nature and the names of all persons authorized to draw thereon
or make withdrawals therefrom.
Section 3.11 Contracts.
(a) Except as set forth on the Alyanza Disclosure Schedule:
(i) Alyanza has no agreements, contracts or commitments
that provide for the sale, licensing or distribution by Alyanza of any Alyanza
Products or Alyanza Proprietary Rights. Without limiting the foregoing, Alyanza
has not granted to any third party any rights to reproduce, manufacture or
distribute any of the Alyanza. Products, nor has Alyanza granted to any third
party any exclusive rights of any kind, nor has Alyanza granted any third party
any right to market any of the Alyanza Products under any private label or "OEM"
arrangements, nor has Alyanza granted any license of any Alyanza trademarks or
servicemarks.
(ii) Alyanza has no agreements, contracts or commitments
with any third parties providing for aggregate payments by or to Alyanza in an
amounts that exceeds $10,000.
(iii) Alyanza has no currently effective collective
bargaining or union agreements, contracts or commitments.
(iv) Alyanza is not restricted by agreement from competing
with any person or from carrying on its business anywhere in the world.
(v) Alyanza has not guaranteed any obligations of other
persons or made any agreements to acquire or guarantee any obligations of other
persons.
(vi) Alyanza has no outstanding loan or advance to any
person (other than normal travel advances not in excess of $3,000 in total to
any one individual); nor is it party to any line of credit, standby financing,
revolving credit or other similar financing arrangement of any sort which would
permit the borrowing by Alyanza of any sum.
(vii) Alyanza has no agreements pursuant to which Alyanza
has agreed to manufacture for, supply to or distribute to any third party any
Alyanza Products or Alyanza Components.
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True and correct copies of each document or instrument listed on
Schedule 3.11 of the Alyanza Disclosure Schedule pursuant to this Section
3.11(a) (the "MATERIAL CONTRACTS") have been provided to Niku or its
representatives.
(b) All of the Material Contracts listed on the Alyanza
Disclosure Schedule are valid, binding, in full force and effect, and
enforceable by Alyanza in accordance with their respective terms (except to the
extent that enforcement is affected by laws pertaining to bankruptcy,
reorganization, insolvency and creditors' rights and by the availability of
injunctive relief, specific performance and other equitable remedies). No
Material Contract contains any liquidated damages, penalty or similar provision.
No party to any such Material Contract has notified Alyanza in writing that such
party intends to cancel, withdraw, modify or amend such contract, agreement or
arrangement.
(c) Alyanza is not in default under or in breach or violation of,
nor, to Alyanza's knowledge, is there any valid basis for any claim of default
by Alyanza under, or breach or violation by Alyanza of, any Material Contract.
To Alyanza's knowledge, no other party is in default under or in breach or
violation of, nor, to Alyanza's knowledge, is there any valid basis for any
claim of default by any other party under or any breach or violation by any
other party of, any Material Contract.
(d) Except as specifically indicated on the Alyanza Disclosure
Schedule, none of the Material Contracts provides for indemnification by Alyanza
of any third party. No claims have been made or threatened in writing to Alyanza
that would require indemnification by Alyanza, and Alyanza has not paid any
amounts to indemnify any third party as a result of indemnification requirements
of any kind.
Section 3.12 Orders, Commitments and Returns. All material agreements,
contracts, or commitments for the purchase of supplies by Alyanza were made in
the ordinary course of business. To the knowledge of Alyanza, no outstanding
purchase or outstanding lease commitment of Alyanza is in excess of the normal,
ordinary and usual requirements of its business or was made at any price (on
both a per unit and aggregate basis) materially in excess of the current market
price at the time made, or contains terms and conditions materially more onerous
to Alyanza than those usual and customary in the industry.
Section 3.13 Compliance With Law. Alyanza and the operation of its
business are in compliance in all material respects with all applicable laws and
regulations. Neither Alyanza nor, to Alyanza's knowledge, any of its employees
has directly or indirectly paid or delivered any fee, commission or other sum of
money or item of property, however characterized, to any finder, agent,
government official or other party in the United States or any other country,
that was or is in violation of any federal, state, or local statute or law or of
any statute or law of any other country having jurisdiction. Alyanza has not
participated directly or indirectly in any boycotts or other similar practices
affecting any of its customers. Alyanza has complied in all material respects at
all times with any and all applicable federal, state and foreign laws, rules,
regulations, proclamations and orders relating to the importation or exportation
of its products.
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Section 3.14 Labor Difficulties; No Discrimination.
(a) Alyanza is not engaged in any unfair labor practice and is
not in violation of any applicable laws respecting employment and employment
practices, terms and conditions of employment, and wages and hours. There is no
unfair labor practice complaint against Alyanza actually pending or, to the
knowledge of Alyanza, threatened before the National Labor Relations Board.
There is no strike, labor dispute, slowdown, or stoppage actually pending or, to
the knowledge of Alyanza, threatened against Alyanza. To the knowledge of
Alyanza, no union organizing activities are taking place with respect to the
business of Alyanza. No grievance, nor any arbitration proceeding arising out of
or under any collective bargaining agreement is pending and, to the knowledge of
Alyanza, no claims therefor exist. No collective bargaining agreement that is
binding on Alyanza restricts it from relocating or closing any of its
operations. Alyanza has not experienced any material work stoppage or other
material labor difficulty.
(b) There is no, and has not been any, claim against Alyanza, or
to Alyanza's knowledge, threatened against Alyanza, based on actual or alleged
race, age, sex, disability or other harassment or discrimination, or similar
tortuous conduct, nor to the knowledge of Alyanza, is there any basis for any
such claim.
(c) There are no pending claims against Alyanza under any
workers' compensation plan or policy or for long term disability. Alyanza has no
material obligations under COBRA with respect to any former employees or
qualifying beneficiaries thereunder. There are no proceedings pending or, to the
knowledge of Alyanza, threatened, between Alyanza and any of their respective
employees, which proceedings have or could reasonably be expected to have a
Material Adverse Effect on Alyanza.
Section 3.15 Trade Regulation. All of the prices charged by Alyanza in
connection with the marketing or sale of any products or services have been in
compliance with all applicable laws and regulations. No claims have been
communicated or threatened in writing against Alyanza with respect to wrongful
termination of any dealer, distributor or any other marketing entity,
discriminatory pricing, price fixing, unfair competition, false advertising, or
any other violation of any laws or regulations relating to anti-competitive
practices or unfair trade practices of any kind, and to Alyanza's knowledge, no
specific situation, set of facts, or occurrence provides any basis for any such
claim.
Section 3.16 Insider Transactions. To the knowledge of Alyanza, no
affiliate ("AFFILIATE") as defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), of Alyanza has any interest in any
equipment or other property, real or personal, tangible or intangible,
including, without limitation, any Alyanza Proprietary Rights or any creditor,
supplier, customer, manufacturer, agent, representative, or distributor of
Alyanza Products; provided, however, that no such Affiliate or other person
shall be deemed to have such an interest solely by virtue of the ownership of
less than 1% of the outstanding stock or debt securities of any publicly-held
company, the stock or debt securities of which are traded on a recognized stock
exchange or quoted on the Nasdaq National Market.
Section 3.17 Employees, Independent Contractors and Consultants. The
Alyanza Disclosure Schedule lists and describes all past and all currently
effective written or, to
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Alyanza's knowledge, oral, consulting, independent contractor and/or employment
agreements and other material agreements concluded with individual employees,
independent contractors or consultants to which Alyanza is a party. True and
correct copies of all such written agreements have been provided to Niku. All
independent contractors have been properly classified as independent contractors
for the purposes of federal and applicable state tax laws, laws applicable to
employee benefits and other applicable law. All salaries and wages paid by
Alyanza are in compliance in all material respects with applicable federal,
state and local laws. Also shown on the Alyanza Disclosure Schedule are the
names, positions and salaries or rates of pay, including bonuses, of all persons
presently employed by Alyanza.
Section 3.18 Insurance. The Alyanza Disclosure Schedule contains a list
of the principal policies of fire, liability and other forms of insurance
currently or previously held by Alyanza, and all claims made by Alyanza under
such policies. To the knowledge of Alyanza, Alyanza has not done anything,
either by way of action or inaction, that might invalidate such policies in
whole or in part. There is no claim pending under any of such policies or bonds
as to which coverage has been questioned, denied or disputed by the underwriters
of such policies or bonds. All premiums due and payable under all such policies
and bonds have been paid and Alyanza is otherwise in compliance with the terms
of such policies and bonds in all material respects. Alyanza has no knowledge of
any threatened termination of, or material premium increase with respect to, any
of such policies.
Section 3.19 Accounts Receivable. Subject to any reserves set forth in
the Most Recent Balance Sheet, the accounts receivable shown on the Most Recent
Balance Sheet represent and will represent bona fide claims against debtors for
sales and other charges, and are not subject to discount except for normal cash
and immaterial trade discounts.
Section 3.20 Inventory. All inventory of Alyanza reflected in the Most
Recent Balance Sheet or thereafter acquired by Alyanza prior to the Closing Date
is or will be owned by Alyanza free and clear of liens or encumbrances of any
kind. The inventory is not stated on the Most Recent Balance Sheet in an amount
greater than the estimated net realizable value thereof.
Section 3.21 Product Warranty. Each product manufactured, sold, leased,
or delivered by Alyanza has been in conformity in all material respects with all
applicable contractual commitments and all express and implied warranties, and
Alyanza has no liability (and, to Alyanza's knowledge, there is no basis for any
present or future claim or demand against any of them giving rise to any
liability) for replacement or repair thereof or other damages in connection
therewith, subject only to the reserve for product warranty claims set forth in
the Most Recent Balance Sheet (if any). No product manufactured, sold, leased,
or delivered or service offered by Alyanza is subject to any guaranty, warranty,
or other indemnity beyond the applicable standard terms and conditions of sale,
lease or license. The Alyanza Disclosure Schedule includes copies of the
standard terms and conditions of sale, lease or license for Alyanza (containing
applicable guaranty, warranty, repair policy, and indemnity provisions).
Section 3.22 Permits/Product Liability.
(i) There have been no written notices, citations or
decisions by any governmental or regulatory body that any Alyanza Product is
defective or fails to meet any
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applicable standards promulgated by any such governmental or regulatory body.
There have been no recalls, field notifications or seizures ordered or, to the
knowledge of Alyanza, threatened by any such governmental or regulatory body
with respect to any of Alyanza Products.
(ii) Alyanza has obtained, in all countries where Alyanza
is marketing or has marketed its Alyanza Products, all applicable material
licenses, registrations, approvals, clearances and authorizations required by
local, state or federal agencies in such countries regulating the safety,
effectiveness and market clearance of the Products that are currently marketed
by Alyanza. Alyanza has identified and made available for examination by Niku
all information relating to regulation of Alyanza Products in the United States,
including licenses, registrations, approvals, permits, inspections, Alyanza's
recalls and product actions. Alyanza has identified to Niku any international
locations where regulatory information and documents regarding Alyanza Products
are kept.
Section 3.23 Litigation. There is no private or governmental action,
suit, proceeding, claim, arbitration or investigation pending before any agency,
court or tribunal, foreign or domestic, or, to the knowledge of Alyanza,
threatened against Alyanza or any of its properties or any of its officers or
directors (in their capacities as such). There is no judgment, decree or order
against Alyanza or any of its respective directors or officers (in their
capacities as such). There is no judgment, decree or order against Alyanza or
any of their respective officers or directors (in their capacities as such),
that could prevent, enjoin, or materially alter or delay any of the transactions
contemplated by this Agreement, or that could reasonably be expected to have a
Material Adverse Effect on Alyanza. All litigation to which Alyanza is a party
(or, to the knowledge of Alyanza, threatened to become a party) is disclosed in
the Alyanza Disclosure Schedule.
Section 3.24 Governmental Authorizations and Regulations. Alyanza has
obtained each federal, state, county, local or foreign governmental consent,
license, permit, grant, or other authorization of a Governmental Entity (i)
pursuant to which Alyanza currently operates or holds any interest in any of its
properties or (ii) that is required for the operation of Alyanza's business or
the holding of any such interest, and all of such authorizations are in full
force and effect, in each case such that the absence of such consent, license,
permit, grant or other authorization would have a Material Adverse Effect on
Alyanza.
Section 3.25 Subsidiaries. Alyanza has no Subsidiaries. Alyanza does not
own or control (directly or indirectly) any capital stock, bonds or other
securities of, and does not have any proprietary interest in, any other
corporation, general or limited partnership, firm, association or business
organization, entity or enterprise, and Alyanza does not control (directly or
indirectly) the management or policies of any other corporation, partnership,
firm, association or business organization, entity or enterprise.
Section 3.26 Compliance with Environmental Requirements. Alyanza has
obtained all permits, licenses and other authorizations which are required under
federal, state and local laws applicable to Alyanza and relating to pollution or
protection of the environment, including laws or provisions relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials, substances, or wastes into air,
surface water,
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groundwater, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials, substances, or wastes
or which are intended to assure the safety of employees, workers or other
persons, the absence of which would be reasonably likely to have a Material
Adverse Effect on Alyanza. Alyanza is in compliance in all material respects
with all terms and conditions of all such permits, licenses and authorizations.
To the knowledge of Alyanza, there are no conditions, circumstances, activities,
practices, incidents, or actions which may form the basis of any material claim,
action, suit, proceeding, hearing, or investigation of, by, against or relating
to Alyanza, based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, or hazardous or toxic substance, material or waste, or relating to
the safety of employees, workers or other persons.
Section 3.27 Corporate Documents. Alyanza has furnished to Niku or its
representatives: (a) copies of its Articles of Incorporation and Bylaws, as
amended to date; (b) its minute book containing all records required to be set
forth of all proceedings, consents, actions, and meetings of the shareholders,
the board of directors and any committees thereof, (c) all material permits,
orders, and consents issued by any regulatory agency with respect to Alyanza, or
any securities of Alyanza, and all applications for such permits, orders, and
consents; and (d) the stock transfer books of Alyanza setting forth all
transfers of any capital stock. The corporate minute books, stock certificate
books, stock registers and other corporate records of Alyanza are complete and
accurate in all material respects, and the signatures appearing on all documents
contained therein are the true signatures of the persons purporting to have
signed the same. All actions reflected in such books and records were duly and
validly taken in compliance with the laws of the applicable jurisdiction.
Section 3.28 Alyanza Action. The Board of Directors of Alyanza, by
unanimous written consent or at a meeting duly called and held, has by the
unanimous vote of all directors (i) determined that the Merger is fair and in
the best interests of Alyanza and its shareholders, (ii) approved the Merger and
this Agreement in accordance with the provisions of California Law, and (iii)
directed that this Agreement and the Merger be submitted to Alyanza shareholders
for their approval and resolved to recommend that Alyanza shareholders vote in
favor of the approval of this Agreement and the Merger.
Section 3.29 Offers. Alyanza has suspended or terminated, and has the
legal right to terminate or suspend, all negotiations and discussions of
Acquisition Transactions (as defined in Section 5.6) with parties other than
Niku.
Section 3.30 No Brokers. Neither Alyanza nor any Alyanza shareholder is
obligated for the payment of fees or expenses of any broker or finder in
connection with the origin, negotiation or execution of this Agreement or the
other Transaction Documents or Investment Agreements (as defined in 8.2(f)) or
in connection with any transaction contemplated hereby or thereby.
Section 3.31 No Commitments Regarding Future Products. Alyanza has made
no sales to customers that are contingent upon providing future enhancements of
existing products, to add features not presently available on existing products
or to otherwise enhance the performance of
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its existing products (other than beta or similar arrangements pursuant to which
Alyanza's customers from time to time test or evaluate products). The products
Alyanza has delivered to customers substantially comply with published
specifications for such products and Alyanza has not received material
complaints from customers about its products that remain unresolved.
Section 3.32 Disclosure. No statements by Alyanza contained in this
Agreement, its exhibits and schedules nor in any of the certificates or
documents, including any of the Transaction Documents and Investment Agreements
(as defined in 8.2(f)) delivered or required to be delivered by Alyanza to Niku
or Sub under this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. Alyanza has disclosed to Niku all material information of
which it is aware relating specifically to the operations and business of
Alyanza as of the date of this Agreement or the transactions contemplated by
this Agreement.
Section 3.33 LLC Conversion. The Conversion of Alyanza's predecessor,
Alyanza Infosystems, LLC, into a Domestic C Corporation, has been completed in
accordance with applicable law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NIKU AND SUB
Niku and Sub represent and warrant to Alyanza that the statements
contained in this Article IV are true and correct.
Section 4.1 Organization of Niku and Sub. Each of Niku and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation and has all requisite corporate
power to own, lease and operate its property and to carry on its business as now
being conducted and is duly qualified or licensed to do business and is in good
standing in each Jurisdiction in which the failure to be so qualified or
licensed would have a Material Adverse Effect on Niku. Sub is a wholly owned
subsidiary of Niku and, other than pursuant to this Agreement, has no
liabilities and heretofore has conducted no business.
Section 4.2 Niku Capital Structure. The authorized capital stock of Niku
consists of 50,000,000 shares of Common Stock, par value of $0.0001 per share
("NIKU COMMON STOCK") and 23,400,000 shares of Preferred Stock, par value
$0.0001 per share ("NIKU PREFERRED STOCK"), of which there were issued and
outstanding as of the close of business on December 10, 1998, 5,282,500 shares
of Niku Common Stock and 10,000,000 shares of Niku Series F Preferred Stock,
5,142,851 shares of Niku Series A Preferred Stock and 7,999,992 shares of Niku
Series B Preferred Stock. There are no other outstanding shares of capital stock
or voting securities of Niku other than shares of Niku Common Stock issued after
December 10, 1998 upon the exercise of options ("NIKU OPTIONS") issued under the
Niku Corporation 1988 Stock Plan (the "NIKU OPTION PLAN"). The authorized
capital stock of Sub consists of 100 shares of Common Stock, all of which are
issued and outstanding and are held by Niku. All outstanding shares of Niku and
Sub have been duly authorized, validly issued, fully paid and are nonassessable
and free of any liens or encumbrances other than any liens or encumbrances
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created by or imposed upon the holders thereof. As of the close of business on
December 10, 1998, Niku has reserved an aggregate of 23,142,843 shares of Niku
Common Stock for issuance upon conversion of the outstanding Niku Preferred
Stock, reserved an aggregate of 2,048,500 shares of Niku Common Stock for
issuance to employees, directors and independent contractors upon exercise of
outstanding Niku Options to acquire shares of Niku Common Stock issued under the
Niku Option Plan and Niku has reserved for issuance 2,481,500 shares of Niku
Common Stock for future grants under the Niku Option Plan. Other than as
contemplated by this Agreement, and except as described in this Section 4.2,
there are no other options, warrants, calls, rights, commitments or agreements
to which Niku or Sub is a party or by which either of them is bound obligating
Niku or Sub to issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of the capital
stock of Niku or Sub or obligating Niku or Sub to grant, extend or enter into
any such option, warrant, call, right, commitment or agreement. The shares of
Niku Common Stock to be issued pursuant to the Merger will be duly authorized,
validly issued, fully paid, and non-assessable and issued in compliance with all
applicable federal or state securities laws and will have the rights and
references set forth in the Certificate of Incorporation of Niku, and will be
free and clear of any liens, encumbrances and adverse claims created by Niku.
Section 4.3 Authority; No Conflict; Required Filings and Consents.
(a) Each of Niku and Sub has all requisite corporate power and
authority to enter into this Agreement and the other Transaction Documents to
which it is or will become a party and to consummate the transactions
contemplated by this Agreement and such Transaction Documents. The execution and
delivery of this Agreement and such Transaction Documents and the consummation
of the transactions contemplated by this Agreement and such Transaction
Documents have been duly authorized by all necessary corporate action on the
part of Niku and Sub. This Agreement has been and such Transaction Documents
have been or, to the extent not executed as of the date hereof, will be duly
executed and delivered by Niku and Sub. This Agreement and each of the
Transaction Documents to which Niku or Sub is a party constitutes, and each of
the Transaction Documents to which Niku or Sub will become a party when executed
and delivered by Niku or Sub will constitute, the valid and binding obligation
of Niku or Sub, enforceable in accordance with its terms (except to the extent
that enforcement is affected by laws pertaining to bankruptcy, reorganization,
insolvency and creditors' rights and by the availability of injunctive relief,
specific performance and other equitable remedies).
(b) The execution and delivery by Niku or Sub of this Agreement
and the Transaction Documents to which it is or will become a party does not,
and consummation of the transactions contemplated by this Agreement or the
Transaction Documents to which it is or will become a party will not, (i)
conflict with, or result in any violation or breach of any provision of the
Certificate of Incorporation or Bylaws of Niku or Sub, (ii) result in any
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or obligation to which Niku or Sub is a
party or by which either of them or any of their properties or assets may be
bound, or (iii) conflict or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Niku or Sub or any of their properties or assets, except in the case of (ii)
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and (iii) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which would not have a Material Adverse Effect on
Niku and its Subsidiaries, taken as a whole.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Niku or Sub in connection with the execution and delivery of
this Agreement or the Transaction Documents to which it is or will become a
party or the consummation of the transactions contemplated hereby or thereby,
except for (i) the filing of the Certificate of Merger with the Delaware
Secretary of State, (ii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and the laws of any foreign country, and (iii)
such other consents, authorizations, filings, approvals and registrations which,
if not obtained or made, could be expected to have a Material Adverse Effect on
Niku and its Subsidiaries, taken as a whole.
Section 4.4 Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated by this Agreement.
Section 4.5 Disclosure. No statements by Niku or Sub contained in this
Agreement, its exhibits and schedules nor in any of the certificates or
documents, including any of the Transaction Documents, delivered or required to
be delivered by Niku or Sub to Alyanza under this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading in light
of the circumstances under which they were made.
ARTICLE V
PRECLOSING COVENANTS OF ALYANZA
Section 5.1 Approval of Alyanza Shareholders. Prior to the Closing Date
and at the earliest practicable date following the date hereof, Alyanza will
solicit written consents from its shareholders seeking approval of the Merger
and related matters. In soliciting such written consent or proxies, unless this
Agreement shall have been validly terminated as provided for herein, the Board
of Directors of Alyanza will recommend to the shareholders of Alyanza that they
approve this Agreement and the Merger and shall use its reasonable efforts to
obtain the approval of the shareholders of Alyanza entitled to vote on or
consent to this Agreement and the Merger in accordance with California Law and
Alyanza's Articles of Incorporation.
Section 5.2 Advise of Changes. Alyanza will promptly advise Niku in
writing of any event occurring subsequent to the date of this Agreement which,
to the knowledge of Alyanza, would render any representation or warranty of
Alyanza contained in this Agreement, if made on or as of the date of such event
or the Closing Date, untrue or inaccurate in any material respect.
Section 5.3 Operation of Business. During the period from the date of
this Agreement and continuing until the earlier of the termination of the
Agreement or the Effective Time, Alyanza agrees (except to the extent that Niku
shall otherwise consent), to carry on its business in the usual, regular and
ordinary course in substantially the same manner as previously
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conducted, and, to the extent consistent with such business, use all reasonable
efforts consistent with past practices and policies to preserve intact its
present business organization, keep available the services of its present
officers and key employees and preserve its relationships with customers,
suppliers, distributors, licensors, licensees, and others having business
dealings with it, to the end that its goodwill and ongoing businesses shall be
unimpaired at the Effective Time. Alyanza shall promptly notify Niku of any
event or occurrence not in the ordinary course of business of Alyanza. In
furtherance of the foregoing, except as expressly contemplated by this
Agreement, Alyanza shall not, without the prior written consent of Niku:
(a) Accelerate, amend or change the period of exercisability or
the vesting schedule of options or restricted stock granted under any employee
stock plan or agreements or authorize cash payments in exchange for any Alyanza
Option or any options granted under any of such plans except as specifically
required by the terms of such plans or any related agreements or any such
agreements in effect as of the date of this Agreement and disclosed in the
Alyanza Disclosure Schedule;
(b) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of capital stock of such party, or purchase or
otherwise acquire, directly or indirectly, any shares of its capital stock
except from former employees, directors and consultants in accordance with
agreements providing for the repurchase of shares in connection with any
termination of service by such party;
(c) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of, or purchase or propose the purchase of, any shares of its
capital stock or securities convertible into shares of its capital stock, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities, other than (i) the issuance of (A) shares of Alyanza
Common Stock issuable upon exercise of Alyanza Options, which are outstanding on
the date of this Agreement or (B) shares of Alyanza Common Stock issuable upon
conversion of shares of Alyanza Preferred Stock or (ii) the repurchase of shares
of Alyanza Common Stock from terminated employees pursuant to the terms of
outstanding stock restriction or similar agreements;
(d) Acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership
or other business organization or division, or otherwise acquire or agree to
acquire any assets;
(e) Sell, lease, license or otherwise dispose of any of its
properties or assets which are material, individually or in the aggregate, to
the business of Alyanza;
(f) (i) Increase or agree to increase the compensation payable or
to become payable to its officers or employees, except for increases in salary
or wages of non-officer employees in accordance with past practices, (ii) except
as contemplated by this Agreement, grant any additional severance or termination
pay to, or enter into any employment or severance agreements with, officers,
(iii) except as contemplated by this Agreement, grant any severance or
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termination pay to, or enter into any employment or severance agreement, with
any non-officer employee, (iv) enter into any collective bargaining agreement,
or (v) establish, adopt, enter into or amend in any material respect any bonus,
profit sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, trust, fund, policy or arrangement for the benefit of any directors,
officers or employees;
(g) Revalue any of its assets, including writing down the value
of inventory or writing off notes or accounts receivable;
(h) Incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities or guarantee any debt securities of others;
(i) Amend or propose to amend its Amended and Restated Articles
of Incorporation or Bylaws;
(j) incur any liability in excess of $1,000 individually or
$5,000 in the aggregate;
(k) lease, license, sell, transfer or encumber or permit to be
encumbered any asset, Alyanza Proprietary Right or other property associated
with the business of Alyanza (including sales or transfers to Affiliates of
Alyanza);
(l) enter into any lease or contract for the purchase or sale of
any property, real or personal, except in the ordinary course of business;
(m) fall to maintain its equipment and other assets which are
material to the operations of Alyanza's business in good working condition and
repair according to the standards it has maintained up to the date of this
Agreement, subject only to ordinary wear and tear;
(n) change accounting methods;
(o) amend or terminate any material contract, agreement or
license to which it is a party except in the ordinary course of business;
(p) loan any amount to any person or entity (except for normal
employee travel advances consistent with past practice), or guaranty or act as a
surety for any obligation;
(q) waive or release any material right or claim, except in the
ordinary course of business;
(r) make or change any Tax or accounting election, change any
annual accounting period, adopt or change any accounting method, file any
amended Return, enter into any closing agreement, settle any Tax claim or
assessment relating to Alyanza, surrender any right to claim refund of Taxes,
consent to any extension or waiver of the limitation period applicable to any
Tax claim or assessment relating to Alyanza, or take any other action or omit to
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take any action, if any such election, adoption, change, amendment, agreement,
settlement, surrender, consent or other action or omission would have the effect
of increasing the Tax liability of Alyanza or Niku;
(s) do anything that Alyanza reasonably believes would cause
there to be a Material Adverse Change with respect to Alyanza;
(t) enter into any agreement not in the ordinary course of
business (including without limitation, any agreements of any kind providing for
obligations that would extend beyond six months of the date of this Agreement);
or
(u) take, or agree in writing or otherwise to take, any of the
actions described above, or any action which is reasonably likely to make any of
Alyanza's representations or warranties contained in this Agreement untrue or
incorrect in any material respect on the date made (to the extent so limited) or
as of the Effective Time.
Section 5.4 Access to Information. Until the Closing, Alyanza shall
allow Niku and its agents reasonable free access during normal business hours
upon reasonable notice to its files, books, records, and offices, including,
without limitation, any and all information relating to taxes, commitments,
contracts, leases, licenses, and personal property and financial condition.
Until the Closing, Alyanza shall cause its accountants to cooperate with Niku
and its agents in making available all financial information requested,
including without limitation the right to examine all working papers pertaining
to all financial statements prepared or audited by such accountants. No
information or knowledge. obtained in any investigation pursuant to this Section
shall effect or be deemed to modify any representation or warranty contained in
this Agreement or it's exhibits and schedules.
Section 5.5 Satisfaction of Conditions Precedent. Alyanza will use its
best efforts to satisfy or cause to be satisfied all the conditions precedent
which are set forth in Sections 8.1 and 8.2 and which have not been waived, and
Alyanza will use its best efforts to cause the transactions contemplated by this
Agreement to be consummated on December 14, 1998, and, without limiting the
generality of the foregoing, to obtain all consents and authorizations of third
parties and to make all filings with, and give all notices to, third parties
which may be necessary or reasonably required on its part in order to effect the
transactions contemplated by this Agreement.
Section 5.6 Other Negotiations. Alyanza will not (and it will not permit
any of its officers, directors, employees, agents and Affiliates on its behalf
to) take any action to solicit, initiate, seek, encourage or support any
inquiry, proposal or offer from, furnish any information to, or participate in
any negotiations with, any corporation, partnership, person or other entity or
group (other than Niku) regarding any acquisition of Alyanza, any merger or
consolidation with or involving Alyanza, or any acquisition of any material
portion of the stock or assets of Alyanza or any material license of Alyanza
Proprietary Rights (any of the foregoing being referred to in this Agreement as
an "ACQUISITION TRANSACTION") or enter into an agreement concerning any
Acquisition Transaction with any party other than Niku. If between the date of
this Agreement and the termination of this Agreement pursuant to Section 9.1,
Alyanza receives from a third party any offer or indication of interest
regarding any Acquisition Transaction, or any request for
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information regarding any Acquisition Transaction, Alyanza shall (i) notify Niku
immediately (orally and in writing) of such offer, indication of interest or
request, including the identity of such party and the full terms of any proposal
therein, and (ii) notify such third party of Alyanza's obligations under this
Agreement.
ARTICLE VI
PRECLOSING AND OTHER COVENANTS OF NIKU AND SUB
Section 6.1 Advise of Changes. Niku and Sub will promptly advise Alyanza
in writing of any event occurring subsequent to the date of this Agreement
which, to the knowledge of Niku, would render any representation or warranty of
Niku or Sub contained in this Agreement, if made on or as of the date of such
event or the Closing Date, untrue or inaccurate in any material respect.
Section 6.2 Access to Information. At reasonable times and at reasonable
intervals prior to Closing, Niku shall make itself available to Alyanza and its
advisors in order to permit the performance of reasonable financial due
diligence by such parties with respect to Niku and its financial position,
results of operations and prospects. Such financial due diligence shall be of
the type, and have the scope, that would be customary for transactions like that
contemplated by this Agreement. No information or knowledge obtained in any
investigation pursuant to this Section shall effect or be deemed to modify any
representation or warranty contained in this Agreement or its exhibits and
schedules.
Section 6.3 Satisfaction of Conditions Precedent. Niku and Sub will use
their best efforts to satisfy or cause to be satisfied all the conditions
precedent which are set forth in Sections 8.1 and 8.3 and which have not been
waived, and Niku and Sub will use their best efforts to cause the transactions
contemplated by this Agreement to be consummated on December 14, 1998, and,
without limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties which may be necessary or reasonably required on its
part in order to effect the transactions contemplated hereby.
Section 6.4 Other Consideration. Niku shall pay up to an aggregate of
five thousand dollars ($5,000) to those Alyanza employees who are not offered
employment with Niku. Such payments shall be made to such people in such amounts
as instructed by Xxxxxx Xxxxxxx, provided that such instructions are received in
writing at least one day before the Closing.
ARTICLE VII
OTHER AGREEMENTS
Section 7.1 No Public Announcement. The parties shall make no public
announcement concerning this Agreement, their discussions or any other
memoranda, letters or agreements between the parties relating to the Merger;
provided, however, that either of the parties, but only after reasonable
consultation with the other, may make disclosure if required under applicable
law.
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Section 7.2 Regulatory Filings; Consents; Reasonable Efforts. Subject to
the terms and conditions of this Agreement, Alyanza and Niku shall use their
respective best efforts to (i) make all necessary filings with respect to the
Merger and this Agreement under the Securities Act of 1933, as amended, and
applicable blue sky or similar securities laws and obtain required approvals and
clearances with respect thereto and supply all additional information requested
in connection therewith; (ii) make merger notification or other appropriate
filings with federal, state or local governmental bodies or applicable foreign
governmental agencies and obtain required approvals and clearances with respect
thereto and supply all additional information requested in connection therewith;
(iii) obtain all consents, waivers, approvals, authorizations and orders
required in connection with the authorization, execution and delivery of this
Agreement and the consummation of the Merger; and (iv) take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement as promptly as practicable.
Section 7.3 Further Assurances. Prior to and following the Closing, each
party agrees to cooperate fully with the other parties and to execute such
further instruments, documents and agreements and to give such further written
assurances, as may be reasonably requested by any other party to better evidence
and reflect the transactions described herein and contemplated hereby and to
carry into effect the intents and purposes of this Agreement.
Section 7.4 Escrow Agreement. On or before the Effective Date, Niku
shall, and the parties hereto shall exercise their best efforts to cause the
Escrow Agent (as defined in Section 10.2) and the Shareholders' Agent (as
defined in Section 10.9) to enter into an Escrow Agreement in the form attached
hereto as Exhibit B.
Section 7.5 Blue Sky Laws. Niku shall take such steps as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable to the issuance of the Niku Common Stock in connection with
the Merger. Alyanza shall use its best efforts to assist Niku as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable in connection with the issuance of Niku Common Stock in
connection with the Merger.
ARTICLE VIII
CONDITIONS TO MERGER
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Board and Shareholder Approval. The Boards of Directors of
each of Niku and Alyanza shall have approved the Merger and shareholders of
Alyanza entitled to vote on or consent to this Agreement and the Merger in
accordance with the California Law and Alyanza's Articles of Incorporation shall
have approved this Agreement and the Merger.
(b) Approvals. Other than the filing provided for by Section 1.2,
all authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations of
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waiting periods imposed by, any Governmental Entity shall have been filed,
occurred or been obtained.
(c) No Injunctions or Restraints, Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger or limiting or restricting
conduct or operation of the business of Niku after the Merger shall have been
issued, nor shall any proceeding brought by a domestic administrative agency or
commission or other domestic Governmental Entity or other third party, seeking
any of the foregoing be pending; nor shall there be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger which makes the consummation of the Merger illegal or
materially more costly to Niku.
Section 8.2 Additional Conditions to Obligations of Niku and Sub. The
obligations of Niku and Sub to effect the Merger are subject to the satisfaction
of each of the following conditions, any of which may be waived in writing
exclusively by Niku and Sub:
(a) Representations and Warranties. The representations and
warranties of Alyanza set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except for changes
contemplated by this Agreement; and Niku shall have received a certificate
signed on behalf of Alyanza by the President of Alyanza to such effect.
(b) Performance of Obligations of Alyanza. Alyanza shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date; and Niku shall have
received a certificate signed on behalf of Alyanza by the chief executive
officer of Alyanza to such effect.
(c) Blue Sky Laws. Niku shall have received all state securities
or "blue sky" permits and other authorizations necessary to issue shares of Niku
Common Stock pursuant to the Merger.
(d) Dissenting Shareholders. Holders of not more than five
percent (5%) of Alyanza's issued and outstanding capital stock as of the Closing
shall have elected to exercise dissenters' rights under California Law as to
such shares.
(e) Escrow Agreement. The Escrow Agent and Shareholders' Agent
shall have executed and delivered to Niku the Escrow Agreement and such
agreement shall remain in full force and effect.
(f) Investment Agreement; Regulation D. Each shareholder of
Alyanza who is receiving shares of Niku Common Stock in the Merger shall have
executed and delivered to Niku an Investment Agreement, in the form attached
hereto as Exhibit C (each an "INVESTMENT AGREEMENT"), and such agreements shall
remain in full force and effect, and based upon the information supplied in such
Investment Agreements, Niku shall have reasonably concluded that the offer and
sale of shares of Niku Common Stock contemplated by this Agreement may be
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effected in compliance with the requirements of Regulation D promulgated under
the Securities Act.
(g) Opinion of Alyanza's Counsel. Niku shall have received an
opinion dated the Closing Date of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel to
Alyanza, as to the matters in the form attached hereto as Exhibit D.
(h) Approvals. All authorizations, consents, or approvals of, or
notifications to any third party, required by Alyanza's contracts, agreements or
other obligations in connection with the consummation of the Merger shall have
occurred or been obtained.
(i) Resignations and Releases. Niku shall have received (i) the
resignations, effective as of the Effective Time, of each director and officer
of Alyanza other than those whom Niku shall have specified in writing at least
one business day prior to the time of Closing and (ii) releases of Alyanza by
such officers and directors in form and substance reasonably satisfactory to
Niku.
(j) Due Diligence. Niku shall have completed its due diligence
review of Alyanza, to Niku's sole satisfaction.
(k) No Material Adverse Change. Alyanza shall not have suffered
any Material Adverse Change since the date of this Agreement.
(l) Noncompetition Agreements. Each of Messrs. Xxxxxxx, Xxxx and
Xxxxxx shall have entered into a Noncompetition Agreement in substantially the
form attached hereto as Exhibit A with Niku and such agreement shall remain in
full force and effect.
(m) Employment Agreements. Each of Messrs. Xxxxxxx, Xxxx and
Xxxxxx shall have accepted the offers of employment with Niku.
(n) Release Agreements. All employees of Alyanza not offered
employment by Niku shall each have executed a Release Agreement in form and
substance agreed to by Niku and such agreement shall remain in full force and
effect.
Section 8.3 Additional Conditions to Obligations of Alyanza. The
obligation of Alyanza to effect the Merger is subject to the satisfaction of
each of the following conditions, any of which may be waived, in writing,
exclusively by Alyanza:
(a) Representations and Warranties. The representations and
warranties of Niku and Sub set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations speak as of an earlier date) as of the Closing Date
as though made on and as of the Closing Date, and Alyanza shall have received a
certificate signed on behalf of Niku by the chief executive officer of Niku to
such effect.
(b) Performance of Obligations of Niku and Sub. Niku and Sub
shall have performed in all material respects all obligations required to be
performed by them under this
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Agreement at or prior to the Closing Date; and Alyanza shall have received a
certificate signed on behalf of Niku by the chief executive officer of Niku to
such effect.
(c) Opinion of Niku's Counsel. Alyanza shall have received an
opinion dated the Closing Date of Venture Law Group, A Professional Corporation,
counsel to Niku, as to the matters attached hereto as Exhibit E.
(d) No Material Adverse Change. Niku shall not have suffered any
Material Adverse Change since the date of this Agreement.
ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual written consent of Niku and Alyanza;
(b) by either Niku or Alyanza, by giving written notice to the
other party, if a court of competent jurisdiction or other Governmental Entity
shall have issued a nonappealable final order, decree or ruling or taken any
other action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger, except, if such party relying on
such order, decree or ruling or other action shall not have complied with its
respective obligations under Sections 5.5 or 6.3 of this Agreement, as the case
may be;
(c) by Niku or Alyanza, by giving written notice to the other
party, if the other party is in material breach of any representation, warranty,
or covenant of such other party contained in this Agreement, which breach shall
not have been cured, if subject to cure, within 10 business days following
receipt by the breaching party of written notice of such breach by the other
party;
(d) by Niku, by giving written notice to Alyanza, if the Closing
shall not have occurred on or before December 14, 1998 by reason of the failure
of any condition precedent under Section 8.1 or 8.2 (unless the failure results
primarily from a breach by Niku of any representation, warranty, or covenant of
Niku contained in this Agreement), provided that such date shall be
automatically extended so long as Alyanza shall be expeditiously working to cure
any breach of representation, warranty, or covenant identified by Niku pursuant
to subsection (c) above;
(e) by Alyanza, by giving written notice to Niku, if the Closing
shall not have occurred on or before December 14, 1998 by reason of the failure
of any condition precedent under Section 8.1 or 8.3 (unless the failure results
primarily from a breach by Alyanza of any representation, warranty, or covenant
of Alyanza contained in this Agreement), provided that such date shall be
automatically extended so long as Niku shall be expeditiously working to cure
any breach of representation, warranty, or covenant identified by Alyanza
pursuant to subsection (c) above; or
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(f) by Niku, by giving written notice to Alyanza, if the required
approvals of the shareholders of Alyanza contemplated by this Agreement shall
not have been obtained by reason of the failure to obtain the required consents
or votes upon a vote taken by written consent or at a meeting of shareholders,
duly convened therefor or at any adjournment thereof.
Section 9.2 Effect of Termination. In the event of termination of this
Agreement as Section 9.1, this Agreement shall immediately become void and there
shall be no liability or obligation on the part of Niku, Alyanza, Sub or their
respective officers, directors, shareholders or Affiliates, except as set forth
in Section 9.3 and further except to the extent that such termination results
from the willful breach by any such party of any of its representations,
warranties or covenants set forth in this Agreement.
Section 9.3 Fees, Expenses and Other Payments. Except as provided for in
this Agreement, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses if the Merger is not consummated.
ARTICLE X
ESCROW AND INDEMNIFICATION
Section 10.1 Indemnification; Limitation on Liability.
(a) From and after the Effective Time and subject to the
limitations contained in Section 10.2, the Former Alyanza Shareholders will,
except as otherwise contemplated by the Indemnity Agreement, severally and pro
rata, in accordance with their Pro Rata Portion, indemnify and hold Niku
harmless against any loss, expense, liability or other damage, including
reasonable attorneys' fees, to the extent of the amount of such loss, expense,
liability or other damage (collectively "DAMAGES") that Niku has incurred by
reason of (i) a breach by Alyanza of any representation, warranty, covenant or
agreement of Alyanza contained in this Agreement, (ii) any failure by Alyanza or
its shareholders to perform any of their obligations under the Agreement and
(iii) any claims brought by employees or consultants of Alyanza who were
terminated prior to Closing provided that any such events occur or become known
to Niku during the Escrow Period (as defined in Section 10.4 below).
(b) Except as provided for in Section 2.2(b) and in the case of
fraud, Niku's and Sub's sole remedy for any and all matters arising out of, or
related to, this Agreement, shall be limited to the indemnification rights set
forth in this Article X and the maximum aggregate amount of damages payable
hereunder, shall be limited to the amounts contained in the Escrow Fund (as
defined below).
Section 10.2 Escrow Fund.
(a) As security for the indemnities in Section 10. 1, as soon as
practicable after the Effective Date, the Escrow Shares and the Escrow Cash
shall be deposited with Chase Manhattan Bank and Trust Company, N.A. (or such
other institution selected by Niku as escrow agent (the "ESCROW AGENT"), such
deposit to constitute the Escrow Fund (the "ESCROW FUND") and to be governed by
the terms set forth in this Article X and in the Escrow Agreement.
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Notwithstanding the foregoing, except in the case of fraud and non-payment of
taxes (including without limitation breach of the representations and warranties
contained in Article III hereof) which shall not be limited to claims against
the Escrow Fund, the indemnification obligations of the Former Alyanza
Shareholders pursuant to this Article X shall be limited to the amount and
assets deposited and present in the Escrow Fund and Niku shall not be entitled
to pursue any claims for indemnification under this Article X against the Former
Alyanza Shareholders directly or personally and the sole recourse of Niku shall
be to make claims against the Escrow Fund in accordance with the terms of the
Escrow Agreement.
(b) In addition to the indemnity contemplated by subsection (a)
above, Niku shall be entitled to be reimbursed out of the Escrow Fund for any
damages (of whatever nature, punitive, treble or compensatory) it or the
Surviving Corporation may be required to pay in satisfaction of any judgment or
other order entered in any state or federal court or arbitration proceeding
prior to the end of the Escrow Period based upon an Infringement Claim against
Niku or the Surviving Corporation, whether or not the basis of such claim shall
have been known to Alyanza as of the date hereof or as of the Effective Time.
Payments required to be made by Niku or the Surviving Corporation in the form of
cross-licensing or royalty payment or settlements with respect to any such
claims shall not be considered reimbursable amounts under this subsection (b).
For purposes hereof, an "INFRINGEMENT CLAIM" shall mean a claim in writing
alleging, in whole or in part, that any of the Alyanza Products or the use or
exploitation of any Alyanza Proprietary Rights in Alyanza's business at or prior
to the Effective Time infringes upon on the rights of or constitutes
misappropriation of any proprietary information or intangible property right of
any third person or entity, including, without limitation, any patent, trade
secret, copyright, trademark or trade name.
(c) Notwithstanding the foregoing, the, Former Alyanza
Shareholders shall have no liability under Section 10.1 and Niku may not receive
any distributions from the Escrow Fund unless and until an Officer's Certificate
or Certificates (as defined in Section 10.4 below) has been delivered to the
Shareholders' Agent and to the Escrow Agent.
(d) The Escrow Cash shall be invested by the Escrow Agent at the
direction of the Shareholders' Agent while any such amount shall be held in the
Escrow Fund, provided that such investments shall be limited to (i) direct
obligations of the United States or any agency thereof with maturities of one
year or less from the date of acquisition, (ii) certificates of deposit issued
by any bank or trust company organized under the laws of the United States or
any state thereof and having capital and surplus in excess of $50,000,000 and
having a rating of "A" or better by a nationally recognized rating agency (a
"QUALIFIED BANK"), with maturities of one year or less from the date of
acquisition, (iii) shares of "money market funds," each having net assets in
excess $50,000,000, or (iv) time deposits or demand deposits with any Qualified
Bank.
Section 10.3 Escrow Period. The Escrow Fund shall terminate 12 months
after the Closing Date (the period from the Closing to such date referred to as
the "ESCROW PERIOD"), provided, however, that that portion of the Escrow Fund,
which, in the reasonable judgment of Niku, subject to the objection of the
Shareholders' Agent and the subsequent resolution of the matter in the manner
provided in Section 10.7 and except to the extent contemplated by Section
10.2(b), are necessary to satisfy any unsatisfied claims made prior to
termination of the
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Escrow Period with respect to Damages incurred or litigation pending prior to
expiration of the Escrow Period, shall remain in the Escrow Fund until such
claims have been finally resolved.
Section 10.4 Claims Upon Escrow Fund. Upon receipt by the Escrow Agent
on or before the last day of the Escrow Period of a certificate signed by any
appropriately authorized officer of Niku (an "OFFICER'S CERTIFICATE"):
(i) Stating the aggregate amount of Niku's Damages or an
estimate thereof, in each case to the extent known or determinable at such time,
and,
(ii) Specifying in reasonable detail the individual items
of such Damages included in the amount so stated, the date each such item was
paid or properly accrued or arose, and the nature of the misrepresentation,
breach or claim to which such item is related, the Escrow Agent shall, subject
to the provisions of Section 10.7 hereof, deliver to Niku out of the Escrow
Fund, as promptly as practicable, Escrow Cash and Escrow Shares having a value
equal to such Damages all in accordance with the Escrow Agreement and Section
10.5 below. All claims for Damages to be paid hereunder shall be paid 50% in
Escrow Cash and 50% in shares of Niku Common Stock, and following total
depletion of the Escrow Cash shall be paid 100% in Escrow Shares. Amounts paid
or distributed from the Escrow Fund shall be paid or distributed pro rata among
the Holders (as defined in the Escrow Agreement) based upon their respective
percentage interests therein at the time.
Section 10.5 Valuation. For the purpose of compensating Niku for its
Damages pursuant to this Agreement, the value per share of the Escrow Shares
shall be the Fair Market Value per share of Common Stock of Niku (as determined
by its Board of Directors).
Section 10.6 Objections to Claims. At the time of delivery of any
Officer's Certificate to the Escrow Agent, a duplicate copy of such Officer's
Certificate shall be delivered to the Shareholders' Agent (as defined in Section
10.8 below) and for a period of thirty (30) days after such delivery, the Escrow
Agent shall make no delivery of Escrow Cash and Escrow Shares pursuant to
Section 10.3 unless the Escrow Agent shall have received written authorization
from the Shareholders' Agent to make such delivery. After the expiration of such
thirty (30) day period, the Escrow Agent shall make delivery of the Escrow Cash
and Escrow Shares in the Escrow Fund in accordance with Section 10.3, provided
that no such delivery may be made if the Shareholders' Agent shall object in a
written statement to the claim made in the Officer's Certificate, and such
statement shall have been delivered to the Escrow Agent and to Niku prior to the
expiration of such thirty (30) day period.
Section 10.7 Resolution of Conflicts.
(a) In case the Shareholders' Agent shall so object in writing to
any claim or claims by Niku made in any Officer's Certificate, Niku shall have
thirty (30) days to respond in a written statement to the objection of the
Shareholders' Agent. If after such thirty (30) day period there remains a
dispute as to any claims, the Shareholders' Agent and Niku shall attempt in good
faith for thirty (30) days to agree upon the rights of the respective parties
with respect to each of such claims. If the Shareholders' Agent and Niku should
so agree, a memorandum setting forth such agreement shall be prepared and signed
by both parties and shall be furnished to the Escrow
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Agent. The Escrow Agent shall be entitled to rely on any such memorandum and
shall distribute the Escrow Fund in accordance with the terms of the memorandum.
(b) If no such agreement can be reached after good faith
negotiation, either Niku or the Shareholders' Agent appropriate portion of may,
by written notice to the other, demand arbitration of the matter unless the
amount of the damage or loss is at issue in pending litigation with a third
party, in which event arbitration shall not be commenced until such amount is
ascertained or both parties agree to arbitration; and in either such event the
matter shall be settled by arbitration conducted by three arbitrators. Within
fifteen (15) days after such written notice is sent, Niku (on the one hand) and
the Shareholders' Agent (on the other hand) shall each select one arbitrator,
and the two arbitrators so selected shall select a third arbitrator. The
decision of the arbitrators as to the validity and amount of any claim in such
Officer's Certificate shall be binding and conclusive upon the parties to this
Agreement, and notwithstanding anything in Section 10.3, the Escrow Agent shall
be entitled to act in accordance with such decision and make or withhold
payments out of the Escrow Fund in accordance with such decision.
(c) Judgment upon any award rendered by the arbitrators may be
entered in any court having Jurisdiction. Any such arbitration shall be held in
Santa Xxxxx or San Mateo County, California under the commercial rules then in
effect of the American Arbitration Association. The non-prevailing party to an
arbitration shall pay its own expenses, the fees of each arbitrator, the
administrative fee of the American Arbitration Association, and the expenses,
including, without limitation, the reasonable attorneys' fees and costs,
incurred by the prevailing party to the arbitration.
Section 10.8 Shareholders' Agent.
(a) Xxxxxx Xxxxxxx shall be constituted and appointed as agent
(the "SHAREHOLDERS' AGENT") for and on behalf of the Former Alyanza Shareholders
to give and receive notices and communications, to authorize delivery to Niku of
the Escrow Shares or Escrow Cash or other property from the Escrow Fund in
satisfaction of claims by Niku, to object to such deliveries, to agree to,
negotiate, enter into settlements and compromises of, and demand arbitration and
comply with orders of courts and awards of arbitrators with respect to such
claims, and to take all actions necessary or appropriate in the judgment of the
Shareholders' Agent for the accomplishment of the foregoing. All actions of the
Shareholders' Agent shall be taken jointly, not individually. Such agency may be
changed by the holders of a majority in interest of the Escrow Shares from time
to time upon not less than ten (10) days' prior written notice to Niku. No bond
shall be required of the Shareholders' Agent, and the Shareholders' Agent shall
receive no compensation for services. Notices or communications to or from the
Shareholders' Agent shall constitute notice to or from each of the Former
Alyanza Shareholders.
(b) The Shareholders' Agent shall not be liable for any act done
or omitted hereunder as Shareholders' Agent, as the case may be, while acting in
good faith and in the exercise of reasonable judgment, and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence of such
good faith. The Former Alyanza Shareholders shall severally and pro rata, in
accordance with their Pro Rata Portion, indemnify the Shareholders' Agent and
hold him harmless against any loss, liability or expense incurred without gross
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negligence or bad faith on the part of the Shareholders' Agent arising out of or
in connection with the acceptance or administration of his duties hereunder
under this Agreement or the Escrow Agreement.
(c) The Shareholders' Agent shall have reasonable access to
information about Alyanza and Niku and the reasonable assistance of Alyanza's
and Niku's officers and employees for purposes of performing their duties and
exercising their rights under this Article X, provided that the Shareholders'
Agent shall treat confidentially and not disclose any nonpublic information from
or about Alyanza or Niku to anyone (except on a need to know basis to
individuals who agree to treat such information confidentially).
Section 10.9 Actions of the Shareholders' Agent. A decision, act,
consent or instruction of the Shareholders' Agent shall constitute a decision of
all of the Former Alyanza Shareholders for whom shares of Niku Common Stock
otherwise issuable to them are deposited in the Escrow Fund and shall be final,
binding and conclusive upon each such Former Alyanza Shareholder, and the Escrow
Agent and Niku may rely upon any decision, act, consent or instruction of the
Shareholders' Agent as being the decision, act, consent or instruction of each
and every such Former Alyanza Shareholder. The Escrow Agent and Niku are hereby
relieved from any liability to any person for any acts done by them in
accordance with such decision, act, consent or instruction of the Shareholders'
Agent.
Section 10.10 Claims. In the event Niku becomes aware of a third-party
claim which Niku believes may result in a demand against the Escrow Fund, Niku
shall notify the Shareholders' Agent of such claim, and the Shareholders' Agent
and the Former Alyanza Shareholders for whom shares of Niku Common Stock
otherwise issuable to them are deposited in the Escrow Fund shall be entitled,
at their expense, to participate in any defense of such claim. Niku shall have
the right in its sole discretion to settle any such claim; provided, however,
that Niku may not affect the settlement of any such claim without the consent of
the Shareholders' Agent, which consent shall not be unreasonably withheld. In
the event that the Shareholders' Agent have consented to any such settlement,
the Shareholders' Agent shall have no power or authority to object to the amount
of any claim by Niku against the Escrow Fund for indemnity with respect to such
settlement.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Survival of Representations and Covenants. All
representations, warranties, covenants and agreements of Alyanza contained in
this Agreement shall survive the Closing and any investigation at any time made
by or on behalf of Niku until the end of the Escrow Period. If Escrow Shares or
other assets are retained in the Escrow Fund beyond expiration of the period
specified in the Escrow Agreement, then (notwithstanding the expiration of such
time period) the representation, warranty, covenant or agreement applicable to
such claim shall survive until, but only for purposes of, the resolution of the
claim to which such retained Escrow Shares or other assets relate. All
representations, warranties, covenants and agreements of Niku contained in this
Agreement shall terminate as of the Effective Time,
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provided that the covenants and agreements contained in Section 9.3 shall
survive the Closing and shall continue in full force and effect.
Section 11.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or two business days after being mailed by
registered or certified mail (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):
(a) if to Niku or Sub:
Niku Corporation
000-X Xxxxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Attention: Chief Executive Officer
Fax No: (000) 000-0000
Telephone No: (000) 000-0000
with a copy to:
Venture Law Group
A Professional Corporation
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Fax No: (000) 000-0000
Telephone No: (000) 000-0000
(b) if to Alyanza:
Alyanza Software Corporation
0000 Xxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attention: President
Fax No: (000) 000-0000
Telephone No: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Fax No: (000) 000-0000
Telephone No: (000) 000-0000
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Section 11.3 Interpretation. When a reference made this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "INCLUDE,"
"INCLUDES" or "INCLUDING" are used in this Agreement they shall be deemed to be
followed by the words "WITHOUT LIMITATION."
Section 11.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 11.5 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein) the
Transaction Documents and the Investment Agreements (a) constitute the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, including
the letter agreement previously entered into by the parties relating to
exclusivity, and (b) are not intended to confer upon any person other than the
parties hereto (including without limitation any Alyanza employees) any rights
or remedies hereunder.
Section 11.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of California without regard
to any applicable conflicts of law.
Section 11.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
Section 11.8 Amendment. This Agreement may be amended by the parties
hereto, at any time before or after approval of matters presented in connection
with the Merger by the shareholders of Alyanza, but after any such shareholder
approval, no amendment shall be made which by law requires the further approval
of shareholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 11.9 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or the other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations or warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
Section 11.10 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in
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accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to injunctive relief to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
[Signature Page Follows]
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IN WITNESS WHEREOF, Niku, Sub and Alyanza have caused this Agreement and
Plan of Reorganization to be signed by their respective officers thereunto duly
authorized as of the date first written above.
NIKU CORPORATION
By:
----------------------------------------
Title:
-------------------------------------
NIKU ACQUISITION CORP.
By:
----------------------------------------
Title:
-------------------------------------
ALYANZA SOFTWARE CORPORATION
By:
----------------------------------------
Title:
-------------------------------------
XXXXXX XXXXXXX, AS AN INDIVIDUAL
-------------------------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
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EXHIBIT A
NIKU CORPORATION
NON-COMPETITION AGREEMENT
This Non-Competition Agreement (the "Agreement") is made and entered
into as of December ___, 1998, between Niku Corporation, a Delaware corporation
(the "Company"), and ____________________ ("Covenantor").
RECITALS
This Agreement is entered into in connection with that certain Agreement
and Plan of Reorganization dated as of December 10, 1998 (the "Agreement"), by
and among the Company, Alyanza Software Corporation, a California corporation
("Target") and Niku Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of the Company ("Sub"). Pursuant to the terms of the Agreement, Sub
will be merged (the "Merge") with and into Target, with Target as the surviving
entity.
In order to induce the Company to consummate the Merger and as
additional consideration for the consideration to be received by Covenantor in
exchange for Covenantor's shares of Target's capital stock upon the consummation
of the Merger, Covenantor is willing to enter into this Agreement.
AGREEMENT
The parties hereby agree as follows:
1. EXPERIENCE AND SKILL OF COVENANTOR. As [an officer of Target,
Covenantor has been actively involved in the management of Target's business and
the development of Target's products] [since Target's inception] and has thereby
acquired considerable experience and skill. The Company wishes to protect its
investment in the business acquired pursuant to the Merger by restricting the
activities of Covenantor which might compete with or otherwise harm such
business, and, as part of the consideration and inducement to the Company for
acquiring the business, Covenantor is willing to agree to and abide by such
restrictions as hereinafter provided.
2. COVENANT NOT TO COMPETE.
(a) GENERAL. Covenantor acknowledges that Covenantor holds a
substantial number of shares and/or options to acquire shares of the Common
Stock of Target. Covenantor further acknowledges that the value of the
consideration paid by the Company in connection with the Merger is substantial
and that preservation of the goodwill associated with Target is a part of the
consideration which the Company is receiving in the Merger in exchange for the
Merger consideration. The Company desires that Covenantor enter into a
non-competition agreement with the Company as set forth in this section and
Covenantor is willing to agree to such non-competition provisions as set forth
below. Target and Covenantor agree that such non-competition provisions are
separately bargained-for consideration and are material inducements
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to the Company to enter into the Agreement. Accordingly, Covenantor and Target
agree to the non-competition provisions set forth in this section.
(b) NON-COMPETE. In connection with the Merger, Covenantor agrees
that for a period of one (1) year following the closing of the Merger,
Covenantor will not own, operate, manage, or provide consulting services to, or
be an employee of, or own an interest or be a proprietor, owner, partner,
stockholder, director, officer, employee, consultant, agent or representative
of, a person, corporation, partnership or other entity, including, without
limitation, a family member, which owns, operates, manages, or provides
consulting services to, or in any other way provides services to, either
directly or indirectly, any business or businesses engaged in the Restricted
Business in a Restricted Territory (as such terms are defined below).
Notwithstanding the foregoing, nothing contained in this Section 2 shall
prohibit Covenantor from making investments in any corporation whose securities
are regularly and publicly traded on a national stock exchange or the Nasdaq
National Market, provided that such investments shall not result in his or her
owning beneficially at any time more than 1% of the equity securities of any
corporation (other than the Company) which is engaged in the Restricted
Business.
(c) CERTAIN DEFINITIONS. For purposes of this Section 2:
(i) "Restricted Business" shall mean the business engaged
in by Target immediately prior to the Merger including, without limitation the
development, distribution, and licensing of software application products for
managing professional services organizations, specifically including
applications for managing employee time records, resources, client projects and
expenses.
(ii) "Restricted Territory" shall mean the counties,
cities and states of the United States of America and each political
subdivision.
(d) SOLICITATION. For a period of two (2) years from the date of
this Agreement, Covenantor shall not (i) engage or participate in any effort or
act to solicit Target's associates, employees or consultants to cease doing
business, or their association or employment with Target or (ii) interfere in
any manner in the contractual or employment relationship between the Company or
Target and any such associate, employee or consultant of the Company or Target.
(e) SEVERABILITY. The parties intend that the covenants contained
in the preceding paragraphs shall be construed as a series of separate
covenants, one for each county, city, state, nation, and other political
subdivision of the Restricted Territory. Except for geographic coverage, each
such separate covenant shall be deemed identical in terms to the covenant
contained in the preceding paragraphs. If, in any judicial proceeding, a court
shall refuse to enforce any of the separate covenants (or any part thereof)
deemed included in said paragraphs, then such unenforceable covenant (or such
part) shall be deemed eliminated from this Agreement for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
(or portions thereof) to be enforced by such court. It is the intent of the
parties that the covenants set forth in this Agreement be enforced to the
maximum degree permitted by applicable law.
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(f) REFORMATION. In the event that the provisions of this Section
2 should ever be deemed to exceed the scope, time or geographic limitations of
applicable law regarding covenants not to compete, then such provisions shall be
automatically reformed to the maximum scope, time or geographic limitations, as
the case may be, permitted by applicable laws.
3. CONFIDENTIALITY. Covenantor has not at any time prior to the date of
this Agreement disclosed in any manner, or used for any purpose whatsoever, any
Confidential Information (as defined below) except in the fulfillment of any of
Covenantor's employment, fiduciary or similar obligations to Target. Covenantor
will treat and hold as confidential (and not disclose or provide access to any
person or entity) and refrain from using for any purpose whatsoever any
information, regardless of format, relating to intellectual property of Target
or to any product development, price, customer and supplier lists, pricing and
marketing plans, policies and strategies, details of client or consultant
contracts, operations methods, product development techniques, business
acquisition plans, new personnel acquisition plans of Target or any other
confidential or proprietary information with respect to Target (collectively,
"Confidential Information"); provided that Covenantor shall not be liable
hereunder for disclosure or use of any Confidential Information if such
Confidential Information: (i) is within the public domain at the time it is
disclosed or used or comes within the public domain as a result of a permissive
disclosure or use by an unrelated third party without any responsibility or
involvement of the Covenantor; or (ii) is disclosed pursuant to the written
instructions of the Company.
4. REPRESENTATIONS OF COVENANTOR. Covenantor represents that: (i) he or
she is familiar with the covenants not to compete and not to solicit set forth
in this Agreement, (ii) he or she is fully aware of his or her obligations under
this Agreement, including, without limitation, the length of time, scope and
geographic coverage of these covenants, and (iii) execution of this Agreement,
and performance of Covenantor's obligations under this Agreement, will not
conflict with, or result in a violation or breach of, any other agreement to
which Covenantor is a party or any judgment, order or decree to which Covenantor
is subject.
5. BREACH. Covenantor acknowledges that in the event of a material or
non-curable breach of any of the provisions of this Agreement by Covenantor, the
Company or Target would sustain irreparable harm, and, therefore, Covenantor
agrees that in addition to any other remedies which the Company or Target may
have under this Agreement or otherwise, the Company shall be entitled to obtain
equitable relief, including specific performance and injunctions restraining the
Covenantor from committing or continuing any such violation of this Agreement.
6. REASONABLENESS OF TERMS. The Covenantor acknowledges that the length,
scope and geographic coverage to which the restrictions imposed in Section 2
above shall apply are fair and reasonable and are reasonably required for the
protection of the Company and Target and that the definition of Restricted
Business used in this Agreement conforms to the business in which Target is
engaged at the date of this Agreement. If any provision of this Agreement is
held to be invalid or unenforceable by Judicial order for any reason, such
action shall not affect the enforceability of the remaining provisions of this
Agreement and, without limiting the foregoing, any such holdings shall in no
event preclude the Company or Target from enforcing the provisions of this
Agreement for such term, in such territory and to such extent not inconsistent
with or prohibited by such judicial order. If the provisions of this Agreement
should ever be
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deemed to exceed the time, scope or geographic limitations permitted by
applicable law, then such provisions shall be reformed to the maximum time,
scope or geographic limitations, as the case may be, permitted by applicable
laws. The parties acknowledge that the Covenantor is receiving no consideration
for entering into this Agreement in addition to the consideration being received
by stockholders of Target who are not executing an Agreement similar to this
Agreement. Accordingly, no amount shall be considered to be allocated to this
Agreement for federal and state income tax purposes.
7. USE OF NAME. From and after the date of this Agreement the Covenantor
will not without the consent of the Company use or consent to or cooperate in
the use of the name "Alyanza," or any similar names thereto in any business
other than that of the Company.
8. ADVICE OF LEGAL COUNSEL. Covenantor acknowledges and represents that,
in executing this Agreement, he or she has consulted with counsel (or has
affirmatively chosen not to do so) and is fully aware of his or her rights and
obligations under this Agreement. This Agreement shall not be construed against
any party by reason of its drafting or preparation.
9. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with this
section shall be binding upon the parties and their respective successors and
assigns.
(b) SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(c) GOVERNING LAW; JURISDICTION. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of California, without giving effect to principles of conflicts of
law. Each of the parties to this Agreement consents to the exclusive
Jurisdiction and venue of the state and federal courts of Santa Xxxxx County,
California.
(d) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(e) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(f) NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier,
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overnight delivery service or confirmed facsimile, or forty-eight (48) hours
after being deposited in the regular mail as certified or registered mail
(airmail if sent internationally) with postage prepaid, if such notice is
addressed to the party to be notified at such party's address or facsimile
number as set forth below, or as subsequently modified by written notice.
(g) SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith, in order to maintain the economic position enjoyed
by each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
(h) ENTIRE AGREEMENT. This Agreement and the documents referred
to herein are the product of both of the parties hereto, and constitutes the
entire agreement between such parties pertaining to the subject matter hereof
and thereof, and merges all prior negotiations and drafts of the parties with
regard to the transactions contemplated herein and therein. Any and all other
written or oral agreements existing between the parties hereto regarding such
transactions are expressly canceled.
(i) ATTORNEY'S FEES. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
(j) WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW,
EACH OF THE PARTIES WAIVES ANY RIGHT TO TRIAL BY JURY THAT THE PARTIES MAY HAVE
IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS RELATED HERETO.
(k) THIRD-PARTY RELIANCE. The parties hereto do not intend to
create any third-party beneficiaries of their agreement hereunder, and no person
or entity other than such parties and their respective successors, heirs and
permitted assigns shall have any rights under this Agreement.
(l) OTHER REMEDIES. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby or by law or equity
on such party, and the exercise of any one remedy will not preclude the exercise
of any other.
(m) FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.
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(n) DISPUTE RESOLUTION. Any dispute or claim arising out of or in
connection with this Agreement will be finally settled by binding arbitration in
accordance with the then-current Commercial Arbitration Rules of the American
Arbitration Association by 3 arbitrators appointed in accordance with said
rules. Each party shall select one such arbitrator, and the two arbitrators so
chosen shall select the third arbitrator. The arbitrators shall apply California
law, without reference to rules of conflicts of law or rules of statutory
arbitration, to the resolution of any dispute. For any claims brought hereunder,
the location of the arbitration shall be San Jose, California. Judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof Notwithstanding the foregoing, the parties may apply to any court of
competent jurisdiction for preliminary or interim equitable relief, or to compel
arbitration in accordance with this paragraph, without breach of this
arbitration provision.
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The parties have caused this Agreement to be executed as of the date
first written above.
NIKU CORPORATION
By:
------------------------------------
Title:
---------------------------------
Address: 000 - X Xxxxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Fax No: 000-000-0000
COVENANTOR
By:
------------------------------------
Title:
---------------------------------
(print)
Address:
-------------------------------
---------------------------------------
---------------------------------------
Fax No:
--------------------------------
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EXHIBIT B
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "AGREEMENT") is entered into as of December
___, 1998, by and among Niku Corporation, a Delaware corporation ("NIKU"),
Alyanza Software Corporation, a California corporation ("ALYANZA"), Chase
Manhattan Bank and Trust Company, N.A., as Escrow Agent ("ESCROW AGENT") and
Xxxxxx Xxxxxxx, as Shareholders' Agent ("SHAREHOLDERS' AGENT") with respect to
the shares of Niku capital stock and cash to be issued to the shareholders
(collectively, the "HOLDERS") of Alyanza in the Merger (as defined below).
RECITALS
A. Niku, Alyanza and Niku Acquisition Corp., a Delaware corporation and
a wholly-owned subsidiary of Niku ("SUB"), have entered into a Agreement and
Plan of Reorganization dated as of December 10, 1998 (the "MERGER AGREEMENT")
pursuant to which Sub will merge with and into Alyanza (the "MERGER"), with
Alyanza surviving the Merger as the surviving corporation. Capitalized terms
used in this Agreement and not otherwise defined in this Agreement shall have
the meanings given them in the Merger Agreement.
B. Section 2.2 of the Merger Agreement provides that at the Effective
Time, the Niku will deposit in escrow (such deposit constituting the "ESCROW
FUND") cash in the amount of $20,000 together with certificates representing
52,500 shares of Niku Common Stock issuable by Niku in the Merger, on a pro rata
basis, in accordance with each Holder's percentage ownership of Alyanza Capital
Stock immediately prior to the Merger. Such cash (the "ESCROW CASH") and such
shares (the "ESCROW SHARES") shall be held as security for the Holders'
indemnification obligations under Article X of the Merger Agreement. The Escrow
Cash and the Escrow Shares are sometimes collectively referred to herein as the
"ESCROW CONSIDERATION."
C. The parties to this Agreement desire to establish the terms and
conditions pursuant to which the Escrow Consideration will be deposited, held
in, and disbursed from the Escrow Fund.
NOW, THEREFORE, the parties to this Agreement agree as follows:
1. Escrow Fund. The Escrow Agent agrees to: (a) accept delivery of the
Escrow Consideration; and (b) hold such Escrow Consideration in escrow as part
of the Escrow Fund, all subject to the terms and conditions of this Agreement
and Article X of the Merger Agreement (which Article X is attached to this
Agreement as Appendix I and incorporated by reference into this Agreement)
(collectively, the "ESCROW PROVISIONS"). The Escrow Shares will include
"ADDITIONAL ESCROW SHARES" as that term is defined in Section 2(c) of this
Agreement.
2. Deposit of Escrow Deposit: Release from Escrow.
(a) Delivery of Escrow Consideration. As soon as practicable
after the Effective Date, the Escrow Cash and the Escrow Shares will be
delivered by Niku to the Escrow Agent. The Escrow Shares will be delivered in
the form of one duly authorized stock certificate or certificates issued in the
name of the Escrow Agent or its nominee. In the event Niku issues
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any Additional Escrow Shares, such shares will be issued in the name of the
Escrow Agent and delivered to the Escrow Agent in the same manner as the Escrow
Shares.
(b) Holders' Accounts. The Escrow Agent will maintain for each
Holder an accounting record (each Holder's "ACCOUNT") specifying the Escrow
Consideration held for the record of each Holder pursuant to the Escrow
Provisions. All Escrow Consideration received under Section 2(a) will be
allocated to each Holder's Account in accordance with such Holder's percentage
interest in the Escrow Fund as set forth on Appendix I. Distributions in cash on
account of the Escrow consideration will be held in a demand deposit or time
deposit account with the Escrow Agent. Such investment shall earn interest at a
rate tied to the average one month LIBOR less fifty (50) basis points. Such
interest will be computed daily and credited to the account monthly. Any
interest accrued thereon will be allocated and paid together with the Escrow
consideration to which such distributions pertain.
(c) Dividends, Voting and Rights of Ownership. Except for
tax-free dividends paid in stock declared with respect to the Escrow Shares
pursuant to Section 305(a) of the Internal Revenue Code of 1986, as amended (the
"CODE") ("ADDITIONAL ESCROW SHARES"), there will be distributed promptly to the
Holders any cash dividends or dividends payable in securities or other
distributions of any kind made in respect of the Escrow Shares. Each Holder will
have voting rights with respect to the Escrow Shares deposited in the Escrow
Fund with respect to such Holder so long as such Escrow Shares are held in
escrow, and Niku will take all reasonable steps necessary to allow the exercise
of such rights. While the Escrow Shares remain in the Escrow Agent's possession
pursuant to this Agreement and the Merger Agreement, the Holders will retain and
will be able to exercise all other incidents of ownership of said Escrow Shares
which are not inconsistent with the terms and conditions of this Agreement and
the Merger Agreement.
(d) Release. The Escrow Shares will be held by the Escrow Agent
until required to be released to the Holders pursuant to Section 10.3 of the
Merger Agreement, unless previously delivered to Niku pursuant to Section 10.4
of the Merger Agreement. Within five (5) business days after the applicable
release condition is met, the Escrow Agent will deliver to each Holder the
Escrow Consideration to be released on such date as identified by Niku and the
Shareholders' Agent to the Escrow Agent in writing (which amount to be released
shall have been reduced by any expenses incurred by the Shareholders' Agent in
connection with services performed hereunder and under the Merger Agreement).
Escrow Shares that are released will be in the form of stock certificate(s)
issued in the name of such Holder. Escrow Consideration will be released to the
respective Holders in accordance with their respective Accounts. Certificates
representing Escrow Shares so issued will bear the legend contained in the
Investment Agreement of each Holder. Cash will be paid in lieu of fractions of
Escrow Shares in an amount equal to the product determined by multiplying such
fraction by the Fair Market Value per share of Common Stock of Niku (as
determined by its Board of Directors). Within five (5) business days after
written request from the Shareholders' Agent, Niku will deposit with the Escrow
Agent sufficient funds to pay such cash amounts for fractional shares.
(1) In the event funds transfer instructions are given
(other than in writing at the time of execution of the Agreement), whether in
writing, by telecopier or otherwise, the Escrow Agent is authorized to seek
confirmation of such instructions by telephone
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call-back to the person or persons designated on Schedule 2 hereto, and the
Escrow Agent may rely upon the confirmations of anyone purporting to be the
person or persons so designated. The persons and telephone numbers for
call-backs may be changed only in writing actually received and acknowledged by
the Escrow Agent. The parties to this Agreement acknowledge that such security
procedure is commercially reasonable.
(2) It is understood that the Escrow Agent and the
beneficiary's bank in any funds transfer may rely solely upon any account
numbers or similar identifying number provided by either of the other parties
hereto to identify (i) the beneficiary, (ii) the beneficiary's bank, or (iii) an
order it executes using any such identifying number, even where its use may
result in a person other than the beneficiary being paid, or the transfer of
funds to a bank other than the beneficiary's bank, or an intermediary bank
designated.
(e) No Encumbrance. Except as provided in this Agreement, none of
the Escrow Consideration or any beneficial interest in the Escrow Consideration
may be pledged, sold, assigned or transferred, including by operation of law, by
a Holder or be taken or reached by any legal or equitable process in
satisfaction of any debt or other liability of a Holder, prior to the delivery
to such Holder of the Escrow Consideration by the Escrow Agent.
(f) Power to Transfer Escrow Consideration. The Escrow Agent is
granted the power to effect any transfer of Escrow Consideration contemplated by
the Escrow Provisions. Niku will cooperate with the Escrow Agent in promptly
issuing stock certificates to effect such transfers.
(g) Reporting. Each Holder will provide the Escrow Agent with
his/her/its Taxpayer Identification Number at or prior to Closing. On or before
January 31 of each year under this Agreement, the Escrow Agent will prepare and
mail to each Holder, other than Holders who demonstrate their status as
non-resident aliens in accordance with the United States Treasury Regulations, a
Form 1099-B reporting any cash payments, in accordance with such Treasury
Regulations. If the Escrow Agent has not received notice from a Holder of such
Holder's certified Taxpayer Identification Number, the Escrow Agent shall deduct
and withhold backup withholding tax from any cash payment made pursuant to the
Code and applicable regulations thereunder. Should any issue arise regarding
federal income tax reporting or withholding, the Escrow Agent shall act in
accordance with the joint written instructions of the Shareholders' Agent and
Xxxx.
0. Limitation of the Escrow Agent's Liability.
(a) The Escrow Agent will incur no liability with respect to any
action taken or suffered by it in reliance upon any notice, direction,
instruction, consent, statement or other document believed by it to be genuine
and duly authorized, nor for any other action or inaction, except its own
willful misconduct, bad faith or gross negligence. The Escrow Agent will not be
responsible for the validity or sufficiency of the Escrow Provisions. In all
questions arising under the Escrow Provisions, the Escrow Agent may rely on the
advice of counsel, and for anything done, omitted or suffered in good faith by
the Escrow Agent based on such advice, the Escrow Agent will not be liable to
anyone. The Escrow Agent will not be required to take any action under the
Escrow Provisions involving any expense unless the payment of such expense is
made
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or provided for in a manner satisfactory to it. Anything in this Agreement
to the contrary not withstanding, in no event shall the Escrow Agent be liable
for special. indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action.
(b) In the event conflicting demands are made or notices are
served upon the Escrow Agent with respect to the Escrow Fund, the Escrow Agent
will have the absolute right, at the Escrow Agent's election, to do either or
both of the following: resign so a successor can be appointed pursuant to
Section 5 or file a suit in interpleader and obtain an order from a court of
competent jurisdiction requiring the parties to interplead and litigate in such
court their several claims and rights among themselves. In the event such
interpleader suit is brought, the Escrow Agent will thereby be fully released
and discharged from all further obligations imposed upon it under the Escrow
Provisions, and Niku will pay the Escrow Agent (subject to reimbursement from
the Holders pursuant to Section 4) all costs, expenses and reasonable attorney's
fees expended or incurred by the Escrow Agent pursuant to the exercise of the
Escrow Agent's rights under this Section 3 (such costs, fees and expenses will
be treated as extraordinary fees and expenses for the purposes of Section 4).
4. Expenses.
(a) Escrow Agent. All fees and expenses of the Escrow Agent
incurred in the ordinary course of performing its responsibilities hereunder
will be paid by Niku upon receipt of a written invoice by the Escrow Agent. Any
extraordinary fees and expenses, including without limitation any fees or
expenses incurred by the Escrow Agent in connection with a dispute over the
distribution of Escrow Shares or the validity of a claim or claims by Niku made
in an Officer's Certificate, will be paid 50% by Niku and 50% by the Holders.
The Holders' liability for the extraordinary fees and expenses of the Escrow
Agent may be paid by Niku and recovered as a claim hereunder out of the Escrow
Fund. If Niku has paid the Holders' portion of such fees and expenses as
permitted under this Section 4(a) then the Escrow Agent will, upon demand by
Niku, transfer to Niku Escrow Consideration having a value equal to such portion
of fees and expenses, with Escrow Shares being valued at for this purpose at the
Fair Market Value per share of Common Stock of Niku (as determined by its Board
of Directors). In the event the balance in the Escrow Fund is not sufficient to
pay the extraordinary fees and expenses of the Escrow Agent, as described in the
prior paragraph, or in the event the Escrow Agent incurs any liability to any
person, firm or corporation by reason of its acceptance or administration of
this Escrow Agreement, the other parties hereto, jointly and severally, agree to
indemnify the Escrow Agent for its extraordinary fees and expenses or costs and
expenses, including, without limitation, counsel fees and expenses, as the case
may be. Notwithstanding the foregoing, no indemnity need be paid in the event of
the Escrow Agent's gross negligence, bad faith or willful misconduct.
(b) Shareholders' Agent and the Shareholders Committee. The
Shareholders' Agent will not be entitled to receive any compensation in
connection with the performance of their duties under this Agreement and the
Merger Agreement. Any fees and expenses incurred by the Shareholders' Agent in
connection with actions taken pursuant to the terms of the Escrow Provisions may
be paid out of the Escrow Fund to the Shareholders' Agent after the satisfaction
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of all claims by Niku against such fund, with the Escrow Shares being valued for
this purpose at the Fair Market Value per share of Common Stock of Niku (as
determined by its Board of Directors). The Shareholders' Agent shall be required
to submit to the Escrow Agent and Niku a notice containing the appropriate
supporting documentation for any fees or expenses to be paid in connection with
the performance of their duties hereunder. It is further understood that any
corporation into which the Escrow Agent in its individual capacity may be merger
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Escrow Agent in its
individual capacity shall be a party, or any corporation to which substantially
all the corporate trust business of the Escrow Agent in its individual capacity
may be transferred, shall be the Escrow Agent under this Escrow Agreement
without further act.
5. Successor Escrow Agent. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity as such, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by giving
resignation to the parties to this Agreement, specifying not less than thirty
(30) days' prior written notice of such a date when such resignation will take
effect. Niku will designate a successor Escrow Agent prior to the expiration of
such 30 day period by giving written notice to the Escrow Agent and the
Shareholders' Agent. Niku may appoint a successor Escrow Agent with the consent
of the Shareholders' Agent, which will not be unreasonably withheld. The Escrow
Agent will promptly transfer the Escrow Fund to such designated successor. In
the event no successor Escrow Agent is appointed as described in this Section 5,
the Escrow Agent may apply to a court of competent jurisdiction for the
appointment of a successor Escrow Agent.
6. Limitation of Responsibility. The Escrow Agent's duties are limited
to those set forth in the Escrow Provisions and the Escrow Agent may rely upon
the written notices delivered to the Escrow Agent under the Escrow Provisions.
7. Incorporation by Reference of Article X. The parties agree that the
terms of Article X of the Merger Agreement shall be deemed to be incorporated by
reference in this Agreement as if such Article had been set forth in its
entirety herein. The parties acknowledge that the administration of the Escrow
Fund by the Escrow Agent will require reference to both the terms of this
Agreement as well as the terms of such Article X.
8. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or two business days after being mailed by registered or certified
mail (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):
(a) if to Niku:
Niku Corporation
000-X Xxxxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Attention: Chief Executive Officer
Fax No: (000) 000-0000
Telephone No: (000) 000-0000
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with a copy to:
Venture Law Group
A Professional Corporation
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Fax No: (000) 000-0000
Telephone No: (000) 000-0000
(b) if to Alyanza:
Alyanza Software Corporation
110 0 Xxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attention: President
Fax No: (000) 000-0000
Telephone No: (000) 000-0000
(c) if to the Escrow Agent:
Chase Manhattan Bank and Trust Company, N.A.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Attn: Corporate Trust Department
Xxx Xxxxxxxxx, XX 00000
Fax No: (000) 000-0000
Telephone No: (000) 000-0000
(d) if to the Shareholders' Agent:
Xxxxxx Xxxxxxx
0000 Xxxxxx Xxxxx
Xxxx Xxxx, XX 00000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxx.
Fax No.: (000)000-0000
Telephone No.: (000) 000-0000
9. General.
(a) Governing Laws. It is the intention of the parties hereto
that the internal laws of the State of California (irrespective of its choice of
law principles) shall govern the
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validity of this Agreement, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the parties to this
Agreement
(b) Binding upon Successors and Assigns. Subject to, and unless
otherwise provided in, this Agreement, each and all of the covenants, terms,
provisions, and agreements contained in this Agreement shall be binding upon,
and inure to the benefit of, the permitted successors, executors, heirs,
representatives, administrators and assigns of the parties to this Agreement.
(c) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against any party whose
signature appears on such counterpart and all of which together shall constitute
one and the same instrument. This Agreement shall become binding when one or
more counterparts of this Agreement, individually or taken together, shall bear
the signatures of all of the parties reflected in this Agreement as signatories.
(d) Entire Agreement. Except as set forth in the Merger
Agreement, this Agreement, the documents referenced in this Agreement and the
exhibits to such documents, constitute the entire understanding and agreement of
the parties to this Agreement with respect to the subject matter of this
Agreement and of such documents and exhibits and supersede all prior and
contemporaneous agreements or understandings, inducements or conditions, express
or implied, written or oral, between the parties with respect to this Agreement.
The express terms of this Agreement control and supersede any course of
performance or usage of the trade inconsistent with any of the terms of this
Agreement.
(e) Waivers. No waiver by any party to this Agreement of any
condition or of any breach of any provision of this Agreement will be effective
unless in writing. No waiver by any party of any such condition or breach, in
any one instance, will be deemed to be a further or continuing waiver of any
such condition or breach or a waiver of any other condition or breach of any
other provision contained in this Agreement.
(f) Amendment. This Agreement may be amended with the written
consent of Niku, the Escrow Agent and the Shareholders' Agent, provided,
however, that if the Escrow Agent does not agree to an amendment agreed upon by
Niku and the Shareholders' Agent, Niku will appoint a successor Escrow Agent in
accordance with Section 5.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written and will be effective as to all the Holders
when executed by Niku, Alyanza, the Escrow Agent and the Shareholders' Agent.
NIKU CORPORATION
By:
---------------------------------
Its:
--------------------------------
ALYANZA SOFTWARE CORPORATION
By:
---------------------------------
Its:
--------------------------------
ESCROW AGENT:
CHASE MANHATTAN BANK AND TRUST
COMPANY, N.A.
By:
---------------------------------
Its:
--------------------------------
SHAREHOLDERS' AGENT:
------------------------------------
------------------------------------
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APPENDIX I
ARTICLE X OF MERGER AGREEMENT
ESCROW AND INDEMNIFICATION
Section 10.1 Indemnification; Limitation on Liability.
(c) From and after the Effective Time and subject to the
limitations contained in Section 10.2, the Former Alyanza Shareholders will,
except as otherwise contemplated by the Indemnity Agreement, severally and pro
rata, in accordance with their Pro Rata Portion, indemnify and hold Niku
harmless against any loss, expense, liability or other damage, including
reasonable attorneys' fees, to the extent of the amount of such loss, expense,
liability or other damage (collectively "DAMAGES") that Niku has incurred by
reason of (i) a breach by Alyanza of any representation, warranty, covenant or
agreement of Alyanza contained in this Agreement, (ii) any failure by Alyanza or
its shareholders to perform any of their obligations under the Agreement and
(iii) any claims brought by employees or consultants of Alyanza who were
terminated prior to Closing provided that any such events occur or become known
to Niku during the Escrow Period (as defined in Section 10.4 below).
(d) Except as provided for in Section 2.2(b) and in the case of
fraud, Niku's and Sub's sole remedy for any and all matters arising out of, or
related to, this Agreement, shall be limited to the indemnification rights set
forth in this Article X and the maximum aggregate amount of damages payable
hereunder, shall be limited to the amounts contained in the Escrow Fund (as
defined below).
Section 10.2 Escrow Fund.
(a) As security for the indemnities in Section 10.1, as soon as
practicable after the Effective Date, the Escrow Shares and the Escrow Cash
shall be deposited with Chase Manhattan Bank and Trust Company, N.A. (or such
other institution selected by Niku as escrow agent (the "ESCROW AGENT"), such
deposit to constitute the Escrow Fund (the "ESCROW FUND") and to be governed by
the terms set forth in this Article X and in the Escrow Agreement.
Notwithstanding the foregoing, except in the case of fraud and non-payment of
taxes (including without limitation breach of the representations and warranties
contained in Article III hereof) which shall not be limited to claims against
the Escrow Fund, the indemnification obligations of the Former Alyanza
Shareholders pursuant to this Article X shall be limited to the amount and
assets deposited and present in the Escrow Fund and Niku shall not be entitled
to pursue any claims for indemnification under this Article X against the
Xxxxxxx Alyanza Shareholders directly or personally and the sole recourse of
Niku shall be to make claims against the Escrow Fund in accordance with the
terms of the Escrow Agreement.
(b) In addition to the indemnity contemplated by subsection (a)
above, Niku shall be entitled to be reimbursed out of the Escrow Fund for any
damages (of whatever nature, punitive, treble or compensatory) it or the
Surviving Corporation may be required to pay in satisfaction of any judgment or
other order entered in any state or federal court or arbitration proceeding
prior to the end of the Escrow Period based upon an Infringement Claim against
Niku or the Surviving Corporation, whether or not the basis of such claim shall
have been known to
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Alyanza as of the date hereof or as of the Effective Time. Payments required to
be made by Niku or the Surviving Corporation in the form of cross-licensing or
royalty payment or settlements with respect to any such claims shall not be
considered reimbursable amounts under this subsection (b). For purposes hereof,
an "INFRINGEMENT CLAIM" shall mean a claim in writing alleging, in whole or in
part, that any of the Alyanza Products or the use or exploitation of any Alyanza
Proprietary Rights in Alyanza's business at or prior to the Effective Time
infringes upon on the rights of or constitutes misappropriation of any
proprietary information or intangible property right of any third person or
entity, including, without limitation, any patent, trade secret, copyright,
trademark or trade name.
(c) Notwithstanding the foregoing, the Former Alyanza
Stockholders shall have no liability under Section 10.1 and Niku may not receive
any distributions from the Escrow Fund unless and until an Officer's Certificate
or Certificates (as defined in Section 10.4 below) has been delivered to the
Shareholders' Agent and to the Escrow Agent.
(d) The Escrow Cash shall be invested by the Escrow Agent at the
direction of the Shareholders' Agent while any such amount shall be held in the
Escrow Fund, provided that such investments shall be limited to (i) direct
obligations of the United States or any agency thereof with maturities of one
year or less from the date of acquisition, (ii) certificates of deposit issued
by any bank or trust company organized under the laws of the United States or
any state thereof and having capital and surplus in excess of $50,000,000 and
having a rating of "A" or better by a nationally recognized rating agency (a
"QUALIFIED BANK"), with maturities of one year or less from the date of
acquisition, (iii) shares of "money market funds," each having net assets in
excess $50,000,000, or (iv) time deposits or demand deposits with any Qualified
Bank.
Section 10.3 Escrow Period. The Escrow Fund shall terminate 12 months
after the Closing Date (the period from the Closing to such date referred to as
the "ESCROW PERIOD"), provided, however, that that portion of the Escrow Fund,
which, in the reasonable judgment of Niku, subject to the objection of the
Shareholders' Agent and the subsequent resolution of the matter in the manner
provided in Section 10.7 and except to the extent contemplated by Section
10.2(b), are necessary to satisfy any unsatisfied claims made prior to
termination of the Escrow Period with respect to Damages incurred or litigation
pending prior to expiration of the Escrow Period, shall remain in the Escrow
Fund until such claims have been finally resolved.
Section 10.4 Claims Upon Escrow Fund. Upon receipt by the Escrow Agent
on or before the last day of the Escrow Period of a certificate signed by any
appropriately authorized officer of Niku (an "OFFICER'S CERTIFICATE"):
(i) Stating the aggregate amount of Niku's Damages or an
estimate thereof, in each case to the extent known or determinable at such time,
and,
(ii) Specifying in reasonable detail the individual items
of such Damages included in the amount so stated, the date each such item was
paid or properly accrued or arose, and the nature of the misrepresentation,
breach or claim to which such item is related, the Escrow Agent shall, subject
to the provisions of Section 10.7 hereof, deliver to Niku out of the Escrow
Fund, as promptly as practicable, Escrow Cash and Escrow Shares having a value
equal to such Damages all in accordance with the Escrow Agreement and Section
10.5 below.
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All claims for Damages to be paid hereunder shall be paid 50% in Escrow Cash and
50% in shares of Niku Common Stock, and following total depletion of the Escrow
Cash shall be paid 100% in Escrow Shares. Amounts paid or distributed from the
Escrow Fund shall be paid or distributed pro rata among the Holders (as defined
in the Escrow Agreement) based upon their respective percentage interests
therein at the time.
Section 10.5 Valuation. For the purpose of compensating Niku for its
Damages pursuant to this Agreement, the value per share of the Escrow Shares
shall be the Fair Market Value per share of Common Stock of Niku (as determined
by its Board of Directors).
Section 10.6 Objections to Claims. At the time of delivery of any
Officer's Certificate to the Escrow Agent, a duplicate copy of such Officer's
Certificate shall be delivered to the Shareholders' Agent (as defined in Section
10.8 below) and for a period of thirty (30) days after such delivery, the Escrow
Agent shall make no delivery of Escrow Cash and Escrow Shares pursuant to
Section 10.3 unless the Escrow Agent shall have received written authorization
from the Shareholders' Agent to make such delivery. After the expiration of such
thirty (30) day period, the Escrow Agent shall make delivery of the Escrow Cash
and Escrow Shares in the Escrow Fund in accordance with Section 10.3, provided
that no such delivery may be made if the Shareholders' Agent shall object in a
written statement to the claim made in the Officer's Certificate, and such
statement shall have been delivered to the Escrow Agent and to Niku prior to the
expiration of such thirty (30) day period.
Section 10.7 Resolution of Conflicts.
(a) In case the Shareholders' Agent shall so object in writing to
any claim or claims by Niku made in any Officer's Certificate, Niku shall have
thirty (30) days to respond in a written statement to the objection of the
Shareholders' Agent. If after such thirty (30) day period there remains a
dispute as to any claims, the Shareholders' Agent and Niku shall attempt in good
faith for thirty (30) days to agree upon the rights of the respective parties
with respect to each of such claims. If the Shareholders' Agent and Niku should
so agree, a memorandum setting forth such agreement shall be prepared and signed
by both parties and shall be furnished to the Escrow Agent. The Escrow Agent
shall be entitled to rely on any such memorandum and shall distribute the Escrow
Fund in accordance with the terms of the memorandum.
(b) If no such agreement can be reached after good faith
negotiation, either Niku or the Shareholders' Agent appropriate portion of may,
by written notice to the other, demand arbitration of the matter unless the
amount of the damage or loss is at issue in pending litigation with a third
party, in which event arbitration shall not be commenced until such amount is
ascertained or both parties agree to arbitration; and in either such event the
matter shall be settled by arbitration conducted by three arbitrators. Within
fifteen (15) days after such written notice is sent, Niku (on the one hand) and
the Shareholders' Agent (on the other hand) shall each select one arbitrator,
and the two arbitrators so selected shall select a third arbitrator. The
decision of the arbitrators as to the validity and amount of any claim in such
Officer's Certificate shall be binding and conclusive upon the parties to this
Agreement, and notwithstanding anything in Section 10.3, the Escrow Agent shall
be entitled to act in accordance with such decision and make or withhold
payments out of the Escrow Fund in accordance with such decision.
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(c) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Santa Xxxxx or San Mateo County, California under the commercial rules then in
effect of the American Arbitration Association. The non-prevailing party to an
arbitration shall pay its own expenses, the fees of each arbitrator, the
administrative fee of the American Arbitration Association, and the expenses,
including, without limitation, the reasonable attorneys' fees and costs,
incurred by the prevailing party to the arbitration.
Section 10.8 Shareholders' Agent.
(a) Xxxxxx Xxxxxxx shall be constituted and appointed as agent
(the "SHAREHOLDERS' AGENT") for and on behalf of the Former Alyanza Shareholders
to give and receive notices and communications, to authorize delivery to Niku of
the Escrow Shares or Escrow Cash or other property from the Escrow Fund in
satisfaction of claims by Niku, to object to such deliveries, to agree to,
negotiate, enter into settlements and compromises of, and demand arbitration and
comply with orders of courts and awards of arbitrators with respect to such
claims, and to take all actions necessary or appropriate in the judgment of the
Shareholders' Agent for the accomplishment of the foregoing. All actions of the
Shareholders' Agent shall be taken jointly, not individually. Such agency may be
changed by the holders of a majority in interest of the Escrow Shares from time
to time upon not less than ten (10) days' prior written notice to Niku. No bond
shall be required of the Shareholders' Agent, and the Shareholders' Agent shall
receive no compensation for services. Notices or communications to or from the
Shareholders' Agent shall constitute notice to or from each of the Former
Alyanza Shareholders.
(b) The Shareholders' Agent shall not be liable for any act done
or omitted hereunder as Shareholders' Agent, as the case may be, while acting in
good faith and in the exercise of reasonable judgment, and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence of such
good faith. The Former Alyanza Shareholders shall severally and pro rata, in
accordance with their Pro Rata Portion, indemnify the Shareholders' Agent and
hold him harmless against any loss, liability or expense incurred without gross
negligence or bad faith on the part of the Shareholders' Agent arising out of or
in connection with the acceptance or administration of his duties hereunder
under this Agreement or the Escrow Agreement.
(c) The Shareholders' Agent shall have reasonable access to
information about Alyanza and Niku and the reasonable assistance of Alyanza's
and Niku's officers and employees for purposes of performing their duties and
exercising their rights under this Article X, provided that the Shareholders'
Agent shall treat confidentially and not disclose any nonpublic information from
or about Alyanza or Niku to anyone (except on a need to know basis to
individuals who agree to treat such information confidentially).
Section 10.9 Actions of the Shareholders' Agent. A decision, act,
consent or instruction of the Shareholders' Agent shall constitute a decision of
all of the Former Alyanza Shareholders for whom shares of Niku Common Stock
otherwise issuable to them are deposited in the Escrow Fund and shall be final,
binding and conclusive upon each such Former Alyanza Shareholder, and the Escrow
Agent and Niku may rely upon any decision, act, consent or instruction of the
Shareholders' Agent as being the decision, act, consent or instruction of each
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and every such Former Alyanza Shareholder. The Escrow Agent and Niku are hereby
relieved from any liability to any person for any acts done by them in
accordance with such decision, act, consent or instruction of the Shareholders'
Agent.
Section 10.10 Claims. In the event Niku becomes aware of a third-party
claim which Niku believes may result in a demand against the Escrow Fund, Niku
shall notify the Shareholders' Agent of such claim, and the Shareholders' Agent
and the Former Alyanza Shareholders for whom shares of Niku Common Stock
otherwise issuable to them are deposited in the Escrow Fund shall be entitled,
at their expense, to participate in any defense of such claim. Niku shall have
the right in its sole discretion to settle any such claim; provided, however,
that Niku may not affect the settlement of any such claim without the consent of
the Shareholders' Agent, which consent shall not be unreasonably withheld. In
the event that the Shareholders' Agent have consented to any such settlement,
the Shareholders' Agent shall have no power or authority to object to the amount
of any claim by Niku against the Escrow Fund for indemnity with respect to such
settlement.
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EXHIBIT C
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this "AGREEMENT") is entered into as of
December 1998, among Niku Corporation, a Delaware corporation ("NIKU"), and the
undersigned shareholder ("SHAREHOLDER") of Alyanza Software Corporation, a
California corporation ("ALYANZA").
RECITALS
A. Niku, Alyanza and Niku Acquisition Corp., a Delaware corporation and
a wholly-owned subsidiary of Niku ("MERGER SUB"), have entered into an Agreement
and Plan of Reorganization dated as of December 10, 1998 (the "MERGER
AGREEMENT") pursuant to which Alyanza and Niku intend to enter into a business
combination transaction in which Alyanza would be merged with and into Merger
Sub (the "MERGER") (capitalized terms used and not otherwise defined herein
shall have the respective meanings ascribed to them in the Merger Agreement).
B. In the Merger, outstanding shares of Alyanza capital stock, including
any such shares owned by Shareholder, will be converted into the right to
receive shares of Niku Common Stock (the "SHARES"), together with cash, subject
to the terms of, and as set forth in, the Merger Agreement.
C. The Shares to be received by Shareholder in the Merger will have not
been registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), in reliance upon the exemption from registration contained in Regulation
D and/or Section 4(2) of the Securities Act.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. Acknowledgments by Shareholder. Shareholder acknowledges and
understands that the representations, warranties and covenants by Shareholder
set forth herein shall be relied upon by Niku, Alyanza, and their respective
affiliates, counsel and accounting firms, and that substantial losses and
damages may be incurred by such persons if Shareholder's representations,
warranties or covenants are breached. Shareholder has carefully read this
Agreement and the Merger Agreement (including the Escrow Agreement attached
thereto as Exhibit D) and has discussed the requirements of this Agreement with
Shareholder's professional advisors to the extent Shareholder has deemed
necessary,
2. Shareholder's Representations. Shareholder represents, warrants and
covenants that:
(a) Acquire Solely for Own Account. The Shares to be received by
Shareholder in the Merger will be acquired for investment for Shareholder's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof. Shareholder does not presently have any
contract, understanding, agreement or arrangement with
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any person to sell, transfer or grant participations to such person or to any
third party with respect to any of the Shares.
(b) Restricted Securities. Shareholder understands that the
Shares will be "restricted securities" under applicable federal and state
securities laws. Accordingly Shareholder will not make any sale, transfer, or
other disposition of Shares unless (i) such sale, transfer, or other disposition
is within the limitations of and in compliance with Rule 144 promulgated by the
Securities and Exchange Commission (the "COMMISSION") under the Securities Act,
or (ii) some other exemption from registration under the Securities Act is
available with respect to any such proposed sale, transfer or other disposition
of Shares, or (iii) such distribution of Shares has been registered under the
Securities Act. Shareholder has no present intention to sell or otherwise
dispose of the Shares and is acquiring such Shares for investment and not with a
view to resale or distribution.
(c) Information Concerning Niku and Alyanza.
(i) Shareholder, either alone or together with his or its
purchaser representative (the "PURCHASER REPRESENTATIVE"), has had the
opportunity to ask questions of, and obtain any additional information
reasonably available to Niku and Alyanza with respect to their respective plans,
results of operations, financial conditions, businesses, properties, assets or
business prospects, and Shareholder, either alone or together with the Purchaser
Representative, has received all such information as Shareholder or the
Purchaser Representative deems necessary and appropriate to enable Shareholder,
either alone or together with the Purchaser Representative, to evaluate the
risks and merits of the Merger and the Shares.
(ii) If Shareholder has retained a Purchaser
Representative, Shareholder has been informed in writing by the Purchaser
Representative of any material relationship between the Purchaser Representative
and its affiliates and Niku and its affiliates that currently exists, that is
understood to be contemplated or has existed at any time during the previous two
years, and any compensation received or to be received as a result of such
relationship, and has, to the extent necessary to evaluate the risks and merits
of the Merger, relied upon the advice of the Purchaser Representative in
connection with the Merger;
(iii) Shareholder acknowledges he or she has previously
received (A) a copy of the Merger Agreement (together with all exhibits
thereto), (B) a copy of Niku's latest Balance Sheet and Income Statement, each
dated November 30, 1998.
(d) Economic Risk. Shareholder, either alone or together with the
Purchaser Representative, can look after Shareholder's financial interests in
connection with the Merger; has such knowledge and experience in financial or
business matters as to be able to evaluate the merits and risks of the Merger;
and is able to acquire the Shares without impairing Shareholder's financial
condition, to hold the Shares for an indefinite period of time and to suffer a
complete loss on Shareholder's investment. Shareholder has not been organized
solely for the purpose of acquiring the Shares.
(e) Accredited Investor Status. Shareholder is _____/is not _____
[please check one of the two choices] an "accredited investor" within the
meaning of Rule 501(a)
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promulgated under the Securities Act. A copy of the definition of "accredited
investor" for this purpose is attached to this Agreement as Annex A.
3. Restrictions on and Procedure for Sales.
(a) Legend. Shareholder understands that all certificates
representing Shares deliverable to Shareholder pursuant to the Merger shall,
until the occurrence of one of the events referred to below, bear a legend
substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH
THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
OTHER CONDITIONS SPECIFIED IN THE INVESTMENT AGREEMENT DATED AS OF
DECEMBER , 1998 BETWEEN THE HOLDER OF THIS CERTIFICATE AND NIKU
CORPORATION, A COPY OF WHICH AGREEMENT WILL BE FURNISHED BY NIKU
CORPORATION TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST AND
WITHOUT CHARGE."
Niku, in its discretion, may cause stop transfer orders to be placed
with its transfer agent with respect to the certificates for the Shares that are
required to bear such legend.
4. Access to Information. Shareholder acknowledges that Niku has made
available all such information as the shareholder has requested.
5. Additional Provisions Regarding Indemnification, Escrow and
Termination of Agreements. Shareholder approves and agrees to be bound by all
provisions of Section 2.2 and Article X of the Merger Agreement and the Escrow
Agreement attached as Exhibit D to the Merger Agreement. Without limiting the
generality of the foregoing, Shareholder consents and agrees to the appointment
of Shareholders' Agent pursuant to Article X of the Merger Agreement and to the
indemnification obligations provided for in Section 10.8(b) of the Merger
Agreement.
6. Miscellaneous.
(a) This Agreement constitutes the entire agreement between the
parties pertaining to the subject matter hereof. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver.
(b) For the convenience of the parties hereto, this Agreement may
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same document.
(c) This Agreement shall be enforceable by, and shall inure to
the benefit of and be binding upon, the parties hereto and their respective
successors and assigns. As used
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herein, the term "successors and assigns" shall mean, where the context so
permits, heirs, executors, administrators, trustees and successor trustees, and
personal and other representatives.
(d) This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the internal laws of the State of
California (without regard to the principles of conflict of laws thereof).
(e) If a court of competent jurisdiction determines that any
provision of this Agreement is not enforceable or enforceable only if limited in
time and/or scope, this Agreement shall continue in full force and effect with
such provision stricken or so limited.
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Executed as of the date shown on the first page of this Agreement.
NIKU CORPORATION
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
SHAREHOLDER
By:
-------------------------------------
Name of Shareholder:
--------------------
Name of Signatory (if
different from name of
Shareholder):
---------------------------
Title of Signatory
(if applicable):
------------------------
Number of shares beneficially owned by Shareholder:
Common Stock
----------------
Preferred Stock
----------------
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ANNEX A
DEFINITION OF ACCREDITED INVESTOR
ACCREDITED INVESTOR. "Accredited investor" shall mean any person who comes
within any of the following categories, or who the issuer reasonably believes
comes within any of the following categories, at the time of the sale of the
securities to that person:
(1) Any bank as defined in section 3(a)(2) of the Act or any
savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Act whether acting in
its individual or fiduciary capacity; any broker dealer
registered pursuant to Section 15 of the Securities
Exchange Act of 1934; insurance company as defined in
Section 2(13) of the Act; investment company registered
under the Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48) of that
Act; Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958; employee
benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings
and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has
total assets in excess of $5,000,000; or, if a
self-directed plan, with investment decisions made solely
by persons that are accredited investors;
(2) Any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or
similar business trust, or partnership, not formed for the
specific purpose of acquiring the securities offered, with
total assets in excess of $5,000,000;
(4) Any director, executive officer, or general partner of the
issuer of the securities being offered or sold, or any
director, executive officer, or general partner of a
general partner of that issuer;
(5) Any natural person whose individual net worth, or joint
net worth with that person's spouse, at the time of his
purchase exceeds $1,0000,000;
(6) Any natural person who had an individual income in excess
of $200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in
each of those years and has a reasonable expectation of
reaching the same income level in the current year;
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(7) Any trust with total assets in excess of S5,000,000, not
formed for the specific purpose of acquiring the
securities offered, whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii);
and
(8) Any entity in which all of the equity owners are
accredited investors.
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EXHIBIT D
SUBJECT MATTER OF OPINION OF COUNSEL TO ALYANZA
[Intentionally Omitted]
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EXHIBIT E
SUBJECT MATTER OF OPINION OF COUNSEL TO NIKU
[Intentionally Omitted]
