EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
PlaceWare, Inc.,
a Delaware corporation;
Gromit Acquisition Corp.,
a Delaware corporation;
Envoy i-Con, Inc.,
an Oregon corporation;
The Shareholders of Envoy i-Con, Inc. listed on Exhibit A;
and
Xxxxxx X. Jesenik and Xxxx Xxxx
as Agents
___________________________
Dated as of June 16, 2000
___________________________
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Table Of Contents
Page
SECTION 1.Description Of Transaction..................................... 1
1.1 Merger of Merger Sub into the Company......................... 1
1.2 Effect of the Merger.......................................... 1
1.3 Closing; Effective Time....................................... 1
1.4 Articles of Incorporation and Bylaws; Directors and Officers.. 2
1.5 Conversion of Shares.......................................... 2
1.6 Conversion of Employee Stock Options and Warrants............. 3
1.7 Closing of the Company's Transfer Books....................... 4
1.8 Exchange of Certificates...................................... 4
1.9 Dissenters' Rights............................................ 5
1.10 Escrow........................................................ 6
1.11 Tax Consequences.............................................. 7
1.12 Further Action................................................ 7
1.13 Market Stand-Off Agreement.................................... 7
SECTION 2.Representations And Warranties Of The Company And The Key
Shareholders................................................... 7
2.1 Due Organization; No Subsidiaries; Etc........................ 7
2.2 Articles of Incorporation and Bylaws; Records................. 8
2.3 Capitalization, Etc........................................... 9
2.4 Financial Statements.......................................... 10
2.5 Absence of Changes............................................ 10
2.6 Personal Property............................................. 12
2.7 Bank Accounts; Receivables.................................... 12
2.8 Equipment; Leasehold.......................................... 12
2.9 Proprietary Assets............................................ 13
2.10 Contracts..................................................... 14
2.11 Liabilities................................................... 16
2.12 Compliance with Legal Requirements............................ 17
2.13 Governmental Authorizations................................... 17
2.14 Tax Matters................................................... 17
i.
Table Of Contents
(CONTINUED)
Page
2.15 Employee and Labor Matters; Benefit Plans..................... 18
2.16 Environmental Matters......................................... 21
2.17 Insurance..................................................... 21
2.18 Related Party Transactions.................................... 22
2.19 Legal Proceedings; Orders..................................... 22
2.20 Authority; Binding Nature of Agreement........................ 22
2.21 Non-Contravention; Consents................................... 23
2.22 Full Disclosure............................................... 24
SECTION 3.Additional Representations And Warranties Of The Key
Shareholders................................................... 24
3.1 Requisite Power and Authority................................. 24
3.2 Investment Representations.................................... 24
3.3 Transfer Restrictions......................................... 25
SECTION 4.Representations And Warranties Of Parent And Merger Sub........ 26
4.1 Capitalization................................................ 26
4.2 Authority; Binding Nature of Agreement........................ 27
4.3 Valid Issuance................................................ 27
4.4 Organization and Standing..................................... 27
4.5 Non-Contravention; Consents................................... 27
4.6 Compliance with Other Instruments............................. 28
4.7 Financial Statements.......................................... 28
4.8 Absence of Changes............................................ 29
4.9 Liabilities................................................... 30
4.10 Litigation.................................................... 30
4.11 Environmental Matters......................................... 30
4.12 Tax Free Reorganization....................................... 31
4.13 Full Disclosure............................................... 32
SECTION 5.Covenants Of The Parties....................................... 32
5.1 Access and Investigation...................................... 32
5.2 Operation of the Company's Business........................... 32
ii.
Table Of Contents
(CONTINUED)
Page
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5.3 Notification; Updates to Disclosure Schedule.................. 34
5.4 No Negotiation................................................ 35
5.5 Filings and Consents.......................................... 35
5.6 Public Announcements.......................................... 35
5.7 Termination of Agreements..................................... 35
5.8 FIRPTA Matters................................................ 36
5.9 Release....................................................... 36
5.10 Investment Representation Letter.............................. 36
5.11 Investor Rights Agreement..................................... 36
5.12 Tax-Free Reorganization....................................... 36
5.13 Blue Sky Laws................................................. 36
5.14 Restated Certificate of Incorporation......................... 37
5.15 Termination of 401(k) Plan.................................... 37
SECTION 6.Conditions Precedent To Obligations Of Parent And
Merger Sub..................................................... 37
6.1 Accuracy of Representations................................... 37
6.2 Performance of Covenants...................................... 37
6.3 Shareholder Approval.......................................... 37
6.4 Consents...................................................... 37
6.5 Agreements and Documents...................................... 38
6.6 Divestiture of Subsidiary..................................... 38
6.7 FIRPTA Compliance............................................. 38
6.8 No Restraints................................................. 38
6.9 No Legal Proceedings.......................................... 38
6.10 Filing of Restated Certificate of Incorporation............... 38
6.11 Filing of Articles of Merger and Certificate of Merger........ 39
6.12 Termination of Existing Employment Agreements................. 39
6.13 Termination of 401(k) Plan.................................... 39
SECTION 7.Conditions Precedent To Obligations Of The Company And The
Shareholders................................................... 39
7.1 Accuracy of Representations................................... 39
iii.
Table Of Contents
(CONTINUED)
Page
7.2 Performance of Covenants...................................... 39
7.3 Documents..................................................... 39
7.4 No Restraints................................................. 39
7.5 Consents...................................................... 40
7.6 Shareholder Approval.......................................... 40
7.7 No Legal Proceedings.......................................... 40
7.8 Filing of Restated Certificate of Incorporation............... 40
7.9 Filing of Articles of Merger and Certificate of Merger........ 40
7.10 Qualification as a Tax-Free Reorganization.................... 40
SECTION 8.Indemnification, Etc........................................... 40
8.1 Survival of Representations, Etc.............................. 40
8.2 Indemnification by Shareholders............................... 41
8.3 Satisfaction of Indemnification Claim......................... 42
8.4 Threshold..................................................... 42
8.5 No Contribution............................................... 43
8.6 Defense of Third Party Claims................................. 43
8.7 Exercise of Remedies by Indemnitees Other Than Parent......... 43
SECTION 9.Termination.................................................... 44
9.1 Termination Events............................................ 44
9.2 Termination Procedures........................................ 44
9.3 Effect of Termination......................................... 45
SECTION 10.Miscellaneous Provisions...................................... 45
10.1 Agents........................................................ 45
10.2 Further Assurances............................................ 45
10.3 Fees and Expenses............................................. 46
10.4 Attorneys' Fees............................................... 46
10.5 Notices....................................................... 46
10.6 Confidentiality............................................... 47
10.7 Time of the Essence........................................... 48
10.8 Headings...................................................... 48
iv.
Table Of Contents
(CONTINUED)
Page
10.9 Counterparts.................................................. 48
10.10 Governing Law................................................. 48
10.11 Successors and Assigns........................................ 48
10.12 Remedies Cumulative; Specific Performance..................... 48
10.13 Waiver........................................................ 48
10.14 Amendments.................................................... 49
10.15 Severability.................................................. 49
10.16 Parties in Interest........................................... 49
10.17 Entire Agreement.............................................. 49
10.18 Construction.................................................. 49
10.19 Withholding Obligations....................................... 50
v.
AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization ("Agreement") is made
and entered into as of June 16, 2000, by and among: PlaceWare, Inc., a Delaware
corporation ("Parent"); Gromit Acquisition Corp., a Delaware corporation
("Merger Sub"); Envoy i-Con, Inc., an Oregon corporation (the "Company"), the
shareholders of the Company listed on Exhibit A (each a "Key Shareholder" and,
collectively, the "Key Shareholders"), and Xxxxxx X. Jesenik and Xxxx Xxxx, as
agents (the "Agents") of the shareholders of the Company as provided herein.
Certain other capitalized terms used in this Agreement are defined herein and in
Exhibit B.
Recitals
A. Parent, Merger Sub, the Company and the Key Shareholders intend to
effect a merger of Merger Sub into the Company in accordance with this
Agreement, Chapter 60 of the Oregon Revised Statutes ("ORS") and the Delaware
General Corporation Law (the "Merger"). Upon consummation of the Merger, Merger
Sub will cease to exist, and the Company will continue as a wholly owned
subsidiary of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code").
C. This Agreement has been approved by the respective boards of directors
of Parent, Merger Sub and the Company, and by the sole stockholder of Merger Sub
and the Key Shareholders.
Agreement
The parties to this Agreement agree as follows:
SECTION 1. Description of Transaction
1.1 Merger of Merger Sub into the Company. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), the Merger Sub shall be merged into the Company, and the separate
existence of the Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the ORS and the Delaware
General Corporation Law ("DGCL").
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Cooley Godward LLP, Five Palo
Alto Square, 0000 Xx Xxxxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx, 00000 at 1:00 p.m. on
the earliest practicable business day after the satisfaction or waiver of the
conditions set forth in Sections 6 and 7 of this Agreement, but in no case later
than June 30, 2000 (the "Scheduled Closing Time"). The date on which the Closing
actually takes place is referred to in this Agreement as the "Closing Date."
Contemporaneously with or as promptly as practicable after the Closing, properly
executed articles of merger conforming to the requirements of Section 60.494 of
the Oregon Revised Statutes ("ORS") shall be filed with the Secretary of State
of the State of Oregon and properly executed certificate of merger conforming to
the requirements of Section 251 of the Delaware General Corporation Law shall be
filed with the Secretary of State of the State of Delaware. The Merger shall
become effective at the time that such certificate of merger is filed with and
has been accepted by the Secretary of State of the State of Oregon (the
"Effective Time").
1.4 Articles of Incorporation and Bylaws; Directors and Officers. Unless
otherwise determined by Parent and the Company prior to the Effective Time:
(a) the Articles of Incorporation of the Surviving Corporation shall
be amended and restated at the Effective Time in a form reasonably acceptable to
Parent;
(b) the Bylaws of the Surviving Corporation shall be amended and
restated at the Effective Time in a form reasonably acceptable to Parent; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the directors and officers of
Merger Sub immediately prior to the Effective time.
1.5 Conversion of Shares. Subject to Section 1.8(c), at the Effective
Time, by virtue of the Merger and without any further action on the part of
Parent, Merger Sub, the Company or any shareholder of the Company (each a
"Shareholder" and collectively, the "Shareholders"):
(a) each share of the Merger Sub outstanding immediately prior to the
Effective Time shall be converted into one share of common stock of the Company,
par value $0.001 per share (the "Company Common Stock").
(b) the Company Common Stock of each shareholder of the Company shall
convert to the right to receive an amount of Parent Common Stock equal to the
amount of that Shareholder's Company Common Stock multiplied by the Common
Conversion Ratio, rounded down to the nearest whole number of shares of Parent
Common Stock (individually, the "Common Shareholder's Common Share Allocation").
(c) the Series A Preferred Stock of the Company, par value $0.001 per
share (the "Company Preferred Stock") of each Shareholder shall convert to the
right to receive (i) an amount of Series D Preferred Stock of the Parent
("Parent Preferred Stock") equal to the amount of that Shareholder's Company
Preferred Stock multiplied by the Preferred Conversion Ratio, rounded down to
the nearest whole number of shares of Parent Preferred Stock (the "Preferred
Shareholder's Preferred Share Allocation"), and (ii) an amount of Parent Common
2.
Stock equal to the amount of that Shareholder's Company Preferred Stock
multiplied by the Special Preferred Conversion Ratio, rounded down to the
nearest whole number of shares of Parent Common Stock (the "Preferred
Shareholder's Common Share Allocation" and collectively with the Preferred
Shareholder's Preferred Share Allocation and the Common Shareholder's Common
Share Allocation, the "Consideration").
(d) the common conversion ratio (the "Common Conversion Ratio") shall
equal the quotient of (A) the difference between (i) one million three hundred
sixty nine thousand four hundred forty four (1,369,444) shares of the Parent
Common Stock, minus (ii) the total number of shares of Parent Preferred Stock
and Parent Common Stock issued pursuant to Section 1.5(c) above, divided by (B)
number of shares outstanding of the Company Common Stock (including any
outstanding options and warrants to receive such Company Common Stock).
(e) the preferred conversion ratio (the "Preferred Conversion Ratio")
shall equal 0.1565.
(f) the special preferred conversion ratio (the "Special Preferred
Conversion Ratio") shall equal 0.2028.
1.6 Conversion of Employee Stock Options and Warrants.
(a) At the Effective Time, each stock option that is then outstanding
under the Company's 1999 Stock Incentive Compensation Plan (the "Stock Plan"),
whether vested or unvested (a "Company Option"), shall be assumed by Parent in
accordance with the terms (as in effect as of the date of this Agreement) of the
Company's Stock Plan and the stock option agreement by which such Company Option
is evidenced in such manner that Parent (i) is "assuming a stock option in a
transaction to which Section 424(a) applied" within the meaning of Section 424
of the Code, or (ii) to the extent that Section 424 of the Code does not apply
to any such Company Option, would be a transaction within Section 424 of the
Code. All rights with respect to Company Common Stock under outstanding Company
Options shall thereupon be converted into rights with respect to Parent Common
Stock, and the status as an "incentive stock option" under Section 422 of the
Code of any Company Option shall be unchanged. Accordingly, from and after the
Effective Time, (a) each Company Option assumed by Parent may be exercised
solely for shares of Parent Common Stock, (b) the number of shares of Parent
Common Stock subject to each such assumed Company Option shall be equal to the
number of shares of Company Common Stock that were subject to such Company
Option immediately prior to the Effective Time multiplied by the Common
Conversion Ratio (as defined in Section 1.5(d)), rounded down to the nearest
whole number of shares of Parent Common Stock, (c) the per share exercise price
for the Parent Common Stock issuable upon exercise of each such assumed Company
Option shall be determined by dividing the exercise price per share of Company
Common Stock subject to such Company Option, as in effect immediately prior to
the Effective Time, by the Common Conversion Ratio, and rounding the resulting
exercise price up to the nearest whole cent, and (d) all restrictions on the
exercise of each such assumed Company Option shall continue in full force and
effect, and the term, exercisability, vesting schedule and other provisions of
such Company Option shall otherwise remain unchanged; provided, however, that
each such assumed Company Option shall, in accordance with its terms, be subject
to further
3.
adjustment as appropriate to reflect any stock split, reverse stock split, stock
dividend, recapitalization or other similar transaction effected by Parent after
the Effective Time. The Company and Parent shall take all action that may be
necessary (under the Company's Stock Plan and otherwise) to effectuate the
provisions of this Section 1.6. Following the Closing, Parent will send to each
holder of an assumed Company Option a written notice setting forth (i) the
number of shares of Parent Common Stock subject to such assumed Company Option,
and (ii) the exercise price per share of Parent Common Stock issuable upon
exercise of such assumed Company Option.
(b) Any outstanding warrant to purchase shares of Company Common
Stock, whether or not vested or exercisable, shall be assumed by Parent and
shall constitute a warrant to acquire, on the terms and conditions stated in
such warrant, the number of shares of Parent Common Stock equal to the number of
shares of Company Common Stock that were subject to such warrant immediately
prior to the Effective Time multiplied by the Common Conversion Ratio rounded
down to the nearest whole number of shares of Parent Common Stock, at an
exercise price equal to the exercise price per share of Company Common Stock
subject to such warrant divided by the Common Conversion Ration, and rounded
down to the nearest whole cent. Any warrant assumed in accordance with the
provisions of this Section shall be subject to further adjustment as appropriate
to reflect any stock split, reverse stock split, stock dividend,
recapitalization or other similar transaction effected by Parent after the
Effective Time.
1.7 Closing of the Company's Transfer Books. At the Effective Time,
holders of certificates representing shares of the Company's capital stock (the
"Company Capital Stock") that were outstanding immediately prior to the
Effective Time shall cease to have any rights as shareholders of the Company,
and the stock transfer books of the Company shall be closed with respect to all
shares of such capital stock outstanding immediately prior to the Effective
Time. No further transfer of any such shares of the Company's capital stock
shall be made on such stock transfer books after the Effective Time. If, after
the Effective Time, a valid certificate previously representing any of such
shares of the Company's capital stock (a "Company Stock Certificate") is
presented to the Surviving Corporation or Parent, such Company Stock Certificate
shall be canceled and shall be exchanged as provided in Section 1.8.
1.8 Exchange of Certificates.
(a) At or as soon as practicable after the Effective Time, Parent
will send to the holders of Company Stock Certificates (i) a letter of
transmittal in customary form and containing such provisions as Parent may
reasonably specify, and (ii) instructions for use in effecting the surrender of
Company Stock Certificates in exchange for certificates representing Parent
Common Stock or Parent Preferred Stock, as applicable. Upon surrender of a
Company Stock Certificate to Parent for exchange, together with a duly executed
letter of transmittal and such other documents as may be reasonably required by
Parent, the holder of such Company Stock Certificate shall be entitled to
receive in exchange therefor a certificate representing the number of whole
shares of Parent Common Stock or Parent Preferred Stock that such holder has the
right to receive pursuant to the provisions of this Section 1, and the Company
Stock Certificate so surrendered shall be canceled. Until surrendered as
contemplated by this Section 1.8, each Company Stock Certificate shall be
deemed, from and after the Effective Time, for all
4.
corporate purposes, to evidence the number of shares of Parent Common Stock or
Parent Preferred Stock as contemplated by this Section 1. If any Company Stock
Certificate shall have been lost, stolen or destroyed, Parent may, in its
discretion and as a condition precedent to the issuance of any certificate
representing Parent Common Stock or Parent Preferred Stock, require the owner of
such lost, stolen or destroyed Company Stock Certificate to provide an
appropriate affidavit and to deliver a bond (in such sum as Parent may
reasonably direct) as indemnity against any claim that may be made against
Parent or the Surviving Corporation with respect to such Company Stock
Certificate.
(b) No dividends or other distributions declared or made with respect
to Parent Common Stock or Parent Preferred Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Company Stock
Certificate with respect to the shares of Parent Common Stock or Parent
Preferred Stock represented thereby, and no cash payment in lieu of any
fractional share shall be paid to any such holder, until such holder surrenders
such Company Stock Certificate in accordance with this Section 1.8.
(c) Neither Parent nor the Surviving Corporation shall be liable to
any holder or former holder of capital stock of the Company for any shares of
Parent Common Stock or Parent Preferred Stock (or dividends or distributions
with respect thereto), or for any cash amounts, delivered to any public official
pursuant to any applicable abandoned property, escheat or similar law.
(d) If, prior to the Effective Time, Parent recapitalizes through a
split-up of its outstanding shares of capital stock into a greater number, or a
combination of its outstanding shares of capital stock into a lesser number,
reorganizes, reclassifies or otherwise changes its outstanding shares of capital
stock into the same or a different number of shares of other classes of capital
stock, or declares a dividend on its outstanding shares of capital stock payable
in shares or securities convertible into shares, the number of shares of Parent
Common Stock and Parent Preferred Stock into which the shares of Company Capital
Stock are to be converted, and the number of shares of Parent Common Stock
issuable upon the exercise of each assumed option and warrant, will be adjusted
appropriately so as to maintain the proportionate interests of the holders of
the Company Capital Stock, options and warrants, and the holders of shares of
capital stock of Parent.
1.9 Dissenters' Rights.
(a) Notwithstanding anything to the contrary contained in this
Agreement, Appraisal Shares (as defined in Section 1.9(c)) shall not be
converted into or represent the right to receive Parent Common Stock or Parent
Preferred Stock in accordance with Section 1.5(a) (or cash in lieu of fractional
shares in accordance with Section 1.8(c)), and each holder of Appraisal Shares
shall be entitled only to such rights with respect to such Appraisal Shares as
may be granted to such holder in Sections 60.551 et seq. of the ORS. From and
after the Effective Time, a holder of Appraisal Shares shall not have and shall
not be entitled to exercise any of the voting rights or other rights of a
shareholder of the Surviving Corporation. If any holder of Appraisal Shares
shall fail to perfect or shall waive, rescind, withdraw or otherwise lose such
holder's right of appraisal under Sections 60.551 et seq. of the ORS, then (i)
any right of such holder to require
5.
the Company to purchase the Appraisal Shares for cash shall be extinguished and
(ii) such shares shall automatically be converted into and shall represent only
the right to receive (upon the surrender of the certificate or certificates
representing such shares) Parent Common Stock or Parent Preferred Stock in
accordance with Section 1.5(a) (and cash in lieu of any fractional share in
accordance with Section 1.8(c)).
(b) The Company (i) shall give Parent prompt written notice of any
demand by any shareholder of the Company for appraisal of such shareholder's
shares of Company capital stock pursuant to the ORS and of any other notice,
demand or instrument delivered to the Company pursuant to the ORS, and (ii)
shall give Parent's Representatives the opportunity to participate in all
negotiations and proceedings with respect to any such notice, demand or
instrument. The Company shall not make any payment or settlement offer with
respect to any such notice or demand unless Parent shall have consented in
writing to such payment or settlement offer, such consent not to be unreasonably
withheld.
(c) For purposes of this Agreement, "Appraisal Shares" shall refer to
any shares of Company Common Stock or Company Preferred Stock outstanding
immediately prior to the Effective Time that are held by a "dissenter" within
the meaning of Section 60.551(3) of the ORS.
1.10 Escrow.
(a) As soon as practicable after the Effective Time, the Escrow
Shares (as defined in Section 1.10(c)), without any act of any Shareholders,
will be deposited by Parent into an escrow fund with an independent escrow
company mutually acceptable to the Parent and the Company (the "Escrow Fund") to
be governed by the terms set forth herein and the Escrow Agreement in the form
of Exhibit C (the "Escrow Agreement"). The Escrow Fund shall be available to
indemnify the Parent for losses resulting from breaches of representations,
warranties and covenants contained in this Agreement.
(b) Subject to the following requirements, the Escrow Fund shall
remain in existence (the "Escrow Period") until twelve (12) months after the
Closing. Upon the expiration of such Escrow Period, the Escrow Shares shall be
distributed to the Shareholders in accordance with the provision of the Escrow
Agreement and the Escrow Fund shall terminate with respect to all Escrow Shares;
provided, however, that the number of Escrow Shares, which, in the good faith,
reasonable judgment of Parent are necessary to satisfy any unsatisfied claims
specified in any Claim Notice (as defined in the Escrow Agreement) delivered to
the Agents prior to the expiration of such Escrow Period, shall remain in the
Escrow Fund (and the Escrow Fund shall remain in existence) until such claims
have been resolved. As soon as all such claims have been resolved, Parent shall
deliver to the Shareholders all Parent Common Stock and Parent Preferred Stock
remaining in the Escrow Fund and not required to satisfy such claims. Deliveries
of Parent Common Stock and Parent Preferred Stock to the Shareholders pursuant
to this Section 1.10(b) and the Escrow Agreement shall, subject to any claims
having been made specifically with respect to any Key Shareholder's Parent
Common Stock and Parent Preferred Stock remaining in the Escrow Fund, be made in
proportion to their respective original contributions to the Escrow Fund.
6.
(c) For purposes of this Agreement, "Escrow Shares" shall mean twenty
percent (20.0%) of the Consideration. The number of shares to be contributed to
the Escrow Fund by each Shareholder shall be equal to the ratio of (A) the
number of shares of the Consideration to be issued in the Merger to such
Shareholder to (B) the number of shares of the Consideration to be issued in the
Merger to all Shareholders.
(d) Upon the satisfactory completion of the closing condition
specified below at Section 6.6, the number of shares to be held as Escrow Shares
shall be reduced to ten percent (10.0%) of the Consideration.
1.11 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(c) and 1.368-3(a) of the
United States Treasury Regulations.
1.12 Further Action. If, at any time after the Effective Time, any further
action is determined by Parent to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation or Parent with
full right, title and possession of and to all rights and property of Merger Sub
and the Company, the officers and directors of the Surviving Corporation and
Parent shall be fully authorized (in the name of Merger Sub, in the name of the
Company and otherwise) to take such action.
1.13 Market Stand-Off Agreement. So long as the officers and directors of
Parent also so agree, the Shareholders shall not sell, dispose of, transfer,
make any short sale of, grant any option for the purchase of, or enter into any
hedging or similar transaction with the same economic effect as a sale, any of
the Consideration or other securities of Parent held by the Shareholders (the
"Restricted Securities"), for a period of time specified by the underwriter (not
to exceed one hundred eighty (180) days) following the effective date of a
registration statement of Parent filed under the Act. So long as the officers
and directors of Parent also agree, the Shareholders agree to execute and
deliver such other agreements as may be reasonably requested by Parent and/or
the underwriter which are consistent with the foregoing or which are necessary
to give further effect thereto. In order to enforce the foregoing, Parent may
impose stop-transfer instructions with respect to the Shareholders' Restricted
Securities until the end of such period.
SECTION 2. Representations and Warranties of the Company and the Key
Shareholders
The Company and the Key Shareholders jointly and severally represent and
warrant, to and for the benefit of the Indemnitees, and except as set forth on
the Company Disclosure Schedule attached hereto, as follows:
2.1 Due Organization; No Subsidiaries; Etc.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Oregon and has all necessary
power and authority: (i) to conduct its business in the manner in which its
business is currently being conducted; (ii) to own
7.
and use its assets in the manner in which its assets are currently owned and
used; and (iii) to perform its obligations under all Company Contracts.
(b) The Company has not conducted any business under or otherwise
used, for any purpose or in any jurisdiction, any fictitious name, assumed name,
trade name or other name, other than the names "Envoy i-Con, Inc.,"
"XxxxxXxxxxx.xxx" and "i-Con Holdings, Inc."
(c) The Company is not and has not been required to be qualified,
authorized, registered or licensed to do business as a foreign corporation in
any jurisdiction other than the jurisdictions identified in Part 2.1 of the
Company Disclosure Schedule, except where the failure to be so qualified,
authorized, registered or licensed has not had and will not have a Material
Adverse Effect on the Company. The Company is in good standing as a foreign
corporation in each of the jurisdictions identified in Part 2.1 of the Company
Disclosure Schedule.
(d) Part 2.1 of the Company Disclosure Schedule accurately sets forth
(i) the names of the members of the Company's board of directors, (ii) the names
of the members of each committee of the Company's board of directors, and (iii)
the names and titles of the Company's officers.
(e) Except as set forth in Part 2.1 of the Company Disclosure
Schedule, the Company does not own any controlling interest in any Entity and
the Company has never owned, beneficially or otherwise, any shares or other
securities of, or any direct or indirect equity interest in, any Entity. The
Company has not agreed and is not obligated to make any future investment in or
capital contribution to any Entity. The Company has not guaranteed and is not
responsible or liable for any obligation of any of the Entities in which it owns
or has owned any equity interest.
2.2 Articles of Incorporation and Bylaws; Records. The Company has
delivered to Parent accurate and complete copies of: (1) the Company's Articles
of Incorporation and bylaws, including all amendments thereto; (2) the stock
records of the Company; and (3) the minutes and other records of the meetings
and other proceedings (including any actions taken by written consent or
otherwise without a meeting) of the shareholders of the Company, the board of
directors of the Company and all committees of the board of directors of the
Company. There have been no formal meetings or other proceedings of the
shareholders of the Company, the board of directors of the Company or any
committee of the board of directors of the Company at which material corporate
actions were taken or authorized that are not reflected in such minutes or other
records in all material respects. There has not been any violation of any of the
provisions of the Company's Articles of Incorporation or bylaws, and the Company
has not taken any action that is inconsistent in any material respect with any
resolution adopted by the Company's shareholders, the Company's board of
directors or any committee of the Company's board of directors. The stock
records, minute books and other similar records of the Company are accurate, up-
to-date and complete in all material respects, and have been maintained in
accordance with prudent business practices.
8.
2.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of: (i)
25,000,000 shares of Common Stock (par value $0.001 per share), of which
6,649,183 shares have been issued and are outstanding as of the date of this
Agreement (which includes 350,000 shares to be issued to JMW Capital or JMW
Capital's designees prior to the Closing of this Agreement as payment for
services rendered relating to the Merger) and (ii) 10,000,000 shares of
Preferred Stock (par value $0.001 per share), 1,000,000 of which have been
designated Series A Preferred Stock, of which 703,534 shares have been issued
and are outstanding as of the date of this Agreement. Each outstanding share of
Company Preferred Stock is convertible into one share of Company Common Stock.
All of the outstanding shares of Company Common Stock and Company Preferred
Stock have been duly authorized and validly issued, and are fully paid and non-
assessable. Part 2.3 of the Company Disclosure Schedule provides an accurate and
complete description of the terms of each repurchase option which is held by the
Company and to which any of such shares is subject.
(b) The Company has reserved 1,700,000 shares of Company Common Stock
for issuance under its Stock Plan, of which options to purchase 1,350,500 shares
are outstanding as of the date of this Agreement, of which 299,183 shares of
Company Common Stock have been issued as a result of the exercise of options.
Part 2.3 of the Company Disclosure Schedule accurately sets forth, with respect
to each Company Option that is outstanding as of the date of this Agreement: (i)
the name of the holder of such Company Option; (ii) the total number of shares
of Company Common Stock that are subject to such Company Option and the number
of shares of Company Common Stock with respect to which such Company Option is
immediately exercisable; (iii) the date on which such Company Option was granted
and the term of such Company Option; (iv) the vesting schedule for such Company
Option; (v) the exercise price per share of Company Common Stock purchasable
under such Company Option; and (vi) whether or not such Company Option has been
designated an "incentive stock option" as defined in Section 422 of the Code.
Except as set forth in Part 2.3 of the Company Disclosure Schedule, there is no:
(i) outstanding subscription, option, call, warrant or right (whether or not
currently exercisable) to acquire any shares of the capital stock or other
securities of the Company; (ii) outstanding security, instrument or obligation
that is or may become convertible into or exchangeable for any shares of the
capital stock or other securities of the Company; (iii) Contract under which the
Company is or may become obligated to sell or otherwise issue any shares of its
capital stock or any other securities; or (iv) to the knowledge of the Company
and the Key Shareholders, condition or circumstance that may give rise to or
provide a basis for the assertion of a valid claim by any Person to the effect
that such Person is entitled to acquire or receive any shares of capital stock
or other securities of the Company.
(c) All outstanding shares of Company Common Stock and Company
Preferred Stock and all outstanding Company Options have been issued and granted
in compliance with (i) all applicable securities laws and other applicable Legal
Requirements, and (ii) all requirements set forth in applicable Contracts.
(d) The Company has never repurchased, redeemed or otherwise
reacquired any shares of capital stock or other securities of the Company.
9.
2.4 Financial Statements.
(a) The Company has delivered to Parent the following financial
statements and notes (collectively, the "Company Financial Statements"): the
audited balance sheet of the Company as of December 31, 1999, and the related
audited income statements, statements of shareholders' equity and statements of
cash flows of the Company for the year then ended together with the notes
thereto and the unqualified audit report of KPMG, LLP relating thereto; and the
unaudited balance sheet of the Company as of April 30, 2000 (the "Statement
Date") and the related income statement for the four month period then ended.
(b) The Company Financial Statements are accurate and complete in all
material respects and present fairly the financial position of the Company as of
the respective dates thereof and the results of operations and cash flows of the
Company for the periods covered thereby. The Company Financial Statements have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered (except that the
unaudited financial statement are subject to normal year-end adjustments, which
will not be material, and do not contain the footnotes and other disclosures
required for audited financial statements).
2.5 Absence of Changes. Since the Statement Date, except as set forth in
Part 2.5 of the Company Disclosure Schedule and as otherwise contemplated by
this Agreement:
(a) there has not been any event resulting in a Material Adverse
Effect on the Company, and, to the knowledge of the Company and the Key
Shareholders, no event has occurred that will, or could reasonably be expected
to, have a Material Adverse Effect on the Company;
(b) there has not been any material loss, damage or destruction to,
or any material interruption in the use of, any of the Company's material assets
(whether or not covered by insurance);
(c) the Company has not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, and has not repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(d) the Company has not sold, issued or authorized the issuance of
(i) any capital stock or other security (except for Company Common Stock issued
upon the exercise of outstanding Company Options), (ii) any option or right to
acquire any capital stock or any other security, or (iii) any instrument
convertible into or exchangeable for any capital stock or other security;
(e) the Company has not amended or waived any of its rights under, or
permitted the acceleration of vesting under, (i) any provision of its Stock
Plan, (ii) any provision of any agreement evidencing any outstanding Company
Option, or (iii) any restricted stock purchase agreement;
10.
(f) there has been no amendment to the Company's Articles of
Incorporation or bylaws, and the Company has not effected or been a party to any
Acquisition Transaction, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction;
(g) the Company has not formed any subsidiary or acquired any equity
interest or other interest in any other Entity;
(h) the Company has not made any capital expenditure which, when
added to all other capital expenditures made on behalf of the Company since the
Statement Date, exceeds $50,000;
(i) the Company has not, other than license agreements for software
in the standard form, (i) entered into or permitted any of the assets owned or
used by it to become bound by any Material Contract (as defined in Section
2.10(a)), or (ii) amended or prematurely terminated, or waived any material
right or remedy under, any such Material Contract;
(j) the Company has not (i) acquired, leased or licensed any right or
other asset from any other Person, (ii) sold or otherwise disposed of, or leased
or licensed, any right or other asset to any other Person, or (iii) waived or
relinquished any right; except, in each case, (x) for immaterial rights or other
immaterial assets acquired, leased, licensed or disposed of in the ordinary
course of business and consistent with the Company's past practices or (y) the
acquisition or disposition of rights or assets required under this Agreement;
(k) the Company has not written off as uncollectible, or established
any extraordinary reserve with respect to, any account receivable or other
indebtedness in excess of $10,000;
(l) the Company has not made any pledge of any of its assets or
otherwise permitted any of its assets to become subject to any Encumbrance,
except for pledges of immaterial assets made in the ordinary course of business
and consistent with the Company's past practices;
(m) the Company has not (i) lent money to any Person (other than
pursuant to routine travel advances made to employees in the ordinary course of
business), or (ii) incurred or guaranteed any indebtedness for borrowed money;
(n) the Company has not (i) established or adopted any Employee
Benefit Plan, (ii) paid any bonus or made any profit-sharing or similar payment
to, or increased the amount of the wages, salary, commissions, fringe benefits
or other compensation or remuneration payable to, any of its directors, officers
or employees, or (iii) hired any new employee;
(o) the Company has not changed any of its methods of accounting or
accounting practices in any respect;
(p) the Company has not made any material Tax election;
11.
(q) the Company has not commenced or settled any Legal Proceeding;
(r) the Company has not entered into any material transaction or
taken any other material action outside the ordinary course of business or
inconsistent with its past practices; and
(s) the Company has not agreed or committed to take any of the
actions referred to in clauses "(c)" through "(r)" above.
2.6 Personal Property. Part 2.6 of the Company Disclosure Schedule
contains a list of each item of personal property having a current value in
excess of $5,000 that is owned, leased, rented or used by the Company other than
the Company Proprietary Assets (the "Personal Property"). The Personal Property
is free and clear of all Encumbrances, except (i) as reflected in the Financial
Statements, (ii) for Encumbrances related to Taxes not yet due and payable by
the Company, (iii) to the knowledge of the Company and the Key Shareholders,
Encumbrances created by lessors to the Company; and (iv) for liens that have
arisen in the ordinary course of business and that do not (in any case or in the
aggregate) materially detract from the value of the property subject thereto or
materially impair the operations of the Company (collectively, "Permitted
Encumbrances"). Other than leased Personal Property that is so noted on Schedule
2.6, the Company owns such Personal Property.
2.7 Bank Accounts; Receivables.
(a) Part 2.7(a) of the Company Disclosure Schedule provides the names
and locations of each bank or financial institution at which the Company
maintains accounts of any nature and the balances in such accounts as of June 1,
2000.
(b) Part 2.7(b) of the Company Disclosure Schedule provides an
accurate and complete in all material respects breakdown and aging of all
accounts receivable, notes receivable and other receivables of the Company as of
the Statement Date. All existing accounts receivable of the Company (including
those accounts receivable reflected on the Balance Sheet that have not yet been
collected and those accounts receivable that have arisen since the Statement
Date and have not yet been collected) (i) represent valid obligations of
customers of the Company arising from bona fide transactions entered into in the
ordinary course of business, (ii) are current and will be collected in full when
due, without any counterclaim or set off (net of an allowance for doubtful
accounts not to exceed $100,000 in the aggregate).
2.8 Equipment; Leasehold.
(a) All material items of equipment and other material tangible
assets owned by or leased to the Company are adequate for the uses to which they
are being put, are in good condition and repair (ordinary wear and tear
excepted) and are adequate for the conduct of the Company's business in the
manner in which such business is currently being conducted.
12.
(b) The Company does not own any real property or any interest in
real property, except for the leasehold created under the real property leases
identified in Part 2.10 of the Company Disclosure Schedule.
2.9 Proprietary Assets.
(a) Part 2.9(a)(i) of the Company Disclosure Schedule sets forth,
with respect to each Company Proprietary Asset owned by the Company registered
by anyone with any Governmental Body or for which an application has been filed
by anyone with any Governmental Body, (i) a brief description of such
Proprietary Asset, and (ii) the names of the jurisdictions covered by the
applicable registration or application. Part 2.9(a)(ii) of the Company
Disclosure Schedule identifies and provides a brief description of all other
Company Proprietary Assets owned by the Company. Part 2.9(a)(iii) of the Company
Disclosure Schedule identifies and provides a brief description of each
Proprietary Asset licensed to the Company by any Person and material to business
of the Company as presently conducted (except for any Proprietary Asset that is
licensed to the Company under any third party software license generally
available to the public at a cost of less than $10,000), and identifies the
license agreement under which such Proprietary Asset is being licensed to the
Company. The Company has good, valid and marketable title to all of the Company
Proprietary Assets identified in Parts 2.9(a)(i) and 2.9(a)(ii) of the Company
Disclosure Schedule, free and clear of all liens and other Encumbrances except
for Permitted Encumbrances, and has a valid right to use all Proprietary Assets
identified in Part 2.9(a)(iii) of the Company Disclosure Schedule. The Company
is not obligated to make any ongoing royalty or similar payment in excess of
$6,000 per year to any Person for the use of any Company Proprietary Asset. The
Company has not developed jointly with any other Person any Company Proprietary
Asset with respect to which such other Person has any rights. Portions of the
Company Proprietary Assets are derived from the public domain or are freeware,
and no ownership is asserted by the Company or the Key Shareholders with respect
to such portions.
(b) The Company has taken reasonable measures and precautions
necessary to protect and maintain the confidentiality and secrecy of all Company
Proprietary Assets (except Company Proprietary Assets whose value, in the
aggregate, would not be impaired in any material respect by public disclosure)
and otherwise to maintain and protect the value of all Company Proprietary
Assets. The Company has not (other than pursuant to license agreements on the
Company's standard form or otherwise identified in Part 2.10(a)(ii) of the
Company Disclosure Schedule) disclosed or delivered to any Person, or permitted
the disclosure or delivery to any Person of, (i) the source code, or any portion
or aspect of the source code, of any Company Proprietary Asset, or (ii) the
object code, or any portion or aspect of the object code, of any Company
Proprietary Asset.
(c) To the knowledge of the Company and the Key Shareholders, none of
the Company Proprietary Assets infringes or conflicts with any Proprietary Asset
owned or used by any other Person. To the knowledge of the Company and the Key
Shareholders, the Company is not infringing, misappropriating or making any
unlawful use of, and the Company has not at any time infringed, misappropriated
or made any unlawful use of, or received any notice or other communication (in
writing or otherwise) of any actual, alleged, possible or potential
13.
infringement, misappropriation or unlawful use of, any Proprietary Asset owned
or used by any other Person. To the knowledge of the Company and the Key
Shareholders, no other Person is infringing, misappropriating or making any
unlawful use of, and no Proprietary Asset owned or used by any other Person
infringes or conflicts with, any Company Proprietary Asset owned by the Company.
(d) (i) Each Company Proprietary Asset conforms in all material
respects with any specification, documentation, performance standard,
representation or statement made or provided with respect thereto by or on
behalf of the Company; and (ii) there has not been any claim made to the Company
or the Key Shareholders by any customer or other Person alleging that any
Company Proprietary Asset (including each version thereof that has ever been
licensed or otherwise made available by the Company to any Person) does not
conform in all material respects with any specification, documentation,
performance standard, representation or statement made or provided by or on
behalf of the Company.
(e) The Company Proprietary Assets constitute all the Proprietary
Assets necessary to enable the Company to conduct its business in the manner in
which such business has been and is being conducted. The Company has not
licensed any of the Company Proprietary Assets to any Person on an exclusive
basis, and the Company has not entered into any covenant not to compete or
Contract limiting its ability to license or sell any of the Company Proprietary
Assets in any market or geographical area or to any Person.
(f) (i) All current and former employees of the Company have executed
and delivered to the Company an agreement (containing no exceptions to or
exclusions from the scope of its coverage) that is substantially identical to
the form of the Special Terms of Employment Agreement previously delivered to
Parent, and (ii) all current and former consultants and independent contractors
to the Company have executed and delivered to the Company an agreement
(containing no exceptions to or exclusions from the scope of its coverage) that
is substantially identical to the form of the Transfer of Copyright Agreement
previously delivered to Parent.
2.10 Contracts.
(a) Part 2.10 of the Company Disclosure Schedule identifies (except
for Company contracts individually in an amount or having a value less than
$25,000):
(i) each Company Contract relating to the employment of, or the
performance of services by, any employee, consultant or independent contractor;
(ii) each Company Contract relating to the acquisition,
transfer, use, development, sharing or license of any technology or any Company
Proprietary Asset (other than any software license in the Company's standard
form);
(iii) each noncompetition agreement or other arrangement that
would prevent the Company from carrying on its business anywhere in the world;
14.
(iv) each Company Contract creating or involving any agency
relationship, distribution arrangement or franchise relationship;
(v) each Company Contract relating to the acquisition,
issuance or transfer of any securities;
(vi) each Company Contract relating to the creation of any
Encumbrance with respect to any material asset of the Company;
(vii) each Company Contract involving or incorporating any
guaranty, any pledge, any performance or completion bond, any indemnity or any
surety arrangement;
(viii) each Company Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits, losses, costs
or liabilities;
(ix) each Company Contract relating to the purchase or sale
of any product or other asset by or to, or the performance of any services by or
for, any Related Party (as defined in Section 2.18);
(x) each Company Contract constituting or relating to a
Government Contract or Government Bid (other than any software license in the
Company's standard form);
(xi) any other Company Contract that was entered into
outside the ordinary course of business or was inconsistent with the Company's
past practices; any other Company Contract that has a term of more than six
months and that may not be terminated by the Company (without penalty) within 60
days after the delivery of a termination notice by the Company; and
(xii) involves (A) the payment or delivery of cash or other
consideration in an amount or having a value in excess of $25,000 in the
aggregate, or (B) the performance of services having a value in excess of
$25,000 in the aggregate.
(Contracts in the respective categories described in clauses "(i)" through
"(xii)" above are referred to in this Agreement as "Material Contracts.")
(b) The Company has delivered to Parent accurate and complete copies
of all written Material Contracts identified in Part 2.10 of the Company
Disclosure Schedule, including all amendments thereto. Part 2.10 (b) of the
Company Disclosure Schedule provides an accurate description of the terms of
each Company Contract that is not in written form. Each Contract identified in
Part 2.10 of the Company Disclosure Schedule is valid and in full force and
effect, and, to the knowledge of the Company and the Key Shareholders, is
enforceable by the Company in accordance with its terms, subject to (i) laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, (ii) rules of law governing specific performance, injunctive relief and
other equitable remedies and (iii) the enforceability of provisions requiring
indemnification in connection with the offering, issuance or sale of securities.
15.
(c) Except as set forth in Part 2.10(c) of the Company Disclosure
Schedule:
(i) to the knowledge of the Company and the Key
Shareholders, the Company is not in breach or default under, any Material
Contract, and, to the knowledge of the Company and the Key Shareholders, no
other Person has violated or breached, or committed any default under, any
Company Contract;
(ii) to the knowledge of the Company and the Key
Shareholders, no event has occurred, and no circumstance or condition exists,
that (with or without notice or lapse of time) will, or could reasonably be
expected to, (A) result in a violation or breach of, or constitute a default
under, any of the provisions of any Company Contract, (B) give any Person the
right to declare a default or exercise any remedy under any Company Contract,
(C) give any Person the right to accelerate the maturity or performance of any
Material Contract, or (D) give any Person the right to cancel, terminate or
modify any Material Contract;
(iii) since inception, the Company has not received any
notice or other communication regarding any actual or possible violation or
breach of, or default under, any Company Contract; and
(iv) the Company has not waived any of its material rights
under any Material Contract.
(d) Except as set forth in Part 2.10(d) of the Company Disclosure
Schedule, no Person is renegotiating, or has a right pursuant to the terms of
any Material Contract to renegotiate, any amount paid or payable to the Company
under any Material Contract or any other material term or provision of any
Material Contract.
(e) The Company Contracts identified in Part 2.10 of the Company
Disclosure Schedule collectively constitute all of the Material Contracts
necessary to enable the Company to conduct its business in the manner in which
its business is currently being conducted.
(f) Part 2.10(f) of the Company Disclosure Schedule identifies and
provides a brief description of each proposed Contract material to the Company
that has not been rejected as to which any bid, offer, award, written proposal,
term sheet or similar document has been submitted or received by the Company
since January 1, 2000 and not in the ordinary course of business.
2.11 Liabilities. To the best of the knowledge of the Company and the Key
Shareholders, after reasonable investigation, the Company has no material
accrued, contingent or other liabilities of any nature, either matured or
unmatured (whether or not required to be reflected in financial statements in
accordance with generally accepted accounting principles, and whether due or to
become due) that is not reflected, reserved against or disclosed in the Company
Financial Statements, except for: (a) liabilities incurred by the Company since
the Statement Date in the ordinary course of business and consistent with the
Company's past practices; and (b) liabilities under the Company Contracts
identified in Part 2.10 of the Company Disclosure
16.
Schedule, to the extent the nature and magnitude of such liabilities can be
specifically ascertained by reference to the text of such Company Contracts.
2.12 Compliance with Legal Requirements. To the knowledge of the Company
and the Key Shareholders, the Company is, and has at all times since inception
been, in compliance with all applicable Legal Requirements, except where the
failure to comply with such Legal Requirements has not had and will not have a
Material Adverse Effect on the Company. Since inception, the Company has not
received any notice or other communication from any Governmental Body regarding
any actual or possible violation of, or failure to comply with, any Legal
Requirement.
2.13 Governmental Authorizations. Part 2.13 of the Company Disclosure
Schedule identifies each material Governmental Authorization held by the Company
necessary to enable the Company to conduct its business in the manner in which
its business is currently being conducted, and the Company has delivered to
Parent accurate and complete copies of all Governmental Authorizations
identified in Part 2.13 of the Company Disclosure Schedule. The Governmental
Authorizations identified in Part 2.13 of the Company Disclosure Schedule are
valid and in full force and effect. The Company is, and at all times since
inception has been, in substantial compliance with the terms and requirements of
the respective Governmental Authorizations identified in Part 2.13 of the
Company Disclosure Schedule. Since inception, the Company has not received any
notice or other communication from any Governmental Body regarding (a) any
actual or possible violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (b) any actual or possible
revocation, withdrawal, suspension, cancellation, termination or modification of
any Governmental Authorization, in any case, except for those that could not
reasonably be expected to have a Material Adverse Effect on the Company.
2.14 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of the
Company with any Governmental Body with respect to any taxable period ending on
or before the Closing Date (the "Company Returns") (i) have been or will be
filed on or before the applicable due date (including any extensions of such due
date), and (ii) have been, or will be when filed, accurately and completely
prepared in all material respects in compliance with all applicable material
Legal Requirements. All amounts shown on the Company Returns to be due and
payable on or before the Closing Date have been or will be paid on or before the
Closing Date. The Company has delivered to Parent accurate and complete copies
of all Company Returns filed since inception.
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with generally accepted accounting principles. The Company
will establish, in the ordinary course of business and consistent with its past
practices, reserves adequate for the payment of all Taxes that accrue during the
period from the Statement Date through the Closing Date, and the Company will
disclose the dollar amount of such reserves to Parent on or prior to the Closing
Date.
17.
(c) No Company Return has ever been examined or audited by any
Governmental Body. The Company has delivered to Parent accurate and complete
copies of all audit reports and similar documents (to which the Company has
access) relating to the Company Returns. No extension or waiver of the
limitation period applicable to any of the Company Returns has been granted (by
the Company or any other Person), and no such extension or waiver has been
requested from the Company.
(d) No claim or Proceeding is pending or, to the knowledge of the
Company or the Key Shareholders, has been threatened against or with respect to
the Company in respect of any Tax. There are no unsatisfied liabilities for
Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by the Company with respect to any Tax (other than
liabilities for Taxes asserted under any such notice of deficiency or similar
document which are being contested in good faith by the Company and with respect
to which adequate reserves for payment have been established). There are no
liens for Taxes upon any of the assets of the Company except liens for current
Taxes not yet due and payable. The Company has not entered into or become bound
by any agreement or consent pursuant to Section 341(f) of the Code. The Company
has not been, and the Company will not be, required to include any adjustment in
taxable income for any tax period (or portion thereof) pursuant to Section 481
or 263A of the Code or any comparable provision under state or foreign Tax laws
as a result of transactions or events occurring or accounting methods employed,
prior to the Closing.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of the Company that, considered individually or
considered collectively with any other such Contracts, will, or could reasonably
be expected to, give rise directly or indirectly to the payment of any amount
that would not be deductible pursuant to Section 280G or Section 162 of the
Code. The Company is not, and has never been, a party to or bound by any tax
indemnity agreement, tax sharing agreement, tax allocation agreement or similar
Contract.
2.15 Employee and Labor Matters; Benefit Plans.
(a) Part 2.15(a) of the Company Disclosure Schedule identifies each
salary, bonus, deferred compensation, incentive compensation, stock purchase,
stock option, severance pay, termination pay, hospitalization, medical, life or
other insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "Plans") sponsored,
maintained, contributed to or required to be contributed to by the Company for
the benefit of any employee of the Company ("Employee"), except for Plans which
would not require the Company to make payments or provide benefits having a
value in excess of $10,000 in the aggregate during any year.
(b) The Company does not maintain, sponsor or contribute to, and, to
the knowledge of the Company and the Key Shareholders, has not at any time in
the past maintained, sponsored or contributed to, any employee pension benefit
plan (as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), whether or not
18.
excluded from coverage under specific Titles or Merger Subtitles of ERISA) for
the benefit of Employees or former Employees (a "Pension Plan").
(c) The Company maintains, sponsors or contributes only to those
employee welfare benefit plans (as defined in Section 3(1) of ERISA, whether or
not excluded from coverage under specific Titles or Merger Subtitles of ERISA)
for the benefit of Employees or former Employees which are described in Part
2.15(c) of the Company Disclosure Schedule (the "Welfare Plans"), none of which
is a multiemployer plan (within the meaning of Section 3(37) of ERISA).
(d) With respect to each Plan, the Company has delivered to Parent:
(i) an accurate and complete copy of such Plan (including
all amendments thereto);
(ii) an accurate and complete copy of the annual report, if
required under ERISA, with respect to such Plan for the last two years;
(iii) an accurate and complete copy of the most recent
summary plan description, together with each Summary of Material Modifications,
if required under ERISA, with respect to such Plan, and all material employee
communications relating to such Plan;
(iv) if such Plan is funded through a trust or any third
party funding vehicle, an accurate and complete copy of the trust or other
funding agreement (including all amendments thereto) and accurate and complete
copies the most recent financial statements thereof;
(v) accurate and complete copies of all Contracts relating
to such Plan, including service provider agreements, insurance contracts,
minimum premium contracts, stop-loss agreements, investment management
agreements, subscription and participation agreements and recordkeeping
agreements; and
(vi) an accurate and complete copy of the most recent
determination letter received from the Internal Revenue Service with respect to
such Plan (if such Plan is intended to be qualified under Section 401(a) of the
Code).
(e) The Company is not required to be, and, to the knowledge of the
Company and the Key Shareholders, has never been required to be, treated as a
single employer with any other Person under Section 4001(b)(1) of ERISA or
Section 414(b), (c), (m) or (o) of the Code. The Company has never been a member
of an "affiliated service group" within the meaning of Section 414(m) of the
Code. To the knowledge of the Company and the Key Shareholders, the Company has
never made a complete or partial withdrawal from a multiemployer plan, as such
term is defined in Section 3(37) of ERISA, resulting in "withdrawal liability,"
as such term is defined in Section 4201 of ERISA (without regard to subsequent
reduction or waiver of such liability under either Section 4207 or 4208 of
ERISA).
19.
(f) The Company does not have any plan or commitment to create any
additional Welfare Plan or any Pension Plan, or to modify or change any existing
Welfare Plan or Pension Plan (other than to comply with applicable law) in a
manner that would affect any Employee.
(g) No Welfare Plan provides death, medical or health benefits
(whether or not insured) with respect to any current or former Employee after
any such Employee's termination of service (other than (i) benefit coverage
mandated by applicable law, including coverage provided pursuant to Section
4980B of the Code, (ii) deferred compensation benefits accrued as liabilities on
the Balance Sheet, and (iii) benefits the full cost of which are borne by
current or former Employees (or the Employees' beneficiaries)).
(h) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
but not limited to ERISA and the Code.
(j) Each of the Plans intended to be qualified under Section 401(a)
of the Code has received a favorable determination from the Internal Revenue
Service, and neither the Company nor any of the Key Shareholders is aware of any
reason why any such determination letter should be revoked.
(k) Neither the execution, delivery or performance of this Agreement,
nor the consummation of the Merger or any of the other transactions contemplated
by this Agreement, will result in any payment (including any bonus, golden
parachute or severance payment) to any current or former Employee or director of
the Company (whether or not under any Plan), or materially increase the benefits
payable under any Plan, or result in any acceleration of the time of payment or
vesting of any such benefits.
(l) Part 2.15(l) of the Company Disclosure Schedule contains a list
of all salaried employees of the Company as of the date of this Agreement, and
correctly reflects, in all material respects, their salaries, any other
compensation payable to them (including compensation payable pursuant to bonus,
deferred compensation or commission arrangements), their dates of employment and
their positions. The Company is not a party to any collective bargaining
contract or other Contract with a labor union involving any of its Employees.
All of the Company's employees are "at will" employees.
(m) Part 2.15(m) of the Company Disclosure Schedule identifies each
Employee who is not fully available to perform work because of disability or
other leave and sets forth the basis of such leave and the anticipated date of
return to full service.
20.
(n) The Company is in compliance in all material respects with all
applicable Legal Requirements and Contracts relating to employment, employment
practices, wages, bonuses and terms and conditions of employment, including
employee compensation matters.
(o) None of the Key Shareholders has actual knowledge that (i) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement will have a material adverse effect on the Company's labor relations,
or (ii) any of the Company's key employees presently intends to terminate his or
her employment with the Company.
2.16 Environmental Matters. To the knowledge of the Company, the Company is
in compliance in all material respects with all applicable Environmental Laws,
which compliance includes the possession by the Company of all Governmental
Authorizations required under applicable Environmental Laws and necessary for
the conduct of the Company's business, and compliance with the terms and
conditions thereof in all material respects. The Company has not received any
written notice or other written communication, whether from a Governmental Body,
citizens group, employee or otherwise, that alleges that the Company is not in
compliance with any Environmental Law, and, to the knowledge of the Company and
Key Shareholders, there are no circumstances that may prevent or interfere in
any material respect with the Company's compliance with any Environmental Law in
the future. To the knowledge of the Company and the Key Shareholders, no current
or prior owner of any property leased or controlled by the Company has received
any written notice or other written communication , whether from a Government
Body, citizens group, employee or otherwise, that alleges that such current or
prior owner or the Company is not in compliance with any Environmental Law. All
Governmental Authorizations currently held by the Company pursuant to
Environmental Laws are identified in Part 2.16 of the Company Disclosure
Schedules. For purposes of this Section 2.16: (i) "Environmental Law" means any
federal, state, local or foreign Legal Requirement relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata), including any law or
regulation relating to emissions, discharges, releases or threatened releases of
Materials of Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern; and (ii) "Materials of
Environmental Concern" include chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum and petroleum products and any other substance that
is now or hereafter regulated by any Environmental Law or that is otherwise a
danger to health, reproduction or the environment.
2.17 Insurance. Part 2.17 of the Company Disclosure Schedule identifies all
insurance policies maintained by, at the expense of or for the benefit of the
Company and identifies any material claims made thereunder (other than health
and dental claims), and the Company has delivered to Parent accurate and
complete copies of the insurance policies identified on Part 2.17 of the Company
Disclosure Schedule. Each of the insurance policies identified in Part 2.17 of
the Company Disclosure Schedule is in full force and effect. Since inception,
the Company has not received any written notice or other written communication
regarding any actual or possible (a) cancellation or invalidation of any
insurance policy currently in effect, (b) refusal of any material coverage or
rejection of any material claim under any insurance policy, or (c) material
adjustment in the amount of the premiums payable with respect to any insurance
policy.
21.
2.18 Related Party Transactions. (a) No Related Party has, and no Related
Party has at any time since inception had, any direct or indirect interest in
any material asset used in or otherwise relating to the business of the Company;
(b) no Related Party is, or has at any time since inception been, indebted to
the Company; (c) no Related Party has entered into, or has had any direct or
indirect financial interest in, any Material Contract, material transaction or
material business dealing involving the Company; (d) no Related Party is
competing, or has at any time since inception competed, directly or indirectly,
with the Company; and (e) no Related Party has any claim or right against the
Company (other than rights under company Options and rights as an employee of
the Company). For purposes of the Section 2.18 each of the following shall be
deemed to be a "Related Party": (i) each of the Shareholders who holds at least
one percent (1%) of the outstanding capital stock of the Company; (ii) each
individual who is an officer of the Company; (iii) each member of the immediate
family of each of the individuals referred to in clauses "(i)" and "(ii)" above;
and (iv) any trust or other Entity (other than the Company) in which any one of
the individuals referred to in clauses "(i)", "(ii)" and "(iii)" above holds (or
in which more than one of such individuals collectively hold), beneficially or
otherwise, a material voting, proprietary or equity interest.
2.19 Legal Proceedings; Orders.
(a) There is no pending Legal Proceeding, and to the knowledge of the
Company and the Key Shareholders, no Person has threatened to commence any Legal
Proceeding: (i) that involves the Company or any of the assets owned or used by
the Company or, to the knowledge of the Company and the Key Shareholders, any
Person whose liability with respect to such Legal Proceeding the Company has or
may have retained or assumed, either contractually or by operation of law; or
(ii) that challenges, or that may have the effect of preventing, delaying,
making illegal or otherwise interfering with, the Merger or any of the other
transactions contemplated by this Agreement. To the knowledge of the Company and
the Key Shareholders, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that will, or that could reasonably be
expected to, give rise to or serve as a basis for the commencement of any such
Legal Proceeding and that could reasonably be expected to have a Material
Adverse Effect on the Company.
(b) There is no order, writ, injunction, judgment or decree to which
the Company, or any of the assets owned or used by the Company, is currently
subject. None of the Key Shareholders is subject to any order, writ, injunction,
judgment or decree that relates to the Company's business or to any of the
assets owned or used by the Company. To the knowledge of the Company and the Key
Shareholders, no officer or other employee of the Company is subject to any
order, writ, injunction, judgment or decree that prohibits such officer or other
employee from engaging in or continuing any conduct, activity or practice
relating to the Company's business.
2.20 Authority; Binding Nature of Agreement. The Company has full power and
authority to enter into and to perform its obligations under this Agreement; and
the execution, delivery and performance by the Company of this Agreement have
been duly authorized by all necessary action on the part of the Company and its
board of directors. This Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the
22.
Company in accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
2.21 Non-Contravention; Consents. Neither (1) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement, nor (2) the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will directly or indirectly (with
or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of the Company's Articles of Incorporation or bylaws, or (ii) any
resolution adopted by the Company's shareholders, the Company's board of
directors or any committee of the Company's board of directors;
(b) contravene, conflict with or result in a violation of, any Legal
Requirement or any order, writ, injunction, judgment or decree to which the
Company, or any of the assets owned or used by the Company, is subject;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by the Company or that otherwise relates to the Company's business
or to any of the assets owned or used by the Company;
(d) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Material Contract, or give
any Person the right to (i) declare a default or exercise any remedy under any
such Material Contract, (ii) accelerate the maturity or performance of any such
Material Contract, or (iii) cancel, terminate or modify any such Material
Contract; or (e) contravene, conflict with or result in a violation or breach
of, or result in a default under, any provision of the Company's Stock Plan or
the option agreements outstanding thereunder; or
(f) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by the Company
(except for Permitted Encumbrances and except for liens or other Encumbrances
attributable to PlaceWare or its affiliates).
Except as otherwise provided for in this Agreement for filings related to the
execution of this Agreement and as may be required upon or after the Closing,
including, without limitation, the filing of this Agreement and officers'
certificates with the Delaware Secretary of State and the Oregon Secretary of
State and appropriate documents with the relevant authorities of other states in
which Parent, Merger Sub or the Company is qualified to do business, the Company
is not and will not be required to make any filing with or give any notice to,
or to obtain any Consent from, any Person in connection with (x) the execution,
delivery or performance of this Agreement or
23.
any of the other agreements referred to in this Agreement, or (y) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement.
2.22 Full Disclosure. This Agreement (including the Company Disclosure
Schedule) does not, and the Key Shareholders' Closing Certificate will not, (i)
contain any representation, warranty or information of the Company and the Key
Shareholders that is false or misleading with respect to any material fact, or
(ii) omit to state any material fact necessary in order to make the
representations, warranties and information of the Company and the Key
Shareholders contained and to be contained herein and therein (in the light of
the circumstances under which such representations, warranties and information
were or will be made or provided) not false or misleading in any material
respect.
SECTION 3. Additional Representations And Warranties Of The Key Shareholders.
Each Key Shareholder hereby severally, and not jointly, represents
and warrants to Parent and Merger Sub as follows (such representations and
warranties do not lessen or obviate the representations and warranties of the
Company and the Key Shareholders set forth in Section 2 of this Agreement):
3.1 Requisite Power and Authority. Key Shareholder has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement and to carry out its provisions. All action on Key
Shareholder's part required for the lawful execution and delivery of this
Agreement has been or will be effectively taken prior to the Closing. Upon
execution and delivery, this Agreement will be the valid and binding obligation
of Key Shareholder, enforceable in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
3.2 Investment Representations. Key Shareholder understands that shares
of Parent Common Stock and Parent Preferred Stock to be issued in the Merger
(the "Shares") have not been registered under the Securities Act. Key
Shareholder also understands that the Shares are being offered and sold pursuant
to an exemption from registration contained in the Securities Act based in part
upon Key Shareholder's representations contained in this Agreement. Key
Shareholder hereby represents and warrants as follows:
(a) Key Shareholder Bears Economic Risk. Key Shareholder has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to Parent so that he is capable
of evaluating the merits and risks of his investment in the Company and has the
capacity to protect his own interests. Key Shareholder must bear the economic
risk of this investment indefinitely unless the Shares are registered pursuant
to the Securities Act, or an exemption from registration is available. Key
Shareholder understands that, other than as required pursuant to the Investor
Rights Agreement, Parent has no present intention of registering the Shares. Key
Shareholder also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow Key Shareholder to transfer all or any
24.
portion of the Shares under the circumstances, in the amounts or at the times
Key Shareholder might propose.
(b) Acquisition for Own Account. Key Shareholder is acquiring the
Shares for Key Shareholder's own account for investment only, and not with a
view towards their distribution.
(c) Key Shareholder Can Protect Its Interest. Key Shareholder
represents that by reason of his business or financial experience, Key
Shareholder has the capacity to protect his own interests in connection with the
transactions contemplated in this Agreement. Further, Key Shareholder is aware
of no publication of any advertisement in connection with the transactions
contemplated in the Agreement.
(d) Parent Information. Key Shareholder has been offered the
opportunity to discuss Parent's business, management and financial affairs with
the officers and management of Parent and has had the opportunity to review the
business and financial information supplied by Parent.
(e) Rule 144. Key Shareholder acknowledges and agrees that the Shares
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Key
Shareholder has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act as in effect from time to time, which
permits limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold, the sale being through an unsolicited "broker's
transaction" or in transactions directly with a market (as said term is defined
under the Exchange Act) and the number of shares being sold during any three-
month period not exceeding specified limitations.
(f) Residence. Key Shareholder resides in the state or province
identified in the address of Key Shareholder set forth on Exhibit A.
3.3 Transfer Restrictions. Each Key Shareholder acknowledges and agrees
that the Shares are subject to restrictions on transfer. Each Key Shareholder
agrees not to make any disposition of all or any portion of the Shares unless
and until:
(a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement;
(b) (A) The transferee has agreed in writing to be bound by the terms
of Section 1.13 and this Section 3.3, (B) such Key Shareholder shall have
notified the Company of the proposed disposition and shall have furnished the
Company with a reasonably detailed statement of the circumstances surrounding
the proposed disposition, and (C) if reasonably requested by the Company, such
Key Shareholder shall have furnished the Company with an
25.
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Securities
Act. It is agreed that the Company will not require opinions of counsel or
require subsequent transferees to be bound by the terms of this Agreement for
transactions made pursuant to Rule 144 except in unusual circumstances; or
(c) Notwithstanding the provisions of paragraphs (a) and (b) above,
no such registration statement or opinion of counsel shall be necessary for a
transfer by a Key Shareholder which is to the Key Shareholder's family
member(s), trust for the benefit of such Key Shareholder or such Key
Shareholder's family member(s), a corporation, limited liability company,
partnership or similar entity, provided that either no less than 50% of the
voting power of such entity is owned by Key Shareholders and/or immediate family
members of Key Shareholders, or Key Shareholders and/or immediate family members
of Key Shareholders have the contractual power to designate no less than 50% of
the directors of such entity, or in the case of unincorporated entities, of
individuals exercising similar functions, or a donation to a charitable
organization; provided that in each case the transferee will be subject to the
transfer restrictions of this Section to the same extent as if he were an
original Key Shareholder hereunder.
SECTION 4. Representations and Warranties of Parent and Merger Sub.
Parent and Merger Sub jointly and severally represent and warrant to
the Company and the Key Shareholders and except as set forth in the Parent
Disclosure Schedule attached hereto, as follows:
4.1 Capitalization.
(a) The authorized capital stock of the Parent consists of 20,000,000
shares of Common Stock, 4,339,529 shares of which are issued and outstanding and
12,305,000 shares of Preferred Stock, 1,705,000 of which are designated Series A
Preferred Stock, all of which are issued and outstanding, 5,200,000 of which are
designated Series B Preferred Stock, 5,120,000 of which are issued and
outstanding, and 5,400,000 of which are designated Series C Preferred Stock,
4,954,785 of which are issued and outstanding. All issued and outstanding shares
of the Parent's Capital Stock have been duly authorized and validly issued and
are fully paid and nonassessable. The rights, preferences, privileges and
restrictions of the capital stock of Parent are as stated in the Restated
Certificate. Each series of Preferred Stock is currently convertible into Common
Stock on a one-for-one basis. Except as disclosed on Schedule 4.1 and for the
conversion privileges of the Preferred Stock specified in the Restated
Certificate, the Common Stock issuable under this Agreement, currently
outstanding options to purchase 1,695,862 shares of Common Stock granted to
employees, consultants and directors pursuant to Parent's 1997 Stock Plan,
warrants to purchase 40,000 shares of Series B Preferred Stock and warrants to
purchase 275,000 shares of Series C Preferred Stock, there are no outstanding
options, warrants, rights (including conversion or preemptive rights and rights
of first refusal), proxy or shareholder agreements, or agreements of any kind
for the purchase or acquisition from Parent of any of its securities.
26.
(b) The authorized Capital Stock of Merger Sub consists of 100 shares
of Common Stock, all of which are issued and outstanding.
4.2 Authority; Binding Nature of Agreement. Parent and Merger Sub have the
full power and authority to perform their obligations under this Agreement; and
the execution, delivery and performance by Parent and Merger Sub of this
Agreement (including the contemplated issuance of Parent Common Stock and Parent
Preferred Stock in the Merger in accordance with this Agreement) have been duly
authorized by all necessary action on the part of Parent and Merger Sub and
their respective boards of directors. No vote of Parent's shareholders is needed
to approve the Merger. This Agreement constitutes the legal, valid and binding
obligation of Parent and Merger Sub, enforceable against them in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
4.3 Valid Issuance. The Parent Common Stock and Parent Preferred Stock to
be issued in the Merger will, when issued in accordance with the provisions of
this Agreement, be duly authorized for issuance, validly issued, fully paid and
nonassessable.
4.4 Organization and Standing. Each of the Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation, has all requisite corporate power and
authority to own, operate and lease its properties and carry on its business as
now conducted, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the failure to so qualify
would have a Material Adverse Effect.
4.5 Non-Contravention; Consents. Neither (1) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement, nor (2) the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will directly or indirectly (with
or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of Parent or Merger Sub's Certificate of Incorporation or bylaws,
or (ii) any resolution adopted by Parent or Merger Sub's stockholders, their
boards of directors or any committee of their boards of directors;
(b) contravene, conflict with or result in a violation of, any Legal
Requirement or any order, writ, injunction, judgment or decree to which Parent
or Merger Sub, or any of the assets owned or used by the Parent or Merger Sub,
is subject;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by the Parent or Merger Sub or that otherwise relates to the Parent
or Merger Sub's business or to any of the assets owned or used by the Parent or
Merger Sub;
27.
(d) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any material Contract of Parent
or Merger Sub, or give any Person the right to (i) declare a default or exercise
any remedy under any such material Contract, (ii) accelerate the maturity or
performance of any such material Contract, or (iii) cancel, terminate or modify
any such material Contract; or
(e) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by the Parent or
Merger Sub.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental entity is required by or with
respect to Parent or Merger Sub in connection with the execution and delivery of
this Agreement or the consummation by Parent or Merger Sub of the transactions
contemplated hereby or thereby, except for (a) the filing of this Agreement and
officers' certificates with the Delaware Secretary of State and the Oregon
Secretary of State and appropriate documents with the relevant authorities of
other states in which Parent and Merger Sub are qualified to do business, and
(b) such consents, approvals orders, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the offer and sale of Parent Common Stock and Parent Preferred
Stock pursuant to this Agreement.
4.6 Compliance with Other Instruments. Parent is not in violation of any
term of its Certificate of Incorporation or Bylaws, and to the best of its
knowledge, is not in violation of any order, statute, rule or regulation
applicable to Parent. To the best of Parent's knowledge, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not conflict with or result in any violation of any material
statute, law, rule, regulation, judgment, order, decree or ordinance applicable
to Parent or Merger Sub or their respective properties or assets, or conflict
with or result in any breach or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit, under (i) any
provision of the Certificate of Incorporation or Bylaws of parent or Merger Sub
or (ii) any material agreement, contract, note, mortgage, indenture, lease,
instrument, permit, concession, franchise or license to which Parent or Merger
Sub is a party or by which Parent or Merger Sub or their respective properties
or assets may be bound or affected.
4.7 Financial Statements.
(a) The Parent has delivered to the Company and the shareholders of
the Company, the following financial statements and notes (collectively, the
"Parent Financial Statements"): the audited balance sheet of the Parent as of
December 31, 1999, and the related audited income statements, statements of
shareholders' equity and statements of cash flows of the Parent for the year
then ended together with the notes thereto and the unqualified audit report of
KPMG LLP relating thereto; and the unaudited balance sheet of the Parent as of
April 30, 2000 (the "Parent Statement Date") and the related income statement
for the four month period then ended.
28.
(b) The Parent Financial Statements are accurate and complete in all
material respects and present fairly the financial position of the Parent as of
the respective dates thereof and the results of operations and cash flows of the
Parent for the periods covered thereby. The Parent Financial Statements have
been prepared in accordance with generally accepted accounting principles on a
basis consistent with prior accounting periods (except that the unaudited
financial statement are subject to normal year-end adjustments and do not
contain the footnotes and other disclosures required for audited financial
statements).
4.8 Absence of Changes. Since the Parent Statement Date, except as
otherwise contemplated by this Agreement:
(a) there has not been any event resulting in a Material Adverse
Effect on the Parent, and, to the knowledge of the Parent, no event has
occurred that will, or could reasonably be expected to, have a Material Adverse
Effect on the Parent;
(b) there has not been any material loss, damage or destruction to,
or any material interruption in the use of, any of the Parent's material assets
(whether or not covered by insurance);
(c) the Parent has not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, and has not repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(d) the Parent has not sold, issued or authorized the issuance of (i)
any capital stock or other security (except for Parent Common Stock issued upon
the exercise of outstanding Parent Options), (ii) any option or right to acquire
any capital stock or any other security, or (iii) any instrument convertible
into or exchangeable for any capital stock or other security;
(e) there has been no amendment to the Parent's Certificate of
Incorporation or bylaws, and the Parent has not effected or been a party to any
Acquisition Transaction, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction;
(f) the Parent has not formed any subsidiary or acquired any equity
interest or other interest in any other Entity;
(g) the Parent has not changed any of its methods of accounting or
accounting practices in any respect;
(h) the Parent has not made any material Tax election;
(i) the Parent has not commenced or settled any Legal Proceeding;
(j) the Parent has not entered into any material transaction or taken
any other material action outside the ordinary course of business or
inconsistent with its past practices; and
(k) the Parent has not agreed or committed to take any of the actions
referred to in clauses "(a)" through "(h)" above.
29.
4.9 Liabilities. To the best of the knowledge of the Parent, after
reasonable investigation, the Parent has no material accrued, contingent or
other liabilities of any nature, either matured or unmatured (whether or not
required to be reflected in financial statements in accordance with generally
accepted accounting principles, and whether due or to become due) that is not
reflected, reserved against or disclosed in the Parent Financial Statements,
except for: liabilities incurred by the Parent since the Statement Date in the
ordinary course of business and consistent with the Company's past practices.
4.10 Litigation. Except as set forth in the Parent Disclosure Schedule,
there is no pending Legal Proceeding, and to the knowledge of the Parent and
Merger Sub, no Person has threatened to commence any Legal Proceeding: (i) that
involves the Parent or Merger Sub or any of the assets owned or used by the
Parent or Merger Sub or to the knowledge of the Parent or Merger Sub, any Person
whose liability the Parent or Merger Sub has or may have retained or assumed,
either contractually or by operation of law; or (ii) that challenges, or that
may have the effect of preventing, delaying, making illegal or otherwise
interfering with, the Merger or any of the other transactions contemplated by
this Agreement. To the knowledge of the Parent or Merger Sub, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
will, or that could reasonably be expected to, give rise to or serve as a basis
for the commencement of any such Legal Proceeding that would be likely to have a
Material Adverse Effect on the Parent.
4.11 Environmental Matters. To the knowledge of Parent, Parent is in
compliance in all material respects with all applicable Environmental Laws,
which compliance includes the possession by Parent of all permits and other
Governmental Authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof. Parent has not received any
notice or other communication (in writing or otherwise), whether from a
Governmental Body, citizens group, employee or otherwise, that alleges that
Parent is not in compliance with any Environmental Law, and, to the knowledge of
Parent, there are no circumstances that may prevent or interfere with Parent's
compliance with any Environmental Law in the future. To the knowledge of Parent,
no current or prior owner of any property leased or controlled by Parent has
received any notice or other communication (in writing or otherwise), whether
from a Government Body, citizens group, employee or otherwise, that alleges that
such current or prior owner or Parent is not in compliance with any
Environmental Law. For purposes of this Section 4.10: (i) "Environmental Law"
means any federal, state, local or foreign Legal Requirement relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata), including
any law or regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern; and (ii) "Materials
of Environmental Concern" include chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum and petroleum products and any other substance that
is now or hereafter regulated by any Environmental Law or that is otherwise a
danger to health, reproduction or the environment.
30.
4.12 Tax Free Reorganization.
(a) The shares issued by Parent in the Merger shall have the full
voting rights accorded such classes of shares.
(b) Immediately following the Merger, the Surviving Corporation will
hold at least 90 percent of the fair market value of Merger Sub's net assets and
at least 70 percent of the fair market value of Merger Sub's gross assets held
immediately prior to the Merger. For purposes of this representation, amounts
paid by Merger Sub to the Company shareholders who receive cash or other
property and Merger Sub assets used to pay reorganization expenses will be
included as assets of Merger Sub held immediately prior to the Merger.
(c) Immediately prior to the Merger, Parent will be in control of
Merger Sub within the meaning of Section 368(c) of the Code.
(d) Parent has no plan or intention to cause or allow the Surviving
Corporation to issue additional shares of its stock that would result in Parent
losing control of the Surviving Corporation within the meaning of Section 368(c)
of the Code.
(e) There is no plan or intention by Parent or any person related to
Parent (as defined in Treasury Reg. ss. 1.368-1(e)(3)) to acquire or redeem any
of the stock of Parent issued in the Merger either directly or through any
transaction, agreement, or arrangement with any other person except for (i)
repurchases that are made in connection with the termination of employees in the
ordinary course of business or (ii) returns of Escrow Shares pursuant to the
terms of the Escrow Agreement.
(f) Parent has no plan or intention to liquidate the Surviving
Corporation; to merge the Surviving Corporation with and into another
corporation; to sell or otherwise dispose of the stock of the Surviving
Corporation; or to cause the Surviving Corporation to sell or otherwise dispose
of any of the assets of Company or Merger Sub, except for dispositions made in
the ordinary course of business or transfers of assets or stock of the Surviving
Corporation described in Treasury Reg. ss. 1.368-2(k).
(g) Merger Sub will have no liabilities assumed by the Surviving
Corporation and will not transfer to the Surviving Corporation in the Merger any
assets subject to liabilities.
(h) Parent is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
(i) Except as otherwise provided in this Agreement, Parent will pay
its own expenses, if any, incurred in connection with the Merger.
(j) Merger Sub is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
31.
(k) Merger Sub has been formed solely in order to consummate the
Merger, and Merger Sub has not conducted and will not conduct, prior to the
Closing Date, any business activities or other operations of any kind other than
the issuance of its stock to Parent.
4.13 Full Disclosure. This Agreement (including the Parent Disclosure
Schedule) does not, and the Parent and Merger Sub Closing Certificate will not,
(i) contain any representation, warranty or information of the Parent that is
false or misleading with respect to any material fact, or (ii) omit to state any
material fact necessary in order to make the representations, warranties and
information of the Parent contained herein (in the light of the circumstances
under which such representations, warranties and information were made) not
false or misleading in any material respect.
SECTION 5. Covenants of the Parties
5.1 Access and Investigation. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), the Company
shall, and shall cause its Representatives to: (a) provide Parent and Parent's
Representatives with reasonable access to the Company's Representatives,
personnel and assets and to all existing books, records, Tax Returns, work
papers and other documents and information relating to the Company; and (b)
provide Parent and Parent's Representatives with copies of such existing books,
records, Tax Returns, work papers and other documents and information relating
to the Company, and with such additional financial, operating and other data and
information regarding the Company, as Parent may reasonably request.
5.2 Operation of the Company's Business. During the Pre-Closing Period,
except as otherwise contemplated by this Agreement:
(a) the Company shall conduct its business and operations in the
ordinary course and in substantially the same manner as such business and
operations have been conducted prior to the date of this Agreement;
(b) the Company shall use reasonable efforts to preserve intact its
current business organization, keep available the services of its current
officers and employees and maintain its relations and good will with all
suppliers, customers, landlords, creditors, employees and other Persons having
business relationships with the Company;
(c) the Company shall use reasonable efforts to keep in full force
all insurance policies identified in Part 2.17 of the Company Disclosure
Schedule;
(d) the Company shall cause its officers to report regularly (but in
no event less frequently than weekly) to Parent concerning the status of the
Company's business;
(e) the Company shall not declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares of capital
stock, other than distributions to Shareholders made to cover their proportional
tax liability incurred as Shareholders of the
32.
Company, and shall not repurchase, redeem or otherwise reacquire any shares of
capital stock or other securities;
(f) the Company shall not, without the prior written consent of
Parent, such consent not to be unreasonably withheld, sell, issue or authorize
the issuance of (i) any capital stock or other security, (ii) any option or
right to acquire any capital stock or other security, or (iii) any instrument
convertible into or exchangeable for any capital stock or other security (except
that the Company shall be permitted (x) to grant stock options to employees in
accordance with its past practices, (y) to issue Company Common Stock to
employees upon the exercise of outstanding Company Options, and (z) to issue
shares of Company Common Stock upon the conversion of shares of Company
Preferred Stock);
(g) the Company shall not amend or waive any of its rights under, or
permit the acceleration of vesting under, (i) any provision of its Stock Option
Plan, (ii) any provision of any agreement evidencing any outstanding Company
Option, or (iii) any provision of any restricted stock purchase agreement, other
than those Company Options that will automatically accelerate exercisability
upon consummation of the Merger;
(h) neither the Company nor any of the Key Shareholders shall amend
or permit the adoption of any amendment to the Company's Articles of
Incorporation or bylaws, or effect or permit the Company to become a party to
any Acquisition Transaction, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction;
(i) the Company shall not form any subsidiary or acquire any equity
interest or other interest in any other Entity;
(j) the Company shall not make any capital expenditure outside of the
ordinary course of business, except for capital expenditures that, when added to
all other capital expenditures made on behalf of the Company during the Pre-
Closing Period, do not exceed $50,000 per month;
(k) the Company shall not (i) enter into, or permit any of the assets
owned or used by it to become bound by, any Contract that is or would constitute
a Material Contract, or (ii) amend or prematurely terminate, or waive any
material right or remedy under, any such Contract;
(l) except for transactions in the ordinary course of business, the
Company shall not (i) acquire, lease or license any right or other asset from
any other Person (except as otherwise required under this Agreement), (ii) sell
or otherwise dispose of, or lease or license, any right or other asset to any
other Person, or (iii) waive or relinquish any right, except for assets
acquired, leased, licensed or disposed of by the Company pursuant to Contracts
that are not Material Contracts;
(m) the Company shall not (i) lend money to any Person (except that
the Company may make routine advances to employees in the ordinary course of
business and may, consistent with its past practices, allow employees to acquire
Company Common Stock in
33.
exchange for promissory notes upon exercise of Company Options), or (ii) incur
or guarantee any indebtedness for borrowed money;
(n) the Company shall not, without the prior written consent of
Parent, (i) establish, adopt or amend any Employee Benefit Plan, (ii) pay any
bonus or make any profit-sharing payment, cash incentive payment or similar
payment to, or increase the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its directors,
officers or employees, other than as disclosed in the Company Disclosure
Schedules, or (iii) hire any new employee whose aggregate annual compensation is
expected to exceed $100,000;
(o) the Company shall not change any of its methods of accounting or
accounting practices in any material respect;
(p) the Company shall not make any Tax election;
(q) the Company shall not commence or settle any material Legal
Proceeding;
(r) the Company shall not agree or commit to take any of the actions
described in clauses "(e)" through "(q)" above.
5.3 Notification; Updates to Disclosure Schedule.
(a) During the Pre-Closing Period, the Company shall promptly notify
Parent in writing of:
(i) the discovery by the Company of any event, condition, fact
or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes an inaccuracy in or breach of any
representation or warranty made by the Company or any of the Key Shareholders in
this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute an inaccuracy in or breach of any representation or warranty made by
the Company or any of the Key Shareholders in this Agreement if (A) such
representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or (B)
such event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement;
(iii) any breach of any covenant or obligation of this Agreement
by the Company or any of the Key Shareholders; and
(iv) any event, condition, fact or circumstance that would make
the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
34.
(b) If any event, condition, fact or circumstance that is required to
be disclosed pursuant to Section 5.3(a) requires any change in the Company
Disclosure Schedule, or if any such event, condition, fact or circumstance would
require such a change assuming the Company Disclosure Schedule were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then the Company shall promptly deliver to Parent a notice
specifying such change. In addition, at the Closing, the Company shall deliver
an updated Company Disclosure Schedule setting forth any required changes to the
Company Disclosure Schedule (the "Updated Company Disclosure Schedule"). No such
notice or Updated Disclosure shall be deemed to supplement or amend the Company
Disclosure Schedule for the purpose of determining whether any of the conditions
set forth in Section 6 has been satisfied.
5.4 No Negotiation. During the Pre-Closing Period, neither the Company nor
any of the Key Shareholders shall, directly or indirectly:
(a) solicit or encourage the initiation of any inquiry, proposal or
offer from any Person (other than Parent) relating to a possible Acquisition
Transaction;
(b) participate in any discussions or negotiations or enter into any
agreement with, or provide any non-public information to, any Person (other than
Parent) relating to or in connection with a possible Acquisition Transaction; or
(c) consider, entertain or accept any proposal or offer from any
Person (other than Parent) relating to a possible Acquisition Transaction.
The Company shall promptly notify Parent in writing of any material
inquiry, proposal or offer relating to a possible Acquisition Transaction that
is received by the Company or any of the Key Shareholders during the Pre-Closing
Period.
5.5 Filings and Consents. As promptly as reasonably practicable after the
execution of this Agreement, each party to this Agreement (a) shall make all
filings (if any) and give all notices (if any) required to be made and given by
such party in connection with the Merger and the other transactions contemplated
by this Agreement, and (b) shall use all commercially reasonable efforts to
obtain all Consents (if any) required to be obtained (pursuant to any applicable
Legal Requirement or Contract, or otherwise) by such party in connection with
the Merger and the other transactions contemplated by this Agreement. The
Company shall (upon request) promptly deliver to Parent a copy of each such
filing made, each such notice given and each such Consent obtained by the
Company during the Pre-Closing Period.
5.6 Public Announcements. Neither Parent, the Company nor any of the
Shareholders shall issue any press release or make any public statement
regarding this Agreement or the Merger, or regarding any of the other
transactions contemplated by this Agreement, without the other party's prior
consent, which consent shall not be unreasonably withheld.
5.7 Termination of Agreements.
(a) The Company, the holders of the Company's Series A Preferred
Stock (the "Investors") and certain of the Shareholders shall enter into an
agreement, reasonably satisfactory
35.
in form and content to Parent (and conditioned and effective upon the Closing),
terminating (i) the Registration Rights Agreement dated as of June 23, 1999 by
and among the Company and the Investors, and (ii) the Shareholders' Agreement
dated as of June 23, 1999 by and among the Company and the Investors.
(b) The Company and the parties to the agreements listed as Items 1-
4, 6-7 and 10 on Schedule 2.10(a)(i) of the Company Disclosure Schedule shall
enter in agreements, reasonably satisfactory in form and content to Parent (and
conditioned and effective upon the Closing), terminating such agreements.
5.8 FIRPTA Matters. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by counsel to
Parent) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the
United States Treasury Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Xxxxxxx 0.000 - 0(x)(0)
xx xxx Xxxxxx Xxxxxx Treasury Regulations.
5.9 Release. At the Closing, each of the Shareholders shall execute and
deliver to the Company and Parent a Release in the form of Exhibit D.
5.10 Investment Representation Letter. At the Closing, each of the
shareholders of the Company that is not a party to this Agreement, if any, and
is not exercising dissenter's rights, shall execute and deliver to Parent an
Investment Representation Letter in the form of Exhibit F.
5.11 Investor Rights Agreement. At the Closing, Parent and each of the
Shareholders shall execute and deliver an Amended and Restated Investor Rights
Agreement containing terms no less favorable to the Shareholders, in the
reasonable judgment of the Company's Board of Directors, than those set forth in
Exhibit E (the "Investor Rights Agreement").
5.12 Tax-Free Reorganization. It is the intent of the parties to this
Agreement that the Merger qualify as a tax-free reorganization under Section
368(a) of the Code. Neither the Company, Parent nor Merger Sub will, either
before or after consummation of the Merger, take any action which, to the
knowledge of such party, would or could reasonably be expected to cause the
Merger to fail to constitute a tax-free "reorganization" within the meaning of
Code Section 368. Following the Merger, Parent will cause the Surviving
Corporation to continue the historic business of Company or use a significant
portion of Company's business assets in a business consistent with the
provisions of Treasury Reg. ss. 1.368-1(d).
5.13 Blue Sky Laws. Parent shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions that are
applicable to the issuance of the Parent Common Stock and Parent Preferred Stock
in connection with the Merger. The Company shall use its commercially reasonable
best efforts to assist Parent as may be reasonably necessary to comply with the
securities and blue sky laws of all jurisdictions which are applicable in
connection with the issuance of Parent Common Stock and Parent Preferred Stock
in connection with the Merger.
36.
5.14 Restated Certificate of Incorporation. Parent shall take such steps as
may be necessary to obtain stockholder approval and file with the Secretary of
State of the State of Delaware a Restated Certificate of Incorporation creating
a new Series D Preferred Stock containing terms no less favorable to the
Shareholders, in the reasonable judgment of the Company's Board of Directors,
than those set forth in the Restated Certificate of Incorporation set forth in
Exhibit J (the "Restated Certificate").
5.15 Termination of 401(k) Plan. Prior to the Closing, the Company shall
terminate its 401(k) Plan. Distributions from such terminated 401(k) Plan shall
not be made until after the receipt of a favorable determination letter from the
IRS regarding the plan's qualified status under Section 401(a) of the Code and
subject to the adoption of any amendments necessary to maintain such qualified
status; provided however that employees of the Company who terminate service to
the Company prior to receipt of such determination shall be permitted to receive
their distribution pursuant to the terms of the plan. The Company shall be
responsible for any administrative or other costs associated with such
termination (including, without limitation, obtaining such determination letter
and adopting any such amendments). The Company represents and warrants to Parent
that the Company will not incur any liability with respect to such termination
as a result of (a) the Company's failure to operate or administer its 401(k)
Plan in compliance its obligations under ERISA or (b) the Company's underfunding
of any obligations under the 401(k) Plan prior to the Closing.
SECTION 6. Conditions Precedent to Obligations of Parent and Merger Sub
The obligations of Parent and Merger Sub to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:
6.1 Accuracy of Representations. Each of the representations and
warranties made by the Company and the Key Shareholders in this Agreement shall
be accurate in all material respects as of the Closing (without giving effect to
the Updated Company Disclosure Schedule).
6.2 Performance of Covenants. All of the covenants and obligations that
the Company and the Key Shareholders are required to comply with or to perform
at or prior to the Closing shall have been complied with and performed in all
respects.
6.3 Shareholder Approval. The principal terms of the Merger shall have
been duly approved by the affirmative vote of at least 90% of the shares of
Company Common Stock and at least 90% of the shares of Company Preferred Stock
entitled to vote with respect thereto.
6.4 Consents. Other than as set forth on Schedule 6.4, all Consents
required to be obtained in connection with the Merger and the other transactions
contemplated by this Agreement (including those Consents identified in Part 2.21
of the Company Disclosure Schedule that Parent desires to obtain) shall have
been obtained and shall be in full force and effect.
37.
6.5 Agreements and Documents. Parent and the Company shall have received
the following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement in the form of Exhibit C, executed by each
of the Shareholders, other than those Shareholders who hold Appraisal Shares;
(b) a Release in the form of Exhibit D, executed by each of the
Shareholders, other than those Shareholders who hold Appraisal Shares;
(c) an Audio-Bridging Services Agreement between Parent and Envoy
Global, Inc., in the form of Exhibit G;
(d) a legal opinion of Xxxxxxx Coie, LLP, dated as of the Closing
Date, substantially in the form attached as Exhibit H;
(e) a certificate executed by the Company and containing the
representation and warranty of the Company that each of the representations and
warranties set forth in Section 2 is accurate in all respects as of the Closing
Date as if made on the Closing Date and that the conditions set forth in
Sections 6.1, 6.2, 6.3, 6.4, and 6.6 have been duly satisfied (the "Company
Closing Certificate"); and
(f) written resignations of all directors of the Company, effective
as of the Effective Time.
6.6 Divestiture of Subsidiary. The Company shall have completed the sale,
spin-off or other divestiture of Envoy Global Inc. ("EGI") into a separate legal
entity in a manner reasonably acceptable to Parent.
6.7 FIRPTA Compliance. The Company shall have filed with the Internal
Revenue Service the notification referred to in Section 5.4 in accordance with
Section 1.897-2(h)(2)(v) of the Internal Revenue Code.
6.8 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.9 No Legal Proceedings. No Person shall have commenced or threatened to
commence any Legal Proceeding challenging or seeking the recovery of a material
amount of damages in connection with the Merger or seeking to prohibit or limit
the exercise by Parent of any material right pertaining to its ownership of
stock of the Surviving Corporation.
6.10 Filing of Restated Certificate of Incorporation. The Restated
Certificate of Incorporation of Parent shall have been filed with the Secretary
of State of the State of Delaware and shall continue to be in full force and
effect as of the Closing Date.
38.
6.11 Filing of Articles of Merger and Certificate of Merger. The Articles
of Merger, in a form acceptable to Parent and the Company, shall have been filed
with the Secretary of State of the State of Oregon and the Certificate of
Merger, in a form acceptable to Parent and the Company, shall have been filed
with the Secretary of State of the State of Delaware.
6.12 Termination of Existing Employment Agreements. The employment
agreements between the Company and each of Xxxx Xxxxxxxx, Xxx Xxxxxxxxxx, Xxxxx
Xxxxxxxxxx and Xxxxx X. X'Xxxx shall be terminated and of no further force and
effect.
6.13 Termination of 401(k) Plan. The Company's 401(k) plan shall have been
terminated as provided in Section 5.15.
SECTION 7. Conditions Precedent to Obligations of the Company and the
Shareholders
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
7.1 Accuracy of Representations. Each of the representations and
warranties made by Parent and Merger Sub in this Agreement shall be accurate in
all material respects as of the Closing (without giving effect to any update to
the Parent Disclosure Schedule).
7.2 Performance of Covenants. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all respects
7.3 Documents. The Company shall have received the following documents:
(a) the Escrow Agreement in the form of Exhibit C, executed by
Parent;
(b) an Amended and Restated Investor Rights Agreement in the form of
Exhibit E, executed by Parent and at least the requisite number of existing
stockholders of Parent necessary to amend such agreement;
(c) a legal opinion of Xxxxxx Godward LLP, dated as of the Closing
Date, substantially in the form attached as Exhibit I; and
(d) a certificate executed by the Parent and containing the
representation and warranty of the Parent that each of the representations and
warranties set forth in Section 4 is accurate in all respects as of the Closing
Date as if made on the Closing Date and that the conditions set forth in Section
7.1 and 7.2 have been duly satisfied (the "Parent Closing Certificate").
7.4 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal
39.
Requirement enacted or deemed applicable to the Merger that makes consummation
of the Merger illegal.
7.5 Consents. All Consents required to be obtained in connection with the
Merger and the other transactions contemplated by this Agreement shall have been
obtained and shall be in full force and effect, except for such Consents, the
failure of which to obtain, could not reasonably be expected to have a Material
Adverse Effect on Parent or the Surviving Corporation or a Material Adverse
Effect on the Company or any of the Key Shareholders.
7.6 Shareholder Approval. The principal terms of the Merger shall have
been duly approved by the affirmative vote of a majority of the shares of
Company Common Stock and at least 75% of the shares of Company Preferred Stock
entitled to vote with respect thereto.
7.7 No Legal Proceedings. No Person shall have commenced or threatened to
commence any Legal Proceeding challenging or seeking the recovery of a material
amount of damages in connection with the Merger or seeking to prohibit or limit
the exercise by the Shareholders of any right pertaining to their ownership of
Company Common Stock or Company Preferred Stock or of Parent Common Stock or
Parent Preferred Stock.
7.8 Filing of Restated Certificate of Incorporation. The Restated
Certificate of Incorporation of Parent shall have been filed with the Secretary
of State of the State of Delaware and shall continue to be in full force and
effect as of the Closing Date.
7.9 Filing of Articles of Merger and Certificate of Merger. The Articles
of Merger, in a form acceptable to Parent and the Company, shall have been filed
with the Secretary of State of the State of Oregon and the Certificate of
Merger, in a form acceptable to Parent and the Company, shall have been filed
with the Secretary of State of the State of Delaware.
7.10 Qualification as a Tax-Free Reorganization. The Company shall be
reasonably satisfied that the Merger qualifies as a tax-free reorganization
under Section 368(a) of the Code.
SECTION 8. Indemnification, Etc.
8.1 Survival of Representations, Etc.
(a) The representations and warranties made by the Company and the
Key Shareholders (including the representations and warranties set forth in
Sections 2 and 3) shall survive the Closing and shall expire twelve (12) months
after the Closing (the "Indemnification Period"); provided, however, that if, at
any time prior to the end of the Indemnification Period, any Indemnitee (acting
in good faith) delivers to the Agents a written notice alleging the existence of
an inaccuracy in or a breach of any of the representations and warranties made
by the Company or the Key Shareholders (and setting forth in reasonable detail
the basis for such Indemnitee's belief that such an inaccuracy or breach may
exist) and asserting a claim for recovery under Section 8.2 based on such
alleged inaccuracy or breach, then the claim asserted in such notice (and only
to the extent of that claim) shall survive the end of the Indemnification Period
until such time as such claim is fully and finally resolved. The representations
and
40.
warranties made by Parent and Merger Sub (including the representations and
warranties set forth in Section 4) shall survive the Closing and shall expire on
the first anniversary of the Closing Date; provided, however, that if, at any
time prior to the first anniversary of the Closing Date, the Agents (acting in
good faith) deliver to Parent a written notice alleging the existence of an
inaccuracy in or a breach of any of the representations and warranties made by
Parent and Merger Sub (and setting forth in reasonable detail the basis for the
Agents' belief(s) that such an inaccuracy or breach may exist) and asserting a
claim for recovery based on such alleged inaccuracy or breach, then the claim
asserted in such notice shall survive the first anniversary of the Closing until
such time as such claim is fully and finally resolved.
(b) The representations, warranties, covenants and obligations of the
Company and the Key Shareholders, and the rights and remedies that may be
exercised by the Indemnitees, shall not be limited or otherwise affected by or
as a result of any information furnished to, or any investigation made by or
knowledge of, any of the Indemnitees or any of their Representatives.
(c) For purposes of this Agreement, each statement or other item of
information set forth in the Company Disclosure Schedule shall be deemed to be a
representation and warranty made by the Company pursuant to Section 2 of this
Agreement, and shall modify any such representations and warranties, as
applicable.
8.2 Indemnification by Shareholders.
(a) From and after the Effective Time (but subject to Section 8.1(a),
8.3 and 8.4), the Shareholders shall hold harmless and indemnify each of the
Indemnitees from and against, and shall compensate and reimburse each of the
Indemnitees for, any Damages which are suffered or incurred by any of the
Indemnitees or to which any of the Indemnitees may otherwise become subject
(regardless of whether or not such Damages relate to any third-party claim) and
which arise from or as a result of: (i) any inaccuracy in or breach of any
representation or warranty set forth in Sections 2 or 3 or in the Closing
Certificate, after giving effect to the Updated Company Disclosure Schedule;
(ii) any breach of any covenant or obligation of the Company or any of the
Shareholders (including the covenants set forth in Section 5); and (iii) that
certain Stock Purchase Agreement between the Company and Envoy Global, Inc.
expected to be executed on or before the Closing Date.
(b) The Shareholders acknowledge and agree that, if the Surviving
Corporation suffers, incurs or otherwise becomes subject to any Damages as a
result of or in connection with any inaccuracy in or breach of any
representation, warranty, covenant or obligation, then (without limiting any of
the rights of the Surviving Corporation as an Indemnitee) Parent shall also be
deemed, by virtue of its ownership of the stock of the Surviving Corporation, to
have incurred Damages as a result of and in connection with such inaccuracy or
breach.
(c) Notwithstanding anything in this Section 8.2 to the contrary, in
the event of a breach of any representation or warranty contained in Section 3
of this Agreement, only the Shareholder who committed such breach shall be
liable for any Damages related to such breach.
41.
8.3 Satisfaction of Indemnification Claim.
(a) In the event the Company or the Shareholders shall have any
liability (for indemnification or otherwise) to any Indemnitee under this
Section 8, such liability shall first, subject to Section 8.2(c), be satisfied
by delivering to such Indemnitee subject to and in accordance with the terms of
the Escrow Agreement the number of shares of the Parent Common Stock or Parent
Preferred Stock determined by dividing (a) the aggregate dollar amount of such
liability by (b) the greater of (i) $18.00 per share, or (ii) the then current
Fair Market Value (as defined below) of one share of the Company's Series D
Preferred Stock or, if the Series D Preferred Stock has been converted into
Parent Common Stock, the Fair Market Value of one share of Parent Common Stock.
(b) The maximum collective liability of the Company and the
Shareholders under this Agreement, and any document or instrument delivered in
connection with this Agreement, relating to breaches of the representations and
warranties contained in Sections 2 and 3, other than the Specified
Representations and Warranties (as defined below), shall not exceed the shares
held pursuant to the Escrow Agreement. The "Specified Representations and
Warranties" shall mean Sections 2.3, 2.4, 2.9, 2.11, 2.14 and 2.19.
(c) The maximum collective liability of the Company and the
Shareholders under this Agreement, and any document or instrument delivered in
connection with this Agreement, relating to breaches of the Specified
Representations and Warranties, shall not exceed the amount equal to 1,027,083
multiplied by the Fair Market Value of one share of the Company's Series D
Preferred Stock or, if the Series D Preferred Stock has been converted into
Parent Common Stock, the Fair Market Value of one share of Parent Common Stock.
(d) Each Shareholder's liability under this Section 8 shall be
limited to such Shareholder's pro rata portion of any such liability and shall
not exceed such Shareholder's pro rata portion of the maximum collective
liability set forth in Section 8.3(c).
(e) The "Fair Market Value" of the Parent Preferred Stock or, if the
Series D Preferred Stock has been converted into Parent Common Stock, the Fair
Market Value of one share of Parent Common Stock shall be determined as follows:
(i) In the event that neither the Parent Common Stock nor the
Parent Preferred Stock are publicly traded, the Fair Market Value shall be
determined in the good faith reasonable judgment of the Board of Directors; and
(ii) In the event that either the Parent Common Stock or the
Parent Preferred Stock is publicly traded, the Fair Market Value shall be the
average of the closing price a one share of such stock on the 10 trading days
prior to the satisfaction of any indemnification claim.
8.4 Threshold. The Company and the Shareholders shall not be required to
make any indemnification payment pursuant to Section 8 until such time as the
total amount of all Damages (including the Damages arising from such breach and
all other Damages arising from
42.
any other breaches of any representations or warranties) that have been suffered
or incurred by any one or more of the Indemnitees, or to which any one or more
of the Indemnitees has or have otherwise become subject, exceeds $150,000 in the
aggregate. At such time as the total amount of such Damages exceeds $150,000 in
the aggregate, the Indemnitees shall be entitled to be indemnified against the
full amount of such Damages (and not merely the portion of such Damages
exceeding $150,000).
8.5 No Contribution. Each Shareholder waives, and acknowledges and agrees
that such Shareholder shall not have and shall not exercise or assert (or
attempt to exercise or assert), any right of contribution, right of indemnity or
other right or remedy against the Surviving Corporation in connection with any
indemnification obligation or any other liability to which such Shareholder may
become subject under or in connection with Section 8 of this Agreement as a
result of the breach by such Shareholder of any of the representations,
warranties, covenants or agreements of such Shareholder contained herein.
8.6 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against the
Surviving Corporation, against Parent or against any other Person) with respect
to which any of the Shareholders may become obligated to hold harmless,
indemnify, compensate or reimburse any Indemnitee pursuant to this Section 8,
Parent shall have the right, at its election, to proceed with the defense of
such claim or Legal Proceeding on its own. If Parent so proceeds with the
defense of any such claim or Legal Proceeding:
(a) all reasonable expenses relating to the defense of such claim or
Legal Proceeding (as contemplated by Section 8.1) shall be borne and paid
exclusively by the Shareholders;
(b) each Shareholder shall make available to Parent any documents and
materials in his possession or control that may be necessary to the defense of
such claim or Legal Proceeding; and
(c) Parent shall have the right to settle, adjust or compromise such
claim or Legal Proceeding with the prior written consent of the Agents;
provided, however, that such consent shall not be unreasonably withheld.
Parent shall give the Agents prompt notice of the commencement of any such Legal
Proceeding against Parent or the Surviving Corporation; provided, however, that
any failure on the part of Parent to so notify the Agents shall not limit any of
the obligations of the Shareholders under this Section 8 (except to the extent
such failure materially prejudices the defense of such Legal Proceeding).
8.7 Exercise of Remedies by Indemnitees Other Than Parent. No Indemnitee
(other than Parent or any successor thereto or assign thereof) shall be
permitted to assert any indemnification claim or exercise any other remedy under
this Agreement unless Parent (or any successor thereto or assign thereof) shall
have consented to the assertion of such indemnification claim or the exercise of
such other remedy.
43.
SECTION 9. Termination
9.1 Termination Events. This Agreement may be terminated prior to the
Closing:
(a) by Parent if:
(i) at or after the Scheduled Closing Time if any condition set
forth in Section 6 has not been satisfied by the Scheduled Closing Time (or any
amendment thereto) (other than as a result of any failure on the part of Parent
or Merger Sub to comply with or perform any covenant or obligation of Parent or
Merger Sub set forth in this Agreement);
(ii) Parent reasonably determines on a good faith basis that the
timely satisfaction of any condition set forth in Section 6 has become
impossible (other than as a result of any failure on the part of Parent or
Merger Sub to comply with or perform any covenant or obligation of Parent or
Merger Sub set forth in this Agreement);
(iii) the Closing has not taken place on or before July 15, 2000
(or any amendment thereto) (other than as a result of any failure on the part of
Parent to comply with or perform any covenant or obligation of Parent set forth
in this Agreement).
(b) by the Company or the Shareholders if
(i) at or after the Scheduled Closing Time if any condition set
forth in Section 7 has not been satisfied by the Scheduled Closing Time;
(ii) the Company reasonably determines on a good faith basis
that the timely satisfaction of any condition set forth in Section 7 has become
impossible (other than as a result of any failure on the part of the Company or
any of the Key Shareholders to comply with or perform any covenant or obligation
set forth in this Agreement or in any other agreement or instrument delivered to
Parent); or
(iii) the Closing has not taken place on or before July 15, 2000
(or any amendment thereto) (other than as a result of the failure on the part of
the Company or any of the Key Shareholders to comply with or perform any
covenant or obligation set forth in this Agreement).
(c) by the mutual consent of Parent, the Company and a majority in
interest of the Key Shareholders.
9.2 Termination Procedures. If Parent wishes to terminate this Agreement
pursuant to Section 9.1(a), Parent shall deliver to the Company a written notice
stating that Parent is terminating this Agreement and setting forth a brief
description of the basis on which Parent is terminating this Agreement. If the
Company or the Key Shareholders wish to terminate this Agreement pursuant to
Section 9.1(b), the Company or the Agents shall deliver to Parent a written
notice stating that the Company or the Agents are terminating this Agreement and
setting forth a brief description of the basis on which the Company or the
Agents are terminating this Agreement.
44.
9.3 Effect of Termination. If this Agreement is terminated pursuant to
Section 9.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) neither the Company nor Parent shall be
relieved of any obligation or liability arising from any prior breach by such
party of any provision of this Agreement; and (b) the parties shall, in all
events, remain bound by and continue to be subject to the provisions set forth
in Section 10.
SECTION 10. Miscellaneous Provisions
10.1 Agents. By virtue of the approval of the Merger and this Agreement by
a vote of the Shareholders, the Shareholders shall have approved, effective upon
such vote, and without further act of any Shareholder, among other matters, the
indemnification and escrow terms set forth in Section 8 and the expense
reimbursement provisions in Section 10.3 and shall have irrevocably appointed,
effective upon such vote, and without further act of any Shareholder, Xxxxxx X.
Jesenik and Xxxx Xxxx, acting jointly as their agents for purposes of Section 8
of this Agreement (each an "Agents," collectively, the "Agents"). Subject to the
approval of the Merger and this Agreement by a vote of the Shareholders, Xxxxxx
X. Jesenik and Xxxx Xxxx hereby accept their appointment as the Agents. Parent
shall be entitled to deal exclusively with the Agents on all matters relating to
Section 8, and shall be entitled to rely conclusively (without further evidence
of any kind whatsoever) on any document executed or purported to be executed on
behalf of any Shareholder by the Agents with respect thereto, and on any other
action taken or purported to be taken on behalf of any Shareholder by the
Agents, as fully binding upon such Shareholder. If an Agent shall die, become
disabled or otherwise be unable to fulfill his responsibilities as an agent of
the Shareholders, then the Shareholders representing a majority in interest of
the Escrow Shares shall, within ten days after such death or disability, to
appoint a successor agent and, promptly thereafter, shall notify Parent of the
identity of such successor. Any such successor shall become an "Agent" for
purposes of Section 9 and this Section 10.1. If for any reason there is no Agent
at any time, all references herein to the Agent shall be deemed to refer to the
Shareholders. Neither Agent shall be liable for any act done or omitted
hereunder as Agent while acting in good faith and in the exercise of reasonable
judgment, and any act done or omitted pursuant to either (i) the advice of
counsel or (ii) the vote of a majority in interest of the Shareholders, shall be
conclusive evidence of such good faith. The Shareholders of the Company shall
severally indemnify each Agent and hold him harmless against any loss, liability
or expense incurred without gross negligence or bad faith on the part of the
Agent and arising out of or in connection with the acceptance or administration
of his duties hereunder or under the Escrow Agreement (including, without
limitation, the reasonable fees and expenses of any legal counsel retained by
the Agent). Notwithstanding the foregoing, the Agents shall not be authorized or
appointed to act for or on behalf of any Key Shareholder with respect to any
claim relating to a breach by such Key Shareholder of any representation or
warranty contained in Section 3 of this Agreement or of any of the covenants of
such Key Shareholder under this Agreement.
10.2 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
45.
10.3 Fees and Expenses. Each party to this Agreement shall bear and pay
all fees, costs and expenses (including legal fees and accounting fees) that
have been incurred or that are incurred by such party in connection with the
transactions contemplated by this Agreement, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by Parent and its Representatives with
respect to the Company's business (and the furnishing of information to Parent
and its Representatives in connection with such investigation and review), (b)
the negotiation, preparation and review of this Agreement (including the Company
Disclosure Schedule) and all agreements, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
transactions contemplated by this Agreement, (c) the preparation and submission
of any filing or notice required to be made or given in connection with any of
the transactions contemplated by this Agreement, and the obtaining of any
Consent required to be obtained in connection with any of such transactions, and
(d) the consummation of the Merger; provided, however, that, to the extent the
total amount of all such legal fees, costs and expenses incurred by or for the
benefit of the Company, (exclusive of any legal fees and costs of Parent)
exceeds $550,000 in the aggregate, such fees, costs and expenses shall be borne
and paid by the Shareholders and not by the Company. All such properly
documented legal fees, costs and expenses incurred by or for the benefit of the
Company, (exclusive of any legal fees and costs of Parent) shall be paid at the
Closing.
10.4 Attorneys' Fees. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
10.5 Notices. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received (a) if given by facsimile, when
transmitted and the appropriate telephonic confirmation received, (b) if given
by telex, when dispatched, but only if, at the time of transmission, the correct
answerback appears at the start and at the end of the sender's copy of the
notice, (c) if given by first-class air mail (certified and return-receipt
requested), when delivered, and (d) if given by a nationally recognized
overnight courier, when received or personally delivered, in each case, with all
charges prepaid to the address or facsimile telephone number set forth beneath
the name of such party below (or to such other address or facsimile telephone
number as such party shall have specified in a written notice given to the other
parties hereto in accordance with this Section 9.4):
if to Parent: PlaceWare, Inc.
000 Xxxxx Xxxxxxxx Xxx.
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
46.
with a copy to: Cooley Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Xx., Esq.
Facsimile: (000) 000-0000
if to the Company: Envoy i-Con, Inc.
000 XX Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000-0000
Attention: Xx X'Xxxx
Facsimile: (000) 000-0000
(correspondence should be marked as
"Confidential")
with a copy to: Xxxxxxx Coie, LLP
0000 XX Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx
if to Agents: Xxxxxx X. Jesenik
c/o JMW Capital Partners Inc.
0000 XX 00xx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Xxxx Xxxx
0000 Xxxxxxxx Xx.
Xxxx Xxxx, XX 00000
Facsimile: (503) _______
If to any Key Shareholder: The address listed on Exhibit A
10.6 Confidentiality. Without limiting the generality of anything contained
in Section 5.2, on and at all times during the period ending three years after
the Closing Date, each Key Shareholder shall keep confidential, and shall not
use or disclose to any other Person (other than to such Key Shareholder's legal
counsel, accountants and financial and other advisers), any confidential or
proprietary non-public document or other non-public information in such Key
Shareholder's possession that relates to the business of the Company or Parent
without prior written consent; provided that the foregoing shall not apply to
any documents or information (a) lawfully received from a third party (other
than the Company or the Parent) having rights to disseminate such documents or
information without restriction or (b) required by law to be disclosed pursuant
to subpoena or court order; provided, that such Key Shareholder shall
47.
promptly notify the Parent of its receipt of such subpoena or court order and
shall provide the Parent with an opportunity (if then available) to contest the
propriety of such subpoena or order.
10.7 Time of the Essence. Time is of the essence of this Agreement.
10.8 Headings. The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.9 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement. Delivery of an executed signature page
to this Agreement, any agreements, documents or instruments to be executed in
connection herewith, or any amendment, waiver, consent or supplement hereto or
thereto, by facsimile transmission shall be as effective as delivery of a
manually signed counterpart thereof.
10.10 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
10.11 Successors and Assigns. This Agreement shall be binding upon: the
Company and its successors and assigns (if any); the Key Shareholders and their
respective personal representatives, executors, administrators, estates, heirs,
successors and assigns (if any); Parent and its successors and assigns (if any);
and Merger Sub and its successors and assigns (if any). This Agreement shall
inure to the benefit of: the Company (to the extent set forth in Section 1.5);
the Key Shareholders; Parent; Merger Sub; the other Indemnitees (subject to
Section 8.6); and the respective successors and assigns (if any) of the
foregoing.
10.12 Remedies Cumulative; Specific Performance. The rights and remedies of
the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (b) an injunction restraining such breach or threatened breach.
10.13 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
48.
(b) No Person shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.14 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
10.15 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
10.16 Parties in Interest. Except for the provisions of Section 8, none of
the provisions of this Agreement is intended to provide any rights or remedies
to any Person other than the parties hereto and their respective successors and
assigns (if any).
10.17 Entire Agreement. This Agreement, and the schedules, exhibits and the
other agreements referred to herein set forth the entire understanding of the
parties hereto relating to the subject matter hereof and thereof and supersede
all prior agreements and understandings among or between any of the parties
relating to the subject matter hereof and thereof; provided, however, that any
Non-Disclosure Agreements between Parent and the Company shall not be superseded
by this Agreement and shall remain in effect in accordance with its terms until
the earlier of (a) the Effective Time, or (b) the date on which such
Non-Disclosure Agreement is terminated in accordance with its terms.
10.18 Construction.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
49.
(d) Except as otherwise indicated, all references in this Agreement
to "Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
10.19 Withholding Obligations. Parent and the Surviving Corporation shall
be entitled to deduct and withhold from any consideration payable or otherwise
deliverable to any holder or former holder of capital stock of the Company
pursuant to this Agreement such amounts, if any, as Parent or the Surviving
Corporation may be required to deduct or withhold therefrom under the Code or
under any provision of state, local or foreign tax law. To the extent such
amounts are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the Person to whom such
amounts would otherwise have been paid.
[This space intentionally left blank]
50.
The parties hereto have caused this AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION to be executed as of the date first above written.
PLACEWARE, INC.,
a Delaware corporation
By:____________________________________
Title:_________________________________
GROMIT ACQUISITION CORP.,
a Delaware corporation
By:____________________________________
Title:_________________________________
ENVOY I-CON, INC.,
an Oregon corporation
By:____________________________________
Title:_________________________________
AGENTS:
_______________________________________
Xxxxxx X. Jesenik
_______________________________________
Xxxx Xxxx
KEY SHAREHOLDER:
By:____________________________________
Print Name:____________________________
Title:_________________________________
SIGNATURE PAGE
LIST OF EXHIBITS
Exhibit A Schedule of Key Shareholders
Exhibit B Certain Definitions
Exhibit C Form of Escrow Agreement
Exhibit D Form of Release
Exhibit E Form of Amended and Restated Investor Rights Agreement
Exhibit F Form of Investment Representation Letter
Exhibit G Form of Audio-Bridging Services Agreement
Exhibit H Form of Legal Opinion of Xxxxxxx Coie LLP
Exhibit I Form of Legal Opinion of Cooley Godward LLP
Exhibit J Form of Restated Certificate of Incorporation
v.
EXHIBIT A
SCHEDULE OF KEY SHAREHOLDERS
NAME AND ADDRESS NUMBER OF SHARES OF STOCK
----------------------------------------------------------- -------------------------------------------------------
Xxxxx X. X'Xxxx 14,286 Series A
00000 Xxxxxxxx Xxx
Xxxx Xxxx, XX 00000
Xxxxx Xxxxxxxxxx 1,339,325 Common
0000 Xxxxxxxxxx Xxxxx 23,045 Series A
Xxxx Xxxx, XX 00000
Xxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxxx 1989 Living 61,677 Common
Trust 5,486 Series A
0000 XX Xxxxxxxxx Xxxx
Xxxx Xxxx, XX 00000
Xxxx Xxxxx 51,432 Series A
000 Xxxxxxx Xxxxx Xx.
Xxxxxxxx, XX 00000
Xxxxxx Family Trust 674,999 Common
0000 XX 000xx Xxxxxx 11,164 Series A
Xxxxxxxx, XX 00000
Xxxxxx Communications LLC 450,000 Common
00 Xxxxxxxx Xxxxxx 36,015 Series A
Xxxx Xxxxxx, XX 00000
Xxxxxxx-Xxx, Inc. 450,000 Common
00000 Xxxx Xxxxx Xxxx, Xxxxx 0 7,443 Series A
Xxxx, XX 00000
Xxxx X. Xxxxxx 450,000 Common
00000 XX Xxxxxxx Xxxx 7,443 Series A
Xxxxxxxxxxx, XX 00000
Xxxxxx X. Jesenik 449,999 Common
0000 Xxxxxxx Xxxxxxx 21,729 Series A
Xxxx Xxxx, XX 00000
Xxxx Xxxx 14,286 Series A
0000 Xxxxxxxx Xx.
Xxxx Xxxx, XX 00000
A-1
EXHIBIT B
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit B):
Acquisition Transaction. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, license, disposition or acquisition of all or a
material portion of the Company's business or assets;
(b) the acquisition of (i) more than fifty percent (50%) of the
capital stock of the Company, (ii) any option, call, warrant or right
(whether or not immediately exercisable) to acquire more than fifty percent
(50%) of the capital stock of the Company, or (iii) any security,
instrument or obligation that is or may become convertible into or
exchangeable for more than fifty percent (50%) of the capital stock of the
Company; or
(c) any merger, consolidation, business combination, reorganization
or similar transaction involving the Company.
Agreement. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit B is attached (including the Company
Disclosure Schedule and Parent Disclosure Schedule), as it may be amended from
time to time.
Company Contract. "Company Contract" shall mean any Contract: (a) to which
the Company is a party; or (b) by which the Company or any of its assets is or
may become bound or under which the Company has, or may become subject to, any
obligation.
Company Disclosure Schedule. "Company Disclosure Schedule" shall mean the
schedule (dated as of the date of the Agreement) delivered to Parent on behalf
of the Company.
Company Proprietary Asset. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Company or otherwise used by the
Company, and that is material to the business of the Company as currently
conducted.
Consent. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
Contract. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan or legally binding commitment or undertaking of
any nature.
Damages. "Damages" shall include any loss, damage, injury, liability,
claim, demand, settlement, judgment, award, fine, penalty, fee (including
reasonable attorneys' fees but
B-1
excluding in-house counsel fees), charge, cost (including costs of
investigation) or expense of any nature.
Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
Government Bid. "Government Bid" shall mean any quotation, bid or proposal
submitted to any Governmental Body or any proposed prime contractor or higher-
tier subcontractor of any Governmental Body.
Government Contract. "Government Contract" shall mean any prime contract,
subcontract, letter contract, purchase order or delivery order executed or
submitted to or on behalf of any Governmental Body or any prime contractor or
higher-tier subcontractor, or under which any Governmental Body or any such
prime contractor or subcontractor otherwise has or may acquire any right or
interest.
Governmental Authorization. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body; in any case, material to the business of the Company as presently
conducted.
Governmental Body. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
B-2.
Indemnitees. "Indemnitees" shall mean the following Persons: (a) Parent;
(b) the Surviving Corporation; and (c) the respective successors and assigns of
the Persons referred to in clauses "(a)" and "(b)" above.
knowledge. "knowledge" as to any Person shall mean to such Person's actual
knowledge, after reasonable inquiry; provided that reasonable inquiry shall not
require that the Company or the Key Shareholders make inquiry of third parties
that are not directors, officers, employees, agents and/or representatives of
the Company.
Legal Proceeding. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
Legal Requirement. "Legal Requirement" shall mean any applicable federal,
state, local, municipal, foreign or other law, statute, constitution, principle
of common law, resolution, ordinance, code, edict, decree, rule, regulation,
ruling or requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Body.
Material Adverse Effect. "Material Adverse Effect" means a material adverse
effect on the referenced entity's business, condition, assets, liabilities,
operations or financial performance, and any subsidiaries of the referenced
entity, taken as a whole.
Parent Disclosure Schedule. "Parent Disclosure Schedule" shall mean the
schedule (dated as of the date of the Agreement) delivered to the Company on
behalf of Parent.
Person. "Person" shall mean any individual, Entity or Governmental Body.
Pre-Closing Period. "Pre-Closing Period" shall mean the period between the
signing of the Letter of Intent between the Company and Parent until the date
hereof.
Proprietary Asset. "Proprietary Asset" shall mean any: (a) patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, mask work, mask work
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset; or (b) right to use or exploit any of the
foregoing.
Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
B-3.
SEC. "SEC" shall mean the United States Securities and Exchange Commission.
Securities Act. "Securities Act" shall mean the Securities Act of 1933, as
amended.
Tax. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
Tax Return. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
B-4.
