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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
EGAIN COMMUNICATIONS CORPORATION,
a Delaware corporation
and
BIG SCIENCE COMPANY,
a Georgia corporation.
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Dated as of February 7, 2000
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TABLE OF CONTENTS
PAGE
SECTION 1. DESCRIPTION OF TRANSACTION.........................................1
1.1 Merger of the Company into Parent..................................1
1.2 Effect of the Merger...............................................1
1.3 Closing; Effective Time............................................2
1.4 Certificate of Incorporation and Bylaws; Directors and Officers....2
1.5 Maximum Shares to Be Issued; Effect on Capital Stock...............2
1.6 Conversion of Shares...............................................2
1.7 Employee Stock Options.............................................4
1.8 Closing of the Company's Transfer Books............................4
1.9 Exchange of Certificates...........................................5
1.10 Appraisal Rights...................................................6
1.11 Escrow of Parent Common Stock......................................6
1.12 Tax Consequences...................................................7
1.13 Accounting Treatment...............................................7
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................7
2.1 Due Organization; No Subsidiaries; Authority; Etc..................7
2.2 Certificate of Incorporation and Bylaws; Records...................8
2.3 Capitalization, Etc................................................8
2.4 Financial Statements...............................................9
2.5 Absence of Changes................................................10
2.6 Title to Assets...................................................11
2.7 Bank Accounts; Receivables........................................12
2.8 Equipment; Leasehold..............................................12
2.9 Proprietary Assets................................................12
2.10 Contracts.........................................................15
2.11 Liabilities; Fees, Costs and Expenses.............................17
2.12 Compliance with Legal Requirements................................17
2.13 Governmental Authorizations.......................................17
2.14 Tax Matters.......................................................18
2.15 Employee and Labor Matters; Benefit Plans.........................19
2.16 Environmental Matters.............................................21
2.17 Insurance.........................................................22
2.18 Related Party Transactions........................................22
2.19 Legal Proceedings; Orders.........................................22
2.20 Authority; Binding Nature of Agreement............................23
2.21 Non-Contravention; Consents.......................................23
2.22 Customers.........................................................24
2.23 Product Development...............................................24
2.24 Full Disclosure...................................................25
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...........25
3.1 Corporate Existence and Power.....................................25
3.2 Authority; Binding Nature of Agreement............................25
3.3 Capitalization....................................................25
3.4 SEC Filings; Financial Statements.................................25
3.5 No Conflict.......................................................26
3.6 Valid Issuance....................................................26
SECTION 4. CERTAIN COVENANTS OF THE COMPANY..................................27
4.1 Access and Investigation..........................................27
4.2 Operation of the Company's Business...............................27
4.3 Notification; Updates to Disclosure Schedule......................29
4.4 No Negotiation....................................................29
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES...............................31
5.1 Filings and Consents..............................................31
5.2 Stockholder Consent...............................................31
5.3 Public Announcements..............................................32
5.4 Best Efforts......................................................32
5.5 Employment Agreements and Confidential Information and
Invention Assignment Agreements...................................32
5.6 Employees.........................................................32
5.7 Release...........................................................32
5.8 Termination of Employee Plans.....................................32
5.9 FIRPTA Matters....................................................32
5.10 Investment Letters................................................32
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB......33
6.1 Accuracy of Representations.......................................33
6.2 Performance of Covenants..........................................33
6.3 Stockholder Approval..............................................33
6.4 Consents..........................................................33
6.5 Agreements and Documents..........................................33
6.6 No Restraints.....................................................34
6.7 No Governmental Litigation........................................34
6.8 No Other Litigation...............................................34
6.9 Termination of Employee Plans.....................................35
6.10 FIRPTA Compliance.................................................35
6.11 Securities Law Requirements.......................................35
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY................35
7.1 Accuracy of Representations.......................................35
7.2 Performance of Covenants..........................................35
7.3 Documents.........................................................35
7.4 Stockholder Approval..............................................36
7.5 Listing...........................................................36
7.6 No Restraints.....................................................36
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7.7 Securities Law Requirements.......................................36
7.8 Registration Rights...............................................36
SECTION 8. TERMINATION.......................................................36
8.1 Termination Events................................................36
8.2 Termination Procedures............................................37
8.3 Effect of Termination.............................................38
SECTION 9. INDEMNIFICATION, ETC..............................................38
9.1 Survival of Representations, Etc..................................38
9.2 Indemnification...................................................38
9.3 Threshold.........................................................39
9.4 Right of Offset of Indemnification Claims.........................39
9.5 No Contribution...................................................39
9.6 Defense of Third Party Claims.....................................40
9.7 Exercise of Remedies by Indemnitees Other Than Parent.............40
9.8 Fraud.............................................................40
SECTION 10. REGISTRATION RIGHTS...............................................40
10.1 Restrictions on Transferability...................................40
10.2 Restrictive Legend................................................41
10.3 Notice of Proposed Transfers......................................41
10.4 Requested Registration............................................42
SECTION 11. MISCELLANEOUS PROVISIONS..........................................42
11.1 Company Stockholders'Representatives..............................42
11.2 Further Assurances................................................42
11.3 Fees and Expenses.................................................42
11.4 Attorneys'Fees....................................................43
11.5 Notices...........................................................43
11.6 Time of the Essence...............................................44
11.7 Headings..........................................................44
11.8 Counterparts......................................................44
11.9 Governing Law.....................................................44
11.10 Successors and Assigns............................................44
11.11 Remedies Cumulative; Specific Performance.........................44
11.12 Waiver............................................................44
11.13 Amendments........................................................45
11.14 Severability......................................................45
11.15 Parties in Interest...............................................45
11.16 Entire Agreement..................................................45
11.17 Construction......................................................45
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EXHIBITS
Exhibit A Certain definitions
Exhibit B Form of Escrow Agreement
Exhibit C Form of Employment Agreements
Exhibit D Confidential Information and Invention Assignment Agreements
Exhibit E Form of Stockholder Release
Exhibit F Form of Investment Letter
Exhibit G Form of legal opinion of Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, LLP
Exhibit H Form of legal opinion of Pillsbury Madison & Sutro LLP
Exhibit I Amendment to Amended and Restated Investors' Rights Agreement
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AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is
made and entered into as of February 7, 2000, by and among EGAIN COMMUNICATIONS
CORPORATION, a Delaware corporation ("Parent"), BIG SCIENCE COMPANY, a Georgia
corporation (the "Company"), and, for the purposes of Section 2 hereof, XXX
XXXXXXX ("XXXXXXX"), XXXX XXXXXXXX ("Xxxxxxxx") and XXXXX XXXXXXXXXX
("Xxxxxxxxxx") (Xxxxxxx, Xxxxxxxx and Xxxxxxxxxx collectively, the "Founders").
Certain other capitalized terms used in this Agreement are defined in Exhibit A.
RECITALS
A. Parent and the Company intend to effect a statutory merger of the
Company into Parent (the "Merger") in accordance with this Agreement, the
Georgia Business Corporation Code (the "GBCC") and the Deleware General
Corporation Law ("DGCL"). Upon consummation of the Merger, the Company will
cease to exist, and Parent will be the surviving corporation.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). For accounting purposes, it is intended that the Merger be
treated as a "purchase."
C. This Agreement has been approved by the respective boards of directors
of Parent and the Company.
D. In connection with the execution and delivery of this Agreement, certain
stockholders of the Company are executing and delivering to Parent a Voting
Agreement of even date herewith.
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 Merger of the Company Into Parent. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), the Company shall be merged with and into Parent, and the separate
existence of the Company shall cease. Parent will continue as the surviving
corporation in the Merger. Parent, as the surviving corporation after the
Merger, is hereinafter sometimes referred to as 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 GBCC and the DGCL.
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1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Pillsbury Madison & Sutro llp, 0000 Xxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx
00000 at 9:00 a.m. Pacific Standard Time, on a date to be designated by Parent
which shall not be more than 10 business days after the date on which the
condition set forth in Section 6.3 is satisfied (or waived by Parent); PROVIDED
HOWEVER, that if any condition set forth in Section 6 or 7 has not been
satisfied as of the date so designated by Parent, then Parent may, by delivering
a written extension notice to the Company, extend the time of the Closing for a
period of up to 30 days. The time and date as of which the Closing takes place
is referred to in this Agreement as the "Closing Date." Contemporaneously with
or as promptly as practicable after the Closing, the parties shall cause the
Merger to be consummated by filing a properly executed certificate of merger
conforming to the requirements of the DGCL and the GBCC with the Secretaries of
State of Delaware and Georgia. The Merger shall become effective at the time
such certificate of merger is filed with the Secretary of State of the State of
Delaware (the "Effective Time").
1.4 Certificate of Incorporation and Bylaws; Directors and Officers. Unless
otherwise determined by Parent prior to the Effective Time:
(a) the Certificate of Incorporation of Parent as in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation, until thereafter amended by Parent;
(b) the Bylaws of Parent, as in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation, until thereafter amended
by Parent; and
(c) the directors and officers of Parent, as in effect immediately prior to
the Effective Time shall be directors and officers of the Surviving Corporation.
1.5 Maximum Shares to be Issued; Effect On Capital Stock. The maximum
number of shares of Parent Common Stock to be issued (including Parent Common
Stock to be reserved for issuance upon exercise of any of the Company's options
and warrants to purchase shares of Company Common Stock to be assumed by Parent)
in exchange for the acquisition by Parent of all outstanding Company Capital
Stock and all unexpired and unexercised options and warrants to acquire Company
Capital Stock shall be determined by dividing (X) an amount equal to $35,000,000
less the sum of the Additional Liabilities (as defined in Exhibit A hereto) by
(Y) $42.25 (the "Stock Consideration"), reduced as a result of any Dissenting
Shares (as defined in Section 1.9 herein). No adjustment shall be made in the
number of shares of Parent Common Stock issued in the Merger as a result of any
cash proceeds received by the Company from the date hereof to the Closing Date
pursuant to the exercise of options or warrants to acquire Company Capital
Stock. Subject to the terms and conditions of this Agreement, as of the
Effective Time, by virtue of the Merger and without any action on the part of
Merger Sub, the Company or the holder of any shares of the Company Capital
Stock, the following shall occur:
1.6 Conversion of Shares. By virtue of the Merger and without any action on
the part of Parent, Company or the holders of any of Company's Capital Stock:
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(A) Conversion of Company Common Stock. Each share of Common Stock of the
Company ("COMPANY COMMON STOCK") issued and outstanding immediately prior to the
Effective Time (other than any Dissenting Shares and shares canceled pursuant to
Section 1.6(b) herein) will be canceled and extinguished and be converted
automatically into that number of shares of Parent Common Stock as is equal to
the Exchange Ratio (as defined in paragraph (ii) of subsection (c) below), it
being understood that certain shares of Parent Common Stock issuable pursuant to
this Section 1.6 shall be held in escrow in accordance with Section 1.11 herein.
(b) Cancellation of Company Capital Stock Owned by Company. At the
Effective Time, all shares of Company Capital Stock that are owned by Company as
treasury stock, immediately prior to the Effective Time shall be canceled and
extinguished without conversion thereof.
(C) Other Consideration. In addition to the Stock Consideration, the
holders of Company Capital Stock shall receive at the Effective Time an amount
per share equal to $554,530 divided by the Fully Diluted Share Amount (as
defined in Section 1.6(c)(ii)) (the "Cash Consideration").
(i) The "Merger Consideration" receivable by a holder of capital stock
of the Company shall consist of (A) the Cash Consideration and Stock
Consideration (other than Escrow Shares) issuable to such holder in accordance
with Sections 1.6(a) and (c) upon the surrender of the certificate or
certificates representing capital stock of the Company held by such holder, (B)
the rights of such holder with respect to the Escrow Shares held by the Escrow
Agent on behalf of such holder, and (C) the right of such holder to receive cash
in lieu of fractional shares of Parent Common Stock in accordance with Section
1.9(a).
(ii) The "Exchange Ratio" shall mean the Stock Consideration divided
by the sum of the following outstanding as of the Closing Date: all outstanding
shares of Company Capital Stock, all outstanding Company Options and all other
outstanding options, warrants and other rights to purchase or otherwise acquire
shares of Company Common Stock (collectively, the "Fully Diluted Share Amount").
(d) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted to
reflect fully the effect of any stock split, reverse stock split, stock divided
(including any dividend or distribution of securities convertible into Parent
Common Stock or Company Common Stock), reorganization, recapitalization or other
like change with respect to Parent Common Stock or Company Common Stock
occurring (or for which the record date occurs) after the date hereof and prior
to the Effective Time.
(e) If any shares of Company Common Stock outstanding immediately prior to
the Effective Time are unvested or are subject to a repurchase option, risk of
forfeiture or other condition under any applicable restricted stock purchase
agreement, stock option agreement or other agreement with the Company, then the
shares of Parent Common Stock issued in exchange for such shares of Company
Common Stock will also be unvested and subject to the same repurchase option,
risk of forfeiture or other condition, and the certificates representing such
shares of Parent Common Stock may accordingly be marked with appropriate
legends. The
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Company shall take all action that may be necessary to ensure that,
from and after the Effective Time, Parent is entitled to exercise any such
repurchase option or other right set forth in any such restricted stock purchase
agreement or other agreement.
(f) Each share of common stock of Merger Sub outstanding immediately prior
to the Effective Time shall be converted into one share of common stock of the
Surviving Corporation.
1.7 Employee Stock Options. At the Effective Time, each then outstanding
Company Option (as defined in Section 2.3(b)) and each other outstanding option
to purchase Common Stock of the Company issued in accordance with the terms of
this Agreement, whether vested or unvested, shall be assumed by Parent in
accordance with the terms (as in effect as of the date of this Agreement) of
such Company Stock Option Plan under which such Company Option was issued and
the stock option agreement by which such Company Option is evidenced. 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 cash.
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 Exchange Ratio, 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 Exchange Ratio, subtracting an amount equal to the Cash
Consideration 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 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 all
Company Stock Option Plans and otherwise) to effectuate the provisions of this
Section 1.7.
1.8 Closing of the Company's Transfer Books. At the Effective Time, holders
of certificates representing shares of the Company Capital Stock that were
outstanding immediately prior to the Effective Time shall cease to have any
rights as stockholders of the Company, and the stock transfer books of the
Company shall be closed with respect to all shares of such capital stock of the
Company outstanding immediately prior to the Effective Time. No further transfer
of any such shares of capital stock of the Company shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any shares of the Company 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 1.9.
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1.9 Exchange of Certificates.
(a) As soon as practicable after the Effective Time, Parent will send to
each of the registered holders of Company Stock Certificates a letter of
transmittal in customary form and containing such provisions as Parent may
reasonably specify and instructions for use in effecting the surrender of
Company Stock Certificates in exchange for the Merger Consideration. 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, Parent shall (i) deliver to the holder of such
Company Stock Certificate, such holder's pro rata portion of the Cash
Consideration and a certificate representing 85% of the number of shares of
Parent Common Stock that such holder has the right to receive pursuant to
Section 1.6, and (ii) deliver to the Escrow Agent under the Escrow Agreement (as
defined below) on behalf of such holder a certificate in the name of the Escrow
Agent representing 15% of the number of shares of Parent Common Stock that such
holder has the right to receive pursuant to Section 1.6, provided that the
certificates representing Parent Common Stock to be delivered to the holder of a
Company Stock Certificate under clause (i) above and to the Escrow Agent under
clause (ii) above shall, in each case, represent only whole shares of Parent
Common Stock and in lieu of any fractional shares to which such holder would
otherwise be entitled, the holder of such Company Stock Certificate shall be
paid in cash an amount equal to the sum of (1) the dollar amount (rounded to the
nearest whole cent) determined by multiplying $42.25 by the fraction of a share
of Parent Common Stock that would otherwise be deliverable to such holder under
clause (i) above and (2) the dollar amount (rounded to the nearest whole cent)
determined by multiplying $42.25 by the fraction of a share of Parent Common
Stock that would otherwise be deliverable to the Escrow Agent under clause (ii)
above. Notwithstanding the foregoing, Parent may deliver to the Escrow Agent one
certificate representing the total number of shares of Parent Common Stock to be
held in escrow pursuant to this Section 1.9(a) in lieu of issuing separate
certificates representing 15% of the total shares of Parent Common Stock
issuable to each holder of Company capital stock pursuant to Section 1.6(a). All
Company Stock Certificates so surrendered shall be canceled. Until surrendered
as contemplated by this Section 1.9, each Company Stock Certificate shall be
deemed, from and after the Effective Time, to represent only the right to
receive the Merger Consideration in accordance with this Agreement. 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 the payment of cash in lieu of
fractional shares, 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 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 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
(at which time such holder shall be entitled to receive all such dividends and
distributions and such cash payment).
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(c) 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 (or options or other rights to acquire capital
stock) of the Company pursuant to this Agreement such amounts 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.
(d) Neither Parent nor the Surviving Corporation shall be liable to any
holder or former holder of capital stock (or options or other rights to acquire
capital stock) of the Company for any shares of Parent Common 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.
1.10 Appraisal Rights. Notwithstanding anything in this Agreement to the
contrary, shares of capital stock of the Company held by a holder who, pursuant
to Section 14-2-1327 of the GBCC or any successor provision, has the right to
demand and properly demands an appraisal of such shares of capital stock of the
Company ("Dissenting Shares"), shall not be converted into the right to receive
Parent Common Stock and cash as set forth in Section 1.6, unless such holder
fails to perfect or otherwise loses such holder's right to such appraisal, if
any. If, after the Effective Time, such holder fails to perfect or loses any
such right to appraisal, such holder's Dissenting Shares shall be treated as
having been converted as of the Effective Time into the right to receive the
Merger Consideration. At the Effective Time, any holder of Dissenting Shares
shall cease to have any rights with respect thereto, except the rights provided
in Section 14-2-1327 of the GBCC or any successor provision and as provided in
the immediately preceding sentence. The Company shall give prompt notice to
Parent of any demands received by the Company for appraisal of shares of capital
stock of the Company and the opportunity to participate in all negotiations and
proceedings with respect to any such demand. The Company shall not make any
payment or settlement offer prior to the Effective Time with respect to any such
demand unless Parent shall have consented in writing to such payment or
settlement offer.
1.11 Escrow of Parent Common Stock. Upon the Closing, Parent shall withhold
the shares of Parent Common Stock to be delivered to the Escrow Agent pursuant
to Section 1.8(a)(ii) (the "Escrow Shares") and deliver such shares to U.S. Bank
Trust National Association, as escrow agent, or such other financial institution
reasonably acceptable to the Company (the "Escrow Agent"), to be held by the
Escrow Agent as collateral to secure the rights of the Indemnitees under Section
9. The Escrow Shares shall be held pursuant to the provisions of an escrow
agreement substantially in the form of Exhibit B (the "Escrow Agreement"). The
Escrow Shares will be represented by a certificate or certificates issued in the
name of the Escrow Agent and will be held by the Escrow Agent for a period of
one year from the Closing Date (the "Escrow Period"); PROVIDED HOWEVER that in
the event any Indemnitee has made a claim under Section 9 prior to the end of
the Escrow Period, then the Escrow Period shall continue until such claim is
fully and finally resolved. In the event that this Agreement is adopted by the
Company's stockholders, then all such stockholders shall, without any further
act of any Company stockholder, be deemed to have consented to and approved (i)
the use of the
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Escrow Shares as collateral to secure the rights of the Indemnitees under
Section 9 in the manner set forth herein and in the Escrow Agreement, and (ii)
the appointment of the Company Stockholders' Representative (as defined in
Section 11.1) as the representative under the Escrow Agreement of the Persons
receiving Stock Consideration under this Agreement and as the attorney-in-fact
and agent for and on behalf of each such Person (other than holders of
Dissenting Shares).
1.12 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(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.13 Accounting Treatment. For accounting purposes, the Merger is intended
to be treated as a "purchase."
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and each of the Founders hereby represent and warrant, to and
for the benefit of eCo, as follows:
2.1 Due Organization; No Subsidiaries; Authority; Etc.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia 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 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) Except as set forth in Part 2.1(b) of the Company Disclosure Schedule,
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 name "Big Science Company."
(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(c)(i) 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(c)(ii) of the
Company Disclosure Schedule.
(d) Part 2.1(d) 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.
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(e) The Company does not own any controlling interest in any Entity and,
except for the equity interests identified in Part 2.1(e) of the Company
Disclosure Schedule, 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 Certificate of Incorporation and Bylaws; Records. The Company has
delivered to Parent accurate and complete copies of: (1) the Company's
Certificate of Incorporation and bylaws, including all amendments thereto; (2)
the stock records of the Company; and (3) except as set forth in Part 2.2 of the
Company Disclosure Schedule, 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 stockholders 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 stockholders of the
Company, the board of directors of the Company or any committee of the board of
directors of the Company that are not fully reflected in such minutes or other
records. There has not been any violation of any of the provisions of the
Company's Certificate 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 stockholders, the Company's board of directors or any
committee of the Company's board of directors. The books of account, stock
records, minute books and other 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.
2.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of: (i)
100,000,000 shares of Common Stock, no par value, of which [33,962,500] shares
have been issued and are outstanding as of the date of this Agreement; and (ii)
1,000,000 shares of Preferred Stock, par value $.001 per share, none of which
have been issued or outstanding as of the date of this Agreement. All of the
outstanding shares of Company Common Stock have been duly authorized and validly
issued, and are fully paid and non-assessable. All outstanding shares of Company
Common 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. Part
2.3(a) 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 shares of capital stock of the Company is subject.
(b) The Company has reserved 1,008,875 shares of Company Common Stock for
issuance under the Company Stock Option Plans, of which options to purchase
[1,019,219] shares are outstanding as of the date of this Agreement. Part 2.3(b)
of the Company Disclosure Schedule accurately sets forth, with respect to each
option to purchase Common Stock of the Company outstanding as of the date hereof
(whether vested or unvested) (the "Company Options"): (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
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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 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(b) 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 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 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 of the Company; or (iv) to the knowledge of the
Company, condition or circumstance that may give rise to or provide a basis for
the assertion of a 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) The Company has no Subsidiaries except for the corporations identified
in Part 2.3(c) of the Company Disclosure Schedule. All outstanding shares of
capital stock of the Company Subsidiaries have been duly authorized and are
validly issued, are fully paid and nonassessable and are owned beneficially and
of record by the Company, free and clear of any Encumbrances.
(d) Except as set forth in Part 2.3(d) of the Company Disclosure Schedule,
the Company has never repurchased, redeemed or otherwise reacquired any shares
of capital stock or other securities of the Company. All securities so
reacquired by the Company were reacquired in compliance with (i) the applicable
provisions of the GBCC and all other applicable Legal Requirements, and (ii) all
requirements set forth in applicable restricted stock purchase agreements and
other applicable Contracts.
2.4 Financial Statements.
(a) The Company has delivered to Parent the following financial statements
and notes (collectively, the "Company Financial Statements"):
(i) The unaudited balance sheets of the Company as of December 31,
1999, 1998 and 1997, and the related unaudited income statements, statements of
stockholders' equity and statements of cash flows of the Company for the years
then ended, together with the notes thereto.
(b) Except as set forth in Part 2.4 of the Company Disclosure Schedule, 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 (in the case of the financial
statements referred to in Section 2.4(a)(i)) 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.
-9-
2.5 Absence of Changes. Except as set forth in Part 2.5 of the Company
Disclosure Schedule, since December 31, 1999:
(a) there has not been any material adverse change in the Company's
business, condition, assets, liabilities, operations, financial performance or
prospects, and, to the knowledge of the Company, 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 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 of the
Company, and has not repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities of the Company;
(d) the Company has not sold, issued or authorized the issuance of (i) any
capital stock or other securities of the Company (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 securities of the Company
(except for Company Options described in Part 2.3 of the Company Disclosure
Schedule), or (iii) any instrument convertible into or exchangeable for any
capital stock or other securities of the Company;
(e) the Company has not amended or waived any of its rights under, or
permitted the acceleration of vesting under, (i) any provision of any Company
Stock Option Plan, (ii) any provision of any agreement evidencing any
outstanding Company Option, or (iii) any restricted stock purchase agreement;
(f) there has been no amendment to the Company's certificate 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 December 31,
1999, exceeds $25,000;
(i) the Company has not (i) entered into or permitted any of the assets
owned or used by it to become bound by any Contract that is or would constitute
a 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
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 for immaterial rights or
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other immaterial assets acquired, leased, licensed or disposed of in the
ordinary course of business and consistent with the Company's past practices;
(k) the Company has not written off as uncollectible, or established any
extraordinary reserve with respect to, any account receivable or other
indebtedness;
(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 Tax election;
(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 Title to Assets.
(a) The Company owns, and has good, valid and marketable title to, all
assets purported to be owned by it, including: (i) all assets reflected on the
unaudited balance sheet of the Company as of December 31, 1999; (ii) all assets
referred to in Parts 2.7 and 2.9 of the Company Disclosure Schedule and all of
the Company's rights under the Material Contracts; and (iii) all other assets
reflected in the Company's books and records as being owned by the Company.
Except as set forth in Part 2.6(a) of the Company Disclosure Schedule, all of
said assets are owned by the Company free and clear of any liens or other
Encumbrances, except for (x) any lien for current taxes not yet due and payable,
and (y) minor 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 assets subject thereto or materially impair the operations of the Company.
(b) Part 2.6(b) of the Company Disclosure Schedule identifies all assets
that are material to the business of the Company and that are being leased or
licensed to or by the Company. All such leases and licenses are valid and
enforceable against the parties thereto.
-11-
2.7 Bank Accounts; Receivables.
(a) Part 2.7(a) of the Company Disclosure Schedule provides accurate
information with respect to each account maintained by or for the benefit of the
Company at any bank or other financial institution including the name of the
bank or financial institution, the account number and the balance as of the date
hereof.
(b) Part 2.7(b) of the Company Disclosure Schedule provides an accurate and
complete breakdown and aging of all accounts receivable, notes receivable and
other receivables of the Company as of December 31, 1999. Except as set forth in
Part 2.7(b) of the Company Disclosure Schedule, all existing accounts receivable
of the Company (including those accounts receivable that have arisen since
December 31, 1999 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, and (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 $25,000 in the aggregate).
2.8 Equipment; Leasehold.
(a) All material items of equipment and other 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.
(b) The Company does not own any real property or any interest in real
property, except for the leasehold created under the real property lease
identified in Part 2.8 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 Proprietary Asset owned by the Company and registered with any
Governmental Body or for which an application has been filed 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 Proprietary Assets owned by the
Company that are material to the business of the Company. Part 2.9(a)(iii) of
the Company Disclosure Schedule identifies and provides a brief description of,
and identifies any ongoing royalty or payment obligations in excess of $10,000
with respect to, each Proprietary Asset that is licensed or otherwise made
available to the Company by any Person and is material to the business of the
Company, and identifies the Contract under which such Proprietary Asset is being
licensed or otherwise made available 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 Encumbrances, except for (i) any lien for current taxes not yet due
and payable, and (ii) minor liens that have arisen in the ordinary course of
business and that do not (individually or in the aggregate) materially detract
from the value of the assets subject thereto or materially impair the operations
of the Company. The Company has a valid
-12-
right to use, license and otherwise exploit all Proprietary Assets identified in
Part 2.9(a)(iii) of the Company Disclosure Schedule. Except as set forth in Part
2.9(a)(iv) of the Company Disclosure Schedule, the Company has not developed
jointly with any other Person any Company Proprietary Asset that is material to
the business of the Company with respect to which such other Person has any
rights. Except as set forth in Part 2.9(a)(v) of the Company Disclosure
Schedule, there is no Company Contract (with the exception of end user license
agreements in the form previously delivered by the Company to Parent) pursuant
to which any Person has any right (whether or not currently exercisable) to use,
license or otherwise exploit any Company Proprietary Asset.
(b) The Company has taken reasonable measures and precautions to protect
and maintain the confidentiality, secrecy and value of all material Company
Proprietary Assets (except Company Proprietary Assets whose value would be
unimpaired by disclosure). Without limiting the generality of the foregoing,
except as set forth in Part 2.9(b) of the Company Disclosure Schedule, (i) all
current and former employees of the Company who are or were involved in, or who
have contributed to, the creation or development of any material Company
Proprietary Asset 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 Confidential Information and Invention
Assignment Agreement previously delivered by the Company to Parent, and (ii) all
current and former consultants and independent contractors to the Company who
are or were involved in, or who have contributed to, the creation or development
of any material Company Proprietary Asset 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 Consultant
Confidential Information and Invention Assignment Agreement previously delivered
to Parent. No current or former employee, officer, director, stockholder,
consultant or independent contractor of or to the Company has any right, claim
or interest in or with respect to any Company Proprietary Asset.
(c) To the knowledge of the Company: (i) all patents, trademarks, service
marks and copyrights held by the Company are valid, enforceable and subsisting;
(ii) none of the Company Proprietary Assets and no Proprietary Asset that is
currently being developed by the Company (either by itself or with any other
Person) infringes, misappropriates or conflicts with any Proprietary Asset owned
or used by any other Person; (iii) none of the products that are or have been
designed, created, developed, assembled, manufactured or sold by the Company is
infringing, misappropriating or making any unlawful or unauthorized use of any
Proprietary Asset owned or used by any other Person, and none of such products
has at any time infringed, misappropriated or made any unlawful or unauthorized
use of, and the Company has not received any notice or other communication (in
writing or otherwise) of any actual, alleged, possible or potential
infringement, misappropriation or unlawful or unauthorized use of, any
Proprietary Asset owned or used by any other Person; (iv) no other Person is
infringing, misappropriating or making any unlawful or unauthorized use of, and
no Proprietary Asset owned or used by any other Person infringes or conflicts
with, any material Company Proprietary Asset.
(d) 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 (i) licensed
any of the material Company Proprietary
-13-
Assets to any Person on an exclusive basis, or (ii) entered into any covenant
not to compete or Contract limiting its ability to exploit fully any material
Company Proprietary Assets or to transact business in any market or geographical
area or with any Person.
(e) Except as set forth in Part 2.9(e)(i) of the Company Disclosure
Schedule, the Company has not disclosed or delivered to any Person, or permitted
the disclosure or delivery to any escrow agent or other Person, of any Company
Source Code. 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, result in the disclosure or delivery to any Person of any Company
Source Code. Part 2.9(e)(ii) of the Company Disclosure Schedule identifies each
Contract pursuant to which the Company has deposited or is required to deposit
with an escrowholder or any other Person any Company Source Code, and further
describes whether the execution of this Agreement or the consummation of any of
the transactions contemplated hereby could reasonably be expected to result in
the release or disclosure of any Company Source Code.
(f) To the knowledge of the Company, except as set forth in Part 2.9(f)(i)
of the Company Disclosure Schedule, each computer, computer program and other
item of software (whether installed on a computer or on any other piece of
equipment, including firmware) that is owned, licensed or used by the Company
for its internal business operations is Year 2000 Compliant. Except as set forth
in Part 2.9(f)(ii) of the Company Disclosure Schedule, each computer program and
other item of software that has been designed, developed, sold, licensed or
otherwise made available to any Person by the Company is Year 2000 Compliant.
Except as set forth in Part 2.9(f)(iii) of the Company Disclosure Schedule, the
Company has conducted sufficient Year 2000 compliance testing for each computer,
computer program and item of software referred to in the preceding two sentences
to be able to determine whether such computer, computer program and item of
software is Year 2000 Compliant, and has obtained warranties or other written
assurances from each of its suppliers to the effect that the products and
services provided by such suppliers to the Company is Year 2000 Compliant other
than when the failure to conduct such testing or obtain such assurances would
not have a Material Adverse Effect. As used in this Section 2.9, "Year 2000
Compliant" means, with respect to a computer, computer program or other item of
software (i) the functions, calculations, and other computing processes of the
computer, program or software (collectively, "Processes") perform in a
consistent and correct manner without interruption regardless of the date on
which the Processes are actually performed and regardless of the date input to
the applicable computer system, whether before, on, or after January 1, 2000;
(ii) the computer, program or software accepts, calculates, compares, sorts,
extracts, sequences, and otherwise processes date inputs and date values, and
returns and displays date values, in a consistent and correct manner regardless
of the dates used whether before, on, or after January 1, 2000; (iii) the
computer, program or software accepts and responds to year input, if any, in a
manner that resolves any ambiguities as to century in a defined, predetermined,
and appropriate manner; (iv) the computer, program or software stores and
displays date information in ways that are unambiguous as to the determination
of the century; and (v) leap years will be determined by the following standard
(A) if dividing the year by 4 yields an integer, it is a leap year, except for
years ending in 00, but (B) a year ending in 00 is a leap year if dividing it by
400 yields an integer.
(g) Except with respect to demonstration or trial copies, to the knowledge
of the Company, no product, system, program or software module designed,
developed, sold, licensed
-14-
or otherwise made available by the Company to any Person contains any "back
door," "time bomb," "Trojan horse," "worm," "drop dead device," "virus" or other
software routines or hardware components designed to permit unauthorized access
or to disable or erase software, hardware or data without the consent of the
user.
2.10 Contracts.
(a) Part 2.10(a) of the Company Disclosure Schedule identifies:
(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 Proprietary Asset;
(iii) each Company Contract imposing any restriction on the Company's
right or ability (A) to compete with any other Person, (B) to acquire any
product or other asset or any services from any other Person, to sell any
product or other asset to or perform any services for any other Person or to
transact business or deal in any other manner with any other Person, or (C)
develop or distribute any technology;
(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 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;
(xi) any other Company Contract that has a term of more than 60 days
and that may not be terminated by the Company (without penalty) within 60 days
after the delivery of a termination notice by the Company;
-15-
(xii) any other Company Contract that contemplates or involves (A) the
payment or delivery of cash or other consideration in an amount or having a
value in excess of $10,000 in the aggregate, or (B) the performance of services
having a value in excess of $10,000 in the aggregate; and
(xiii) each Company Contract constituting a commitment of any Person
to purchase products (including products in development) of the Company.
(Company Contracts in the respective categories described in clauses "(i)"
through "(xiii)" 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, including all amendments thereto. Part 2.10(b) of
the Company Disclosure Schedule provides an accurate description of the terms of
each Material Contract that is not in written form. Each Contract identified in
Part 2.10(a) and Part 2.10(b) of the Company Disclosure Schedule is valid and in
full force and effect, and, to the knowledge of the Company, is enforceable by
the Company in accordance with its terms.
(c) Except as set forth in Part 2.10(c) of the Company Disclosure Schedule:
(i) the Company has not violated or breached, or committed any default
under, any Company Contract, and, to the knowledge of the Company, no other
Person has violated or breached, or committed any default under, any Company
Contract;
(ii) to the knowledge of the Company, 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
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 Company
Contract, or (D) give any Person the right to cancel, terminate or modify any
Company Contract;
(iii) since the Company's 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) No Person is renegotiating, or has a right pursuant to the terms of any
Company 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 Material Contracts collectively constitute all of the Contracts
necessary to enable the Company to conduct its business in the manner in which
its business is currently being conducted.
-16-
(f) Part 2.10(f) of the Company Disclosure Schedule identifies and provides
a brief description of each proposed Contract as to which any bid, offer, award,
written proposal, term sheet or similar document has been submitted or received
by the Company that is still active.
(g) Part 2.10(g) of the Company Disclosure Schedule provides an accurate
description and breakdown of the Company's backlog under Company Contracts.
2.11 Liabilities; Fees, Costs and Expenses.
(a) The Company has no 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), except for: (i) liabilities
identified as such in the "liabilities" column of the Company's Balance Sheet
for the period ending December 31, 1999; (ii) accounts payable or accrued
salaries that have been incurred by the Company since December 31, 1999 in the
ordinary course of business and consistent with the Company's past practices;
(iii) liabilities under the Material Contracts, to the extent the nature and
magnitude of such liabilities can be specifically ascertained by reference to
the text of such Company Contracts; and (iv) the liabilities identified in Part
2.11(a) of the Company Disclosure Schedule.
(b) The total amount of all fees, costs and expenses incurred by or for the
benefit of the Company in connection with the negotiation, preparation and
review of this Agreement and all agreements, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
transactions contemplated by this Agreement, do not in the aggregate exceed the
amounts set forth in clauses (b) and (c) under the heading "Additional
Liabilities" of Exhibit A to this Agreement.
2.12 Compliance With Legal Requirements. The Company is, and has at all
times since its 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. Except
as set forth in Part 2.12 of the Company Disclosure Schedule, since its
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, 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, and
collectively constitute all Governmental Authorizations necessary to enable the
Company to conduct its business in the manner in which its business is currently
being conducted. The Company is, and at all times since its 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 the date of its 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
-17-
Authorization, or (b) any actual or possible revocation, withdrawal,
suspension, cancellation, termination or modification of any Governmental
Authorization.
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 Legal
Requirements. All amounts shown on the Company Returns to be due 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 December 31, 1997 which have been requested by Parent.
(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 for the period from
December 31, 1999 through the Closing Date, and the Company will disclose the
dollar amount of such reserves to Parent on or prior to the Closing Date.
(c) No Company Return relating to income Taxes has ever been examined or
audited by any Governmental Body. Except as set forth in Part 2.14(c) of the
Company Disclosure Schedule, there have been no examinations or audits of any
Company Return. 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. Except as set forth in Part 2.14(c) of the
Company Disclosure Schedule, 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) Except as set forth in Part 2.14(d) of the Company Disclosure Schedule,
no claim or Proceeding is pending or 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.
-18-
(e) Except as set forth in Part 2.14(e) of the Company Disclosure Schedule,
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. Part 2.15(a) of the Company
Disclosure Schedule sets forth the citizenship status of every employee of the
Company (whether such employee is a United States citizen or otherwise) and,
with respect to non-United States citizens, identifies the visa or other similar
permit under which such employee is working for the Company and the dates of
issuance and expiration of such visa or other similar permit.
(b) Except as set forth in Part 2.15(b) of the Company Disclosure Schedule,
the Company does not maintain, sponsor or contribute to, and, to the knowledge
of the Company, 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 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 and/or the Code, with respect to such Plan for the last two
years;
-19-
(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, 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, 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).
(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) Except as set forth in Part 2.15(g) of the Company Disclosure Schedule,
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
Unaudited Interim 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.
-20-
(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 the Company is not aware of any reason why any such determination letter
should be revoked nor of any operational defects that could affect the qualified
status of the Plans.
(k) Except as set forth in Part 2.15(k) of the Company Disclosure Schedule,
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.
(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) Except as set forth in Part 2.15(o) of the Company Disclosure Schedule,
the Company has good labor relations, and has no reason to believe 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 employees intends to terminate his or her
employment with the Company.
2.16 Environmental Matters. The Company is in compliance in all material
respects with all applicable Environmental Laws, which compliance includes the
possession by the Company of all permits and other Governmental Authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof. The Company 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 the Company is not in
compliance with any Environmental Law, and, to the knowledge of the Company,
there are no circumstances that may prevent or interfere with the Company's
compliance with any Environmental Law in the future. To the knowledge of the
Company, no current or prior owner of any property leased or controlled by the
Company has received any notice or other communication (in writing or
otherwise), whether from a Governmental Body, citizens group, employee or
otherwise, that alleges that such current or prior owner or the Company is not
in
-21-
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 Schedule. (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, 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 the Company's inception, the Company has not
received any notice or other communication regarding any actual or possible (a)
cancellation or invalidation of any insurance policy, (b) refusal of any
coverage or rejection of any claim under any insurance policy, or (c) material
adjustment in the amount of the premiums payable with respect to any insurance
policy.
2.18 Related Party Transactions. Except as set forth in Part 2.18 of the
Company Disclosure Schedule: (a) no Related Party has, and no Related Party has
at any time since the Company's 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 the Company's
inception been, indebted to the Company; (c) since the Company's inception, no
Related Party has entered into, or has had any direct or indirect financial
interest in, any material Contract, transaction or business dealing involving
the Company; (d) no Related Party is competing, or has at any time since the
Company's 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 to receive compensation for services performed
as an employee of the Company). (For purposes of this Section 2.18 each of the
following shall be deemed to be a "Related Party": (i) each individual who is,
or who has at any time since the Company's inception been, an officer or
director of the Company; (ii) each Person deemed an Affiliate of the Company;
(iii) each member of the immediate family of each of the Persons 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) Except as set forth in Part 2.19 of the Company Disclosure Schedule,
there is no pending Legal Proceeding, and to the knowledge of the Company, no
Person has threatened to
-22-
commence any Legal Proceeding: (i) that involves the Company or any of the
assets owned or used by the Company or any Person whose liability 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, except as set forth in Part 2.19(a) of the Company Disclosure Schedule,
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.
(b) Except as set forth in Part 2.19(b) of the Company Disclosure Schedule,
no Legal Proceeding has ever been commenced by or has ever been pending against
the Company.
(c) 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 subject. To the
knowledge of the Company, 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 the absolute
and unrestricted right, 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 and this Agreement and the
Merger have been unanimously approved by the board of directors of the Company.
The affirmative vote of a majority of the shares of Company Common Stock that
are outstanding on the first date on which a signed written consent of a Company
stockholder approving this Agreement is received by the Company is the only vote
of the stockholders of the Company needed to approve and adopt this Agreement
and approve the Merger and the transactions contemplated hereby (the "Required
Company Stockholder Vote"). This Agreement constitutes the legal, valid and
binding obligation of the Company, enforceable against the 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. Except as set forth in Part 2.21 of the
Company Disclosure Schedule, 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 certificate of incorporation or bylaws, or (ii) any
resolution adopted by the Company's stockholders, 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, or give any
Governmental Body or other Person the right to challenge any of the transactions
contemplated by this
-23-
Agreement or to exercise any remedy or obtain any relief under, 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 Company Contract that is or
would constitute a Material Contract, or give any Person the right to (i)
declare a default or exercise any remedy under any such Company Contract, (ii)
accelerate the maturity or performance of any such Company Contract, or (iii)
cancel, terminate or modify any such Company 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 Company (except for minor
liens that will not, in any case or in the aggregate, materially detract from
the value of the assets subject thereto or materially impair the operations of
the Company).
Except as set forth in Part 2.21 of the Company Disclosure Schedule, 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 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 Customers. Part 2.22 of the Company Disclosure Schedule identifies
each Person that has committed (whether oral or written and whether pursuant to
an agreement or purchase order or otherwise) to purchase existing products or
services or products or services being developed by the Company, and sets forth
for each such Person the quantities or amounts of such products or services that
such Person has committed to purchase (the "Purchase Commitments") and whether
such commitment is oral or written. The Company has provided to Parent true and
complete copies of all documents evidencing such written Purchase Commitments.
All such written Purchase Commitments are in full force and effect, have not
been withdrawn, amended, modified or terminated and are enforceable by the
Company and, upon consummation of the Merger, will be enforceable by Parent,
against the other party to such written Purchase Commitments. No fact, condition
or circumstance exists that would give any party the right to withdraw, amend,
modify or terminate any written Purchase Commitment and no Person has given any
notice to the Company. The Company has no reason to believe, that any Person
intends to withdraw, amend, modify or terminate any Purchase Commitment.
2.23 Product Development. Part 2.23 of the Company Disclosure Schedule sets
forth for each product or service being developed by or on behalf of the Company
a true and correct development status. No fact, condition or circumstance exists
that would materially impair or delay the development of any such products or
services.
-24-
2.24 Full Disclosure.
(a) This Agreement (including the Disclosure Schedule) does not, (i)
contain any representation, warranty or information 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
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.
(b) The information supplied by the Company for inclusion in the
Information Statement (as defined in Section 5.2) will not, as of the date the
Required Company Stockholder Vote is obtained, (i) contain any statement that is
inaccurate or misleading with respect to any material fact, or (ii) omit to
state any material fact necessary in order to make such information (in the
light of the circumstances under which it is provided) not false or misleading.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
3.1 Corporate Existence and Power. Each of Parent and Merger Sub is a
corporation duly incorporated, validly existing and in good standing under the
laws of their jurisdiction of incorporation, and has all corporate power
required to conduct its business as now conducted, and is duly qualified to do
business and is in good standing in each jurisdiction in which the conduct of
its business or the ownership or leasing of its properties requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on Parent's business, financial condition or results of
operations.
3.2 Authority; Binding Nature of Agreement. Parent and Merger Sub have the
right, 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 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 stockholders is needed to adopt this
Agreement or 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.
3.3 Capitalization. The authorized capital stock of Parent consists of: (i)
50,000,000 shares of Common Stock ($.001 par value per share), of which
28,836,694 shares have been issued and are outstanding as of February 7, 2000;
and (ii) 5,000,000 shares of Preferred Stock ($.001 par value per share), none
of which is outstanding as of the date of this Agreement. An aggregate of
6,500,000 shares of Parent Common Stock are reserved for issuance under Parent's
1998 Stock Plan, of which options to purchase [3,982,113] shares were
outstanding as of February 7, 2000. As of February 7, 2000 options to purchase
an additional [713,196] shares of Parent Common Stock were outstanding under the
Sitebridge 1997 Stock Plan assumed by
-25-
Parent in 1999; an aggregate of 750,000 shares of Parent Common Stock were
reserved for issuance under Parent's 1999 Employee Stock Purchase Plan; and an
additional 159,554 shares of Parent Common Stock were reserved for issuance
upon exercise of outstanding warrants. Except as set forth above, 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 Parent; (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 Parent; or (iii) Contract under which Parent is or
may become obligated to sell or otherwise issue any shares of capital stock or
any other securities of Parent.
3.4 SEC Filings; Financial Statements.
(a) Each report, registration statement (on a form other than Form S-8) and
definitive proxy statement filed by Parent with the SEC between September 23,
1999 and the date of this Agreement (the "Parent SEC Documents") is publicly
available from the SEC and Parent will deliver to the Company accurate and
complete copies (excluding copies of exhibits) of each Parent SEC Document prior
to the Closing. As of the time it was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing): (i) each of the Parent SEC Documents complied in all material
respects with the applicable requirements of the Securities Act or the Exchange
Act (as the case may be); and (ii) none of the Parent SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The consolidated financial statements contained in the Parent SEC
Documents: (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered, except as may be indicated in the notes to
such consolidated financial statements and (in the case of unaudited statements)
as permitted by Form 10-Q of the SEC, and except that the unaudited financial
statements may not contain footnotes and are subject to year-end audit
adjustments; and (iii) fairly present the consolidated financial position of
Parent as of the respective dates thereof and the consolidated results of
operations of Parent for the periods covered thereby.
3.5 No Conflict. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Parent and Merger Sub
are not prohibited by, and will not violate or conflict with, any provision of
the certificate of incorporation (or certificate of incorporation) or bylaws of
Parent or Merger Sub.
3.6 Valid Issuance. Subject to Section 1.6(e), the shares of Parent Common
Stock to be issued pursuant to Section 1.6(a) will, when issued in accordance
with the provisions of this Agreement, be validly issued, fully paid and
nonassessable and shall be issued in accordance with all applicable securities
laws.
-26-
SECTION 4. CERTAIN COVENANTS OF THE COMPANY
4.1 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.
4.2 Operation of the Company's Business. During the Pre-Closing Period:
(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 its best 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 keep in full force and effect 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 of the
Company, and shall not repurchase, redeem or otherwise reacquire any shares of
capital stock or other securities of the Company (except that the Company may
repurchase Company Common Stock from former employees pursuant to the terms of
existing restricted stock purchase agreements);
(f) the Company shall not sell, issue or authorize the issuance of (i) any
capital stock or other securities of the Company, (ii) any option or right to
acquire any capital stock or other securities of the Company, or (iii) any
instrument convertible into or exchangeable for any capital stock or other
securities of the Company (except that the Company shall be permitted to issue
shares of Company Common Stock (x) to employees and directors upon the exercise
of Company Options, and (y) to issue shares of Company Common Stock upon the
conversion of shares of Preferred Stock of the Company outstanding as of the
date of this Agreement);
(g) the Company shall not amend or waive any of its rights under, or permit
the acceleration of vesting (except pursuant to agreements existing as of the
date of this Agreement) under, (i) any provision of any Company Stock Option
Plan, (ii) any provision of any agreement evidencing any outstanding Company
Option, or (iii) any provision of any restricted stock
-27-
purchase agreement (unless acceleration of vesting is required under any
Company Stock Option Plan, Company Option or other agreement);
(h) the Company shall not amend or permit the adoption of any amendment to
the Company's certificate 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 (except that the Company may issue shares of Company Common Stock
upon the conversion of shares of outstanding Preferred of the Company Stock);
(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, 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 $10,000 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) the Company shall not (i) acquire, lease or license any right or other
asset from any other Person, (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 travel advances to employees in the ordinary course of
business), or (ii) incur or guarantee any indebtedness for borrowed money,
except for loans and advances from Parent;
(n) the Company shall not (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, or (iii) hire any new
employee whose aggregate annual compensation exceeds $35,000;
(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.
Notwithstanding the foregoing, the Company may take any action described in
clauses "(e)" through "(r)" above if Parent gives its prior written consent to
the taking of such action by the Company, which consent will not be unreasonably
withheld (it being understood that Parent's
-28-
withholding of consent to any action will not be deemed unreasonable if Parent
determines in good faith that the taking of such action would not be in the best
interests of Parent or would not be in the best interests of the Company).
4.3 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 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 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 the Company; and
(iv) any event, condition, fact or circumstance that would make the
timely satisfaction of any condition set forth in Section 6 or Section 7
impossible or unlikely.
(b) If any event, condition, fact or circumstance that is required to be
disclosed pursuant to Section 4.3(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 an
update to the Company Disclosure Schedule specifying such change. No such update
shall be deemed to supplement or amend the Company Disclosure Schedule for the
purpose of (i) determining the accuracy of any of the representations and
warranties made by the Company in this Agreement, or (ii) determining whether
any condition set forth in Section 6 has been satisfied.
4.4 No Negotiation.
(a) During the Pre-Closing Period, the Company shall not, and shall not
authorize or permit any Representative of the Company to, directly or
indirectly:
(i) solicit or encourage the initiation of any inquiry, proposal or
offer from any Person (other than Parent) relating to a possible
Acquisition Transaction;
-29-
(ii) 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
(iii) consider, entertain or accept any proposal or offer from any
Person (other than Parent) relating to a possible Acquisition Transaction.
The Company shall immediately cease and cause to be terminated any existing
discussions with any Person that relate to any Acquisition Transaction. The
Company shall promptly notify Parent in writing of any inquiry, proposal or
offer relating to a possible Acquisition Transaction that is received by the
Company during the Pre-Closing Period.
(b) Nothing in this Agreement shall prevent the Board of Directors of the
Company from withholding, withdrawing, amending or modifying its recommendation
in favor of the Merger if (i) a Superior Offer (as defined below) is made to the
Company and is not withdrawn, (ii) neither the Company nor any of its
representatives shall have violated any of the restrictions set forth in Section
4(a), and (iii) the Board of Directors of the Company concludes in good faith,
after consultation with its outside counsel, that, in light of such Superior
Offer, the withholding, withdrawal, amendment or modification of such
recommendation is required in order for the Board of Directors of the Company to
comply with its fiduciary obligations to the Company and the Company's
shareholders under applicable law. Nothing contained in this Section 4.4(b)
shall limit the Company's obligation to hold and convene the Company
Stockholders' Meeting (regardless of whether the recommendation of the Board of
Directors of the Company shall have been withdrawn, amended or modified). For
purposes of this Agreement, "Superior Offer" shall mean an unsolicited, bona
fide written offer made by a third party to consummate any of the following
transactions: (i) a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company pursuant to which the shareholders of the Company immediately preceding
such transaction hold less than 51% of the equity interest in the surviving or
resulting entity of such transaction; (ii) a sale or other disposition by the
Company of assets (excluding inventory and used equipment sold in the ordinary
course of business) representing in excess of 50% of the fair market value of
the Company's business immediately prior to such sale, or (iii) the acquisition
by any person or group (including by way of a tender offer or an exchange offer
or issuance by the Company), directly or indirectly, of beneficial ownership or
a right to acquire beneficial ownership of shares representing in excess of 50%
of the voting power of the then outstanding shares of capital stock of the
Company, in each case on terms that the Board of Directors of the Company
determines, in its reasonable judgment (based on a written opinion of an
investment bank of nationally recognized reputation) to be more favorable to the
Company shareholders from a financial point of view than the terms of the Merger
and the consideration of which reasonably likely exceeds the value of the
consideration in the Merger (after taking into account all relevant factors,
including any conditions to the Superior Offer, the timing of the consummation
of the transaction pursuant to the Superior Offer, the risk of nonconsummation
thereof and the need for any required governmental or other consents, filings
and approvals); provided, however, that any such offer shall not be deemed to be
a "Superior Offer" if any financing required to consummate the transaction
contemplated by such offer is not committed.
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SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 Filings and Consents. As promptly as 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.
5.2 Stockholder Consent.
(a) As promptly as practicable after the date of this Agreement, Parent and
the Company shall prepare disclosure material concerning the parties to the
proposed Merger, to be sent to the Company stockholders (the "Information
Statement"). Each of Parent and the Company shall use all reasonable efforts to
cause the Information Statement to comply with the rules and regulations
promulgated by the SEC. The Company shall promptly furnish to Parent all
information concerning the Company and the stockholders of the Company that may
be required or reasonably requested in connection with any action contemplated
by this Section 5.2. If any event relating to the Company occurs, or if the
Company becomes aware of any information that should be disclosed in an
amendment or supplement to the Information Statement, then the Company shall
promptly inform Parent thereof and shall cooperate with Parent in preparing such
amendment or supplement and, if appropriate, in mailing such amendment or
supplement to the stockholders of the Company.
(b) The Company shall take all action necessary under all applicable Legal
Requirements to solicit the written consent of the stockholders of the Company
entitled to vote upon the adoption and approval of this Agreement and the
approval of the Merger and will promptly mail to each holder of capital stock of
the Company a copy of the Information Statement, a form of written consent and
such other documents as Parent deems are necessary to comply with applicable law
or are otherwise reasonably appropriate. The Company shall use its best efforts
to ensure that the Required Company Stockholder Vote will be obtained as
promptly as practicable (and in any event within 15 days) after the Information
Statement is first sent to the stockholders of the Company. The Company shall
ensure that the Required Company Stockholder Vote is obtained in compliance with
all applicable Legal Requirements.
(c) The board of directors of the Company shall unanimously recommend that
the Company's stockholders adopt and approve this Agreement and approve the
Merger. The Information Statement shall include a statement to the effect that
the board of directors of the Company has unanimously recommended that the
Company's stockholders adopt and approve this Agreement and approve the Merger.
Neither the board of directors of the Company nor any committee thereof shall
withdraw, amend or modify, or propose or resolve to withdraw, amend or modify,
in a manner adverse to Parent, the unanimous recommendation of the board of
directors of the Company that the Company's stockholders adopt and approve this
Agreement and approve the Merger. For purposes of this Agreement, said
recommendation of the board of
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directors of the Company shall be deemed to have been modified in a manner
adverse to Parent if said recommendation shall no longer be unanimous.
5.3 Public Announcements. During the Pre-Closing Period, (a) the Company
shall not (and the Company shall not permit any of its Representatives to) 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 Parent's prior written consent, and (b) Parent will use
reasonable efforts to consult with the Company prior to issuing any press
release or making any public statement regarding the Merger provided that
nothing herein shall be deemed to prohibit Parent from making any public
disclosure Parent deems necessary or appropriate under applicable laws.
5.4 Best Efforts. During the Pre-Closing Period, (a) the Company shall use
its best efforts to cause the conditions set forth in Section 6 to be satisfied
on a timely basis, and (b) Parent and Merger Sub shall use their best efforts to
cause the conditions set forth in Section 7 to be satisfied on a timely basis.
5.5 Employment Agreements and Confidential Information and Invention
Assignment Agreements. Prior to the Closing, Parent shall use its best efforts
to cause each of the employment agreements to Xxx Xxxxxxx, Xxxx Xxxxxxxx and
Xxxxx Xxxxxxxxxx (the "Founders") attached hereto as Exhibit C (the "Employment
Agreements") and the Confidential Information and Invention Assignment
Agreements substantially in the form attached hereto as Exhibit D (the
"Invention Assignment Agreements") to be executed by the applicable parties and
delivered to Company and the Founders.
5.6 Employees. Parent and the Company shall consult with each other with
respect to the disclosure of the Merger to the employees of the Company.
5.7 Release. At the Closing, each stockholder of the Company shall execute
and deliver to the Company a Release in the form of Exhibit E.
5.8 Termination of Employee Plans. At the Closing, the Company shall
terminate the Company Stock Option Plans and all other employee benefit plans of
the Company.
5.9 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.
5.10 Investment Letters. Each of the Company stockholders as of immediately
prior to the Effective Time shall execute and deliver to Parent an Investment
Letter in the form of Exhibit F.
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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 or waiver, 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 in this Agreement and in each of the other agreements and
instruments delivered to Parent in connection with the transactions contemplated
by this Agreement shall have been accurate in all material respects as of the
date of this Agreement (without giving effect to any "Material Adverse Effect"
or other materiality qualifications, or any similar qualifications, contained or
incorporated directly or indirectly in such representations and warranties), and
shall be accurate in all material respects as of the Closing Date as if made on
the Closing Date (without giving effect to any update to the Company Disclosure
Schedule, and without giving effect to any "Material Adverse Effect" or other
materiality qualifications, or any similar qualifications, contained or
incorporated directly or indirectly in such representations and warranties).
6.2 Performance of Covenants. All of the covenants and obligations that the
Company is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
6.3 Stockholder Approval. This Agreement shall have been duly adopted by
the Required Company Stockholder Vote. None of the holders of shares of capital
stock of the Company shall be entitled to have such shares treated as Dissenting
Shares.
6.4 Consents. All Consents required to be obtained in connection with the
Merger and the other transactions contemplated by this Agreement (including the
Consents identified in Part 2.21 of the Company Disclosure Schedule) shall have
been obtained and shall be in full force and effect.
6.5 Agreements and Documents. Parent shall have received, or shall have
waived its right to receive, the following agreements and documents, each of
which shall be in full force and effect:
(a) the Employment Agreements and the Invention Assignment Agreements
attached hereto as Exhibits C and D, respectively, shall have been executed by
the Founders;
(b) a Release in the form of Exhibit E, executed by each of the
stockholders of the Company;
(c) confidential invention and assignment agreements, reasonably
satisfactory in form and content to Parent, executed by all employees and former
employees of the Company and by all consultants and independent contractors and
former consultants and former independent contractors to the Company who have
not already signed such agreements (including the individuals identified in Part
2.9(f) of the Company Disclosure Schedule);
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(d) Investment Letters in the form of Exhibit F executed by all of the
Company stockholders as of the Closing Date;
(e) a legal opinion of Xxxxxx Xxxxxxx Xxxxx & Scarborough LLP, dated as of
the Closing Date, substantially in the form of Exhibit G;
(f) a written opinion from Parent's counsel to the effect that the Merger
will be treated for Federal income tax purposes as a Reorganization within the
meaning of Section 368 of the Internal Revenue Code;
(g) an Escrow Agreement in the form of Exhibit B, executed by the Company
Stockholders' Representatives and the Escrow Agent;
(h) a certificate signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company representing and
warranting that the conditions set forth in Sections 6.1 and 6.2 have been duly
satisfied (the "Company Compliance Certificate");
(i) a detailed and complete description of all expenses set forth in Part
2.11 of the Company Disclosure Schedule;
(j) a written acknowledgement from each officer and director of the Company
that any indemnification agreement between the Company and such person will not
in any way mitigate such person's liability under Section 9.8 of this Agreement
or for fraud in connection with the Merger.
6.6 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.
6.7 No Governmental Litigation. There shall not be pending or threatened
any Legal Proceeding in which a Governmental Body is or is threatened to become
a party or is otherwise involved, and neither Parent nor the Company shall have
received any communication from any Governmental Body in which such Governmental
Body indicates the possibility of commencing any Legal Proceeding or taking any
other action: (a) challenging or seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions contemplated by this
Agreement; (b) relating to the Merger and seeking to obtain from Parent or any
of its Subsidiaries, or the Company or any of its Subsidiaries, any damages or
other relief that may be material to Parent; (c) seeking to prohibit or limit in
any material respect Parent's ability to vote, receive dividends with respect to
or otherwise exercise ownership rights with respect to the stock of the Company
or any of its Subsidiaries; or (d) which would materially and adversely affect
the right of Parent or the Company or any of its Subsidiaries to own the assets
or operate the business of the Company or any of its Subsidiaries.
6.8 No Other Litigation. There shall not be pending any Legal Proceeding in
which, in the reasonable judgment of Parent, there is a reasonable possibility
of an outcome that could
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have a Material Adverse Effect on the Company or any of its Subsidiaries or a
material adverse effect on Parent: (a) challenging or seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions
contemplated by this Agreement; (b) relating to the Merger and seeking to obtain
from Parent or any of its Subsidiaries, or any of the Company or any of its
Subsidiaries, any damages or other relief that may be material to Parent; (c)
seeking to prohibit or limit in any material respect Parent's ability to vote,
receive dividends with respect to or otherwise exercise ownership rights with
respect to the stock of the Company or any of its Subsidiaries; or (d) which
would affect adversely the right of Parent or the Company or any of its
Subsidiaries to own the assets or operate the business of the Company or any of
its Subsidiaries.
6.9 Termination of Employee Plans. The Company shall have provided
Parent with evidence, reasonably satisfactory to Parent, as to the
termination of the benefit plans referred to in Section 5.10.
6.10 FIRPTA Compliance. Parent shall have received the statement referred
to in Section 5.11(a) and the Company shall have filed with the Internal Revenue
Service the notification referred to in Section 5.11(b).
6.11 Securities Law Requirements. All permits, licenses, consents and
approvals necessary under any laws relating to the sale of securities shall have
been issued or given and no such permit, license, consent or approval shall have
been revoked, concluded, terminated, suspended or made subject of any stop
orders or proceeding therefor.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction or waiver, 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 have been accurate in all
material respects as of the date of this Agreement (without giving effect to any
materiality qualifications or similar qualifications contained or incorporated
directly or indirectly in such representations and warranties), and shall be
accurate in all material respects as of the Closing Date as if made on the
Closing Date (without giving effect to any materiality qualifications or similar
qualifications contained or incorporated directly or indirectly in such
representations and warranties).
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 material
respects.
7.3 Documents. The Company shall have received the following documents:
(a) a legal opinion of Pillsbury Madison & Sutro llp, dated as of the
Closing Date, in the form of Exhibit H;
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(b) a written opinion from the Company's legal counsel to the effect that
the Merger will be treated for Federal income tax purposes as a Reorganization
within the meaning of Section 368 of the Internal Revenue Code;
(c) an Escrow Agreement in the form of Exhibit B, executed by Parent and
the Escrow Agent; and
(d) a certificate signed on behalf of Parent by the Chief Executive Officer
and the Chief Financial Officer of Parent representing and warranting that the
conditions set forth in Sections 7.1 and 7.2 have been duly satisfied.
7.4 Stockholder Approval. This Agreement shall have been duly adopted and
approved and the Merger shall have been duly approved by the Required Company
Stockholder Vote.
7.5 Listing. The shares of Parent Common Stock to be issued in the Merger
shall have been approved for quotation (subject to notice of issuance) on the
Nasdaq.
7.6 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.
7.7 Securities Law Requirements. All permits, licenses, consents and
approvals necessary under any laws relating to the sale of securities shall have
been issued or given and no such permit, license, consent or approval shall have
been revoked, concluded, terminated, suspended or made subject of any stop
orders or proceeding therefor.
7.8 Registration Rights. The Amendment to Investors' Rights Agreement in
the form attached as Exhibit G shall have been executed by Parent and holders of
a majority in interest of Parent's "Registrable Securities," as defined therein.
SECTION 8. TERMINATION
8.1 Termination Events. This Agreement may be terminated prior to the
Closing:
(a) by Parent if Parent reasonably determines 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);
(b) by the Company if the Company reasonably determines 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 to comply with
or perform any covenant or obligation set forth in this Agreement or in any
other agreement or instrument delivered to Parent);
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(c) by Parent at or after the Scheduled Closing Time if any condition set
forth in Section 6 has not been satisfied by the Scheduled Closing Time;
(d) by Parent if any of the Company's representations and warranties
contained in this Agreement shall have been materially inaccurate as of the date
of this Agreement or shall have become materially inaccurate as of any
subsequent date (as if made on such subsequent date), or if any of the Company's
covenants contained in this Agreement shall have been breached in any material
respect; PROVIDED, HOWEVER, that Parent may not terminate this Agreement under
this Section 8.1(d) on account of an inaccuracy in the Company's representations
and warranties that is curable by the Company or on account of a breach of a
covenant by the Company that is curable by the Company unless the Company fails
to cure such inaccuracy or breach within 15 days after receiving written notice
from Parent of such inaccuracy or breach;
(e) by the Company at or after the Scheduled Closing Time if any condition
set forth in Section 7 has not been satisfied by the Scheduled Closing Time;
(f) by the Company if any of Parent's representations and warranties
contained in this Agreement shall have been materially inaccurate as of the date
of this Agreement or shall have become materially inaccurate as of any
subsequent date (as if made on such subsequent date), or if any of Parent's
covenants contained in this Agreement shall have been breached in any material
respect; PROVIDED, HOWEVER, that the Company may not terminate this Agreement
under this Section 8.1(f) on account of an inaccuracy in Parent's
representations and warranties that is curable by Parent or on account of a
breach of a covenant by Parent that is curable by Parent unless Parent fails to
cure such inaccuracy or breach within 15 days after receiving written notice
from the Company of such inaccuracy or breach;
(g) by Parent if the Closing has not taken place on or before March 31,
2000 (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);
(h) by the Company if the Closing has not taken place on or before March
31, 2000 (other than as a result of the failure on the part of the Company 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
(i) by the mutual consent of Parent and the Company.
8.2 Termination Procedures. If Parent wishes to terminate this Agreement
pursuant to Section 8.1(a), Section 8.1(c), Section 8.1(d) or Section 8.1(g),
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 wishes to terminate
this Agreement pursuant to Section 8.1(b), Section 8.1(e), Section 8.1(f) or
Section 8.1(h), the Company shall deliver to Parent a written notice stating
that the Company is terminating this Agreement and setting forth a brief
description of the basis on which the Company is terminating this Agreement.
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8.3 Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1, 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 inaccuracy or prior
breach by such party of any representation, warranty, covenant or other
provision of this Agreement; (b) the parties shall, in all events, remain bound
by and continue to be subject to the provisions set forth in Section 10; and (c)
the Company shall, in all events, remain bound by and continue to be subject to
Section 5.3.
SECTION 9. INDEMNIFICATION, ETC.
9.1 Survival of Representations, Etc.
(a) The representations and warranties made by the Company (including the
representations and warranties set forth in Section 2 and the representations
set forth in the Company Compliance Certificate) shall survive the Closing and
shall expire on the first anniversary of the Closing Date; PROVIDED, HOWEVER,
that the representations set forth in Sections 2.14 and 2.15 shall survive until
expiration of applicable statutes of limitations and provided further that if,
at any time prior to the first anniversary of the Closing Date, any Indemnitee
(acting in good faith) delivers to the Company Stockholders' Representative a
written notice alleging the existence of an inaccuracy in or a breach of any of
the representations and warranties made by the Company (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 9.2 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. All representations and warranties made by Parent
and Merger Sub shall terminate and expire as of the Effective Time, and any
liability of Parent or Merger Sub with respect to such representations and
warranties shall thereupon cease.
(b) The representations, warranties, covenants and obligations of the
Company, 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 or in any update to the
Company Disclosure Schedule shall be deemed to be a representation and warranty
made by the Company in this Agreement.
9.2 Indemnification.
(a) From and after the Closing Date (but subject to Section 9.1(a)), each
Indemnitee shall be held harmless and indemnified from and against, and shall be
compensated, reimbursed and paid for, any Damages which are directly or
indirectly suffered or incurred by any Indemnitee or to which any Indemnitee 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, or are directly
or indirectly connected with: (i) any inaccuracy in or breach of any
representation or warranty of the Company set forth in this Agreement (without
giving effect to any "Material Adverse Effect" or other materiality
qualification or any similar qualification contained or
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incorporated directly or indirectly in such representation or warranty, and
without giving effect to any update to the Company Disclosure Schedule delivered
by the Company to Parent prior to the Closing) or in the Company Compliance
Certificate; (ii) any inaccuracy in or breach of any representation or warranty
made by the Company in this Agreement (without giving effect to any "Material
Adverse Effect" or other materiality qualification or any similar qualification
contained or incorporated directly or indirectly in such representation or
warranty, and without giving effect to any update to the Company Disclosure
Schedule delivered by the Company to Parent prior to the Closing) or in the
Company Compliance Certificate as if such representation or warranty were made
on and as of the Closing Date, (iii) any breach of any covenant or obligation of
the Company (including the covenants set forth in Sections 4 and 5); or (iv) any
Legal Proceeding relating to any inaccuracy or breach of the type referred to in
clauses "(i)" "(ii)" or "(iii)" above (including any Legal Proceeding commenced
by any Indemnitee for the purpose of enforcing any of its rights under this
Section 9).
(b) In the event 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.
9.3 Threshold. No indemnitee shall be entitled to indemnification pursuant
to Section 9.2(a) for any inaccuracy in or breach of any of the Company's
representations and warranties set forth in this Agreement or the Company
Compliance Certificate until such time as the total amount of all Damages
(including the Damages arising from such inaccuracy or breach and all other
damages arising from any other inaccuracies in or breaches of any
representations or warranties) that have been directly or indirectly 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 $50,000 in
aggregate, provided that if the total amount of such Damages excess $50,000,
then any Indemnitee that has suffered or incurred any Damages shall be entitled
to be indemnified against and compensated, reimbursed and paid for all of such
Damages and not merely that portion of such Damages exceeding $50,000.
9.4 Right of Offset of Indemnification Claims. Subject to Section 9.3, in
the event any Indemnitee shall suffer any Damages for which such Indemnitee is
entitled to indemnification under this Section 9, such Indemnitee shall be
entitled to recover such Damages solely by obtaining that number of Escrow
Shares equal in value (as determined in accordance with the terms and conditions
of the Escrow Agreement) to the aggregate amount of such Damages.
9.5 No Contribution. The Company stockholders 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 stockholders may become subject under or in connection
with this Agreement or the Escrow Agreement.
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9.6 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 Indemnitees may be entitled to indemnification or any other
remedy pursuant to this Section 9, 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 shall be satisfied out of the Escrow Shares in the manner set forth
in the Escrow Agreement; and
(b) Parent shall have the right to settle, adjust or compromise such claim
or Legal Proceeding with the consent of the Company Stockholders'
Representative; PROVIDED, HOWEVER, that such consent shall not be unreasonably
withheld.
Parent shall give the Company Stockholders' Representative 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 Company Stockholders' Representative shall not limit any of the
Indemnitees' rights to indemnification under this Section 9 (except to the
extent such failure materially prejudices the defense of such Legal Proceeding).
If Parent does not elect to proceed with the defense of any such claim or Legal
Proceeding, the Company Stockholders' Representative may proceed with the
defense of such claim or Legal Proceeding with counsel reasonably satisfactory
to Parent; PROVIDED, HOWEVER, that the Company Stockholders' Representative may
not settle, adjust or compromise any such claim or Legal Proceeding without the
prior written consent of Parent (which consent may not be unreasonably
withheld).
9.7 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 or under the Escrow 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.
9.8 Fraud. Notwithstanding any provision in this Agreement to the contrary,
the liability of a stockholder for fraud shall not be limited as set forth
above, and any claim with respect to such liability need not be presented within
the time limits set forth in Section 9.1(a) and shall be subject only to
applicable statutes of limitation.
SECTION 10. REGISTRATION RIGHTS
10.1 Restrictions on Transferability. The shares of Parent Common Stock
issued in the Merger shall not be sold, assigned, transferred or pledged except
upon the conditions specified in this Section 10, which conditions are intended
to ensure compliance with the provisions of the Securities Act. The Company and
the stockholders of the Company will cause any proposed purchaser, assignee,
transferee or pledgee of such shares of Parent Common Stock in any transaction
other than a registered transaction to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this Section 10.
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10.2 Restrictive Legend. Each certificate representing the shares of Parent
Common Stock issued in the Merger and any other securities issued in respect of
such shares upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event, shall (unless otherwise permitted by the
provisions of Section 10.3) be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend required under
applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS THE CORPORATION RECEIVES AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SAID ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES
AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION.
Each Holder consents to Parent making a notation on its records and giving
instructions to any transfer agent of the Parent Common Stock as and if
necessary in order to implement the restrictions on transfer established in this
Section 10.
10.3 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 10.3. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than a
transfer not involving a change in beneficial ownership), unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to Parent of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied, at such holder's expense by either (a) a written opinion of legal
counsel who shall be, and whose legal opinion shall be, reasonably satisfactory
to Parent, addressed to Parent, to the effect that the proposed transfer of the
Restricted Securities may be effected without registration under the Securities
Act, or (b) a "no action" letter from the SEC to the effect that the transfer of
such securities without registration will not result in a recommendation by the
staff of the SEC that action be taken with respect thereto, whereupon the holder
of such Restricted Securities shall be entitled to transfer such Restricted
Securities in accordance with the terms of the notice delivered by the holder to
Parent. Each certificate evidencing the Restricted Securities transferred as
above provided shall bear, except if such transfer is made pursuant to Rule 144
or in a registered transaction, the appropriate restrictive legend set forth in
Section 10.2, except that such certificate shall not bear such restrictive
legend if, in the reasonable opinion of counsel for such holder and Parent, such
legend is not required in order to establish compliance with any provision of
the Securities Act.
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10.4 Requested Registration.
Parent shall use best efforts to cause its Amended and Restated
Investors' Rights Agreement dated as of July 12, 1999 to be amended
substantially in the form attached hereto as Exhibit J in order to provide to
the stockholders of the Company the registration rights thereunder.
SECTION 11. MISCELLANEOUS PROVISIONS
11.1 Company Stockholders' Representatives. The stockholders of the
Company, by adopting this Agreement and the transactions contemplated hereby,
hereby irrevocably appoint Xxx Xxxxxxx and Xxxx Xxxxxxxx as their agents for
purposes of Section 9 and the Escrow Agreement (the "Company Stockholders'
Representatives"), and each of Xxx Xxxxxxx and Xxxx Xxxxxxxx hereby accepts his
appointment as a Company Stockholders' Representative for purposes of Section 9
and the Escrow Agreement. Parent shall be entitled to deal exclusively with the
Company Stockholders' Representatives on all matters relating to Section 9 and
the Escrow Agreement, 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 Company stockholder by a Company Stockholders'
Representative, and on any other action taken or purported to be taken on behalf
of any Company stockholder by a Company Stockholders' Representative, as fully
binding upon such Company stockholder. If a Company Stockholders' Representative
shall die, become disabled or otherwise be unable to fulfill his
responsibilities as agent of the Company stockholders, then a
majority-in-interest of the holders of Escrowed Shares shall, within ten days
after such death or disability, appoint a successor representative reasonably
satisfactory to Parent. Any such successor shall become a "Company Stockholders'
Representative" for purposes of Section 9, the Escrow Agreement and this Section
11.1. If for any reason there is no Company Stockholders' Representative at any
time, all references herein to the Company Stockholders' Representative shall be
deemed to refer to Xxx Xxxxxxx and Xxxx Xxxxxxxx.
11.2 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.
11.3 Fees and Expenses. Subject to Section 1.5 of this Agreement, 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
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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 fees, costs and expenses incurred by or
for the benefit of the Company exceeds in the aggregate the amount set forth in
clauses (b) and (c) of Exhibit A under the heading "Additional Liability," such
fees, costs and expenses shall be paid and satisfied by the cancellation of that
number of Escrow Shares equal in value to the amount by which such fees, costs
and expenses exceed the Stated Amounts.
11.4 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).
11.5 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 when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) 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):
IF TO PARENT:
EGAIN COMMUNICATIONS CORPORATION
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxx Xxx
Xxxxxxx XxXxxxx
Fax: (000) 000-0000
WITH A COPY TO:
PILLSBURY MADISON & SUTRO LLP
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
IF TO THE COMPANY:
BIG SCIENCE COMPANY
0000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxxxx
Fax: (000) 000-0000
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WITH A COPY TO:
XXXXXX XXXXXXX XXXXX & SCARBOROUGH, LLP
000 Xxxxxxxxx Xxxxxx XX, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
11.6 Time of the Essence. Time is of the essence of this Agreement.
11.7 Headings. The underlined 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.
11.8 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.
11.9 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).
11.10 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns (if
any). The Company shall not assign this Agreement or any rights or obligations
hereunder (by operation of law or otherwise) to any Person.
11.11 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.
11.12 Waiver. 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. 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.
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11.13 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. 11.14 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.
11.15 Parties in Interest. Except for the provisions of Sections 1.5, 1.6
and 9, 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).
11.16 Entire Agreement. This Agreement 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 the Confidentiality Agreement
executed by Parent and the Company on December 1, 1999 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
Confidentiality Agreement is terminated in accordance with its terms.
11.17 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."
(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.
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The parties hereto have caused this Agreement to be executed and delivered
as of the date first set forth above.
EGAIN COMMUNICATIONS CORPORATION
a Delaware corporation
By: /s/
-----------------------------------
Print Name:___________________________
Title:________________________________
BIG SCIENCE COMPANY
a Georgia corporation
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Print Name: Xxxxxx X. Xxxxxxx
--------------------------
Title: President
-------------------------------
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For purposes of Section 2 only:
/s/ Xxx Xxxxxxx
-------------------------------------
Xxx Xxxxxxx
/s/ Xxxx Xxxxxxxx
-------------------------------------
Xxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxxxx
-------------------------------------
Xxxxx Xxxxxxxxxx
COMPANY STOCKHOLDERS' REPRESENTATIVES
/s/ Xxx Xxxxxxx
-------------------------------------
Xxx Xxxxxxx
/s/ Xxxx Xxxxxxxx
-------------------------------------
Xxxx Xxxxxxxx
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, lease, exchange, transfer license, disposition or acquisition
of more than 20% of the assets of the Company's business or assets;
(b) the issuance, disposition or acquisition of (i) any capital stock or
other equity securities of the Company (other than Common Stock issued to
employees of the Company upon exercise of Company Options), (ii) any option,
call, warrant or right (whether or not immediately exercisable) to acquire any
capital stock or other equity securities of the Company, or (iii) any security,
instrument or obligation that is or may become convertible into or exchangeable
for any capital stock or other equity securities of the Company; or
(c) any merger, consolidation, business combination, reorganization or
similar transaction involving the Company.
ADDITIONAL LIABILITIES . "Additional Liabilities" shall mean the sum of the
following:
(a) $554,530 payable to the stockholders of the Company pursuant to Section
1.6(c);
(b) all consideration payable by the Company to Xxxxxx Xxxx Securities
Corporation, the Company's financial adviser (the "Adviser"), consisting of
$740,940 in cash, $250,000 in shares of Parent Common Stock at an assumed value
of $42.25 and reimbursement of the Adviser's out of pocket expenses incurred on
behalf of the Company;
(c) the legal, accounting and other professional fees and expenses incurred
by Company in connection with the Merger not to exceed [$75,000];
(d) any amounts borrowed by Company from Parent as of the date of this
Agreement;
(e) the $10,000 loan from Xxx Xxxxxxx to the Company in January 2000; and
(f) any material liabilities which exceed $50,000 in the aggregate and
which are not reflected in the Company Financial Statements, except for the
following liabilities:
(i) that certain loan by Xxxxx Xxxxxxxxxx to the Company in January
2000 in the amount of $25,000;
(ii) the travel expenses owed to Xxxx Xxxxxxxx not to exceed $15,000
and provided such expenses are documented; and
A-1
(iii) salary accrued to each of the Founders since January 1, 2000, in
the amount of $10,000 per month.
AFFILIATE. "Affiliate" shall have the meaning set forth in Rule 144 under
the Securities Act.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached (including the Company
Disclosure Schedule), as it may be amended from time to time.
COMPANY CAPITAL STOCK. "Company Capital Stock" shall mean collectively the
Company Common Stock, [Company Preferred Stock] and all other shares of capital
stock of the Company.
COMPANY CONTRACT. "Company Contract" shall mean any Contract: (a) to which
the Company is a party; (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; or (c) under which the Company has or may acquire any right or
interest.
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.
COMPANY SOURCE CODE. "Company Source Code" shall mean source code for any
Company Proprietary Assets, including, but not to limited to TMT, Clarity, CKO
and ATP.
COMPANY STOCK OPTION PLANS. "Company Stock Option Plans" shall mean the
Company's 1999 Stock Incentive Plan.
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, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys' 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
A-2
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.
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).
INDEMNITEES. "Indemnitees" shall mean the following Persons: (a) Parent;
(b) Parent's current and future Affiliates (including the Surviving
Corporation); (c) the respective Representatives of the Persons referred to in
clauses "(a)" and "(b)" above; and (d) the respective successors and assigns of
the Persons referred to in clauses "(a)", "(b)" and "(c)" above.
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 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,
A-3
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Body.
MATERIAL ADVERSE EFFECT. A violation or other matter will be deemed to have
a "Material Adverse Effect" on the Company if such violation or other matter
(considered together with all other matters that would constitute exceptions to
the representations and warranties set forth in the Agreement or in the Company
Compliance Certificate but for the presence of "Material Adverse Effect" or
other materiality qualifications, or any similar qualifications, in such
representations and warranties) has had or could have a material adverse effect
on the Company's business, condition, prospects, assets, liabilities,
operations, financial performance customer relationships or Purchase
Commitments.
NASDAQ. "Nasdaq" shall mean the Nasdaq National Stock Market.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
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, maskwork, maskwork
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.
RESTRICTED SECURITIES. "Restricted Securities" shall mean the securities of
Parent required to bear the legend set forth in Section 10.2.
SEC. "SEC" shall mean the United States Securities and Exchange Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933, as
amended.
SUBSIDIARY. Any Entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record,
(a) an amount of voting securities or other interests in such Entity that is
sufficient to enable such Person to elect at least a majority of the members of
such Entity's board of directors or other governing body, or (b) at least 50% of
the outstanding equity or financial interests of such Entity.
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.
A-4
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.
A-5
EXHIBIT B
ESCROW AGREEMENT
B-1
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is entered into as of March 7, 2000 by and among
EGAIN COMMUNICATIONS CORPORATION, a Delaware corporation ("Parent"), BIG SCIENCE
COMPANY, a Georgia corporation (the "Company"), U.S. BANK TRUST, NATIONAL
ASSOCIATION (the "Escrow Agent"), and XXX XXXXXXX and XXXX XXXXXXXX (each a
"Company Stockholders' Representative", collectively the "Company Stockholders'
Representatives"). Capitalized terms used in this Agreement and not otherwise
defined shall have the meanings given them in the Merger Agreement (as defined
below).
RECITALS
A. Parent and the Company have entered into an Agreement and Plan of
Merger and Reorganization dated as of February 7, 2000 (the "Merger Agreement")
pursuant to which the Company will be merged with and into Parent whereby Parent
will be the surviving corporation (the "Surviving Corporation").
B. The Merger Agreement provides that an escrow account will be
established as collateral for certain indemnification obligations owed to the
Indemnitees by the holders of the Company's capital stock (the "Company
Stockholders") under the Merger Agreement, which indemnification obligations
will be limited to the collateral in the escrow account.
C. The parties hereto desire to establish the terms and conditions
pursuant to which such escrow account will be established and maintained.
AGREEMENT
NOW, THEREFORE, the parties hereby agree as follows:
1. ESCROW ACCOUNT.
(A) ESCROW OF SHARES. On the Closing Date, Parent shall deliver to the
Escrow Agent a certificate or certificates for 110,938.23 shares of Parent
Common Stock (the "Escrow Shares") to be issued in the name of the Escrow Agent
or its nominee. The Escrow Shares shall be held as an escrow account and shall
not be subject to any lien, attachment, trustee process or any other judicial
process of any creditor of any party hereto. The Escrow Agent agrees to accept
delivery of the Escrow Shares and to hold the Escrow Shares in an escrow account
(the "Escrow Account") subject to the terms and conditions of this Agreement.
(B) DIVIDENDS, ETC. Any securities distributable in respect of or in
exchange for any of the Escrow Shares, whether by way of stock dividend, stock
splits or otherwise, shall be delivered to the Escrow Agent, who shall hold such
securities in the Escrow Account. Such securities shall be issued in the name of
the Escrow Agent or its nominee and shall be considered Escrow Shares for all
purposes hereof. Any cash dividend or property (other than securities)
distributable to the Company Stockholders in respect of the Escrow Shares shall
be distributed to
the Escrow Agent, who shall promptly distribute such dividends upon receipt to
the Company Stockholders.
(C) VOTING OF SHARES. For so long as voting securities are held in the
Escrow Account, on any matter brought before the stockholders of Parent for a
vote, each Company Stockholder shall deliver notice to the Escrow Agent ("Voting
Notice") setting forth the manner in which the Escrow Shares held by such
Company Stockholder shall be voted by the Escrow Agent. Each Company Stockholder
shall deliver such Voting Notice to the Escrow Agent at least five days prior to
the date of the taking of any vote of the stockholders of Parent (the "Voting
Notice Date"). The Escrow Agent shall have no obligation to vote any of the
Escrow Shares if no Voting Notice is received prior to the Voting Notice Date or
if such notice does not clearly set forth the manner in which the Escrow Agent
shall vote the Escrow Shares.
(D) TRANSFERABILITY. The interests of the Company Stockholders in the
Escrow Shares shall not be assignable or transferable, other than by operation
of law. Notice of any such assignment or transfer by operation of law shall be
given to the Escrow Agent and Parent, and no such assignment or transfer shall
be valid until such notice is given.
(E) ESCROW AGENT'S POWER TO TRANSFER. The Escrow Agent is hereby granted
the power to effect any transfer of the Escrow Shares permitted under the terms
of this Agreement.
2. ADMINISTRATION OF ESCROW ACCOUNT. The Escrow Agent shall administer the
Escrow Account as follows:
(A) DELIVERY OF CLAIM NOTICE. If any Indemnitee has incurred or suffered
any Damages for which it is or may be entitled to indemnification under the
Merger Agreement, the Parent shall, on behalf of such Indemnitee and on or prior
to the Termination Date (as defined below), give written notice of such claim (a
"Claim Notice") to the Company Stockholders' Representatives and the Escrow
Agent. Each Claim Notice shall state the basis for such claim and the amount of
Damages incurred or suffered by such Indemnitee (the "Claimed Amount"). No
Indemnitee shall make any claim for Damages after March 6, 2001 (the
"Termination Date").
(B) RESPONSE NOTICE; UNCONTESTED CLAIMS. Within 20 days of the date a Claim
Notice was sent to the Company Stockholders' Representatives and the Escrow
Agent (the "Response Date"), the Company Stockholders' Representatives shall
provide to Parent and to the Escrow Agent a written response (the "Response
Notice") in which the Company Stockholders' Representatives shall: (i) agree
that Escrow Shares having a Fair Market Value (as calculated pursuant to Section
4 hereof) equal to the full Claimed Amount may be released from the Escrow
Account to the Indemnitee, (ii) agree that Escrow Shares having a Fair Market
Value equal to part, but not all, of the Claimed Amount (the "Agreed Amount")
may be released from the Escrow Account to the Indemnitee or (iii) contest that
any of the Escrow Shares may be released from the Escrow Account to the
Indemnitee. The Company Stockholders' Representatives may contest the release of
Escrow Shares having a Fair Market Value equal to all or a portion of a Claimed
Amount only based upon a good faith belief that all or such portion of the
Claimed Amount does not constitute Damages for which the Indemnitee is entitled
to indemnification under the Merger Agreement. If no Response Notice is
delivered by the Company Stockholders'
2
Representatives to the Escrow Agent by the Response Date, the Company
Stockholders' Representatives shall be deemed to have agreed that Escrow Shares
having a Fair Market Value equal to the entire Claimed Amount may be released to
the Indemnitee from the Escrow Account.
(C) UNCONTESTED CLAIM. If the Company Stockholders' Representatives, in the
Response Notice, agree or are deemed to have agreed that Escrow Shares having a
Fair Market Value equal to the Claimed Amount may be released from the Escrow
Account to the Indemnitee, the Escrow Agent shall, no later than ten days after
receipt of the Response Notice, transfer, deliver, and assign to such Indemnitee
such number of Escrow Shares held in the Escrow Account having a Fair Market
Value equal to the Claimed Amount (or such lesser number of Escrow Shares as is
then held in the Escrow Account).
(D) PARTIALLY CONTESTED CLAIMS. If the Company Stockholders'
Representatives, in the Response Notice, agree that Escrow Shares having a Fair
Market Value equal to part, but not all, of the Claimed Amount may be released
from the Escrow Account to such Indemnitee, the Escrow Agent shall, no later
than ten days after receipt of the Response Notice, transfer, deliver, and
assign to such Indemnitee such number of Escrow Shares held in the Escrow
Account which have a Fair Market Value equal to the Agreed Amount (or such
lesser number of Escrow Shares as is then held in the Escrow Account).
(E) CONTESTED CLAIMS. If the Company Stockholders' Representatives, in the
Response Notice, contest the release of all or part of the Escrow Shares having
a Fair Market Value equal to all or part of the Claimed Amount (the "Contested
Amount"), the matter shall be settled by binding arbitration held in Santa Xxxxx
County, California. All claims shall be settled by three arbitrators in
accordance with the Commercial Arbitration Rules then in effect of the American
Arbitration Association (the "Rules"). The Company Stockholders' Representatives
and Parent shall each designate one arbitrator within 15 days of the delivery of
the Response Notice contesting the Claimed Amount. Such designated arbitrators
shall mutually agree upon and shall designate a third arbitrator; PROVIDED,
HOWEVER, that (i) in the event the two designated arbitrators fail to reach
agreement with respect to the designation of the third arbitrator within 15 days
of delivery of the Response Notice, the third arbitrator shall be appointed in
accordance with the Rules and (ii) if either the Company Stockholders'
Representatives or Parent fail to timely designate an arbitrator, the dispute
shall be resolved by the one arbitrator timely designated. There shall be
limited discovery prior to the arbitration hearing, subject to the discretion of
the arbitrators, as follows: (a) exchange of witness lists and copies of
documentary evidence and documents related to or arising out of the issues to be
arbitrated, (b) depositions of all party witnesses, and (c) such other
depositions as may be allowed by the arbitrators upon a showing of good cause.
Depositions shall be conducted in accordance with the California Code of Civil
Procedure. Each party shall pay its own costs and expenses (including counsel
fees) of any such arbitration. The Company Stockholders' Representatives and
Parent shall pay the fees and expenses of their respectively designated
arbitrators and shall bear equally the fees and expenses of the third
arbitrator. The arbitrators shall decide the matter to be arbitrated pursuant
hereto within 60 days after the appointment of the last arbitrator. The
arbitrators' decision shall relate solely to whether Parent is entitled to
receive the Contested Amount (or a portion thereof) pursuant to the applicable
terms of the Merger Agreement and this Agreement. The final decision of the
majority of the arbitrators shall be furnished to the Company Stockholders'
3
Representatives, Parent and the Escrow Agent in writing and shall constitute a
conclusive determination of the issue in question, binding upon the Company
Stockholders' Representatives, the Company Stockholders, the Company, Parent and
the Escrow Agent and shall not be contested by any of them. Such decision may be
used in a court of law only for the purpose of seeking enforcement of the
arbitrators' award. After delivery of a Response Notice that the Claimed Amount
is contested by the Company Stockholders' Representatives, the Escrow Agent
shall continue to hold in the Escrow Account a number of Escrow Shares having a
Fair Market Value equal to one hundred percent (100%) of the Contested Amount
(up to the number of Escrow Shares then available in the Escrow Account),
notwithstanding the occurrence of the Termination Date, until (x) delivery of a
copy of a settlement agreement executed by Parent and the Company Stockholders'
Representatives setting forth instructions to the Escrow Agent as to release of
Escrow Shares from the Escrow Account, if any, that shall be made with respect
to the Contested Amount, or (y) delivery of a copy of the final award of the
majority of the arbitrators setting forth instructions to the Escrow Agent as to
the release of Escrow Shares from the Escrow Account, if any, that shall be made
with respect to the Contested Amount. The Escrow Agent shall thereupon release
Escrow Shares from the Escrow Account (to the extent Escrow Shares are then held
in the Escrow Account) in accordance with such agreement or instructions.
3. RELEASE OF ESCROW SHARES.
(A) Within 15 days after the Termination Date, the Escrow Agent shall
distribute to the Company Stockholders all of the Escrow Shares then held in
escrow. Notwithstanding the foregoing, if any Indemnitee shall have asserted a
claim for indemnification prior to the Termination Date and such claim has not
yet been resolved, the Escrow Agent shall retain in the Escrow Account after the
Termination Date a number of Escrow Shares having a Fair Market equal to one
hundred percent (100%) of the Claimed Amount or Contested Amount, as the case
may be (as well as any amounts the Escrow Agent reasonably determines are
necessary to satisfy the fees and expenses contemplated by Section 5(a)), which
has not then been resolved, upon the terms set forth in Section 2.
(B) Any distribution of all or a portion of the Escrow Shares to the
Company Stockholders shall be made in accordance with the percentages set forth
opposite such holders' respective names on ATTACHMENT A hereto; PROVIDED,
HOWEVER, that the Escrow Agent shall withhold the distribution of the portion of
the Escrow Shares otherwise distributable to the Company Stockholders who have
not, according to written notice provided by Parent to the Escrow Agent, prior
to such distribution, surrendered their respective Company Stock Certificates in
accordance with Section 1.8 of the Merger Agreement. Any such withheld amounts
shall be delivered to Parent promptly after the Termination Date, and shall be
delivered by Parent to the Company Stockholders to whom such shares would have
otherwise been distributed upon surrender of their respective Company Stock
Certificates. Distributions to the Company Stockholders shall be made by mailing
stock certificates in the names of such holders to the address of the applicable
Company Stockholder shown on ATTACHMENT A (or such other address as may be
provided in writing to the Escrow Agent and Parent by the Company Stockholders).
4
(C) No fractional shares of Parent Common Stock shall be distributed to the
Company Stockholders pursuant to this Agreement. In lieu of any fractional
shares to which such Company Stockholder would otherwise be entitled, such
Company Stockholder shall be paid in cash an amount equal to the sum of the
dollar amount (rounded to the nearest whole cent) determined by multiplying the
Fair Market Value by the fraction of a share of Parent Common Stock that would
otherwise be deliverable to such Company Stockholder hereunder. As soon as
practicable after the Termination Date, Parent shall deposit cash in a
sufficient amount to pay all fractional shares in accordance with this Section
3(c).
4. VALUATION OF ESCROW SHARES. For purposes of this Agreement, the Fair
Market Value of the Escrow Shares shall be determined based upon the average
closing price of Parent Common Stock on the Nasdaq National Stock Market during
the ten trading days immediately preceding the Closing Date.
5. FEES AND EXPENSES.
(A) Upon execution of this Agreement and initial deposit of the Escrow
Shares, an acceptance fee and administration fee will be payable to the Escrow
Agent as set forth on ATTACHMENT B hereto. The administration fee will cover the
initial twelve months of the escrow. If the period which the Escrow Agent is
required to maintain the Escrow Account continues beyond the Termination Date
pursuant to Section 3(a), fees will be payable in accordance with the Escrow
Agent's fee schedules set forth on Attachment B. The Escrow Agent will also be
entitled to reimbursement for extraordinary expenses incurred in performance of
its duties hereunder as set forth on Attachment B.
(B) Parent shall pay the fees and expenses of the Escrow Agent for the
services to be rendered by the Escrow Agent hereunder.
(C) All reasonable expenses (including attorneys' fees) incurred by the
Company Stockholders' Representatives in connection with the performance of
their duties hereunder shall be paid by the Company Stockholders. Parent shall
have no liability whatsoever for any fees, costs, or other expenses incurred by
the Company Stockholders' Representatives. In all questions arising under this
Agreement, the Escrow Agent may rely on the advice of counsel, and for anything
done, omitted or suffered in good faith by the Company Stockholders'
Representatives based on such advice, the Company Stockholders' Representatives
shall not be liable to anyone. The Company Stockholders' Representatives shall
not be required to take any action hereunder involving any expense unless the
payment of such expense is made or provided for in a manner reasonably
satisfactory to the Company Stockholders' Representatives.
6. DUTIES OF ESCROW AGENT.
(A) The Escrow Agent shall be entitled to rely upon any order, judgment,
certificate, demand, notice, instrument or other writing delivered to it
hereunder without being required to investigate the validity, accuracy or
content thereof nor shall the Escrow Agent be responsible for the validity or
sufficiency of this Agreement. In all questions arising under this Agreement,
the Escrow Agent may rely on the advice of counsel, and for anything done,
omitted or suffered in good faith by the Escrow Agent based on such advice, the
Escrow Agent shall not
5
be liable to anyone. The Escrow Agent shall not be required to take any action
hereunder involving any expense unless the payment of such expense is made or
provided for in a manner reasonably satisfactory to it.
(B) In the event conflicting demands are made or conflicting notices are
served upon the Escrow Agent with respect to the Escrow Shares, the Escrow Agent
will have the absolute right, at the Escrow Agent's election, to do either or
both of the following: (i) resign as Escrow Agent so a successor can be
appointed pursuant to clause (d) of this Section 6, or (ii) file a suit in
interpleader and obtain an order from a court of competent jurisdiction
requiring the parties to interplead and litigate in such court their several
claims and rights among themselves. In the event such interpleader suit is
brought, the Escrow Agent will thereby be fully released and discharged from all
further obligations imposed upon it under this Agreement, and Parent will pay
the Escrow Agent all costs, expenses and reasonable attorneys' fees expended or
incurred by the Escrow Agent pursuant to the exercise of the Escrow Agent's
rights under this Section 6(b) (such costs, fees and expenses will be treated as
extraordinary fees and expenses for the purposes of Section 5 hereof).
(C) The Escrow Agent shall not be liable, except for its or its
representatives, own gross negligence or willful misconduct and, with respect to
claims not based upon such gross negligence or willful misconduct that are
successfully asserted against the Escrow Agent, Parent and the Company
Stockholders shall, jointly and severally, indemnify and hold harmless the
Escrow Agent (and any successor Escrow Agent) from and against any and all
losses, liabilities, claims, actions, damages and expenses, including reasonable
attorneys' fees and disbursements, arising out of and in connection with this
Agreement.
(D) The Escrow Agent shall have no interest in the Escrow Shares, but is
serving as escrow holder only and having only possession thereof.
(E) The Escrow Agent may resign as Escrow Agent at any time and for any
reason whatsoever. In the event the Escrow Agent desires to resign as Escrow
Agent under this Agreement, the Escrow Agent shall deliver a notice to Parent
and the Company Stockholders' Representatives stating the date upon which such
resignation shall be effective; PROVIDED, HOWEVER, that any such resignation
shall not be effective until at least the 30th day after Parent and the Company
Stockholders' Representatives receive such notice. Upon the receipt of any such
notice from the Escrow Agent, Parent may appoint a successor escrow agent
without the consent of the Company Stockholders' Representatives so long as such
successor is a bank or trust company with assets of at least $500 million, and
may appoint any other successor escrow agent with the consent of the Company
Stockholders' Representatives, which consent shall not be unreasonably withheld.
In the case of the appointment of any successor escrow agent requiring the
consent of the Company Stockholders' Representatives as set forth in the
preceding sentence, Parent and the Company Stockholders' Representatives shall
deliver a written notice to the Escrow Agent designating the successor escrow
agent. Upon the effectiveness of the resignation of the Escrow Agent, the Escrow
Agent shall deliver the Escrow Shares to any successor escrow agent properly
designated hereunder, whereupon the Escrow Agent shall be discharged from any
and all further obligations arising hereunder. If upon the effective date of
resignation of the Escrow Agent a successor escrow agent has not been duly
designated, Escrow Agent may petition any court of competent jurisdiction to
name a successor escrow agent and the
6
Escrow Agent's sole responsibility after that time shall be to retain and
safeguard the Escrow Shares until receipt of a designation of successor escrow
agent or a final nonappealable order of a court of competent jurisdiction.
7. TERMINATION. This Agreement shall terminate upon the later of the
Termination Date or the release by the Escrow Agent of all of the Escrow Shares
in accordance with this Agreement.
8. NOTICES. All notices, instructions and other communications given
hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) via a reputable
nationwide overnight courier service, in each case to the address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered three business days after it is sent prepaid, or one business day
after it is sent via a reputable nationwide overnight courier service.
If to Parent: EGAIN COMMUNICATIONS CORPORATION
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxx Xxx
Xxxxxxx XxXxxxx
Fax: (000) 000-0000
With a copy to: PILLSBURY MADISON & SUTRO LLP
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
. Fax: (000) 000-0000
If to the Company Stockholders'
Representatives: XXX XXXXXXX
000 Xxxxx Xxxx
Xxxxxxx, XX 00000
XXXX XXXXXXXX
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
With a copy to: XXXXXX XXXXXXX XXXXX & XXXXXXXXXXX LLP
000 Xxxxxxxxx Xxxxxx XX, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Esq.
. Fax: (000) 000-0000
7
If to the Escrow Agent: U.S. BANK TRUST, N.A.
Xxx Xxxxxxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
Fax: (000) 000-0000
Any party may give any notice, instruction or communication in connection with
this Agreement using any other means (including personal delivery, facsimile or
ordinary mail), but no such notice, instruction or communication shall be deemed
to have been delivered unless and until it is actually received by the party to
whom it was sent. Any party may change the address to which notices,
instructions or communications are to be delivered by giving the other parties
to this Agreement notice thereof in the manner set forth in this Section 8.
9. AGENT. For purposes of this Agreement, each of the Company Stockholders
hereby consents to the appointment of Xxx Xxxxxxx and Xxxx Xxxxxxxx as the
Company Stockholders' Representatives and as attorneys-in-fact for and on behalf
of the Company Stockholder, and the taking by the Company Stockholders'
Representatives of any and all actions and the making of any decisions required
or permitted to be taken by him under this Agreement, including without
limitation, the exercise of the power to (i) authorize delivery to any
Indemnitee of Escrow Shares in satisfaction of any Damages or Claimed Amounts,
(ii) agree to negotiate, enter into settlements and compromises with respect to
such Damages or Claimed Amounts, (iii) resolve any claims or disputes hereunder,
and (iv) take all actions necessary in the judgment of the Company Stockholders'
Representatives for the accomplishment of the foregoing and all of the other
terms, conditions and limitations contained in this Agreement.
10. GENERAL.
(A) GOVERNING LAW. The validity, interpretation, construction, performance,
enforcement and remedies of or relating to this Agreement, and the rights and
obligations of the parties hereunder, shall be governed by the laws of the State
of California without regard to principles of conflicts of laws, and any and
every legal or other proceeding (including any arbitration proceedings conducted
in accordance with Section 2(e)) arising out of or in connection with this
Agreement shall be brought in the appropriate courts of Santa Xxxxx County, in
the State of California, each of the parties hereby consenting to the exclusive
jurisdiction of said courts for this purpose.
(B) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(C) ENTIRE AGREEMENT. Except as set forth in the Merger Agreement, this
Agreement constitutes the entire understanding and agreement of the parties with
respect to the subject matter of this Agreement and supersedes all prior
agreements or understandings, written or oral, between the parties with respect
to the subject matter hereof.
8
(D) WAIVERS. No waiver by any party hereto of any condition or of any
breach of any provision of this Agreement shall be effective unless in writing.
No waiver by any party of any such condition or breach, in any one instance,
shall be deemed to be a further or continuing waiver of any such condition or
breach or a waiver of any other condition or breach of any other provision
contained herein.
(E) AMENDMENT. This Agreement may be amended only with the written consent
of Parent, the Escrow Agent and the Company Stockholders' Representatives (or
their duly designated successors).
(F) SEVERABILITY. In the event that any provision of this Agreement, shall
be determined to be invalid, unlawful, void or unenforceable to any extent, the
remainder of this Agreement shall not be impaired or otherwise affected and
shall continue to be valid and enforceable to the fullest extent permitted by
law.
[THIS SPACE INTENTIOIANLLY LEFT BLANK]
9
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
PARENT: EGAIN COMMUNICATIONS CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
THE COMPANY: BIG SCIENCE COMPANY
By:__________________________________
Name:________________________________
Title:_______________________________
COMPANY STOCKHOLDERS' REPRESENTATIVE: XXX XXXXXXX
_____________________________________
XXXX XXXXXXXX
_____________________________________
ESCROW AGENT: U.S. BANK TRUST, N. A.
By:__________________________________
Name:________________________________
Title:_______________________________
[ESCROW AGREEMENT]
ATTACHMENT A
COMPANY STOCKHOLDERS PERCENTAGE OWNERSHIP
[ESCROW AGREEMENT]
ATTACHMENT B
U.S. BANK
CORPORATE TRUST SERVICES
SCHEDULE OF FEES FOR ESCROW SERVICES
EGain Communicatons Corporation / Big Science Company
ACCEPTANCE FEE
010 The acceptance fee includes the review of all documents, $4,000.00
initial set-up of the account, and other reasonably
required services up to and including the closing. This is
a one-time fee, payable at inception.
ADMINISTRATION/AGENT FEES
Annual account administration fee covers the normal duties
of the escrow agent associated with the management of the account.
Administration fees are payable in advance and are not proratable
470 Depository Escrow Agent $1,000.00
TRANSACTION FEES
880 DISBURSEMENT/DRAW $20.00
Charge per item disbursed. Includes the wire or check fee.
100 TRADES-OPEN MARKET/DIRECTED $100.00
Charge per trade to buy or sell permitted investments.
This excludes U.S. Bank investment transactions.
101 RECEIPTS $20.00
Charge per item received.
INDIRECT OUT OF POCKET
Charge for miscellaneous expenses such as fax, messenger
service, overnight mail, stationery, and postage
(excluding large mailings).
166 This charge is applied against your total Administration/ 3%
AgentFees, and will not be prorated.
EXTRAORDINARY SERVICES Charge for duties or responsibilities of an unusual
nature not provided for in the indenture or otherwise set forth in this
schedule. A reasonable charge will be made based on the nature of the service
and the responsibility involved. These charges will be billed as a flat fee or
our hourly rate then in effect, at our option.
Final account acceptance is subject to review of documents. Fees are based on
our understanding of the transaction and are subject to revision if the
structure is changed. In the event this transaction does not close, any related
out-of-pocket expenses will be billed to you at cost. Fees for any services not
specifically covered will be based on appraisal of services rendered.
With general reference to all of our charges, it should be understood that they
are subject to adjustment from time to time, upon written notification.
The fees in this schedule are the terms under which you agree to do business.
Closing the transaction constitutes agreement to this fee schedule, as does
payment of the invoice received after subsequent fee adjustment notification.
Absent your instructions to sweep or otherwise invest balances, no interest,
earnings, or other compensation for uninvested balances will be paid to you.
DATED: MARCH 9, 2000 CONFIDENTIAL
EXHIBIT C
EMPLOYMENT AGREEMENTS
C-1
EGAIN COMMUNICATIONS CORPORATION
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of the Effective
Date (as defined below) by and between _________________ ("Employee") and EGAIN
COMMUNICATIONS CORPORATION, a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Employee is a founder, a stockholder and an employee of Big
Science Company ("BSC"); and
WHEREAS, BSC, the Company and certain stockholders of BSC (including
Employee) have entered into an Agreement and Plan of Merger dated as of February
__, 2000 (the "Merger Agreement"), which provides for the merger (the "Merger")
of BSC into the Company; and
WHEREAS, as a result of the Merger, Employee shall receive from the Company
significant consideration in the form of shares of capital stock of the Company
in exchange for shares of capital stock of BSC held by Employee; and
WHEREAS, as a condition to the Merger, and to preserve the value of the
business being acquired by the Company after the Merger, the Merger Agreement
contemplates, among other things, that Employee enter into this Agreement, which
includes a restriction on Employee's ability to compete with the Company for a
period of time; and
WHEREAS, in connection with the Merger, the Company desires to employ
Employee, and Employee desires to accept employment with the Company, on the
terms and conditions of this Agreement; and
WHEREAS, the closing date of the Merger shall be the "Effective Date" of
this Agreement:
NOW THEREFORE, in consideration of the mutual promises made herein,
Employee and the Company hereby agree as follows:
1. TERM OF AGREEMENT. This Agreement shall commence on the Effective Date
and shall have a term of two (2) years (the "Original Term"). This Agreement may
be terminated by either party, with or without cause, on thirty (30) days'
written notice, as described in Section 3 and subject to the terms of Section 6.
This Agreement may be extended by the Company and Employee by mutual agreement
after the end of the Original Term.
2. DUTIES.
(A) POSITION. Employee shall be employed as Director of __________, and
will initially report to the ___________of the Company.
-1-
(B) OBLIGATIONS TO THE COMPANY. Employee agrees that to the best of his
ability and experience he will at all times loyally and conscientiously perform
all of the duties and obligations required of and from Employee pursuant to the
express and implicit terms hereof and consistent with his position as
__________, and to the reasonable satisfaction of the Company. During the term
of Employee's employment relationship with the Company, Employee further agrees
that he shall devote all of his business time and attention to the business of
the Company and, except with the prior written consent of the Company, shall not
render commercial or professional services to any other person or organization.
3. AT-WILL EMPLOYMENT; TERMINATION. This Agreement shall commence on the
Effective Date and shall continue until terminated by either party on thirty
(30) days written notice to the other party. The Company and Employee
acknowledge that, subject to the terms of this Agreement, Employee's employment
is and shall continue to be at-will, as defined under applicable law, and that
Employee's employment with the Company may be terminated by either party at any
time for any or no reason. If Employee's employment is terminated by either
party for any reason, Employee shall not be entitled to any payments, benefits,
damages or compensation other than as provided in this Agreement. The rights and
duties created by this Section 3 may not be modified in any way except by a
written agreement executed by the Company's Board of Directors or Chief
Executive Officer.
4. COMPENSATION. For the duties and services to be performed by Employee
hereunder, the Company shall pay Employee, and Employee agrees to accept, the
salary and other benefits described below in this Section 4.
(A) SALARY. Employee shall receive a monthly salary of $_________, which is
equivalent to $__________ on an annualized basis. Employee's salary will be
payable bimonthly in accordance with the Company's normal payroll practices.
Employee's base salary shall be reviewed on an annual basis.
(B) STOCK OPTIONS. Company shall grant to Employee options to purchase an
aggregate of ______ shares of common stock exercisable at the fair market value
of eGain Common Stock on the date of grant ("Options"), which date shall be the
first meeting of the Company's Board of Directors following the Effective Date.
Options shall vest over four (4) years at the rate of 1/48th of the shares per
month. The Options will be issued pursuant to and subject to the terms of the
Company's 1998 Stock Plan.
(C) RELOCATION. To facilitate Employee's relocation to Northern California,
the Company shall reimburse Employee's out-of-pocket expenses incurred in
relocating Employee, Employee's family and Employee's belongings, up to a
maximum $________, unless otherwise agreed by the Company.
(D) ADDITIONAL BENEFITS. Employee will be eligible to participate in the
Company's employee benefit plans of general application as may from time to time
be adopted (including plans covering medical and life insurance), in accordance
with the rules established for individual participation in any such plan and
under applicable law. Employee will be eligible for vacation and sick leave in
accordance with the policies in effect during the term of this Agreement
-2-
and will receive such other benefits as the Company generally provides to its
other employees of comparable position and experience.
5. REPURCHASE OPTION.
(a) Employee is a holder of __________ shares of Common Stock of BSC (the
"Merger Shares"), which as of the Effective Date will be exchangeable for shares
of Common Stock of the Company pursuant to Sections 1.6 (a) and (e) of the
Merger Agreement. Employee and the Company agree that, effective immediately
prior to the Closing of the Merger, the Company shall have a repurchase option
as set forth below as to _________ of the Merger Shares (including the shares of
the Company's Common Stock issuable upon exchange of the Merger Shares pursuant
to the Merger Agreement) (the "Vesting Shares").
(b) In the event of the termination of employment or consulting services of
Employee with the Company, the Company shall, upon the date of such termination
(the "Termination Date"), have an irrevocable, exclusive option (the "Repurchase
Option") for a period of ninety (90) days from the Termination Date to
repurchase all or any portion of the Vesting Shares held by Employee as of the
Termination Date which have not yet been released from the Repurchase Option at
the original purchase price of [$.____] per share, adjusted to reflect the
Exchange Ratio for the Merger.
(c) The Repurchase Option shall be exercised by the Company by written
notice to Employee and, at the Company's option, (i) by delivery to Employee
with such notice of a check in the amount of the purchase price for the Vesting
Shares being purchased, or (ii) in the event Employee is indebted to the
Company, by cancellation by the Company of an amount of such indebtedness equal
to the purchase price for the shares being repurchased, or (iii) by a
combination of (i) and (ii) so that the combined payment and cancellation of
indebtedness equals such purchase price. Upon delivery of such notice and
payment of the purchase price in any of the ways described above, the Company
shall become the legal and beneficial owner of the Vesting Shares being
repurchased and all rights and interest therein or related thereto, and the
Company shall have the right to transfer to its own name the number of Vesting
Shares being repurchased by the Company, without further action by Employee.
(d) The Vesting Shares held by Employee shall be released from the
Repurchase Option as follows (provided in each case that Employee's employment
or consulting services have not been terminated prior to the date of any such
release): 1/36th of the total number of Vesting Shares shall be released from
the Repurchase Option at the end of each full month following the Effective
Date, until all Vesting Shares are released from the Repurchase Option.
Fractional shares shall be rounded to the nearest whole share.
(e) Notwithstanding the foregoing, upon the occurrence of (i) a Termination
without Cause, as defined in and subject to Section 6(b) below or (ii) a Change
of Control, the Repurchase Option shall immediately terminate with respect to,
and Employee shall acquire a vested interest in, all of the then remaining
unvested Vesting Shares previously subject to the Repurchase Option. For
purposes of this Agreement, "Change of Control" shall mean
-3-
(i) the consummation of the acquisition of 51% or more of the
outstanding stock of the Company pursuant to a tender offer validly made under
any federal or state law (other than a tender offer by the Company);
(ii) the consummation of a merger, consolidation or other
reorganization of the Company (other than a reincorporation of the Company),
if after giving effect to such merger, consolidation or other reorganization of
the Company, the stockholders of the Company immediately prior to such merger,
consolidation or other reorganization do not represent a majority in interest of
the holders of voting securities (on a fully diluted basis) with the ordinary
voting power to elect directors of the surviving or resulting entity after such
merger, consolidation or other reorganization; or
(iii) the sale of all or substantially all of the assets of the
Company to a third party who is not an affiliate of the Company.
6. TERMINATION OF EMPLOYMENT; BENEFITS.
(b) TERMINATION OF EMPLOYMENT. This Agreement may be terminated during its
Original Term (or any extension thereof), subject to the notice provisions set
forth in Section 1, upon the occurrence of any of the following events:
(i) The Company's termination of Employee for Cause (as defined in
Section 7 below) ("Termination for Cause");
(ii) The Company's determination that it is terminating Employee
without Cause, which determination may be made by the Company at any time at
the Company's sole discretion, for any or no reason ("Termination
Without Cause"); or
(iii) The effective date of a written notice sent to the Company from
Employee stating that Employee is electing to terminate his employment with the
Company ("Voluntary Termination").
(b) SEVERANCE BENEFITS. Employee shall be entitled to receive upon
termination of employment acceleration of his unvested Merger Shares and other
benefits only as set forth in this Section 6(b) and in Exhibit A hereto, and
receipt of such benefits shall be conditioned upon execution and delivery by
Employee to the Company of a full release, releasing any and all claims Employee
may have against the Company, its officers, directors, stockholders, agents and
affiliates, in form and substance satisfactory to counsel for the Company. In
the event Employee materially breaches any material provision of this Agreement,
all severance benefits shall stop immediately.
(i) VOLUNTARY TERMINATION. If Employee's employment terminates by
Voluntary Termination, then Employee shall not be entitled to receive
acceleration of vesting or any other any severance benefits. Employee will
receive payment(s) for all salary and unpaid vacation accrued as of the
date of Employee's termination of employment, and Employee's benefits will
be terminated or continued under the
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Company's then existing benefit plans and policies in accordance with such plans
and policies in effect on the date of termination and in accordance with
applicable law.
(ii) INVOLUNTARY TERMINATION. If Employee's employment is
Terminated Without Cause, or due to death or disability, Employee will be
entitled to receive severance benefits as follows: The Company's repurchase
option will lapse, and Employee will be fully vested in the Merger Shares.
Medical insurance benefits with the coverage provided to Employee immediately
prior to the termination will be provided at the Company's cost for a period of
thirty (30) days, but all other benefits will terminate.
(iii) TERMINATION FOR CAUSE. If Employee's employment is
terminated for Cause (as defined below), then Employee shall not be entitled to
receive acceleration of vesting or other severance benefits. Employee will
receive payment(s) for all salary and unpaid vacation accrued as of the date of
Employee's termination of employment, and Employee's benefits will be terminated
or continued under the Company's then existing benefit plans and policies in
accordance with such plans and policies in effect on the date of termination and
in accordance with applicable law.
7. DEFINITION OF CAUSE. For purposes of this Agreement, "Cause" for
Employee's termination will exist at any time after the happening of one or more
of the following events:
(a) Employee's willful misconduct or gross negligence in the performance of
his duties hereunder, including Employee's refusal to comply in any material
respect with the legal directives of the Company so long as such directives are
not inconsistent with Employee's position and duties, and such refusal to comply
is not remedied within ten (10) working days after written notice from the
Company, which written notice shall state that failure to remedy such conduct
may result in termination for Cause;
(b) Fraudulent conduct, a deliberate attempt to do a material injury to the
Company, use or appropriation for Employee's personal use or benefit, of any
funds, assets or properties of the Company not authorized by the Company to be
so used or appropriated, or conduct that is intended to materially discredit the
Company or is of material detriment to the reputation of the Company, including
conviction of a felony;
(c) Employee's willfully engaging or participating in any activity which
violates Section 9 of this Agreement; or
(d) Employee's incurable material breach of any element of the
Confidentiality Agreement (as defined below), including without limitation,
Employee's theft or other misappropriation of the Company's proprietary
information.
8. CONFIDENTIALITY AGREEMENT. Employee shall sign a Proprietary Information
and Employee-Generated Intellectual Property Agreement (the "Confidentiality
Agreement") with the Company, in the form attached as Exhibit B. Employee
further agrees that the provisions of the Confidentiality Agreement shall
survive any termination of this Agreement or of Employee's employment
relationship with the Company. Employee acknowledges that with respect to his
employment by BSC prior to the Effective Date, he remains subject to the terms
of his
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Employment Confidential Information and Invention Assignment Agreement
executed in favor of BSC.
9. COVENANT NOT TO COMPETE OR SOLICIT.
(a) Beginning on the Effective Date and ending on the second anniversary of
the Effective Date (the "Non-Competition Period"), Employee shall not directly
or indirectly (other than on behalf of the Company or BSC), without the prior
written consent of the Company, engage anywhere in the Restricted Territory in
(whether as an employee, agent, consultant, advisor, independent contractor,
proprietor, partner, officer, director or otherwise), or have any ownership
interest in (except for ownership of one percent (1%) or less of any entity
whose securities have been registered under the Securities Act of 1933 or
Section 12 of the Securities Exchange Act of 1934), or participate in the
financing, operation, management or control of, any firm, partnership,
corporation, entity or business (other than the Company) that engages or
participates in a "Competing Business Purpose." The term Competing Business
Purpose shall mean any business relating to the design, development, marketing
or sale of software or services for on-line customer interaction for customer
service, sales and marketing applications. The term Restricted Territory shall
mean each and every country, province, state, city or other political
subdivision of the United States, of Europe or of Japan in which the Company or
BSC is engaged currently or during the two (2) year term of this covenant
engages in business or otherwise sells its products.
(b) During the Non-Competition Period, Employee shall not directly or
indirectly, solicit, encourage or take any other action which is intended to
induce or encourage, any employee of BSC or the Company to terminate his or her
employment with BSC or the Company, provided that this shall not restrict
Employee from making general public solicitations through advertising or search
firms. Likewise, Employee shall not solicit or divert any business or clients or
customers of the Company made known to Employee during his employment with the
Company and shall not induce customers, clients, suppliers, agents, or persons
under contract with or associated with the Company to reduce or alter their
association or business with the Company.
(c) The covenants contained in paragraph (a) shall be construed as a series
of separate covenants, one for each country, province, state, city or other
political subdivision of the Restricted Territory. Except for geographic
coverage, each such separate covenant shall be deemed identical in terms to the
covenant contained in paragraph (a). If, in any judicial proceeding, a court
refuses to enforce any of such separate covenants (or any part thereof), then
such unenforceable covenant (or such part) shall be eliminated from this
Agreement to the extent necessary to permit the remaining separate covenants (or
portions thereof) to be enforced. In the event that the provisions of this
Section 9(c) are deemed to exceed the time, geographic or scope limitations
permitted by applicable law, then such provisions shall be reformed to the
maximum time, geographic or scope limitations, as the case may be, permitted by
applicable law.
(d) Employee acknowledges that (i) the goodwill associated with the
existing business, customers and assets of BSC prior to the Merger is an
integral component of the value of BSC to the Company and is reflected in the
value of the Merger consideration payable under the Reorganization Agreement and
(ii) Employee's agreement as set forth herein is necessary to
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preserve the value of BSC for the Company following the Merger. Employee also
acknowledges that the limitations of time, geography and scope of activity
agreed to in this Agreement are reasonable because, among other things, (i) BSC
and the Company are engaged in a highly competitive industry, (ii) Employee has
unique access to, and will continue to have access to, the trade secrets and
know-how of BSC and the Company, including without limitation the plans and
strategy (including the competitive strategy), (iii) Employee is receiving
significant compensation in connection with the Merger and (iv) in the event
Employee's employment with the Company ended, Employee would be able to obtain
suitable and satisfactory employment without violation of this Agreement.
(e) Employee's obligations under this Section 9 shall remain in effect if
Employee's employment with the Company is terminated for any reason.
10. CONFLICTS. Employee represents that his performance of all the terms of
this Agreement will not breach any other agreement to which Employee is a party.
Employee has not, and will not during the term of this Agreement, enter into any
oral or written agreement in conflict with any of the provisions of this
Agreement. Employee further represents that he is entering into or has entered
into an employment relationship with the Company of his own free will.
11. SUCCESSORS. Any successor to the Company (whether direct or indirect
and whether by purchase, merger, consolidation or otherwise) or to all or
substantially all of the Company's business and/or assets shall assume the
obligations under this Agreement and agree expressly to perform the obligations
under this Agreement in the same manner and to the same extent as the Company
would be required to perform such obligations in the absence of a succession.
The terms of this Agreement and all of Employee's rights hereunder shall inure
to the benefit of, and be enforceable by, Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
12. MISCELLANEOUS PROVISIONS.
(a) NO DUTY TO MITIGATE. Employee shall not be required to mitigate the
amount of any payment contemplated by this Agreement (whether by seeking new
employment or in any other manner), nor, except as otherwise provided in this
Agreement, shall any such payment be reduced by any earnings that Employee may
receive from any other source.
(b) PLEDGE OF SHARES. In the event that during the term of this Agreement
Employee seeks to pledge all or a portion of his Merger Shares that are no
longer subject to the Repurchase Option in order to obtain a loan from a
financial institution, subject to compliance with all applicable laws, the
Company shall consent to, and take no action that would preclude Employee from
entering into, such pledge.
(c) AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended or
waived only with the written consent of the parties.
(d) SOLE AGREEMENT. This Agreement, including any Exhibits hereto,
constitutes the sole agreement of the parties and supersedes all oral
negotiations and prior writings with respect to the subject matter hereof.
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(e) NOTICES. Any notice required or permitted by this Agreement shall be in
writing and shall be deemed sufficient upon receipt, when delivered personally
or by a nationally recognized delivery service (such as Federal Express or UPS),
or forty-eight (48) hours after being deposited in the U.S. mail as certified or
registered mail with postage prepaid, if such notice is addressed to the party
to be notified at such party's address as set forth below or as subsequently
modified by written notice.
(f) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California, without giving effect to the principles of conflict of laws.
(g) SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.
(h) COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together will constitute one
and the same instrument.
(i) ARBITRATION. Any dispute or claim arising out of or in connection with
this Agreement will be finally settled by binding arbitration in Santa Xxxxx
County, California in accordance with the rules of the American Arbitration
Association by one arbitrator appointed in accordance with said rules. The
arbitrator shall apply California law, without reference to rules of conflicts
of law or rules of statutory arbitration, to the resolution of any dispute.
Judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Notwithstanding the foregoing, the parties may
apply to any court of competent jurisdiction for preliminary or interim
equitable relief, or to compel arbitration in accordance with this paragraph,
without breach of this arbitration provision. This Section 12(i) shall not apply
to the Confidentiality Agreement.
(j) ADVICE OF COUNSEL. EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES THAT, IN
EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE
OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND
PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY
PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.
-8-
The parties have executed this Employment Agreement the date first written
above.
COMPANY
EGAIN COMMUNICATIONS CORPORATION
By __________________________________
Title _______________________________
Address: 000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
EMPLOYEE
_____________________________________
Address: __________________________
__________________________
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EXHIBIT D
CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENTS
D-1
PROPRIETARY INFORMATION
AND EMPLOYEE-GENERATED INTELLECTUAL PROPERTY AGREEMENT
As an employee of eGain Communications Corporation, a Delaware
corporation ("Company"), I recognize that the Company is engaged in a continuous
program of research, development and production with respect to its business
pertaining to computer software development, marketing, sales and service,
present and future.
RECITALS
I understand that:
A. Definitions for certain of the capitalized terms used in this
Proprietary Information And Employee-Generated Intellectual Property Agreement
("Agreement") are contained in Exhibit A attached to this Agreement.
B. My employment creates a relationship of confidence and trust between
the Company and me with respect to any information (i) applicable to the
business of the Company pertaining to computer software development, marketing,
sales and service; or (ii) applicable to the business of any customer of the
Company; or (iii) which the Company is under a contractual obligation to keep
confidential which may be made known to me by the Company or by any customer of
the Company, or learned by me during the period of my employment.
C. The Company possesses and will continue to possess Proprietary
Information.
This Agreement is in consideration for my employment with the Company.
I hereby agree as follows:
1 PROTECTION OF PROPRIETARY INFORMATION.
1.1 All Proprietary Information shall be the sole property of the
Company and its assigns or a third party, as applicable, and the Company and its
assigns or such third party shall be the sole owner of all patents and other
rights in connection with such Proprietary Information. I hereby assign to the
Company any rights I may have or acquire in any or all Proprietary Information.
1.2 During the term of my employment by the Company and any time
thereafter, I will keep in confidence and trust all Proprietary Information, and
I will not directly or indirectly disclose, sell, use, lecture upon or publish
any Proprietary Information or anything relating to it without the written
consent of the Company, except as may be necessary in the ordinary course of
performing my duties as an employee of the Company.
1.3 I will comply with any specific directions, limitations, or other
obligations related to Proprietary Information that the Company receives from a
third party. Subject to the preceding obligations, my obligations regarding
Proprietary Information shall continue until such time as the Proprietary
Information is publicly known without fault on my own part.
2 AVOID CONFLICT OF INTEREST. I agree that during the period of my
employment by the Company, I will not, without the Company's express written
consent, engage in any employment or activity in any business competitive with
the Company.
3 RETURN OF MATERIALS. All apparatus, computers, computer files and
media, data, documents,
drawings, engineering log books, equipment, inventor notebooks, programs,
prototypes, records, samples, equipment and other information and physical
property, whether or not pertaining to Proprietary Information and no matter
where located, furnished to me by the Company or produced by myself or others in
connection with my employment shall be and remain the sole property of the
Company and shall be returned promptly to the Company as and when requested by
the Company. Should the Company not so request, I shall return and deliver all
such property upon termination of my employment for any reason and I will not
take with me any such property or any reproduction of such property upon such
termination. I further agree that any property situated on the Company's
premises or at my home and owned by the Company, including computers, computer
files, e-mail, voicemail, disks and other electronic storage media, prototypes,
samples, engineering log books, notebooks, filing cabinets or other work areas,
is subject to inspection by Company personnel at any time with or without
notice.
4 NON-SOLICITATION. I agree that during the period of my employment and
for a period of one (1) year following termination of my employment with the
Company, I will not directly or indirectly (i) solicit or in any manner
encourage employees or consultants of the Company to leave its employ or work
for any business that is in competition in any manner whatsoever with the
business of the Company pertaining to computer software development, marketing,
sales and service; or (ii) other than on behalf of the Company, solicit the
business of any customer of the Company with whom I became acquainted during the
course of my employment or any customer if such solicitation involves the use of
Proprietary Information. By signing this Agreement, I acknowledge and agree that
the names, addresses and product specifications of the Company's customers
constitute Company Proprietary Information and that the sale or unauthorized use
or disclosure of this or any other Company Proprietary Information that I
obtained during the course of this Agreement would constitute unfair competition
with the Company. I promise not to engage in any unfair competition with the
Company either during the term of my employment or at any time thereafter.
5 DEVELOPED INFORMATION. I will promptly disclose to the Company, or
any persons designated by it, any and all Developed Information; such disclosure
shall continue for one (1) year after termination of this Agreement with respect
to any and all Developed Information made, conceived, reduced to practice or
learned during such one (1) year term. If any application for any United States
or foreign patent related to or useful in the business of the Company or any
customer of the Company shall be filed by me or for me during the period of one
(1) year after my employment is terminated, the subject matter covered by such
application shall be presumed to have been conceived during my employment with
the Company.
6 OWNERSHIP AND PROTECTION OF DEVELOPED INFORMATION.
6.1 THE COMPANY OWNS DEVELOPED INFORMATION. I agree that any and all
Developed Information shall be the sole property of the Company and its assigns,
and the Company and its assigns shall be the sole owner of all patents and other
rights in connection with such Developed Information.
6.2 DEVELOPED INFORMATION PROTECTION. I hereby assign to the Company
any rights I may have or acquire in Developed Information. I further agree as to
any and all Developed Information to assist the Company in every proper way (but
at the Company's expense) to obtain and from time to time enforce patents,
copyrights, trademarks and other rights on Developed Information in any and all
countries, and to that end I will execute all documents for use in applying for
and obtaining such patents, copyrights, trademarks and other protections on
Developed Information and enforcing the same, as the Company may desire,
together with any assignments of such protections to the Company or persons
designated by it. My obligation to assist the Company in obtaining and enforcing
patents, copyrights, trademarks and other protections on Developed Information
in any and all countries shall
continue beyond the termination of my employment, but, after such termination,
the Company shall compensate me at a reasonable rate for time actually spent by
me at the Company's request on such assistance. I acknowledge that I may be
unavailable when the Company needs to secure my signature for lawful and
necessary documents required to apply for or execute any patent, copyright,
trademark or other protection with respect to Developed Information (including
renewals, extensions, continuations, divisions or continuations in part of
patent applications). Therefore, I agree to irrevocably designate and appoint
the Company and its duly authorized officers and agents, as my agents and
attorneys-in-fact, to act for and in my behalf and instead of me, to execute and
file any such application(s) and to do all other lawfully permitted acts to
further the prosecution and issuance of patents, copyrights, trademarks and
other protections on Developed Information with the same legal force and effect
as if executed by me. The Company shall also have the right to keep any and all
Developed Information as trade secrets.
7 LIST OF PRE-EMPLOYMENT INVENTIONS. I have attached to this Agreement
as Exhibit B a complete list of all developments, discoveries, improvements,
inventions, trade secrets or works of authorship which I have made or conceived
or first reduced to practice alone or jointly with others prior to my engagement
by the Company which are not subject to a confidentiality agreement that would
bar such listing (collectively "Pre-Employment Inventions"); and I covenant that
such list is complete. If no such list is attached to this Agreement, I
represent that I have made no such Pre-Employment Inventions at the time of
signing this Agreement. The Company will not require me to assign any rights I
may have in any of the listed Pre-Employment Inventions. Furthermore, the listed
Pre-Employment Inventions will not be classified as Proprietary Information or
Developed Information. I acknowledge and agree that the Company and its
subsidiaries or affiliates are free to compete or develop information,
inventions and products within the areas and types of inventions described in
such list.
8 NONINTERFERENCE WITH THIRD-PARTY RIGHTS.
8.1 I represent that my performance of all the terms of this Agreement
and that my employment by the Company does not and will not breach any agreement
to keep in confidence Proprietary Information acquired by me in confidence or in
trust prior to my employment by the Company. I have not entered into, and I
agree I will not enter into, any agreement either written or oral in conflict
with this Agreement.
8.2 As part of the consideration for the offer of employment extended
to me by the Company and of my employment or continued employment by the
Company, I have not brought and will not bring with me to the Company or use in
the performance of my responsibilities at the Company any equipment, supplies,
facility, electronic media, software, trade secret or other information or
property of any former employer or organization to which I provided services
when such former employer or organization may have exclusive ownership rights in
such information or property or when such information or property is not
generally available to the public, unless I have obtained written authorization
for their possession and use. I agree to promptly notify the Company in writing
if I am asked to assign or transfer any intellectual property rights to such
former employer or organization.
8.3 I also understand that, in my employment with the Company, I am not
to breach any obligation of confidentiality that I have to others, and I agree
that I shall fulfill all such obligations during my employment with the Company.
9. EQUITABLE RELIEF. I agree that in addition to any other rights and
remedies available to the Company for any breach by me of my obligations under
this Agreement, the Company shall be entitled to enforcement of such obligations
by court injunction, without posting bond or other security. I will indemnify
Company against any costs, including reasonable legal fees, incurred in
obtaining relief
against my breach of this Agreement.
10. MODIFICATIONS. No modification of this Agreement shall be
valid unless made in writing and signed by the parties hereto.
11. SEVERABILITY. If any term or provision of the Agreement shall be
declared invalid, illegal or unenforceable, such term or provision shall be
amended to achieve as nearly as possible the same effect of protecting
Proprietary Information as the original term or provision, and all remaining
provisions shall continue in full force and effect.
12. TERM OF EMPLOYMENT. I understand and agree that employment with the
Company is not for a specific term and can be terminated by myself or by the
Company at any time for any reason, with or without cause. I also understand
that the Company requests that all of its employees, to the extent possible,
give the Company advance notice if they intend to resign. I further understand
and agree that the foregoing terms shall be the terms of my employment and that
any additions to or modifications of these terms shall be in writing and signed
by myself and an officer of the Company.
13. SECTION 2870 INVENTIONS. This Agreement does not apply to
inventions which qualify fully for protection under section 2870 of the
California Labor Code ("Section 2870").
13.1 Currently, Section 2870 applies to inventions for which no
equipment, supplies, facility or trade secret information of the Company was
used and which was developed entirely on my own time, and (i) which does not
relate, at the time of conception or reduction to practice of the invention, to
the business of the Company, or to the Company's actual or demonstrably
anticipated research or development, or (ii) which does not result from any work
performed by me for the Company.
13.2 Notwithstanding this Section 13, during the term of my employment,
I shall disclose in confidence to the Company any invention in order to permit
the Company to make a determination as to compliance by me with the terms and
conditions of this Agreement. I understand that I bear the full burden of
proving to the Company that the invention qualifies fully under Section 2870.
14. SURVIVAL OF OBLIGATIONS. This Agreement shall survive termination
of my employment, regardless of the circumstances of such termination.
15. EFFECTIVE DATE. This Agreement shall be effective as of the first
day of my employment by the Company.
16. BINDING EFFECT. This Agreement shall be binding upon my heirs,
executors, administrators or other legal representatives and shall inure to the
benefit of successors and assigns of the Company.
17. INTEGRATED AGREEMENT. This Agreement constitutes the full, complete
and exclusive agreement between the Company and me with regard to this
Agreement's subject matter. This Agreement supersedes any previous agreements or
representations, whether oral or written, express or implied between the Company
and me with respect to this Agreement's subject matter.
18. EXHIBITS. The following Exhibits are made a part of and
incorporated by reference in this Agreement:
Exhibit A: Definitions;
Exhibit B: List of Pre-Employment Inventions.
19. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
Dated: __________, 1999
EMPLOYEE:
By _____________________________
Name ____________________________
Social Security No. ____________
Address: _______________________
_________________________________
ACCEPTED AND AGREED TO BY:
EGAIN COMMUNICATIONS CORPORATION
By _____________________________
Name ___________________________
Title __________________________
EXHIBIT A
1. DEFINITIONS. As used in the foregoing Agreement, the following terms shall
have the meanings as defined below. Where the context so indicates, a word in
the singular form shall include the plural and vice-versa.
1.1 COMPANY as used herein, shall include any subsidiary or affiliate
of EGAIN COMMUNICATIONS CORPORATION.
1.2 DEVELOPED INFORMATION means all data, discoveries, designs,
developments, formulae, ideas, improvements, inventions, know-how, processes,
programs, and techniques, whether or not patentable or registrable under
copyright, trademark or similar statutes, and all designs, trademarks and
copyrightable works that I made or conceived or reduced to practice or learned,
either alone or jointly with others, during the period of my employment which
(i) are related or useful in the business of the Company or to the Company's
actual or demonstrably anticipated research, design, development, experimental
production, financing, manufacturing, licensing, distribution or marketing
activity carried on by the Company, or (ii) result from tasks assigned me by the
Company, or (iii) result from use of premises or equipment owned, leased or
contracted for by the Company.
1.3 PROPRIETARY INFORMATION shall mean information that has been
created, discovered or developed, or has otherwise become known to the Company
(including without limitation information created, discovered, developed or made
known by or to me during the period of or arising out of my employment by the
Company), and/or in which property rights have been assigned or otherwise
conveyed to the Company, which information has commercial value in the business
in which the Company is engaged. By way of illustration but not limitation,
"Proprietary Information" includes: (i) inventions, confidential knowledge,
trade secrets, ideas, data, programs, works of authorship, know-how,
improvements, discoveries, designs, techniques and sensitive information the
Company receives from its customers or receives from a third party under
obligation to keep confidential; (ii) technical information relating to the
Company's existing and future products, including, where appropriate and without
limitation, manufacturing techniques and procedures, production controls,
software, firmware, information, patent disclosures, patent applications,
development or experimental work, formulae, engineering or test data, product
specification and part lists, names of suppliers, structures, models,
techniques, processes and apparatus relating to the same disclosed by the
Company to me or obtained by me through observation or examination of
information or developments; (iii) confidential marketing information (including
without limitation marketing strategies, customer names and requirements and
product and services, prices, margins and costs); (iv) confidential future
product plans; (v) confidential financial information provided to me by the
Company; (vi) personnel information (including without limitation employee
compensation); and (vii) other confidential business information.
EXHIBIT B
LIST OF PRE-EMPLOYMENT INVENTIONS
This List of Pre-Employment Inventions, along with any attached pages,
is part of and incorporated by reference into the attached PROPRIETARY
INFORMATION AND EMPLOYEE-GENERATED INTELLECTUAL PROPERTY AGREEMENT
The following is a complete list of all developments, discoveries,
improvements, inventions, trade secrets and works of authorship which I have
made or conceived or first reduced to practice alone or jointly with others
prior to my engagement by the Company which are not subject to a confidentiality
agreement that would bar such listing (collectively "Pre-Employment
Inventions"). I understand that the Company will not require me to assign any
rights I may have in any of the listed Pre-Employment Inventions. I further
understand that the listed Pre-Employment Inventions will not be classified as
Proprietary Information or Developed Information. I represent that this list of
Pre-Employment Inventions is complete.
______ No Pre-Employment Inventions to report.
______ See below.
______ Additional sheets attached.
_______________________________________
Name of Employee
_______________________________________
Date
Proprietary Information and Employee-Generated Intellectual Property Agreement
(from 12487355) ver. 2.12.98.doc
EXHIBIT E
FORM OF RELEASE
E-1
GENERAL RELEASE
THIS GENERAL RELEASE ("General Release") is being executed and
delivered as of ______________, 2000, on behalf of the parties identified on
Schedule A hereto (all of whom are referred to collectively as the "Releasors,"
and each of whom is referred to individually as a "Releasor") to and in favor
of, and for the benefit of, EGAIN CORPORATION, a Delaware corporation
("Company"), BIG SCIENCE COMPANY, a Georgia corporation ("Purchaser"), BSC
ACQUISITION CORP., a Georgia corporation and wholly owned subsidiary of
Purchaser ("Merger Sub"), and the other Releasees (as defined in Section 2).
RECITALS
A. Contemporaneously with the execution and delivery of this General
Release, certain of the Releasors have entered into an Agreement and Plan of
Merger and Reorganization (the "Merger Agreement") among Purchaser, Merger Sub,
Company and certain stockholders of Company.
B. Purchaser and Merger Sub have required, as a condition to
consummating the transactions contemplated by the Merger Agreement, that the
Releasors execute and deliver this General Release.
AGREEMENT
In order to induce Purchaser and Merger Sub to consummate the
transactions contemplated by the Merger Agreement, and for other valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
the Releasors), the Releasors hereby covenant and agree as follows:
1. RELEASE. Each Releasor, for himself, herself or itself and for each of
such Releasor's Associated Parties (as defined in Section 2), hereby generally,
irrevocably, unconditionally and completely releases and forever discharges each
of the Releasees (as defined in Section 2) from, and hereby irrevocably,
unconditionally and completely waives and relinquishes, each of the Released
Claims (as defined in Section 2).
2. DEFINITIONS.
(a) The term "Associated Parties," when used herein with respect to a
Releasor, shall mean and include: (i) such Releasor's predecessors, successors,
executors, administrators, heirs and estate; (ii) such Releasor's past, present
and future assigns, agents and representatives; (iii) each entity that such
Releasor has the power to bind (by such Releasor's acts or signature) or over
which such Releasor directly or indirectly exercises control; and (iv) each
entity of which such Releasor owns, directly or indirectly, at least 50% of the
outstanding equity, beneficial, proprietary, ownership or voting interests.
(b) The term "Releasees" shall mean and include: (i) Purchaser; (ii)
Company; (iii) Merger Sub; (iv) each of the direct and indirect subsidiaries of
Company; (v) each other affiliate of Company; and (vi) the successors and past,
present and future assigns, directors, officers, employees, agents, attorneys
and representatives of the respective entities
1
identified or otherwise referred to in clauses "(i)" through "(v)" of this
sentence, other than the Releasors.
(c) The term "Claims" shall mean and include all past, present and future
disputes, claims, controversies, demands, rights, obligations, liabilities,
actions and causes of action of every kind and nature, including: (i) any
unknown, unsuspected or undisclosed claim; (ii) any claim or right that may be
asserted or exercised by a Releasor in such Releasor's capacity as a
stockholder, director, officer or employee of Company or in any other capacity;
and (iii) any claim, right or cause of action based upon any breach of any
express, implied, oral or written contract or agreement.
(d) The term "Released Claims" shall mean and include each and every Claim
that (i) any Releasor or any Associated Party of any Releasor may have had in
the past, may now have or may have in the future against any of the Releasees,
and (ii) has arisen or arises directly or indirectly out of, or relates directly
or indirectly to, any circumstance, agreement, activity, action, omission, event
or matter occurring or existing on or prior to the date of this General Release
(excluding only such Releasor's rights, if any, under the Merger Agreement, the
Escrow Agreement, the Noncompetition Agreement and the Stockholder Agreement).
3. [INTENTIONALLY OMMITTED]
4. REPRESENTATIONS AND WARRANTIES. Each Releasor represents and
warrants that:
(a) such Releasor has not assigned, transferred, conveyed or otherwise
disposed of any Claim against any of the Releasees, or any direct or indirect
interest in any such Claim, in whole or in part;
(b) to the best of such Releasor's knowledge, no other person or entity has
any interest in any of the Released Claims;
(c) no Associated Party of such Releasor has or had any Claim against any
of the Releasees;
(d) no Associated Party of such Releasor will in the future have any Claim
against any Releasee that arises directly or indirectly from or relates directly
or indirectly to any circumstance, agreement, activity, action, omission, event
or matter occurring or existing on or before the date of this General Release;
(e) this General Release has been duly and validly executed and delivered
by such Releasor;
(f) this General Release is a valid and binding obligation of such Releasor
and such Releasor's Associated Parties, and is enforceable against such Releasor
and each of such Releasor's Associated Parties in accordance with its terms;
(g) there is no action, suit, proceeding, dispute, litigation, claim,
complaint or investigation by or before any court, tribunal, governmental body,
governmental agency or arbitrator pending or, to the best of the knowledge of
such Releasor, threatened against such
2
Releasor or any of such Releasor's Associated Parties that challenges or would
challenge the execution and delivery of this General Release or the taking of
any of the actions required to be taken by such Releasor under this General
Release;
(h) neither the execution and delivery of this General Release nor the
performance hereof will (i) result in any violation or breach of any agreement
or other instrument to which such Releasor or any of such Releasor's Associated
Parties is a party or by which such Releasor or any of such Releasor's
Associated Parties is bound, or (ii) result in a violation or any law, rule,
regulation, treaty, ruling, directive, order, arbitration award, judgment or
decree to which such Releasor or any of such Releasor's Associated Parties is
subject; and
(i) no authorization, instruction, consent or approval of any person or
entity is required to be obtained by such Releasor or any of such Releasor's
Associated Parties in connection with the execution and delivery of this General
Release or the performance hereof.
5. INDEMNIFICATION. Without in any way limiting any of the rights or
remedies otherwise available to any Releasee, each Releasor shall indemnify and
hold harmless each Releasee against and from any loss, damage, injury, harm,
detriment, lost opportunity, liability, exposure, claim, demand, settlement,
judgment, award, fine, penalty, tax, fee, charge or expense (including
attorneys' fees) that is directly or indirectly suffered or incurred at any time
by such Releasee, or to which such Releasee otherwise becomes subject at any
time, and that arises directly or indirectly out of or by virtue of, or relates
directly or indirectly to, (a) any failure on the part of such Releasor to
observe, perform or abide by, or any other breach of, any restriction, covenant,
obligation, representation, warranty or other provision contained herein, or (b)
the assertion or purported assertion of any of the Released Claims by such
Releasor or any of such Releasor's Associated Parties.
6. MISCELLANEOUS.
(a) This General Release sets forth the entire understanding of the parties
relating to the subject matter hereof and supersedes all prior agreements and
understandings among or between any of the Releasors and Releasees relating to
the subject matter hereof.
(b) If any provision of this General Release or any part of any such
provision is held under any circumstances to be invalid or unenforceable in any
jurisdiction, then (i) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (ii) the invalidity or unenforceability of such provision or part
thereof under such circumstances and in such jurisdiction shall not affect the
validity or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (iii) such invalidity or
enforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this General Release. If any provision
of this General Release or any part of such provision is held to be
unenforceable against any Releasor, then the unenforceability of such provision
or part thereof against such Releasor shall not affect the enforceability
thereof against any other Releasor. Each provision of this General Release is
separable from every other
3
provision of this General Release, and each part of each provision of this
General Release is separable from every other part of such provision.
(c) This General Release shall be construed in accordance with, and
governed in all respects by, the laws of the [State of California] (without
giving effect to principles of conflicts of laws).
(d) Any legal action or other legal proceeding relating to this General
Release or the enforcement of any provision of this General Release may be
brought or otherwise commenced by any Releasee in any state or federal court
located in the State of California. Each Releasor:
(i) expressly and irrevocably consents and submits to the jurisdiction of
each state and federal court located in the State of California in connection
with any such legal proceeding;
(ii) agrees that each state and federal court located in the State of
California shall be deemed to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense or otherwise),
in any such legal proceeding commenced in any state or federal court located in
the State of California, any claim that such Releasor is not subject personally
to the jurisdiction of such court, that such legal proceeding has been brought
in an inconvenient forum, that the venue of such proceeding is improper or that
this General Release or the subject matter of this General Release may not be
enforced in or by such court.
Nothing contained in this General Release shall be deemed to limit or otherwise
affect the right of any Releasee (1) to commence any legal proceeding or to
otherwise proceed against any of the Releasors or any other person or entity in
any other forum or jurisdiction, or (2) to raise this Release as a defense in
any legal proceeding in any other forum or jurisdiction.
(e) This General Release may be executed in several counterparts, each of
which shall constitute an original and all of which, when taken together, shall
constitute one agreement.
(f) Each Releasor shall execute and/or cause to be delivered to each
Releasee such instruments and other documents, and shall take such other
actions, as such Releasee may reasonably request for the purpose of carrying out
or evidencing any of the actions contemplated by this General Release.
(g) If any legal action or other legal proceeding relating to this General
Release or the enforcement of any provision hereof is brought by any Releasor or
Releasee, the prevailing party shall be entitled to recover reasonable
attorneys' fees, costs and disbursements to the extent actually incurred (in
addition to any other relief to which the prevailing party may be entitled).
4
(h) This General Release shall be effective with respect to, and shall be
binding upon and enforceable against, each Releasor who executes this General
Release, regardless of whether any of the other Releasors executes this General
Release.
(i) Whenever required by the context, the singular number shall include the
plural, and vice versa; the masculine gender shall include the feminine and
neuter genders; and the neuter gender shall include the masculine and feminine
genders.
(j) 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 General Release.
(k) As used in this General Release, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, and shall
be deemed to be followed by the words "without limitation."
[THIS SPACE INTENTIONALLY LEFT BLANK]
5
IN WITNESS WHEREOF, the Releasors have caused this General Release to
be executed as of the date first above written.
RELEASORS:
[CORPORATION]
___________________________________
(Printed Name)_____________________
By: _______________________________
Name: _____________________________
Title: ____________________________
[INDIVIDUAL]
___________________________________
(Printed Name)_____________________
[GENERAL RELEASE SIGNATURE PAGE]
6
SCHEDULE A
SCHEDULE OF RELEASORS
EXHIBIT F
FORM OF INVESTMENT LETTER
F-1
INVESTMENT LETTER
This Investment Letter (the "Investment Letter") is entered into as of
February __, 2000, between eGain Corporation, a Delaware corporation ("Parent")
and the undersigned stockholder ("Stockholder") of Big Science Company, a
Georgia corporation ("Company").
Stockholder acknowledges that Stockholder has received and reviewed (i) a
copy of that certain Agreement and Plan of Merger and Reorganization (the
"Merger Agreement"), dated as of February 7, 2000, by and between Parent, BSC
Acquisition Corp., a Georgia corporation ("Merger Sub") , the Company and the
Founders (together the "Parties") pursuant to which the Parties have agreed that
Merger Sub will merge with and into the Company with the Company as the
surviving corporation (the "Merger"); (ii) a copy of Parent's Prospectus dated
September 23, 1999; (iii) a copy of Parent's quarterly report on Form 10-Q for
the three months ended September 30, 1999; and (iv) an Information Statement
(collectively, the "Disclosure Documents").
1. Defined Terms. Capitalized terms used in this Investment Letter and not
otherwise defined shall have the meanings given them in the Merger Agreement.
2. Acknowledgements and Understandings of the Stockholder.
(a) Merger of Merger Sub into the Company. Stockholder acknowledges that
pursuant to Section 1.1 of the Merger Agreement, at the Effective Time, Merger
Sub will merge with and into the Company, the separate existence of Merger Sub
will cease and the Company will continue as the surviving corporation in the
Merger. Stockholder further acknowledges that, in accordance with Section 1.6 of
the Merger Agreement, at the Effective Time, the Stockholder will receive in
exchange for Stockholder's shares of Company Common Stock held immediately prior
to the Effective Time, certain consideration as set forth in the Merger
Agreement, including shares of Parent Common Stock (the "Shares").
(b) Unregistered Stock. Stockholder is fully aware that the Shares
Stockholder will receive are being distributed under an exemption from
registration provided for in Section 4(2) of the Securities Act, that
Stockholder is acquiring the Shares without being offered or furnished any
offering literature or prospectus other than the Disclosure Documents, that this
transaction has not been approved or reviewed by the U.S. Securities and
Exchange Commission or by any administrative agency charged with the
administration of the securities law of any state, that financial statements,
and other documents pertaining to Parent and Company have been made available to
the Stockholder and Stockholder's representatives, including Stockholder's
attorney and accountant.
(c) Rule 144. Stockholder is fully aware that because the issuance of the
Shares has not been registered under the Securities Act, the Shares are deemed
to constitute "restricted securities" under Rule 144 promulgated under the
Securities Act and that the Shares must be held indefinitely unless their resale
or other disposition is subsequently registered under the Securities Act or an
exemption from such registration is available. Stockholder is aware of the
provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of
1
shares purchased in a private placement subject to the satisfaction of certain
conditions, including among other things, the existence of a public market for
the shares, the availability of certain current public information about the
issuer, the resale occurring not less than one year after an exchange, the sale
being through a "broker's transaction" or in transactions directly with a
"market maker" (as provided by Rule 144(f)) and the number of shares being sold
during any three-month period not exceeding specified limitations (unless the
sale is within the requirements of Rule 144(k)).
(d) No Duty to Register. Stockholder realizes that, in the absence of the
availability of Rule 144 under the Securities Act, any disposition by
Stockholder of the Shares may require compliance with an exemption under the
Securities Act or a registration under the Securities Act, and that the Parent
is under no obligation, except as explicitly provided for in Section 10 of the
Merger Agreement, to take any action to make any such registration or exemption
so available.
(e) Experience. Stockholder has such knowledge and experience in financial
and business matters that Stockholder is capable of evaluating the merits and
risks of the Merger and the transactions related thereto.
(f) Investment. Stockholder is acquiring the Shares for investment for
Stockholder's own account and not with a view to, or for resale in connection
with, any unregistered distribution thereof, and Stockholder has no current
intention to sell, convey, dispose of or otherwise distribute any interest in or
risk related to the Shares. Stockholder understands that the Shares Stockholder
shall receive has not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
as expressed herein.
(g) Risk Awareness. Stockholder confirms that Stockholder understands and
has fully considered for purposes of this investment the risks of this
investment and that (i) this investment is suitable only for an investor who is
able to bear the economic consequences of losing Stockholder's entire
investment, (ii) the Shares are a speculative investment which involves a high
degree of risk of loss by Stockholder of Stockholder's investment therein, and
(iii) there are substantial restrictions on the transferability of the Shares,
and accordingly, it may not be possible for Stockholder to liquidate
Stockholder's investment in the case of emergency.
(h) Ability to Bear Risk. Stockholder confirms that Stockholder is able (i)
to bear the economic risk of this investment, (ii) to hold the Shares for a
substantial period of time, and (iii) presently to afford a complete loss of his
or her investment.
(i) Opportunity to Investigate. Stockholder confirms that Stockholder's
representatives and advisors have been given the opportunity to ask questions
of, and to receive answers from, persons acting on behalf of Company and Parent
concerning the terms and conditions of the Merger and the business and prospects
of Company and Parent, and to obtain any additional information, to the extent
such persons possess such information or can acquire it without unreasonable
effort or expense and without breach of confidentiality obligations, necessary
to verify the accuracy of the information set forth in the Disclosure Documents.
2
3. Reliance on Representations, Warranties and Acknowledgements. The
representations, warranties and acknowledgments of Stockholder herein (a) are
made by the undersigned with the intent that they may be relied upon in
determining Stockholder's suitability as an investor in Parent, (b) are true and
accurate as of the date of this Investment Letter and (c) shall be true and
accurate as of the date of delivery to and acceptance by Parent and shall
survive the issuance of the Shares; Stockholder acknowledges that certificates
representing the Shares may bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS THE CORPORATION RECEIVES AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SAID ACT. COPIES OF THE AGREEMENT COVERING THE ISSUANCE OF THESE SHARES
AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION."
[THIS SPACE INTENTIONALLY LEFT BLANK]
3
In Witness Whereof, the undersigned has hereby executed this Investment
Letter as of this ____ day of __________, 2000.
By: ___________________________________________
Printed Name: _________________________________
Address: ______________________________________
[Investment Letter Signature Page]
4
EXHIBIT G
FORM OF LEGAL OPINION OF
XXXXXX XXXXXXX XXXXX & XXXXXXXXXXX, LLP
G-1
[FORM OF TARGET LEGAL OPINION]
February __, 2000
eGain Communications Corporation
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Re: eGain Communications Corporation - Big Science Company Merger
Ladies and Gentlemen:
We have acted as counsel for Big Science Company, a Georgia corporation
(the "Company"), in connection with the Agreement and Plan of Merger and
Reorganization dated as of February __, 2000 (the "Reorganization Agreement"),
by and among the Company, you and certain other parties named therein. This
letter is provided to you in satisfaction of the requirement set forth in
Section 6.5(e) of the Reorganization Agreement. Terms not otherwise defined
herein have the meanings given to them in the Reorganization Agreement. This
opinion letter is limited by, and is in accordance with, the Interpretive
Standards attached hereto which are incorporated in this opinion letter by this
reference.
In connection with the foregoing, we have examined the Reorganization
Agreement, the Company Disclosure Schedule to the Reorganization Agreement, the
Amendment to the Amended and Restated Investors' Rights Agreement (the "Rights
Amendment"), records of proceedings of the directors and stockholders of the
Company, the Articles of Incorporation of the Company, as amended (the
"Articles"), Bylaws of the Company, as amended (the "Bylaws"), certificates of
officers of the Company and public officials, and such other documentation as we
have deemed necessary or advisable in order to render the opinions expressed
herein. As to questions of fact material to such opinions, we have relied upon
certificates of officers of the Company without investigation.
Based upon the foregoing and except as set forth on the Schedule of
Exceptions, it is our opinion that:
1. The Company has been duly incorporated and organized and is a validly
existing corporation in good standing under the laws of the State of Georgia and
has the requisite corporate power to own its property and assets and to conduct
its business as it is currently being conducted. The Company has qualified to do
business as a foreign corporation in the State of Washington.
2. The Company has all requisite corporate power and authority to execute
and deliver the Reorganization Agreement and to carry out and perform its
obligations under the terms of the Reorganization Agreement.
eGain Communications Corporation
February __, 2000
Page 2
3. The Reorganization Agreement has been duly and validly authorized,
executed and delivered by the Company, constitutes a valid and binding agreement
of the Company (assuming due authorization, execution and delivery thereof by
all the other parties to the agreement), and is enforceable against the Company
in accordance with its terms.
4. The capital stock of the Company immediately prior to the Closing is as
follows:
(a) PREFERRED STOCK. 1,000,000 shares of Preferred Stock (the
"Preferred Stock") have been authorized, none of which are issued and
outstanding immediately prior to the Closing.
(b) COMMON STOCK. 100,000,000 shares of Common Stock have been
authorized, of which _________ shares are outstanding. All such issued and
outstanding shares of Common Stock have been duly authorized and validly
issued, are fully paid and non assessable. Assuming the accuracy and
completeness of the information provided to the Company by the purchasers
of such shares and the absence of general solicitation in connection with
the offer and sale thereof, all such shares were issued pursuant to
available exemptions from registration under Section 5 of the Securities
Act of 1933 and applicable state securities laws. Such shares are free of
any preemptive or similar rights contained in the Articles or Bylaws of the
Company. Except for (i) shares reserved for issuance under the 2000 Stock
Incentive Plan _________ of which options to purchase [1,019,214] shares
have been issued and are outstanding and _________ shares remain available
for future issuance, (ii) the possible right of Japan Entry Inc. to certain
shares in payment of the Company's retainer obligation, and (iii) Xxxx
Xxxxx'x right to exchange a promissory note in the principal amount of
$100,000 for certain shares, to our knowledge, without investigation, there
are no other options, warrants, conversion privileges or other rights
presently outstanding to purchase or otherwise acquire any authorized but
unissued shares of capital stock or other securities of the Company.
5. The execution, delivery and performance of the Reorganization Agreement
by the Company on or prior to the Closing do not violate any provision of the
Company's Articles or Bylaws, and do not constitute a material default under the
provisions of any material agreement set forth on the Company Disclosure
Schedule to the Reorganization Agreement and to which the Company is a party or
by which it is bound, and do not violate or contravene (a) any governmental
statute, rule or regulation applicable to the Company of which we are aware
without investigation or (b) any order, writ, judgment, injunction, decree,
determination or award which has been entered against the Company and of which
we are aware without investigation, the violation or contravention of which
would materially and adversely affect the Company, its assets, financial
condition or operations.
eGain Communications Corporation
February __, 2000
Page 3
6. To our knowledge, without investigation, there is no action, proceeding
or investigation pending or overtly threatened against the Company before any
court or administrative agency that questions the validity of the Reorganization
Agreement, or that might result, either individually or in the aggregate, in any
material adverse change in the assets, financial condition, or operations of the
Company.
7. All consents, approvals, authorizations, or orders of, and filings,
registrations, and qualifications with any regulatory authority or governmental
body in the United States required to be made by the Company for the
consummation by the Company of the transactions contemplated by the Agreement,
have been made or obtained, except for filings such as may be required to be
filed pursuant to applicable federal and state securities laws prior to or
subsequent to the consummation of the transactions contemplated by the
Reorganization Agreement.
The foregoing opinion is subject to such matters as are set forth in the
Schedule of Exceptions to the Reorganization Agreement and the following
qualifications:
Our opinion in paragraph 1 above is based solely upon a review of a
certificates of good standing from the States of Georgia and Washington.
In addition to the limitations set forth in the Interpretive Standards,
our opinion in paragraph 3 above is subject to and limited by the effect of
applicable court decisions, invoking statutes or principles of equity, which
have held that certain covenants and provisions of agreements are unenforceable
where the breach of such covenants or provision imposes restrictions or burdens
upon a party and it cannot be demonstrated that the enforcement of such
restrictions or burdens is necessary for the protection of the other party.
Our opinion in paragraph 4 above is based solely on an officer's
certificate of the Company and a review of the Board of Directors minutes and
other records of the Company provided to us and described in the officer's
certificate as complete minutes and records of all actions of the stockholders
and directors; however, although we have made no other investigation with
respect to such matters, we have no reason to believe such certificate is
inaccurate and that such records are not complete based on our representation of
the Company in connection with this transaction.
Our opinion in paragraph 5 above is based on our review of the
documents provided to us by the Company and described in an officer's
certificate as true and complete copies of the agreements set forth on the
Company Disclosure Schedule to the Reorganization Agreement.
We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals, the conformity to original documents
of all documents submitted to us as photostatic or telecopied originals, the
legal capacity of all natural persons, and as to documents executed by entities
other than the Company, that each such entity has complied with any applicable
requirement to file tax returns and pay taxes under California Franchise Tax law
eGain Communications Corporation
February __, 2000
Page 2
and had the power to enter into and perform its obligations under such
documents, and that such documents have been duly authorized, executed and
delivered by, and are binding upon and enforceable against such entities. This
opinion is limited in all respects to matters governed by the laws of the State
of Georgia and the laws of the United States, and we express no opinion
concerning the laws or regulations of any other jurisdiction or jurisdictions.
We assume that you know of no agreements, understandings or
negotiations between the parties not set forth in the Reorganization Agreement
that would modify the terms or rights and obligations of the parties thereunder.
Whenever a statement herein is qualified by "to the best of our
knowledge," "we are not aware" or similar phrase, it indicates that in the
course of our representation of the Company no information that would give us
current actual knowledge of the inaccuracy of such statement has come to the
attention of the attorneys in this firm who have rendered legal services in
connection with this transaction. We have not made any independent investigation
to determine the accuracy of such statement, except as expressly described
herein.
This opinion is being delivered to you by us as counsel to the Company
and may not be delivered to or relied upon by any other person without our
express written approval.
Yours very truly,
XXXXXX XXXXXXX XXXXX & XXXXXXXXXXX, L.L.P.
By: ___________________________________________
Enclosure
SCHEDULE I
INTERPRETIVE STANDARDS
APPLICABLE TO LEGAL OPINIONS
TO THIRD PARTIES IN CORPORATE TRANSACTIONS
PURPOSE AND SCOPE OF INTERPRETIVE STANDARDS
The purpose of these Interpretive Standards is to explain the meaning
of Opinion Letters (which incorporate these interpretive standards by reference)
addressed to non-client third parties in connection with corporate acquisition
or financing transactions. Included in these Interpretive Standards are general
qualifications to legal opinions, common assumptions as to fact and law,
standards governing an opinion that an agreement is "enforceable" and
interpretations of certain recurring legal opinions and confirmations of fact.
Incorporation in an Opinion Letter of these Interpretive Standards is intended
to shorten the content of the letter while expanding the mutual understanding of
its meaning. Any part of these Interpretive Standards, however, may be
overridden by a specific statement in an Opinion Letter which supersedes a
contrary Interpretive Standard.
DEFINITIONS OF TERMS USED IN INTERPRETIVE STANDARDS
The following capitalized terms have the following meanings when used
in these Interpretive Standards:
AGREEMENT means the primary legal document which evidences the
Transaction.
ASSETS means all of the tangible and intangible real and personal
property of Company.
COMPANY means the entity (or entities) which is (or are) the client (or
clients) of Opinion Giver and on whose behalf the Opinion Letter is given.
DOCUMENTS means the Agreement, together with any other document
identified in the Opinion Letter, which contains one or more obligations of
Company related to the Transaction.
LAW(S), whether or not a capitalized term, means the constitution,
statutes, judicial and administrative decisions, and rules and regulations of
governmental agencies of the Opining Jurisdiction and, unless otherwise
specified, federal law.
LOCAL LAW means the statutes, administrative decisions, and rules and
regulations of any county, municipality or subdivision, whether created at the
federal, state or regional level.
1
OPINING JURISDICTION means a jurisdiction, the law of which Opinion
Giver addresses.
OPINION, whether or not a capitalized term, means a legal opinion
contained in an Opinion Letter.
OPINION GIVER means the law firm or lawyer giving an Opinion.
OPINION LETTER, whether or not a capitalized term, means the letter
containing one or more Opinions or confirmations of fact by Opinion Giver.
OPINION RECIPIENT means the person or persons to whom the Opinion
Letter is addressed.
OTHER AGREEMENTS mean documents (other than the Documents) to which
Company is a party or by which Company is bound.
OTHER COUNSEL means counsel (other than Opinion Giver) providing a
legal opinion or confirmation of fact on aspects of the Transaction directed to
Opinion Recipient or Opinion Giver or both.
OTHER JURISDICTION means any jurisdiction (other than the Opining
Jurisdiction) the law of which is stipulated to be the governing law.
PERSONAL PROPERTY means all of the tangible and intangible personal
property of Company.
PRIMARY LAWYER GROUP has the meaning discussed in Interpretative
Standard 7 below.
PUBLIC AUTHORITY DOCUMENTS means certificates issued by a governmental
office or agency, such as the Secretary of State, or by a private organization
having access to and regularly reporting on government files and records, as to
a person's property or status.
REMEDIES OPINION means an Opinion dealing with the enforceability
against Company or the Selling Shareholders of one or more Documents.
TRANSACTION means the transaction with respect to which the Opinion
Letter is given.
2
QUALIFICATIONS TO EACH OPINION
1. LAW ADDRESSED BY OPINION.
If Opinion Letter is expressly limited to the Law of one or more
specified jurisdictions or to one or more discrete laws within one or more
jurisdictions, an Opinion with respect to any other law, or the effect of any
other law, is disclaimed.
2. SCOPE OF OPINION.
An Opinion covers only those matters both essential to the conclusion
stated by the Opinion and, based upon prevailing norms and expectations found
among experienced legal practitioners in the Opining Jurisdiction, reasonable in
the circumstances. Other matters are not included in an Opinion by implication.
The following matters, including their effects and the effects of noncompliance,
are not covered by implication or otherwise in any Opinion, unless coverage is
specifically addressed in the Opinion Letter as provided by Interpretative
Standard 11:
(1) Local Law
(2) Law relating to permissible rates, computation or
disclosure of interest, E.G., usury
(3) Antitrust and unfair competition law
(4) Securities law
(5) Fiduciary obligations
(6) Pension and employee benefit law, E.G., ERISA
(7) Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System
(8) Fraudulent transfer law
(9) Environmental law
(10) Land use and subdivision law
(11) Except with respect to the No Consent Opinion in
(Interpretative Standard 28), Xxxx-Xxxxx-Xxxxxx, Exon-Xxxxxx
and other laws related to
3
filing requirements, other than charter-related filing
requirements, such as the requirements for filing articles
of merger
4
(12) Except with respect to a No Violation Opinion (Interpretive
Standards 27), concerning creation, attachment, perfection
or priority of a security interest in any Assets
(13) Bulk transfer law
(14) Tax law
(15) Patent, copyright, trademark and other intellectual property
law
(16) Racketeering law, E.G., RICO
(17) Criminal statutes of general application, E.G., mail fraud
and wire fraud
(18) Health and safety law, E.G., OSHA
(19) Labor law
(20) Law concerning national or local emergency
(21) Communications, public utility or common carrier law
3. UNWARRANTED RELIANCE.
Opinion Giver may not rely for purposes of the Opinion Letter upon
information, whether or not in a Public Authority Document, or (except in the
case of arbitrary or hypothetical assumptions contained in an overriding
agreement referred to in Interpretive Standard 11, or as stated in Interpretive
Standard 22 with respect to choice of law) upon an assumption otherwise
appropriate, if Opinion Giver has knowledge that such information or assumption
is false, or recognizes factors that compel the conclusion that reliance upon
such information or assumption would be unreasonable. "Knowledge" or
"recognizes" for purposes of the foregoing sentence and wherever used in these
Interpretive Standards means the current awareness of information by any lawyer
in the Primary Lawyer Group.
4. RELIANCE ON OTHER SOURCES OF INFORMATION.
Subject to Interpretive Standard 3, Opinion Giver may rely, without
investigation, upon facts established by a Public Authority Document, facts
provided by an agent of Company or others and, if disclosed in the Opinion
Letter, facts asserted by a party to the Transaction in a representation or
warranty embodied in the Documents, provided:
(1) if not established by a Public Authority Document, the
facts do not constitute a statement, directly or in practical effect,
of the legal conclusion in question;
5
(2) the person providing facts is, in Opinion Giver's
professional judgment, an appropriate source; and
(3) if the facts are set forth in a certificate, Opinion Giver
has used reasonable professional judgment as to its form and content.
5. SCOPE OF OPINION GIVER'S INQUIRY.
Opinion Giver is presumed to have reviewed such documents and given
consideration to such matters of law and fact as Opinion Giver deemed
appropriate in order to give an Opinion or confirmation of fact, unless Opinion
Giver has expressly limited the scope of inquiry in the Opinion Letter. A
recital of specific documents reviewed or specific procedures followed, without
more, is not a limitation on the scope of Opinion Giver's inquiry for purposes
of the foregoing presumption.
6. OPINION OR CONFIRMATION QUALIFIED BY KNOWLEDGE OF OPINION GIVER.
Whenever an Opinion Letter qualifies an Opinion or confirmation of fact
by the words "to our knowledge," "known to us" or words of similar meaning, the
quoted words mean the current awareness by lawyers in the Primary Lawyer Group
of information such lawyers recognize as relevant to the Opinion or confirmation
so qualified. The quoted words do not include within what is "known" information
not within such current awareness that might be revealed if a canvass of lawyers
outside the Primary Lawyer Group were made, if the Opinion Giver's files were
searched or if any other investigation were made.
7. "PRIMARY LAWYER GROUP".
"Primary Lawyer Group" means that lawyer in Opinion Giver's
organization who signs the Opinion Letters and, solely as to information
relevant to an Opinion or confirmation issue, any lawyer in Opinion Giver's
organization who is primarily responsible for providing the response concerning
the particular issue or who provided substantive attention to such issue in
connection with the Transaction.
8. WHO MAY RELY ON OPINION.
Opinion Recipient and designated principals of Opinion Recipient, if
Opinion Recipient is identified in the Opinion Letter as an agent for designated
principals, are the only persons entitled to rely upon any Opinion or
confirmation of fact contained in the Opinion Letter, and then only for purposes
of the Transaction.
9. OTHER COUNSEL.
Opinion Giver's responsibility for the opinion of Other Counsel depends
upon what is stated in the Opinion Letter. A statement that Opinion Giver has
relied on an opinion of Other
6
Counsel means only that Opinion Giver believes that (i) based upon Other
Counsel's professional reputation, it is competent to render such opinion, and
(ii) such opinion on its face appears to address the matters upon which Opinion
Giver places reliance. A statement that Opinion Giver believes that Opinion
Recipient is justified in relying on an Opinion of Other Counsel means only that
Opinion Giver believes that, based upon Other Counsel's professional reputation,
it is competent to render such opinion. A statement that Opinion Giver concurs
in an opinion of Other Counsel means that Opinion Giver has assumed the
responsibility for verifying the accuracy of the opinion of Other Counsel. If no
concurrence by Opinion Giver is expressed, no concurrence is implied. If Opinion
Giver merely identifies or remains silent with respect to the opinion of Other
Counsel, Opinion Giver assumes no responsibility for Other Counsel's opinion,
and Opinion Recipient may not assume that Opinion Giver has relied upon Other
Counsel's opinion.
10. UPDATING.
An Opinion Letter speaks as of the date of its delivery, and Opinion
Giver has no obligation to advise Opinion Recipient or anyone else of any matter
of fact or law thereafter occurring, whether or not brought to the attention of
Opinion Giver, even though that matter affects any analysis or conclusion in the
Opinion Letter.
11. OVERRIDING AGREEMENT.
Opinion Giver and Opinion Recipient may agree upon arbitrary or
hypothetical assumptions that may not be true and upon qualifications, standards
or interpretations inconsistent with these Interpretive Standards. Any such
agreement with respect to such assumptions, qualifications, standards or
interpretations, when described with reasonable particularity in the Opinion
Letter, will supersede any contrary provision of these Interpretive Standards.
ASSUMPTIONS
12. ASSUMPTIONS AS TO PARTIES OTHER THAN COMPANY.
Opinion Recipient in the Transaction has acted in good faith and
without notice of any defense against enforcement of rights created by, or
adverse claim to any property transferred as part of, the Transaction. Each
party to the Transaction other than Company has complied with all laws
applicable to it that affect the Transaction.
13. ASSUMPTIONS AS TO NATURAL PERSONS AND DOCUMENTS.
Each natural person acting on behalf of any party to the Transaction
has sufficient legal competency to carry out such person's role in the
Transaction. Each document submitted to Opinion Giver for review is accurate and
complete, each document purporting to be original is
7
authentic, each document purporting to be a copy conforms to an authentic
original, and each signature on a document is genuine.
14. ASSUMPTIONS AS TO TRANSACTION.
The Transaction complies with any test required by law of good faith or
fairness. Each party will act in accordance with the terms and conditions of the
Documents.
15. ASSUMPTION AS TO ACCESSIBILITY TO LAWS.
Each Law for which Opinion Giver is deemed to be responsible is
published, accessible and generally available to lawyers practicing in the
Opining Jurisdiction.
16. ASSUMPTIONS AS TO COMPANY.
No discretionary act of Company or on its behalf will be taken after
the date of the Transaction if such act might result in a violation of law or
breach or default under any agreement, decree, writ, judgment or court order.
After the date of the Transactions, the Company will obtain all permits and
governmental approvals and take all other actions which are both (i) relevant to
performance of the Documents or consummation of the Transaction, and (ii)
required in the future under applicable law. Company holds the requisite title
and rights to its Assets.
17. ASSUMPTIONS AS TO OTHER AGREEMENT.
Any Other Agreement will be enforced as written.
18. ASSUMPTION AS TO UNDERSTANDINGS.
There is no understanding or agreement not embodied in a Document among
parties to the Transaction that would modify any term of a Document or any right
or obligation of a party.
19. ASSUMPTION AS TO ABSENCE OF MISTAKE OR FRAUD.
With respect to the Transaction and the Documents, there has been no
mutual mistake of fact and there exists no fraud or duress.
20. ASSUMPTION AS TO INVALIDITY.
No issue of unconstitutionality or invalidity of a relevant Law exists
unless a reported case has so held.
REMEDIES OPINION STANDARDS
21. MEANING OF REMEDIES OPINION.
A. GENERAL MEANING. The Remedies Opinion, with respect to any
referenced Document, and subject to the limitations contained in these
Interpretive Standards and in the Opinion Letter, means that:
(i) a contract has been formed under the law of contracts of the
jurisdiction applicable under Interpretive Standard 22; and
(ii) under laws normally applicable to contracts like the
Document, to parties like the Company and to transactions like the
Transaction, each obligation imposed on Company by the Document, each
agreement made by Company in the Document, and each right, benefit and
remedy conferred by Company in the Document, will be given effect as
stated in the Document.
B. EXISTENCE OF CONTRACT. The professional judgment reflected in
subparagraph A(i) above requires the Opinion Giver to conclude that:
(i) All legal requirements under contract law for the
formation of a contract of the type involved in the referenced Document
effective against Company (other than requirements that would be
covered by a Corporate Status Opinion, Corporate Powers Opinion and a
Corporate Acts Opinion discussed at Interpretive Standards 24, 25 and
26) are met, such as necessary formalities (including compliance with
any applicable statute of frauds), consideration (where necessary),
definiteness, and the inclusion of essential terms.
(ii) The Document does not violate a law as to formation of
contracts that would prevent a court presented with the Document from
enforcing it.
(iii) Company does not presently have available any
contractual defense to the Document, such as the statute of
limitations.
22. CHOICE OF LAW IN REMEDIES OPINION.
If a Document covered by the Remedies Opinion contains no governing law
provision, or contains a governing law provision which names the Opining
Jurisdiction, the Remedies Opinion means that if Company is brought before a
proper court of the Opining Jurisdiction to enforce rights under the Document,
and if such court applies the substantive law of the Opining Jurisdiction, the
result will be as stated in the Opinion and these Interpretive Standards.
If the Document contains a governing law provision which names a
jurisdiction other than the Opining Jurisdiction, the Remedies Opinion does not
opine whether any court of any jurisdiction will give effect to the governing
law provision in the Agreement, but assumes that
9
if Company is brought before a proper court of the Opining Jurisdiction to
enforce rights under the Document, such court will apply the substantive law of
the Opining Jurisdiction, notwithstanding the governing law provision in the
Document, and based upon such assumption the result will be as stated in the
Opinion and these Interpretive Standards.
The Remedies Opinion does not extend to the content or effect of any
law other than the law of the Opining Jurisdiction and federal law.
23. EXCEPTIONS TO THE REMEDIES OPINION.
Any Remedies Opinion contained in an Opinion Letter which incorporates
these Interpretive Standards by reference will be deemed not to address the
matters excluded in Interpretive Standard 2 and subject to the following
exceptions:
(i) The effect of bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the rights and remedies of
creditors. This includes the effect of the Federal Bankruptcy Code in
its entirety, including matters of contract rejection, fraudulent
conveyance and obligation, turn-over, preference, equitable
subordination, automatic stay, conversion of a non-recourse obligation
into a recourse obligation, and substantive consolidation. This also
includes state laws regarding fraudulent transfers, obligations, and
conveyances, and state receivership laws.
(ii) The effect of general principles of equity, whether
applied by a court of law or equity. This includes the following
concepts: (a) principles governing the availability of specific
performance, injunctive relief or other traditional equitable remedies;
(b) principles affording traditional equitable defenses (e.g., waiver,
laches and estoppel); (c) good faith and fair dealing; (d)
reasonableness; (e) materiality of the breach; (f) impracticability or
impossibility of performance; (g) the effect of obstruction, failure to
perform or otherwise to act in accordance with an agreement by any
person other than Company; (h) the effect of section 1-102(3) of the
Uniform Commercial Code; and (i) unconscionability.
(iii) The effect and possible unenforceability of contractual
provisions providing for choice of governing law.
(iv) The possible unenforceability of provisions purporting to
waive certain rights of guarantors.
(v) The possible unenforceability of provisions requiring
indemnification for, or providing exculpation, release or exemption
from liability for, action or inaction, to the extent such action or
inaction involves negligence or willful misconduct or to the extent
otherwise contrary to public policy.
10
(vi) The possible unenforceability of provisions purporting to
require arbitration of disputes.
(vii) The possible unenforceability of provisions prohibiting
competition, the solicitation or acceptance of customers, of business
relationships or of employees, the use or disclosure of information, or
other activities in restraint of trade.
(viii) The possible unenforceability of provisions imposing
increased interest rates or late payment charges upon delinquency in
payment or default or providing for liquidated damages, or for premiums
on prepayment, acceleration, redemption, cancellation, or termination,
to the extent any such provisions are deemed to be penalties or
forfeitures.
(ix) The possible unenforceability of waivers or advance
consents that have the effect of waiving statutes of limitation,
marshalling of assets or similar requirements, or as to the
jurisdiction of courts, the venue of actions, the right to jury trial
or, in certain cases, notice.
(x) The possible unenforceability of provisions that waivers
or consents by a party may not be given effect unless in writing or in
compliance with particular requirements or that a person's course of
dealing, course of performance, or the like or failure or delay in
taking actions may not constitute a waiver of related rights or
provisions or that one or more waivers may not under certain
circumstances constitute a waiver of other matters of the same kind.
(xi) The effect of course of dealing, course of performance,
or the like, that would modify the terms of an agreement or the
respective rights or obligations of the parties under an agreement.
(xii) The possible unenforceability of provisions that
enumerated remedies are not exclusive or that a party has the right to
pursue multiple remedies without regard to other remedies elected or
that all remedies are cumulative.
(xiii) The effect of laws related to attorneys fees.
(xiv) The possible unenforceability of provisions that
determinations by a party or a party's designee are conclusive.
(xv) The possible unenforceability of provisions permitting
modifications of an agreement only in writing.
(xvi) The possible unenforceability of provisions that the
provisions of an agreement are severable.
11
(xvii) The effect of laws requiring mitigation of damages.
(xviii) The possible unenforceability of provisions permitting
the exercise, under certain circumstances, of rights without notice or
without providing opportunity to cure failures to perform.
(xix) The effect of agreements as to rights of set off
otherwise than in accordance with the applicable law.
24. CORPORATE STATUS OPINION.
An Opinion to the effect that Company was duly organized as a
corporation and is existing in good standing under the laws of the State of its
incorporation (Corporate Status Opinion) is subject to the following
understandings:
(1) "duly organized" means that Company (i) properly complied
with the statutory requirements for incorporation, and (ii) thereafter
properly complied with the statutory requirements for organization;
(2) "is existing" means that Company is a corporation which
has not ceased to exist;
(3) the Opinion refers to the status of Company only for
purposes of and under the statutory requirements; and
(4) "good standing", which has no meaning under the Corporate
Code, means for purposes of the Opinion that the Company has filed no notice of
intent to dissolve and has not been administratively dissolved.
25. CORPORATE POWERS OPINION.
An Opinion to the effect that Company has the corporate power to
execute and deliver a Document, to perform its obligations under a Document, to
own and use its Assets and to conduct its business (Corporate Powers Opinion) is
subject to the following understandings:
(1) the Opinion refers only to the statutory requirements and
the Company's certificate of incorporation as sources of corporate
power;
(2) "power" refers only to whether the acts referenced in the
Opinion are ULTRA XXXXX;
(3) the Opinion is built upon an assumption that the Corporate
Status Opinion could also be given;
12
(4) "own and use" refers to every right Company has in the
Assets;
(5) the Opinion refers to Assets owned and used and business
conducted on the date of the Opinion, and not those contemplated for
future ownership, use or conduct except to the extent the acquisition
of the Assets or conduct of the business is concurrent with, and
recognized by Opinion Giver as constituting part of, the consummation
of the Transaction.
26. CORPORATE ACTS OPINION.
An Opinion to the effect that Company has duly authorized the execution
and delivery of, and performance by Company under, the Documents and has duly
executed and delivered the Documents (Corporate Acts Opinion) is subject to the
following understandings:
(1) the Opinion affirms compliance with all corporate action
necessary under the statutory requirements, Company's articles of
incorporation and bylaws and, if applicable, Company's duly adopted
policies and practices for delegation of authority, in order to
authorize the execution and delivery of, and performance under, the
Documents;
(2) the Opinion affirms that the execution and delivery of the
Documents was, and Company's performance of its obligations under the
Documents in accordance with the Documents as written will be, in
accordance with the authorizations;
(3) the Opinion is built upon an assumption that the Corporate
Status Opinion and the Corporate Powers Opinion could also be given;
(4) the Opinion addresses no law other than the statutory law
of the Opining Jurisdiction and applicable law of agency.
27. NO VIOLATION OPINION.
An Opinion to the effect that Company's execution and delivery of the
Documents do not, and if Company were now to perform its obligations under the
Documents such performance would not, result in (i) a violation of Company's
articles of incorporation, bylaws or any law to which the Company or its Assets
are subject, or (ii) a breach of or default under described agreements, or (iii)
a creation or imposition of contractual liens or security interests arising out
of described agreements, or (iv) a violation of any known judicial or
administrative decree, writ, judgment or order to which the Company or its
assets are subject (No Violation Opinion) is subject to the following
understandings:
(1) a "violation" or "breach or default" means any act or
omission that, by itself or upon notice or the passage of time or both,
would constitute a violation, breach or default giving rise to a remedy
under the document or law instrument in question;
13
(2) the Opinion addresses only the relevant facts and law as
they exist on the date of the Opinion Letter;
(3) "agreements" refers to agreements, indentures, documents
and other instruments in writing, identified in the Opinion Letter;
(4) references to any law or to "decree, writ, judgment or
order" or the like include only those (i) which either prohibit
performance by Company under the Documents or subject Company to a
fine, penalty or other sanction, and (ii) which a lawyer, using
customary professional diligence, would reasonably recognize as
applicable to Company and the Transaction;
(5) the Opinion addresses only whether the specific terms of
the relevant Document violate law or cause a breach of or default under
the specific terms of an obligation created by a described Other
Agreement, taking into account information provided in accordance with
Interpretive Standard 4 and other facts known to Opinion Giver;
(6) the Opinion does not address acts permitted or
contemplated but not required, or inferred but not set forth, by the
relevant Document, except to the extent such acts are concurrent with,
and recognized by Opinion Giver as constituting part of, the
consummation of the Transaction;
(7) to the extent the interpretation of words in described
agreements requires resort to law, the law is that of the Opinion
Jurisdiction; and
(8) the Opinion does not address liens or security interests
created by or in favor of Opinion Recipient, created under a Document
or arising by operation of law.
28. NO CONSENT OPINION.
An Opinion to the effect that no consent, approval, authorization or
filing or other action by, or filing with, any governmental authority is
required for Company's execution and delivery of the Documents and consummation
of the Transaction (No Consent Opinion) is subject to the understandings set
forth in Interpretive Standards 2 and 27(2) and (4). "Required" means that there
is no governmental consent, approval, authorization or filing, the absence of
which would either prohibit performance by Company of its obligations under the
Documents or subject Company to a fine, penalty or other similar sanction.
29. CAPITALIZATION OPINION.
14
An Opinion to the effect that described shares have been duly
authorized and are, or upon issuance will be, validly issued, fully paid and
nonassessable (Capitalization Opinion) is subject to the following
understandings:
(1) the Opinion affirms compliance with all corporate action
necessary to create and issue the shares under the corporate law of the
Opining Jurisdiction in effect at the time of such creation and
issuance ("Corporate Code") and Company's articles of incorporation and
bylaws;
(2) "duly authorized" means Company had the corporate power to
create the shares, the shares so created have the rights and attributes
required by the Corporate Code, and the rights and attributes of the
shares so created were permitted by the Corporate Code and Company's
articles of incorporation and bylaws;
(3) "validly issued" means that at the time of issuance
Company had sufficient authorized and unissued shares to permit the
shares to be issued, Company took the steps necessary to accord
shareholder status to the persons to whom the shares were issued and
Company has taken no step to deprive the shares of the "validly issued"
status;
(4) "fully paid and nonassessable" means that the
consideration received upon issuance of the (i) was legally sufficient,
(ii) satisfied the requirements of the Corporate Code, Company's
articles of incorporation and bylaws, and relevant corporate
resolutions, and (iii) was approved (e.g., as to value of property or
services) by the directors or shareholders, as required; and
(5) the Opinion is based upon the assumption that the
Corporate Status Opinion could also be given and that the consideration
for the shares was in fact received.
30. SHARE TRANSFER OPINION.
The only laws addressed in any Opinion as to the rights of a seller in
shares of Company acquired by any purchaser are the Corporate Code and Article 8
of the UCC, and no Opinion is given regarding liens (other than UCC security
interests) that may be perfected without filing or possession of the share
certificate. The Opinion is based upon the assumption that the Capitalization
Opinion could also be given.
31. PERSONAL PROPERTY TRANSFER OPINION.
An Opinion as to Company's transfer of Personal Property expresses no
opinion as to Company's title. See Interpretive Standard 16.
32. FOREIGN QUALIFICATION OPINION.
15
An Opinion to the effect that Company is qualified to transact business
as a foreign corporation in any one or more named jurisdictions is a statement
based solely upon one or more certificates referenced in the Opinion Letter and
limited in meaning to the words of each certificate. No implication arises from
such confirmation that certificates have been acquired from all jurisdictions in
which Company is required to be qualified, or that certificates obtained are
from the appropriate public officials in the jurisdictions referenced.
33. LITIGATION OPINION.
An Opinion regarding litigation pending or threatened in writing
against Company or any Assets derives from Opinion Giver's knowledge as defined
at Interpretive Standard 6 and certificate reliance discussed as Interpretive
Standard 4, but not from any reviews of public or court records or files, other
than those of the Opinion Giver or the Company.
INCORPORATION BY REFERENCE ACCORD
34. These Interpretive Standards may be incorporated by reference in
the Opinion Letter by a statement similar to the following:
This Opinion Letter is limited by, and is in accordance with,
the Interpretive Standards attached hereto which are
incorporated in this Opinion Letter by this reference.
16
EXHIBIT H
FORM OF LEGAL OPINION OF
PILLSBURY MADISON & SUTRO LLP
H-1
Attorneys at Law
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
TELEPHONE: (000) 000-0000 FAX: (000) 000-0000
INTERNET: XXXXXXXXXXXX.XXX
February __, 2000
Big Science Company
______________________
______________________
Re: eGain Communications Corporation, Inc. -- Big Science Company Merger
Ladies and Gentlemen:
We have acted as counsel for eGain Communications Corporation, Inc., a
Delaware corporation (the "eGain"), in connection with the Agreement and Plan of
Reorganization dated as of February 7, 2000 (the "Reorganization Agreement"), by
and among the eGain, Big Science Company (the "Company") and certain other
parties named therein. This letter is provided to you in satisfaction of the
requirement set forth in Section 7.3(a) of the Reorganization Agreement. The
Reorganization Agreement provides for, among other things, the issuance of
shares of eGain's Common Stock (the "Common Stock"). Terms not otherwise defined
herein have the meanings given to them in the Reorganization Agreement.
In connection with the foregoing, we have examined the Reorganization
Agreement, the Company Schedule of Exceptions, the Amendment to the Amended and
Restated Investors' Rights Agreement (the "Rights Amendment"), certificates
evidencing the Common Stock, records of proceedings of the directors and
stockholders eGain, the Certificate of Incorporation of eGain, as amended (the
"Certificate") and Bylaws of eGain, certificates of officers of eGain and public
officials, and such other documentation as we have deemed necessary or advisable
in order to render the opinions expressed herein. As to questions of fact
material to such opinions, we have when relevant facts were not independently
established, relied upon certificates of officers of eGain.
Based upon the foregoing and except as set forth on the Schedule of
Exceptions, it is our opinion that:
1. eGain has been duly incorporated and organized and is a validly existing
corporation in good standing under the laws of the State of Delaware and has the
requisite corporate power to own its property and assets and to conduct its
business as it is currently being conducted. eGain has qualified to do business
as a foreign corporation in the State of California.
Big Science Company
February __, 2000
Page 2
2. eGain has all requisite corporate power and authority to execute and
deliver the Reorganization Agreement and the Rights Amendment, to issue the
Common Stock pursuant to the Reorganization Agreement and to carry out and
perform its obligations under the terms of the Reorganization Agreement and the
Rights Amendment.
3. The Reorganization Agreement and the Rights Amendment have been duly and
validly authorized, executed and delivered by eGain, constitute valid and
binding agreements of eGain (assuming due authorization, execution and delivery
thereof by all the other parties to such agreements), and are enforceable
against eGain in accordance with their respective terms, except as may be
limited by applicable laws and except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' rights, and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance.
4. The capital stock of eGain is as follows:
(a) PREFERRED STOCK. 5,000,000 shares of undesignated Preferred Stock
(the "Preferred Stock") have been authorized, none of which is issued and
outstanding.
(b) COMMON STOCK. 50,000,000 shares of Common Stock have been
authorized. The shares of Common Stock issuable pursuant to the Merger,
when issued in compliance with the provisions of the Reorganization
Agreement, will be validly issued, fully paid and non-assessable. Except
(i) 6,500,000 shares reserved for issuance under the 1998 Stock Plan;
______________ shares reserved for issuance under the Sitebridge stock plan
assumed by the Company; an aggregate of 750,000 shares of Common Stock
reserved under for issuance under eGain's 1999 Employee Stock Purchase
Plan; and (ii) warrants to purchase 159,554 shares of Common, to our
knowledge, there are no other options, warrants, conversion privileges or
other rights presently outstanding to purchase or otherwise acquire any
authorized but unissued shares of capital stock or other securities of
eGain.
5. The execution, delivery and performance of the Reorganization Agreement
and the Rights Amendment by eGain on or prior to the Closing and the issuance of
the shares of Common Stock pursuant thereto do not violate any provision of the
eGain's Certificate or Bylaws, and do not violate or contravene (a) any
governmental statute, rule or regulation applicable to eGain of which we are
aware or (b) any order, writ, judgment, injunction, decree, determination or
award which has been entered against eGain and of which we are aware, the
violation or contravention of which would materially and adversely affect eGain,
its assets, financial condition or operations.
6. To our knowledge, there is no action, proceeding or investigation
pending or overtly threatened against eGain before any court or administrative
agency that questions the validity of the Reorganization Agreement or the Rights
Agreement, or that might result, either individually or in the aggregate, in any
material adverse change in the assets, financial condition, or operations of
eGain.
Big Science Company
February __, 2000
Page 3
7. All consents, approvals, authorizations, or orders of, and filings,
registrations, and qualifications with any regulatory authority or governmental
body in the United States required to be made by eGain for the consummation by
eGain of the transactions contemplated by the Agreement, have been made or
obtained, except for filings such as may be required to be filed pursuant to
applicable federal and state securities laws prior to or subsequent to the
consummation of the transactions contemplated by the Reorganization Agreement.
8. The issuance of the Common Stock pursuant to the Reorganization
Agreement will be exempt from the registration requirements of the Securities
Act of 1933, as amended to date.
9. Upon the filing of the Certificate of Merger with the Secretary of State
of Georgia, the Merger will have been validly consummated in accordance with
applicable law.
The foregoing opinion is subject to such matters as are set forth in the
Schedule of Exceptions to the Reorganization Agreement and the following
qualifications:
Our opinion in paragraph 1 above is based solely upon a review of a
certificate of good standing from the State of Delaware.
Our opinion in paragraph 3 above is subject to and limited by (a) the
effect of bankruptcy, insolvency, reorganization, receivership, conservatorship,
arrangement, moratorium or other laws affecting or relating to the rights of
creditors generally; (b) the rules governing the availability of specific
performance, injunctive relief or other equitable remedies and general
principles of equity, regardless of whether considered in a proceeding in equity
or at law; (c) the effect of applicable court decisions, invoking statutes or
principles of equity, which have held that certain covenants and provisions of
agreements are unenforceable where the breach of such covenants or provision
imposes restrictions or burdens upon a party and it cannot be demonstrated that
the enforcement of such restrictions or burdens is necessary for the protection
of the other party. We also express no opinion as to the enforceability of
Section 1.7 of the Rights Agreement, to the extent that enforcement thereof may
be limited by public policy or otherwise.
Our opinion in paragraph 4 above with respect to the number of issued and
outstanding shares is based solely on an officer's certificate of the Company
and a review of the Board of Directors minutes and other records of the Company
provided to us; however, although we have made no other independent
investigation with respect to such matters, we have no reason to believe such
certificate is inaccurate and that such records are not complete based on our
representation of the Company in connection with this transaction.
We have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as photostatic or telecopied originals, the legal
capacity of all natural persons, and as to documents executed by entities other
than the Company, that each such entity has complied with any applicable
requirement to file tax returns and pay taxes under California Franchise Tax law
Big Science Company
February __, 2000
Page 4
and had the power to enter into and perform its obligations under such
documents, and that such documents have been duly authorized, executed and
delivered by, and are binding upon and enforceable against such entities. This
opinion is limited in all respects to matters governed by the laws of the State
of California, the Delaware General Corporation Law and the laws of the United
States, and we express no opinion concerning the laws or regulations of any
other jurisdiction or jurisdictions. For purposes of the opinion expressed in
paragraph 9 above, we have assumed that, to the extent the Merger is governed by
the general corporate law of the State of Georgia, that the general corporate
law of the State of Georgia is the same as the general corporate law of the
State of Delaware. We express no opinion as to the effect on the transaction of
the antitrust laws of any state or the United States.
We assume that you know of no agreements, understandings or negotiations
between the parties not set forth in the Reorganization Agreement that would
modify the terms or rights and obligations of the parties thereunder.
Whenever a statement herein is qualified by "to the best of our knowledge,"
"we are not aware" or similar phrase, it indicates that in the course of our
representation of the Company no information that would give us current actual
knowledge of the inaccuracy of such statement has come to the attention of the
attorneys in this firm who have rendered legal services in connection with this
transaction. We have not made any independent investigation to determine the
accuracy of such statement, except as expressly described herein.
This opinion is being delivered to you by us as counsel to the Company and
may not be delivered to or relied upon by any other person without our express
written approval.
Very truly yours,
E-12984
EXHIBIT I
AMENDMENT TO AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
I-1
EGAIN COMMUNICATIONS CORPORATION
AMENDMENT TO
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
THIS AMENDMENT TO AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
(this "Amendment"), made and entered into as of the ___ day of March, 2000 by
and among EGAIN COMMUNICATIONS CORPORATION, a Delaware corporation (the
"Company"), those investors in the Company listed on EXHIBIT A attached hereto
(the "Original Investors"), those investors in the Company listed on EXHIBIT B
attached hereto (the "BSC Investors") who are holders of shares of common stock
of Big Science Company, a Georgia Corporation ("BSC), and XXXXXXXX XXX and
XXXXXX XXXXX (the "Founders").
W I T N E S S E T H:
WHEREAS, the Company, BSC and certain shareholders of BSC have entered
into that certain Agreement and Plan of Reorganization, dated February 7, 2000
(the "Merger Agreement"), pursuant to which BSC will be merged with and into the
Company with the Company as the surviving corporation (the "Merger");
WHEREAS, as a condition precedent to the consummation of the Merger,
the Merger Agreement provides that the holders shares of BSC common stock shall
be granted certain registration rights with respect to the shares of common
stock of the Company ("Company Common Stock") that are issued to such holders in
the Merger;
WHEREAS, the Amended and Restated Investors' Rights Agreement dated
July 21, 1999 (the "Original Agreement") allows the Company to grant
registration rights to investors from time to time provided such investors
become parties to the Original Agreement; and
WHEREAS, the Company desires to grant registration rights under the
Original Agreement to the BSC Investors being issued Company Common Stock
pursuant to the Merger Agreement; and
WHEREAS, the Original Agreement shall be amended to grant registration
rights to the BSC Investors and the BSC Investors shall become parties to the
Original Agreement, with such modifications as set forth herein:
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, and for other consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
1. Section 1.1(g) shall be deleted in its entirety and amended to read
in its entirety as follows:
-1-
"Registrable Securities" shall mean (i) shares of Common Stock
issued to Investors or issued or issuable pursuant to the conversion of
the Shares; (ii) any Common Stock issued as a dividend or other
distribution with respect to or in exchange for or in replacement of
the shares referenced in (i) above, provided, however, that Registrable
Securities shall not include any shares of Common Stock which have
previously been registered or which have been sold to the public; (iii)
shares of Common Stock of the Company held by the BSC Investors and
(iv) shares of Common Stock of the Company held by the Founders
("Founders Stock"); provided, however, that such Founders Stock shall
not be deemed "Registrable Securities" for purposes of Section 1.2
hereof."
2. Section 1.5(a) shall be deleted in its entirety and amended to read
in its entirety as follows:
"1.5 REGISTRATION ON FORM S-3.
"(a) After its initial public offering, the Company shall use
its best efforts to qualify for registration on Form S-3 or any
comparable or successor form or forms. After the Company has qualified
for the use of Form S-3, in addition to the rights contained in the
foregoing provisions of this Section 1, the holders of at least (X)
thirty percent (30%) of Registrable Securities, or, (Y) a majority of
the Registrable Securities held by the BSC Investors, have the right to
request registrations on Form S-3 (such requests shall be in writing
and shall state the number of shares of Registrable Securities to be
disposed of and the intended methods of disposition of such shares by
such Holder or Holders), provided, however, that the Company shall not
be obligated to effect any such registration if (i) the Holders,
together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) on Form S-3 at an
aggregate price to the public of less than $1,000,000, or (ii) in the
event the Company shall furnish the certification described in
paragraph 1.2(b)(ii) (but subject to the limitations set forth
therein), or (iii) the Company has, within the six (6) month period
preceding the date of such request already effected one registration on
Form S-3 for the Holders pursuant to this Section 1.5."
3. Each of the undersigned BSC Investors, by the execution hereof,
covenant and agrees to become a party to the Original Agreement attached hereto
as EXHIBIT C and hereby undertakes all of the representations, warranties,
obligations and duties of an "Investor" and "Holder" under the Original
Agreement and agrees to be bound by the provisions of the Original Agreement.
4. Except as modified by this Amendment, all other terms and conditions
in the Original Agreement shall remain in full force and effect and this
Amendment shall be governed by all provisions thereof.
-2-
5. This Amendment may be executed in separate counterparts, all of which
taken together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
effective as of the day and year first above written.
eGAIN COMMUNICATIONS CORPORATION
By_______________________________________
Xxxxxxxx Xxx
Chief Executive Officer
FOUNDERS
_________________________________________
Xxxxxxxx Xxx
_________________________________________
Xxxxxx Xxxxx
-3-
ORIGINAL INVESTORS
FW VENTURES I, L.P.
By ______________________________________
Title ___________________________________
CHARTER VENTURES III, LLC
By ______________________________________
Title ___________________________________
XXXXX XXXXXXX INVESTMENT
PARTNERSHIP NO. 5 L.P.
By ______________________________________
Title ___________________________________
Counterpart Signature Page to eGain Communication Corporation Amendment to
Amended and Restated Investors Rights Agreement
_________________________________________
Xxxxx Xxxxxxxxxxx
XXXXXXX X. & XXX X. XXXXXXXX,
TRUSTEES OF THE XXXXXXXX REVOCABLE
TRUST DATED JANUARY 14, 1994
By ______________________________________
Xxxxxxx X. Xxxxxxxx, Trustee
By ______________________________________
Xxx X. Xxxxxxxx, Trustee
_________________________________________
Xxxxxxxxx X. Xxxxxxx
_________________________________________
Xxxxxxx Xxxxxx
_________________________________________
Xxxx Xxxxx
PM&S VENTURE FUND II, LLC
By ______________________________________
Title ___________________________________
Counterpart Signature Page to eGain Communication Corporation Amendment to
Amended and Restated Investors Rights Agreement
_________________________________________
Xxxxxxx X. Xxxxxxx
_________________________________________
Xxxxx del Xxxxx
IMPERIAL BANK
By ______________________________________
Title ___________________________________
PHOENIX LEASING INCORPORATED
By ______________________________________
Title ___________________________________
_________________________________________
Xxxxxxxx Xxxxxxxx
_________________________________________
Xxxxx Xxxxxxxxx
_________________________________________
Xxxx Xxxxxx
Counterpart Signature Page to eGain Communication Corporation Amendment to
Amended and Restated Investors Rights Agreement
_________________________________________
Xxxxx XxXxxxx
_________________________________________
Xxxxx Xxxx
_________________________________________
Xxxxx Xxxxxx
_________________________________________
Xxxxx Xxxxxx
_________________________________________
Xxxxxxx Xxxxxx
_________________________________________
Xxxxx Xxxxxxxx
_________________________________________
Xxxx Xxxxxxx
_________________________________________
Xxxxxxx Xxxxxxx
_________________________________________
Xxxxx Xxxxxxx
Counterpart Signature Page to eGain Communication Corporation Amendment to
Amended and Restated Investors Rights Agreement
_________________________________________
Key Compton
_________________________________________
Xxxxxxx Xxxxxxx
_________________________________________
Xxxx Xxxx
_________________________________________
Xxxx Xxxxxxxxx
_________________________________________
Xxxxx Xxxxxxx
_________________________________________
Xxxxxx Xxxxx
_________________________________________
Xxxxx Xxxxxxxx
WINDCREST PARTNERS
By ______________________________________
Title ___________________________________
Counterpart Signature Page to eGain Communication Corporation Amendment to
Amended and Restated Investors Rights Agreement
_________________________________________
Xxxxxxx Xxxxxxxx
INCENTIVE INVESTMENT
By ______________________________________
Title ___________________________________
LINKS VENTURES, LLC
By ______________________________________
Title ___________________________________
_________________________________________
Xxxxx Xxxxxxx
_________________________________________
Xxxxxxx Xxxxxx
XX XXXXX STREET CORP.
By ______________________________________
Title ___________________________________
Counterpart Signature Page to eGain Communication Corporation Amendment to
Amended and Restated Investors Rights Agreement
U.S. BANK TRUST NATIONAL ASSOCIATION
By ______________________________________
Title ___________________________________
BSC INVESTORS:
_________________________________________
Print Name
By ______________________________________
Title ___________________________________
(if Applicable)
_________________________________________
Print Name
By ______________________________________
Title ___________________________________
(if Applicable)
Counterpart Signature Page to eGain Communication Corporation Amendment to
Amended and Restated Investors Rights Agreement
EXHIBIT A
SCHEDULE OF ORIGINAL INVESTORS
A-1
EXHIBIT B
SCHEDULE OF BSC INVESTORS
B-1
EXHIBIT C
ORIGINAL AGREEMENT
C-1
