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EXHIBIT 2.03
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
NIKU CORPORATION,
LA ACQUISITION CORPORATION,
LEGAL ANYWHERE, INC.,
XXXXXX XXXXXXX,
XXXXX XXXXXX
AND
XXXX XXXXXXXX
DATED AS OF JANUARY 19, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER.............................................................. 2
1.1 The Merger................................................................. 2
1.2 Effective Time............................................................. 2
1.3 Effect of the Merger....................................................... 2
1.4 Articles of Incorporation; Bylaws.......................................... 2
1.5 Directors and Officers..................................................... 2
1.6 Maximum Aggregate Merger Consideration; Effect on Capital Stock............ 3
1.7 Appraisal Rights........................................................... 4
1.8 Surrender of Certificates.................................................. 5
1.9 Company Stock Options...................................................... 6
1.10 No Further Ownership Rights in Company Capital Stock....................... 7
1.11 Lost, Stolen or Destroyed Certificates..................................... 7
1.12 Tax Consequences........................................................... 7
1.13 Taking of Necessary Action; Further Action................................. 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................... 8
2.1 Organization and Qualification............................................. 8
2.2 Subsidiaries............................................................... 8
2.3 Company Capital Structure.................................................. 8
2.4 Authority.................................................................. 9
2.5 No Conflict................................................................ 9
2.6 Consents...................................................................10
2.7 Company Financial Statements...............................................10
2.8 No Undisclosed Liabilities.................................................10
2.9 No Changes.................................................................10
2.10 Tax and Other Returns and Reports..........................................12
2.11 Restrictions on Business Activities........................................13
2.12 Title to Properties; Absence of Liens and Encumbrances.....................14
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2.13 Governmental Authorization.................................................14
2.14 Intellectual Property......................................................15
2.15 Product Warranties; Defects; Liabilities...................................19
2.16 Agreements, Contracts and Commitments......................................20
2.17 Interested Party Transactions..............................................21
2.18 Compliance with Laws.......................................................22
2.19 Litigation.................................................................22
2.20 Insurance..................................................................22
2.21 Minute Books...............................................................22
2.22 Environmental Matters......................................................22
2.23 Brokers' and Finders' Fees.................................................23
2.24 Employee Matters and Benefit Plans.........................................23
2.25 Bank Accounts..............................................................27
2.26 Indemnification Obligations................................................28
2.27 Representations Complete...................................................28
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...............28
3.1 Organization, Good Standing and Qualification..............................28
3.2 Capitalization and Voting Rights...........................................28
3.3 Subsidiaries...............................................................29
3.4 Authorization..............................................................29
3.5 Consents and Agreements....................................................30
3.6 Litigation.................................................................30
3.7 Proprietary Information and Inventions Agreements..........................30
3.8 Title to Property and Assets...............................................30
3.9 Financial Statements.......................................................31
3.10 Books and Records..........................................................31
3.11 Rights of Registration.....................................................31
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3.12 Proprietary Rights.........................................................31
3.13 No Conflict of Interest....................................................32
3.14 Tax Returns................................................................32
3.15 Compliance with Laws.......................................................32
3.16 Year 2000 Compliance.......................................................32
3.17 No Contravention...........................................................33
3.18 Disclosure.................................................................33
ARTICLE IV SECURITIES ACT COMPLIANCE; REGISTRATION................................33
4.1 Securities Act Exemption...................................................33
4.2 Stock Restrictions.........................................................34
4.3 The Company Shareholders' Restrictions Regarding Securities
Law Matters..............................................................34
ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME.....................................34
5.1 Conduct of Business of the Company.........................................34
5.2 Notices....................................................................37
ARTICLE VI ADDITIONAL AGREEMENTS..................................................38
6.1 Preparation of Oregon Fairness Hearing Documents and Information
Statement................................................................38
6.2 Shareholder Approval.......................................................38
6.3 Access to Information......................................................39
6.4 Confidentiality............................................................39
6.5 Consents...................................................................39
6.6 Legal Conditions to the Merger.............................................39
6.7 Best Efforts; Additional Documents and Further Assurances..................39
6.8 Notification of Certain Matters............................................40
6.9 Reorganization.............................................................40
6.10 Voting Agreements..........................................................40
6.11 Non-Competition Agreements.................................................40
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6.12 Blue Sky Laws..............................................................40
6.13 Benefit Arrangements.......................................................40
6.14 No Solicitation............................................................41
6.15 Declaration of Registration Rights.........................................42
ARTICLE VII CONDITIONS TO THE MERGER..............................................42
7.1 Conditions to Obligations of Each Party to Effect the Merger...............42
7.2 Additional Conditions to Obligations of the Company........................43
7.3 Additional Conditions to the Obligations of Parent and Merger Sub..........43
ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW...................45
8.1 Survival of Representations and Warranties.................................45
8.2 Escrow Arrangements........................................................45
8.3 Indemnification by Parent..................................................54
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER......................................55
9.1 Termination................................................................55
9.2 Effect of Termination......................................................56
9.3 Amendment..................................................................56
9.4 Extension; Waiver..........................................................56
ARTICLE X GENERAL PROVISIONS......................................................56
10.1 Notices....................................................................56
10.2 Expenses...................................................................58
10.3 Interpretation.............................................................58
10.4 Counterparts...............................................................58
10.5 Entire Agreement; Assignment...............................................58
10.6 Severability...............................................................59
10.7 Other Remedies.............................................................59
10.8 Governing Law..............................................................59
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10.9 Rules of Construction......................................................59
10.10 Specific Performance.......................................................59
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT") is made and
entered into as of January 19, 2000 among Niku Corporation, a Delaware
corporation ("PARENT"), LA Acquisition Corporation, an Oregon corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"), Legal Anywhere, Inc., an
Oregon corporation (the "COMPANY"), and Xxxxxx Xxxxxxx, Xxxxx Xxxxxx and Xxxx
Xxxxxxxx (collectively, the "EXECUTIVES").
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger (the
"MERGER") of Merger Sub with and into the Company in accordance with this
Agreement and the Oregon Business Corporation Act ("OREGON LAW"). Upon
consummation of the Merger, Merger Sub will cease to exist.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a)(2)(E) of the Internal Revenue Code of 1986,
as amended (the "Code").
C. The Board of Directors of the Company has (i) determined that the
Merger is consistent with and in furtherance of the long-term strategy of the
Company and fair to, and in the best interests of, the Company and its
shareholders, (ii) approved this Agreement, the Merger and the other
transactions contemplated by this Agreement and (iii) determined unanimously to
recommend that the shareholders of the Company adopt and approve the principal
terms of this Agreement and approve the Merger.
D. The respective Boards of Directors of Parent and Merger Sub have
approved this Agreement and the Merger.
E. As a condition and inducement to Parent to enter into this Agreement,
each of the Executives and Xxxxxx X. Xxxxx, Xxxxx Xxxx, Xxxxxx X. Xxxxxxxxxxx,
Xxxxxxx X. Xxxxxx and Xxxxxx Xxxxx shall, at the request of Parent, enter into a
Voting Agreement substantially in the form attached hereto as Exhibit A (the
"VOTING AGREEMENT").
F. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent to enter into this Agreement, each Executive is
entering into a Non-Competition Agreement substantially in the form attached
hereto as Exhibit B (the "NON-COMPETITION AGREEMENT").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby the parties agree as follows:
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ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and Oregon Law,
Merger Sub shall be merged with and into the Company, the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the
surviving corporation and as a wholly-owned subsidiary of Parent. The Company as
the surviving corporation after the Merger is hereinafter sometimes referred to
as the "SURVIVING CORPORATION."
1.2 Effective Time. Unless this Agreement is earlier terminated pursuant
to Section 9.1, the closing of the Merger (the "CLOSING") will take place as
promptly as practicable, but no later than three business days, following
satisfaction or waiver of the conditions set forth in Article VII, at the
offices of Fenwick & West LLP, Two Palo Alto Square, Palo Alto, California,
unless another place or time is agreed to by Parent and the Company. The date
upon which the Closing actually occurs is herein referred to as the "CLOSING
DATE." On the Closing Date, the parties hereto shall cause the Merger to be
consummated by filing Articles of Merger, in substantially the form attached
hereto as Exhibit C (the "ARTICLES OF MERGER"), with the Secretary of State of
the State of Oregon, in accordance with the relevant provisions of Oregon Law
(the time of acceptance by the Secretary of State of Oregon of such filing being
referred to herein as the "EFFECTIVE TIME").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Oregon Law. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the rights and property of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts and liabilities of the Company and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 Articles of Incorporation; Bylaws.
(a) Unless otherwise determined by Parent prior to the Effective
Time, at the Effective Time, the Articles of Incorporation of the Surviving
Corporation shall be the Articles of Incorporation of the Company until
thereafter amended as provided by law and such Articles of Incorporation.
(b) Unless otherwise determined by Parent prior to the Effective
Time, the Bylaws of the Company, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation until thereafter amended.
1.5 Directors and Officers. The directors of Merger Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation. The officers of Merger
Sub immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, each to hold office in accordance with the Bylaws of the
Surviving Corporation.
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1.6 Maximum Aggregate Merger Consideration; Effect on Capital Stock.
(a) The aggregate maximum number of shares of common stock of Parent
("PARENT COMMON STOCK") to be issued in exchange for the acquisition by Parent
of all outstanding common stock of the Company ("COMPANY COMMON STOCK") and all
outstanding unexpired and unexercised options, warrants and other rights to
acquire any capital stock of the Company ("COMPANY CAPITAL STOCK") shall be
995,000 (the "AGGREGATE SHARE NUMBER"). 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
Company Common Stock, the holder of any options, warrants or other rights to
acquire or receive shares of Company Common Stock, the following shall occur:
(b) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time (other than
any shares of Company Common Stock to be canceled pursuant to Section 1.6(e) and
any "DISSENTING SHARES" (as defined and to the extent provided in Section
1.7(a))) will be canceled and extinguished and be converted automatically into
the right to receive that number of shares of Parent Common Stock equal to the
product of (i) one share of Company Common Stock multiplied by (ii) the
Consideration Factor (as defined in Section 1.6(c) below) (the "EXCHANGE RATIO")
upon surrender of the certificate representing such share of Company Common
Stock in the manner provided in Section 1.8.
(c) Definitions.
(i) Consideration Factor. The "CONSIDERATION FACTOR" shall be
equal to the number (rounded to the sixth decimal place) computed using the
following formula:
X = A
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D
Where X = the Consideration Factor
A = the Aggregate Share Number
D = the Diluted Shares (as defined below)
(ii) Diluted Shares. The "DILUTED SHARES" shall mean that number
equal to the sum of (A) the number of shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time (regardless of whether such
shares are unvested, subject to any right of repurchase, risk of forfeiture or
other condition in favor of the Company at such time); plus (B) the number of
shares of Company Common Stock issuable upon exercise of any Company Options (as
defined in Section 1.9) outstanding at the Effective Time (regardless of whether
such Company Options are vested); plus (C) the number of shares of Company
Common Stock issuable in connection with any other options, warrants, calls,
rights, exchangeable or convertible securities, commitments or agreements of any
character, written or oral, to which the Company is a party or by which it is
bound obligating the Company to issue, deliver, sell or cause to be issued,
delivered or sold any Company Common Stock immediately prior to the Effective
Time.
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(d) Escrow. Ten percent (10%) of the number of shares of Parent
Common Stock to be issued at the Effective Time pursuant to Section 1.6(b)
hereof shall be held in escrow (the "ESCROW AMOUNT") pursuant to Article VIII of
this Agreement to be available to compensate Parent and its affiliates
(including the Surviving Corporation) for any "LOSSES" (as defined in Section
8.2 hereof) incurred in connection with this Agreement and the transactions
contemplated hereby.
(e) Cancellation of Parent-Owned and Company-Owned Stock. Each share
of Company Common Stock owned by Merger Sub, Parent, the Company or any direct
or indirect wholly-owned subsidiary of Parent or of the Company immediately
prior to the Effective Time shall be canceled and extinguished without any
conversion thereof.
(f) Capital Stock of Merger Sub. Each share of common stock of
Merger Sub outstanding immediately prior to the Effective Time will be converted
into one outstanding share of Company Common Stock.
(g) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (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 after the date hereof and prior to the Effective Time.
(h) Fractional Shares. No fraction of a share of Parent Common Stock
will be issued at the Effective Time, but in lieu thereof, each holder of shares
of Company Common Stock who would otherwise be entitled to a fraction of a share
of Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock to be received by such holder) shall be entitled to receive from Parent an
amount of cash (rounded to the nearest whole cent) equal to the product of (i)
such fraction, multiplied by (ii) $11.00.
1.7 Appraisal Rights. (a) Notwithstanding any provision of this
Agreement to the contrary (other than Section 1.7(b)), any shares of Company
Common Stock held by a holder who has demanded and perfected appraisal rights
for such shares in accordance with Sections 60.554 and 60.564 of Oregon Law and
who, as of the Effective Time, has not effectively withdrawn or lost such
appraisal or dissenters' rights ("DISSENTING SHARES"), shall not be converted
into or represent a right to receive Parent Common Stock pursuant to Section
1.6, but the holder thereof shall only be entitled to such rights as are granted
by Oregon Law. From and after the Effective Time, a holder of Dissenting Shares
shall not be entitled to exercise any of the voting rights or other rights of a
shareholder of the Surviving Corporation.
(b) Notwithstanding the provisions of Section 1.6(b) hereof, if any
holder of shares of Company Common Stock who demands appraisal of such shares
under Oregon Law shall effectively withdraw or lose (through failure to perfect
or otherwise) the right to appraisal, then, as of the later of the Effective
Time and the occurrence of such event, such holder's shares shall automatically
be converted into and represent only the right to receive Parent Common Stock
and cash for fractional shares as provided in Section 1.6, without interest
thereon, upon surrender of the certificate representing such shares.
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(c) The Company shall give Parent (i) prompt notice of any written
demands for appraisal of any shares of Company Common Stock, withdrawals of such
demands, and any other instruments served pursuant to Oregon Law and received by
the Company and (ii) the opportunity to participate in all negotiations and
proceedings with respect to demands for appraisal under Oregon Law. The Company
shall not, except with the prior written consent of Parent, voluntarily make any
payment with respect to any demands for appraisal of capital stock of the
Company or offer to settle or settle any such demands.
1.8 Surrender of Certificates.
(a) Parent to Provide Common Stock. Promptly after the Effective
Time, Parent shall make available to shareholders of the Company the shares of
Parent Common Stock issuable pursuant to Section 1.6 in exchange for outstanding
shares of Company Common Stock; provided, however, that, on behalf of the
holders of Company Common Stock, and pursuant to Article VIII hereof, Parent
shall deposit into an escrow account a number of shares of Parent Common Stock
equal to the Escrow Amount out of the aggregate number of shares of Parent
Common Stock otherwise issuable pursuant to Section 1.6. The portion of the
Escrow Amount contributed on behalf of each holder of Company Common Stock shall
be equal to ten percent (10%) of the number of shares of Parent Common Stock
which, in each case, such holder would otherwise be entitled to receive under
Section 1.6 by virtue of ownership of outstanding shares of Company Common
Stock.
(b) Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause to be mailed to each holder of record of a
certificate or certificates (the "CERTIFICATES") which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock whose
shares were converted into the right to receive shares of Parent Common Stock
pursuant to Section 1.6, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to Parent and shall be in such form
and have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock. Upon surrender of a
Certificate for cancellation to Parent or to such other agent or agents as may
be appointed by Parent, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, the holder of
such Certificate shall be entitled to receive in exchange therefor a certificate
representing the number of whole shares of Parent Common Stock (less the number
of shares of Parent Common Stock, if any, to be deposited in the Escrow Fund on
such holder's behalf pursuant to Article VIII hereof), plus cash in lieu of
fractional shares in accordance with Section 1.6(h), to which such holder is
entitled pursuant to Section 1.6, and the Certificate so surrendered shall
forthwith be canceled. As soon as practicable after the Effective Time, and
subject to and in accordance with the provisions of Article VIII hereof, Parent
shall cause to be distributed to the Escrow Agent (as defined in Article VIII) a
certificate or certificates representing that number of shares of Parent Common
Stock which in the aggregate equal the Escrow Amount, which shall be registered
in the name of the Escrow Agent. As set forth in Section 8.2(c)(iii), such
shares shall be beneficially owned by the holders on whose behalf such shares
were deposited in the Escrow Fund and such shares shall be available to
compensate Parent as provided in Article VIII. Until so surrendered, each
outstanding Certificate that, prior to the Effective Time, represented shares of
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Company Common Stock will be deemed from and after the Effective Time, for all
corporate purposes, other than the payment of dividends, to evidence the
ownership of the number of full shares of Parent Common Stock into which such
shares of Company Common Stock shall have been so converted and the right to
receive an amount in cash in lieu of the issuance of any fractional shares in
accordance with Section 1.6.
(c) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time will be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock represented thereby until the holder of record of such Certificate
shall surrender such Certificate. Subject to applicable law, following surrender
of any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock.
(d) Transfers of Ownership. If any certificate for shares of Parent
Common Stock is to be issued in a name other than that in which the certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Parent or any agent designated by it any transfer or
other taxes required by reason of the issuance of a certificate for shares of
Parent Common Stock in any name other than that of the registered holder of the
certificate surrendered, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not payable.
(e) No Liability. Notwithstanding anything to the contrary in this
Section 1.8, none of Parent, the Surviving Corporation or any party hereto shall
be liable to a holder of shares of Parent Common Stock or Company Common Stock
for any amount properly paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
1.9 Company Stock Options. At the Effective Time, each of the then
outstanding Company Options (as defined below) shall be assumed by Parent and
converted into nonqualified options under Parent's 1998 Stock Plan to purchase
that number of shares of Parent Common Stock (a "PARENT OPTION") obtained by
multiplying each share of Company Common Stock in the relevant Company Option by
the Exchange Ratio. If the foregoing calculation results in a Parent Option
being exercisable for a fraction of a share of Parent Common Stock, then the
number of shares of Parent Common Stock subject to such option shall be rounded
down to the nearest whole number of shares. The exercise price of each Parent
Option shall be equal to the exercise price of the Company Option from which
such Parent Option was converted divided by the Exchange Ratio, rounded up to
the nearest whole cent. The Parent Options shall be fully vested, except to the
extent that any Company Options held by the Executives are subject to vesting
following the Closing. As a condition to the receipt of and by accepting any
such Parent Options, each holder of a Company Option shall forfeit all rights,
preferences and privileges associated with its Company Options, including
(without limitation) any notice provisions relating to the Merger. The terms and
conditions of Company Options will be as set forth in Parent's 1998 Stock Plan,
provided that the
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Parent Options shall have the expiration dates of the Company Options for which
such Parent Options are being substituted (subject to terms and conditions
relating to termination of optionees). The Company will take or cause to be
taken, all actions that are necessary, proper or advisable under the Stock Plans
(as defined below) to make effective the transactions contemplated by this
Section 1.9. Within a reasonable time following the Effective Time, Parent will
issue to each holder of an outstanding Company Option a document evidencing the
substituted Parent Option. "COMPANY OPTIONS" means any option or warrant granted
and not exercised or expired, to a current or former employee, director or
independent contractor of the Company or any of its subsidiaries or any
predecessor thereof or to any other party to purchase Company Common Stock
pursuant to any stock option, warrant, stock bonus, stock award or stock
purchase plan, program or arrangement of the Company or any subsidiaries or any
predecessor thereof (collectively, the "STOCK PLANS") or any other contract or
agreement entered into by the Company or any of its subsidiaries.
1.10 No Further Ownership Rights in Company Capital Stock. All shares of
Parent Common Stock issued upon the surrender for exchange of shares of Company
Common Stock in accordance with the terms hereof (including any cash paid in
respect thereof) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
shares of Company Common Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article I.
1.11 Lost, Stolen or Destroyed Certificates. In the event any
certificates evidencing shares of Company Common Stock shall have been lost,
stolen or destroyed, Parent shall issue in exchange for such lost, stolen or
destroyed certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of Parent Common Stock and cash for fractional
shares, if any, as may be required pursuant to Section 1.6; provided, however,
that Parent may, in its reasonable and good faith discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificates to deliver an indemnity agreement, in such customary form
as it may reasonably direct, against any claim that may be made against Parent
with respect to the certificates alleged to have been lost, stolen or destroyed.
1.12 Tax Consequences. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Section
368(a)(2)(E) of the Code (and this Agreement is intended to constitute a plan of
reorganization for purposes of Section 368 of the Code).
1.13 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company and Merger Sub, the officers and directors
of the Company and Merger Sub are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful and
necessary action.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company (including its subsidiaries) and each of the Executives
hereby jointly and severally represent and warrant to Parent and Merger Sub,
subject to the exceptions specifically disclosed in writing in the disclosure
letter dated as of the date hereof (the "COMPANY SCHEDULES"), as follows:
2.1 Organization and Qualification. The Company is a corporation duly
organized and validly existing under the laws of the State of Oregon. The
Company has the corporate power and corporate authority to own, lease and
operate its properties and to carry on its business as now being conducted and
as proposed to be conducted and to perform its obligations under any Contracts
(as such term is defined in Section 2.16 hereof) by which it is bound. The
Company is duly qualified or licensed to do business and is in good standing as
a foreign corporation in each jurisdiction (each of which is listed on Schedule
2.1) in which the failure to be so qualified or licensed would have a material
adverse effect on the business, assets (including intangible assets), financial
condition, results of operations or sales prospects of the Company identified by
the Company on or prior to the date hereof in connection with Parent's
investigation of the Company (hereinafter referred to as a "MATERIAL ADVERSE
EFFECT"). The Company has delivered a true and correct copy of its Articles of
Incorporation and Bylaws, each as amended to date, to Parent. Such Articles of
Incorporation and Bylaws are in full force and effect. The Company is not in
violation of any of the provisions of its Articles of Incorporation or Bylaws.
2.2 Subsidiaries. The Company does not have any subsidiaries or
affiliated companies and does not otherwise own, directly or indirectly, any
shares of capital stock or any equity, debt or similar interest in or any
interest convertible, exchangeable or exercisable for any equity, debt or
similar interest in, or control, directly or indirectly, any other corporation,
partnership, association, joint venture or other business entity. The Company
has not agreed nor is the Company obligated to make or be bound by any written,
oral or other agreement, contract, sub-contract, lease, binding understanding,
instrument, note, option, warranty, purchase order, license, sub-license,
insurance policy, benefit plan, commitment or undertaking of any nature, as of
the date hereof or as may hereafter be in effect under which it may become
obligated to make any future investment in or capital contribution to any other
entity.
2.3 Company Capital Structure.
(a) The authorized capital stock of the Company consists of
10,000,000 shares of authorized Common Stock, of which 3,657,280 shares are
issued and outstanding, and 5,000,000 shares of preferred stock, none of which
is issued or outstanding. The Company has not authorized or issued any other
class or series of equity securities (other than Company Common Stock and such
authorized but unissued preferred stock). The Company Common Stock is held of
record by the persons, with the addresses of record and in the amounts set forth
on Schedule 2.3(a). No shares of Company Common Stock held by any shareholder
are subject to a repurchase right in favor of the Company. All outstanding
shares of Company Common Stock are duly authorized, validly issued,
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fully paid and non-assessable and not subject to preemptive rights created by
statute, the Articles of Incorporation or Bylaws of the Company or any agreement
to which the Company is a party or by which it is bound. All issued and
outstanding shares of Company Common Stock have been offered, sold and delivered
by the Company in compliance with applicable federal and state securities laws.
(b) The Company has reserved 908,000 shares of Common Stock for
issuance to employees and consultants pursuant to the Company's Stock Plans. The
Company has issued 605,250 Company Options under the Stock Plans. The number of
Company Options awarded to each participant in the Stock Plans and the number of
Company Options in which each participant will be vested at the Closing is set
forth in Schedule 2.3(b).
(c) Except for the Company Options described in Schedule 2.3(b),
there are no subscriptions, options, warrants, equity securities, partnership
interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which the Company is a
party or by which it is bound obligating the Company to issue, deliver or sell,
or cause to be issued, delivered or sold, or repurchase, redeem or otherwise
acquire, or cause the repurchase, redemption or acquisition of, any shares of
capital stock, partnership interests or similar ownership interests of the
Company or obligating the Company to grant, extend, accelerate the vesting of or
enter into any such subscription, option, warrant, equity security, call, right,
commitment or agreement.
(d) As of the Closing Date, there will be no outstanding options,
rights or obligations of the Company pursuant to the Stock Plans or any similar
plan.
(e) As of the date of this Agreement, except as contemplated by this
Agreement and as described in Schedule 2.3(e), there are no registration rights
agreements, no voting trust, proxy or other similar agreement or understanding
to which the Company is a party or by which it is bound with respect to any
equity security of any class of the Company.
(f) As a result of the Merger, Parent will be the record and sole
beneficial owner of all Company Capital Stock and rights to acquire or receive
Company Capital Stock.
2.4 Authority. Subject only to the requisite approval of the Merger and
the principal terms of this Agreement by the Company's shareholders, the Company
has all requisite corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. The Company's Board of
Directors has unanimously approved the Merger and this Agreement. This Agreement
has been duly executed and delivered by the Company and constitutes the valid
and binding obligation of the Company, enforceable in accordance with its terms.
2.5 No Conflict. Except as set forth on Schedule 2.5, subject only to
the approval of the principal terms of this Agreement and the Merger by the
Company's shareholders, the execution and delivery of this Agreement by the
Company does not, and, as of the Effective Time, the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any benefit under (any such
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event, a "CONFLICT") (a) any provision of the Articles of Incorporation or
Bylaws of the Company or (b) any material mortgage, indenture, lease, contract
or other material agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or its properties or assets.
2.6 Consents. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any court, administrative agency or
commission or other federal, state, county, local or foreign governmental
authority, instrumentality, agency or commission ("GOVERNMENTAL ENTITY") or any
third party (so as not to trigger any Conflict), is required by or with respect
to the Company in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby, except for (a) the
filing of the Articles of Merger with the Oregon Secretary of State, (b) such
consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities laws and (c) such other consents, waivers, authorizations, filings,
approvals and registrations that are set forth on Schedule 2.6.
2.7 Company Financial Statements. Schedule 2.7 sets forth true and
correct copies of the Company's audited balance sheets as of December 31, 1998
and December 31, 1999 and the related audited statements of income for the
respective twelve-month periods then ended (the "COMPANY FINANCIALS"). The
Company Financials are complete and correct in all material respects and have
been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods indicated and
consistent with each. The Company Financials present fairly in all material
respects the financial condition and operating results of the Company as of the
dates and during the periods indicated therein. The Company's Balance Sheet as
of December 31, 1999 shall be referred to herein as the "CURRENT COMPANY BALANCE
SHEET."
2.8 No Undisclosed Liabilities. Except as set forth in Schedule 2.8, the
Company does not have, as of the date hereof, any material liability,
indebtedness or obligation of any type, whether accrued, absolute, contingent,
matured, unmatured or other (whether or not required to be reflected in
financial statements in accordance with GAAP), which individually or in the
aggregate, (a) has not been reflected in the Current Company Balance Sheet or
(b) has not been set forth in the Company Schedules.
2.9 No Changes. Except as set forth in Schedule 2.9, since December 31,
1999 and through the date of this Agreement, there has not been, occurred or
arisen any:
(a) material transaction by the Company except in the ordinary
course of business as conducted on that date and consistent with past practices;
(b) amendments or changes to the Articles of Incorporation or Bylaws
of the Company;
(c) capital expenditure or capital commitment by the Company of
$10,000 in any individual case or $50,000 in the aggregate (other than
commitments to pay expenses incurred in connection with this transaction);
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(d) destruction of, damage to or loss of any material assets,
business or customer of the Company (whether or not covered by insurance);
(e) change in accounting methods, principals or practices (including
any change in depreciation or amortization policies or rates) by the Company;
(f) revaluation by the Company of any of its material assets,
including, without limitation, writing down the value of capitalized inventory
or writing off material notes or material accounts receivable;
(g) declaration, setting aside or payment of a dividend or other
distribution with respect to any Company Capital Stock, or any direct or
indirect redemption, purchase or other acquisition by the Company of any Company
Capital Stock;
(h) split, combination or reclassification of any Company Capital
Stock;
(i) agreement, contract, covenant, instrument, lease, license or
commitment to which the Company is a party or by which it or any of its assets
is bound or any termination, extension, amendment or modification of the terms
of any agreement, contract, covenant, instrument, lease, license or commitment
to which the Company is a party or by which it or any of its assets is bound,
except as set forth in Schedule 2.16(a);
(j) sale, lease, license or other disposition of any of the assets
or properties of the Company, or creation of any lien or security interest in
such assets or properties except in the ordinary course of business and
consistent with past practices;
(k) loan by the Company to any person or entity, incurring by the
Company of any indebtedness, guaranteeing by the Company of any indebtedness,
issuance or sale of any debt securities of the Company or guaranteeing of any
debt securities of others except for advances to employees for travel and
business expenses in the ordinary course of business, consistent with past
practices;
(l) waiver or release of any material right or claim of the Company,
including any write-off or other compromise of any material amount of any
account receivable of the Company;
(m) except as set forth in Schedule 2.14, (i) sale by the Company of
any Company Intellectual Property (as defined in Section 2.14 below) or the
entering into of any license agreement (other than end-user license agreements
entered into by the Company in the ordinary course of business consistent with
past practice), distribution agreement, reseller agreement, security agreement,
assignment or other conveyance or option for the foregoing, with respect to the
Company Intellectual Property with any person or entity, (ii) the purchase or
other acquisition of any Intellectual Property (as defined in Section 2.14
below) or the entering into of any license agreement, distribution agreement,
reseller agreement, security agreement, assignment or other conveyance or option
for the foregoing, with respect to the Intellectual Property of any person or
entity or (iii) the change in pricing or royalties set or charged by the Company
to its customers or licensees or in pricing or royalties set or charged by
persons who have licensed Intellectual Property to Company;
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(n) issuance or sale by the Company of any Company Capital Stock, or
securities exchangeable, convertible or exercisable therefor, or any securities,
warrants, options or rights to purchase any of the foregoing or any amendment of
any existing equity arrangement; or
(o) agreement by the Company or any officer or employees thereof to
do any of the things described in the preceding clauses (a) through (n) (other
than negotiations with Parent and its representatives regarding the transactions
contemplated by this Agreement).
2.10 Tax and Other Returns and Reports.
(a) Definition of Taxes. For the purposes of this Agreement, "TAX"
or, collectively, "TAXES", means any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements with
any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.
(b) Tax Returns and Audits. Except as set forth in Schedule 2.10:
(i) The Company has prepared and filed all required federal,
state, local and foreign returns, estimates, information statements and reports
("RETURNS") relating to any and all Taxes concerning or attributable to the
Company or its operations and such Returns are true and correct in all material
respects and have been completed in accordance with applicable law.
(ii) The Company: (A) has paid or accrued all Taxes it is
required to pay or accrue and (B) has withheld with respect to its employees all
federal and state income taxes, FICA, FUTA and other Taxes required to be
withheld.
(iii) The Company has not been delinquent in the payment of any
Tax nor is there any Tax deficiency outstanding, proposed or assessed against
the Company, nor has the Company executed any waiver of any statute of
limitations on or extended the period for the assessment or collection of any
Tax.
(iv) No audit or other examination of any Return of the Company
is presently in progress, nor has the Company been notified of any request for
such an audit or other examination.
(v) The Company has no liabilities for unpaid federal, state,
local and foreign Taxes which have not been accrued or reserved against in the
Company Financials, whether asserted or unasserted, contingent or otherwise, and
the Company has not incurred any liability for Taxes since the date of the
Current Company Balance Sheet other than in the ordinary course of business
consistent with past practice.
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(vi) The Company has provided to Parent copies of all federal
and state income and all state sales and use Returns for all periods since
January 1, 1997.
(vii) There are (and as of immediately following the Closing
there will be) no liens, pledges, charges, claims, restrictions on transfer,
mortgages, security interests or other encumbrances of any sort (collectively,
"LIENS") on the assets of the Company relating to or attributable to Taxes,
other than Liens for Taxes not yet due and payable as of such time.
(viii) To the Company's knowledge, there is no basis for the
assertion of any claim relating or attributable to Taxes which, if adversely
determined, would result in any Lien on the assets of the Company.
(ix) None of the Company's assets are treated as "tax-exempt use
property" within the meaning of Section 168(h) of the Code.
(x) There is no contract, agreement, plan or arrangement to
which the Company is a party, including but not limited to the provisions of
this Agreement, covering any employee or former employee of the Company that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to Section 280G, 404 or 162(m) of the Code.
(xi) The Company has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by the Company.
(xii) The Company is not a party to a tax sharing or allocation
agreement nor does the Company owe any amount under any such agreement. The
Company has not been a member of an affiliated group (within the meaning of
Section 1504(a) of the Code) filing a consolidated income tax return.
(xiii) The Company is not, and has not been at any time, a
"United States real property holding corporation" within the meaning of Section
897(c)(2) of the Code.
(xiv) No adjustment or deficiency relating to any Return filed
or required to be filed by the Company has been proposed formally or informally
by any tax authority to the Company or any representative thereof.
(xv) The Company utilizes the accrual method of accounting for
U.S. federal income tax purposes.
(xvi) The Company has not distributed the stock of any
corporation in a transaction satisfying the requirements of Section 355 of the
Code. No Company Capital Stock has been distributed in a transaction satisfying
the requirements of Section 355 of the Code.
2.11 Restrictions on Business Activities. There is no agreement
(noncompete or otherwise), judgment, injunction, order or decree to which the
Company is a party or otherwise
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binding upon the Company that has or reasonably would be expected to have the
effect of prohibiting or impairing any business practice of the Company, any
acquisition of property (tangible or intangible) by the Company or the conduct
of business by the Company. Without limiting the foregoing, the Company has not
entered into any agreement under which the Company is restricted from selling,
licensing or otherwise distributing any of its products or services to any class
of customers, in any geographic area, during any period of time or in any
segment of the market.
2.12 Title to Properties; Absence of Liens and Encumbrances.
(a) The Company does not own any real property, nor has it ever
owned any real property. Schedule 2.12(a) sets forth a list of all real property
currently leased by the Company and the name of each lessor. The Company has
provided true and complete copies of all real property leases and amendments
thereto to Parent. All such current leases are in full force and effect, are
valid and effective in accordance with their respective terms, and there is not,
under any of such leases, any existing default or event of default, or to the
Company's knowledge, any event which with notice or lapse of time, or both,
would constitute a default. To the Company's knowledge, neither the operations
of the Company on such real property nor such real property, including
improvements thereon, violate any applicable building code, zoning requirement,
or classification or pollution control ordinance or statute relating to the
particular property or such operations, and such non-violation is not dependent,
in any instance, on so-called non-conforming use exceptions.
(b) The Company has good and marketable title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its material
tangible properties and assets, real, personal and mixed, used or held for use
in its business, free and clear of any Liens (as defined in Section
2.10(b)(vii)), except as reflected in the Company Financials or in Schedule
2.12(b) and except for liens for taxes not yet due and payable and such
imperfections of title and encumbrances, if any, which are not material in
character, amount or extent, and which do not materially detract from the value,
or materially interfere with the present use, of the property subject thereto or
affected thereby.
(c) Schedule 2.12(c) lists all items of material equipment (the
"EQUIPMENT") owned or leased by the Company. All facilities, machinery,
equipment, fixtures, vehicles, and other properties owned, leased or used by the
Company are (i) adequate for the conduct of the business of the Company as
currently conducted and (ii) in good operating condition, regularly and properly
maintained, subject to normal wear and tear and reasonably fit and usable for
the purposes for which they are being used, except where a failure to be in such
condition would not have a Material Adverse Effect on the Company.
2.13 Governmental Authorization. Schedule 2.13 accurately lists each
material consent, license, permit, grant or other authorization issued to the
Company by a Governmental Entity (a) pursuant to which the Company currently
operates or holds any interest in any of its properties or (b) which is required
for the operation of its business or the holding of any such interest (herein
collectively called "COMPANY AUTHORIZATIONS"). The Company Authorizations are in
full force and effect and constitute all Company Authorizations required to
permit the Company to operate or conduct its business or hold any interest in
its properties or assets. To the Company's knowledge,
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the Company is in compliance in all material respects with the terms of the
Company Authorizations.
2.14 Intellectual Property.
(a) Definitions. For all purposes of this Agreement, the following
terms shall have the following respective meanings:
(i) "TECHNOLOGY" shall mean any or all of the following: (A)
works of authorship including, without limitation, computer programs, source
code and executable code, whether embodied in software, firmware or otherwise,
documentation, designs, files, net lists, records, data and mask works; (B)
inventions (whether or not patentable), improvements and technology; (C)
proprietary and confidential information, including technical data and customer
and supplier lists, trade secrets and know how; (D) databases, data compilations
and collections and technical data; (E) logos, trade names, trade dress,
trademarks and service marks; (F) World Wide Web addresses, domain names and
sites; (G) tools, methods and processes; and (H) all instances of the foregoing
in any form and embodied in any media.
(ii) "INTELLECTUAL PROPERTY RIGHTS" shall mean any or all of the
following and all rights in, arising out of, or associated therewith: (A) all
United States and foreign patents and utility models and applications therefor
and all reissues, divisions, re-examinations, renewals, extensions,
provisionals, continuations and continuations-in-part thereof and equivalent or
similar rights anywhere in the world in inventions and discoveries, including,
without limitation, invention disclosures ("Patents"); (B) all trade secrets and
other rights in know-how and confidential or proprietary information; (C) all
copyrights, copyrights registrations and applications therefor and all other
rights corresponding thereto throughout the world ("COPYRIGHTS"); (D) all mask
works, mask work registrations and applications therefor, and any equivalent or
similar rights in semiconductor masks, layouts, architectures or topology
("MASKWORKS"); (E) all industrial designs and any registrations and applications
therefor throughout the world; (F) all rights in World Wide Web addresses and
domain names and applications and registrations therefor; (G) all trade names,
logos, common law trademarks and service marks, trademark and service xxxx
registrations and applications therefor and all goodwill associated therewith
throughout the world ("TRADEMARKS"); and (H) any similar, corresponding or
equivalent rights to any of the foregoing anywhere in the world.
(iii) "COMPANY INTELLECTUAL PROPERTY" shall mean any Technology
and Intellectual Property Rights including the Company Registered Intellectual
Property Rights (as defined below) that are owned (in whole or in part) by the
Company.
(iv) "REGISTERED INTELLECTUAL PROPERTY RIGHTS" shall mean all
United States, international and foreign: (A) Patents, including applications
therefor; (B) registered Trademarks, applications to register Trademarks,
including intent-to-use applications, or other registrations or applications
related to Trademarks; (C) Copyrights registrations and applications to register
Copyrights; (D) Mask Work registrations and applications to register Mask Works;
and (E) any other Technology that is the subject of an application, certificate,
filing, registration or other
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document issued by, filed with, or recorded by, any state, government or other
public or private legal authority at any time.
(v) For all purposes of this Section 2.14, the term "COMPANY"
shall be deemed to refer to both Company and any of its subsidiaries.
(b) Schedule 2.14(b) lists all Registered Intellectual Property
Rights owned by, filed in the name of, or applied for, by the Company (the
"COMPANY REGISTERED INTELLECTUAL PROPERTY RIGHTS") and lists any proceedings or
actions before any court, tribunal (including the United States Patent and
Trademark Office (the "PTO") or equivalent authority anywhere in the world)
related to any of the Company Registered Intellectual Property Rights or Company
Intellectual Property.
(c) Each registration of Company Registered Intellectual Property
Rights is valid and subsisting, and all necessary registration, maintenance and
renewal fees in connection with such Company Registered Intellectual Property
Rights have been paid and all necessary documents and certificates in connection
with such Company Registered Intellectual Property Rights have been filed with
the relevant patent, copyright, trademark or other authorities in the United
States or foreign jurisdictions, as the case may be, for the purposes of
maintaining such Registered Intellectual Property Rights. Except as set forth on
Schedule 2.14(c), there are no actions that must be taken by the Company within
one hundred twenty (120) days of the Closing Date, including the payment of any
registration, maintenance or renewal fees or the filing of any responses to PTO
office actions, documents, applications or certificates for the purposes of
obtaining, maintaining, perfecting or preserving or renewing any Registered
Intellectual Property Rights. In each case in which the Company has acquired all
rights, title and interest in, as opposed to the right to use, any Technology or
Intellectual Property Right from any person, the Company or such Subsidiary has
obtained a valid and enforceable assignment sufficient to irrevocably transfer
all rights in such Technology and the associated Intellectual Property Rights to
the Company. Except as set forth on Schedule 2.14(c), the Company has not
claimed a particular status, including "SMALL BUSINESS STATUS," in the
application for any Intellectual Property Rights, which claim of status was not
at the time made, or which has since become, inaccurate or false or that will no
longer be true and accurate as a result of the Closing.
(d) The Company has no knowledge of any facts or circumstances that
would render any Company Intellectual Property invalid or unenforceable. Except
as set forth on Schedule 2.14(d), without limiting the foregoing, the Company
knows of no information, materials, facts or circumstances, including any
information or fact that would constitute prior art, that would render any of
the Company Registered Intellectual Property Rights invalid or unenforceable, or
would adversely effect any pending application for any Company Registered
Intellectual Property Right and the Company has not misrepresented, or failed to
disclose, and has no knowledge of any misrepresentation or failure to disclose,
any fact or circumstances in any application for any Company Registered
Intellectual Property Right that would constitute fraud or a misrepresentation
with respect to such application or that would otherwise affect the validity or
enforceability of any Company Registered Intellectual Property Right.
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(e) Each item of Company Intellectual Property is free and clear of
any Liens except for non-exclusive licenses granted to end-user customers in the
ordinary course of business. The Company is the exclusive owner of all Company
Intellectual Property subject only to non-exclusive licenses granted to
distributors, resellers and end-users. Without limiting the foregoing, to the
knowledge of the Company: (i) the Company is the exclusive owner of all
Trademarks used in connection with the operation or conduct of the business of
the Company, including the sale, licensing, distribution or provision of any
products or services by the Company; and (ii) except as set forth on Schedule
2.14(e), the Company owns exclusively, and has good title to, all Copyrighted
Works that are products of the Company or which the Company otherwise purports
to own.
(f) Except as set forth in Schedule 2.14(f), all Company
Intellectual Property will be fully transferable, alienable or licensable by
Surviving Corporation and/or Parent without restriction except that any such
transfer, alienation or license shall be subject to non-exclusive licenses
granted to end user customers in the ordinary course of the Company's business
prior to the Merger and without payment of any kind to any third party other
than royalties and fees payable in the ordinary course of the Company's business
prior to the Merger.
(g) To the extent that any Company Technology has been developed or
created by a third party for the Company, the Company has a written agreement
with such third party with respect thereto and the Company thereby either (i)
has obtained ownership of, and is the exclusive owner of, or (ii) has obtained a
license (sufficient for the conduct of its business as currently conducted and
as proposed to be conducted) to all such third party's Intellectual Property
Rights in such Technology by operation of law or by valid assignment, to the
fullest extent it is legally possible to do so.
(h) Except as set forth on Schedule 2.14 and with the exception of
"shrink-wrap" or similar widely-available commercial end-user licenses, all
Technology used in or necessary to the conduct of Company's business as
presently conducted or currently contemplated to be conducted by the Company was
written and created solely by either (i) employees of the Company acting within
the scope of their employment or (ii) by third parties who have validly and
irrevocably assigned all of their rights, including Intellectual Property Rights
therein, to the Company, and no third party owns or has any rights to any of the
Company Intellectual Property.
(i) All current and former employees of the Company and current and
former consultants and contractors engaged by the Company have entered into a
valid and binding written proprietary information confidentiality and assignment
agreement with the Company sufficient to vest title in the Company of all
Technology, including all accompanying Intellectual Property Rights, created by
such employee in the scope of his or her employment with the Company.
(j) Except as set forth on Schedule 2.14, no person who has licensed
Technology or Intellectual Property Rights to the Company has ownership rights
or license rights to improvements made by the Company in such Technology or
Intellectual Property Rights.
(k) The Company has not transferred ownership of, or granted any
exclusive license of or right to use, or authorized the retention of any
exclusive rights to use or joint ownership
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of, any Technology or Intellectual Property Right that is or was Company
Intellectual Property, to any other person.
(l) Other than inbound "shrink-wrap" and similar publicly available
commercial binary code end-user licenses and outbound "shrink-wrap" licenses in
the form set forth on Schedule 2.14(l), Schedule 2.14(l) lists all contracts,
licenses and agreements to which the Company is a party with respect to any
Technology or Intellectual Property Rights. The Company is not in breach of nor
has the Company failed to perform under, any of the foregoing contracts,
licenses or agreements and, to the Company's knowledge, no other party to any
such contract, license or agreement is in breach thereof or has failed to
perform thereunder.
(m) Schedule 2.14(m) lists all material contracts, licenses and
agreements between the Company and any other person wherein or whereby the
Company has agreed to, or assumed, any obligation or duty to warrant, indemnify,
reimburse, hold harmless, guaranty or otherwise assume or incur any obligation
or liability or provide a right of rescission with respect to the infringement
or misappropriation by the Company or such other person of the Intellectual
Property Rights of any person other than the Company.
(n) To the knowledge of the Company, there are no contracts,
licenses or agreements between the Company and any other person with respect to
Company Intellectual Property under which there is any dispute regarding the
scope of such agreement, or performance under such agreement, including with
respect to any payments to be made or received by the Company thereunder.
(o) To the knowledge of the Company, the operation of the business
of the Company as it currently is conducted or is contemplated to be conducted
by the Company, including but not limited to the design, development, use,
import, branding, advertising, promotion, marketing, manufacture and sale of the
products, technology or services (including products, technology or services
currently under development) of the Company does not and will not and will not
when conducted by Parent and/or Surviving Corporation in substantially the same
manner following the Closing, infringe or misappropriate any Intellectual
Property Right of any person, violate any right of any person (including any
right to privacy or publicity) or constitute unfair competition or trade
practices under the laws of any jurisdiction, and the Company has not received
notice from any person claiming that such operation or any act, product,
technology or service (including products, technology or services currently
under development) of the Company infringes or misappropriates any Intellectual
Property Right of any person or constitutes unfair competition or trade
practices under the laws of any jurisdiction (nor does the Company have
knowledge of any basis therefor).
(p) To the Company's knowledge, no person is infringing or
misappropriating any Company Intellectual Property Right.
(q) No Company Intellectual Property or service of the Company is
subject to any proceeding or outstanding decree, order, judgment or settlement
agreement or stipulation that restricts in any manner the use, transfer or
licensing thereof by the Company or may affect the validity, use or
enforceability of such Company Intellectual Property.
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(r) No (i) product, technology, service or publication of the
Company, (ii) material published or distributed by the Company or (iii) conduct
or statement of the Company constitutes obscene material, a defamatory statement
or material, false advertising or, to the Company's knowledge, otherwise
violates in any material respect any law or regulation.
(s) To the Company's knowledge, except as set forth on Schedule
2.14(s), and except for Technology or Intellectual Property subject to "shrink
wrap" or similar widely available commercial end user licenses, the Company
Intellectual Property constitutes all the Technology and Intellectual Property
Rights used in and/or necessary to the conduct of the business of the Company as
it currently is conducted, including, without limitation, the design,
development, manufacture, use, import and sale of products, technology and
performance of services.
(t) Except to the extent resulting from the continuation of
contracts and licenses of the Company following the Closing on the terms
applicable prior to the Closing, and except for the contracts identified in
Schedule 2.14(t), neither this Agreement nor the transactions contemplated by
this Agreement, including the assignment to Parent or Surviving Corporation, by
operation of law or otherwise, of any contracts or agreements to which the
Company is a party, will result in (i) either Parent's or the Surviving
Corporation's granting to any third party any right to or with respect to any
Technology or Intellectual Property Right owned by, or licensed to, either of
them, (ii) either the Parent's or the Surviving Corporation's being obligated to
pay any royalties or other amounts to any third party in excess of those payable
by the Company, Parent or Surviving Corporation, respectively, prior to the
Closing.
(u) The Company's products and services have not failed and shall
not fail to perform any function specified in the product specifications
therefor, or otherwise be adversely affected in any material respect, solely as
a result of the date change from December 31, 1999 to January 1, 2000, including
without limitation, date data century recognition, calculations which
accommodate same century and multi-century formulas and date values, and date
data interface values which reflect the correct century. In addition, to the
Company's knowledge, all of the products and services upon which the Company is
materially reliant, either individually or in the aggregate, including, without
limitation, information technology systems such as financial and order entry
systems, non-information technology systems such as phones and facilities, third
party licensed software and the products and services of the Company's
customers, vendors and suppliers are designed to be used prior to, during, and
after calendar year 2000 A.D., and such products and services will operate
during each such time period without error relating to date data, including
without limitation any error relating to, or the product of, date data that
represents or references different centuries or more than one century.
2.15 Product Warranties; Defects; Liabilities. Each Company Product has
been in all material respects in conformity with all applicable contractual
commitments and all applicable express and implied warranties. The Company does
not have any liability or obligation (and to the Company's knowledge, there is
no current reasonable basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against the Company
giving rise to any liability or obligation) for replacement or repair thereof or
other damages in connection therewith except liabilities or obligations incurred
in the ordinary course of business consistent with
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past practice which do not have a Material Adverse Effect on the Company. Except
as disclosed in Schedule 2.15, no Company Product is subject to any guaranty,
warranty or other indemnity beyond the applicable standard terms and conditions
of sale, license or lease or beyond that implied or imposed by applicable law.
The Company has provided to Parent a copy of the standard terms and conditions
of sale, license or lease for each of the Company Products and copies of the
Company's standard forms of merchant agreements, portal agreements and
professional services agreements.
2.16 Agreements, Contracts and Commitments. As of the date hereof,
except as set forth on Schedule 2.16(a), the Company does not have, is not a
party to nor is it bound by:
(a) any collective bargaining agreements;
(b) any employment or consulting agreement, contract or commitment
with any officer, director, employee or member of the Company's Board of
Directors, other than those that are terminable by the Company without liability
of financial obligation of the Company;
(c) any employment or consulting agreement with an employee or
individual consultant or salesperson or consulting or sales agreement, under
which a firm or other organization provides services to the Company;
(d) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation rights plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
(e) any fidelity or surety bond or completion bond;
(f) any lease of personal property having a value individually in
excess of $10,000;
(g) any agreement of indemnification or guaranty other than standard
indemnification terms contained in contracts with resellers and distributors and
licensees of the Company's products;
(h) any agreement, contract or commitment containing any covenant
limiting in any respect the right of Company to engage in any line of business
or to compete with any person or granting any exclusive distribution rights;
(i) any agreement relating to capital expenditures and involving
future payments in excess of $10,000;
(j) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by the Company after the date of this
Agreement of a material amount of assets not in the ordinary course of business
or pursuant to which the Company has any material ownership interest in any
corporation, partnership, joint venture or other business enterprise;
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(k) any mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of money
or extension of credit, including guaranties referred to in clause (g) hereof;
(l) any purchase order or contract involving $10,000 or more;
(m) any construction contracts;
(n) any dealer, distribution, joint marketing (including any pilot
program), development, content provider, destination site or merchant agreement;
(o) any agreement pursuant to which the Company has granted or may
be obligated to grant in the future, to any party a source-code license or
option or other right to use or acquire source-code, including any agreements
which provide for source code escrow arrangements;
(p) any sales representative, original equipment manufacturer, value
added, remarketer or other agreement for distribution of the Company's products
or services or the products or services of any other person or entity;
(q) any agreement pursuant to which the Company has advanced or
loaned any amount to any shareholder of the Company or any director, officer,
employee or consultant other than business travel advances in the ordinary
course of business consistent with past practice;
(r) any settlement agreement entered into since January 1, 1997 that
provides for continuing obligations of the Company; or
(s) any other agreement that involves $10,000 or more or is not
cancelable without penalty within thirty (30) days.
Except as set forth on Schedule 2.16(b), the Company has not breached,
violated or defaulted under, or received notice that it has breached, violated
or defaulted under, any of the terms or conditions of any material agreement,
contract or commitment required to be set forth on Schedule 2.16(a) or Schedule
2.14 (any such agreement, contract or commitment, a "CONTRACT"). Each Contract
is in full force and effect and, except as otherwise disclosed in Schedule
2.16(b), is not subject to any default thereunder of which the Company has
knowledge by any party obligated to the Company pursuant thereto.
2.17 Interested Party Transactions. No employee, officer or director of
the Company or member of his or her immediate family is indebted to the Company,
nor is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them. To the best of the Company's knowledge, none of such
persons has any direct or indirect ownership interest in any firm or corporation
with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the Company. No
member of the immediate family of any officer or director of the Company is
directly or indirectly interested in any material contract with the Company.
There are no receivables of the Company owing by any director, officer, employee
or consultant to the Company (or any ancestor, sibling, descendant, or
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spouse of any such persons, or any trust, partnership or corporation in which
any of such persons has an economic interest), other than advances in the
ordinary and usual course of business for reimbursable business expenses (as
determined in accordance with the Company's established employee reimbursement
policies and consistent with past practice). None of the Company shareholders
has agreed to, or assumed, any obligation or duty to guaranty or otherwise
assume or incur any obligation or liability of the Company.
2.18 Compliance with Laws. The Company is not in conflict in any
material respect with, or in default or violation of any order, judgment or
decree, or to its knowledge, any law, rule or regulation, applicable to the
Company or by which its properties are bound or affected. To the knowledge of
the Company, no investigation or review by any governmental or regulatory body
or authority is pending or threatened against the Company, nor has any
governmental or regulatory body or authority indicated an intention to conduct
the same, other than, in each such case, those the outcome of which could not,
individually or in the aggregate, reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of the Company, any
acquisition of material property by the Company or the conduct of business by
the Company.
2.19 Litigation. There is no action, suit or proceeding of any nature
pending or to the Company's knowledge threatened against the Company, its
properties or any of its officers, directors or employees (in their capacities
as officers, directors or employees, as the case may be), nor, to the knowledge
of the Company, is there any reasonable basis therefor. There is no
investigation pending or, to the Company's knowledge, threatened against the
Company, its properties or any of its officers, directors or employees (in their
capacities as officers, directors or employees, as the case may be) by or before
any Governmental Entity. No Governmental Entity has at any time challenged or
questioned the legal right of the Company to conduct its operations as presently
or previously conducted.
2.20 Insurance. With respect to the insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of the Company, there is no claim by the
Company pending under any of such policies or bonds as to which coverage has
been denied or disputed by the underwriters of such policies or bonds. All
premiums due and payable under all such policies and bonds have been paid and
the Company is otherwise in material compliance with the terms of such policies
and bonds (or other policies and bonds providing substantially similar insurance
coverage). The Company has no knowledge of any threatened termination of, or
material premium increase with respect to, any of such policies.
2.21 Minute Books. The minute books of the Company made available to
Parent are the only minute books of the Company and contain an accurate summary
of all meetings of directors (or committees thereof) and shareholders or actions
by written consent since the time of incorporation of the Company through the
date hereof.
2.22 Environmental Matters. The Company (a) has obtained all applicable
and material permits, licenses and other authorizations that are required under
Environmental Laws; (b) to the Company's knowledge, is in compliance with all
material terms and conditions of such required permits, licenses and
authorizations, and also is in compliance with all other material limitations,
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restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in such laws or contained in any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder; (c) is not aware of and has not received
notice of any event, condition, circumstance, activity, practice, incident,
action or plan that is reasonably likely to interfere with or prevent continued
compliance or that would give rise to any common law or statutory liability, or
otherwise form the basis of any Environmental Claim with respect to the Company
or any person or entity whose liability for any Environmental Claim the Company
has retained or assumed either contractually or by operation of law; (d) has not
disposed of, released, discharged or emitted any Hazardous Materials into the
soil or groundwater at any properties owned or leased at any time by the
Company, or at any other property, or exposed any employee or other individual
to any Hazardous Materials or condition in such a manner as would result in any
material liability or result in any corrective or remedial action obligation;
and (e) has taken all actions necessary under Environmental Laws to register any
products or materials required to be registered by the Company (or any of its
agents) thereunder. To the Company's knowledge, no Hazardous Materials are
present in, on or under (or, to the knowledge of the Company, in the vicinity
of) any properties owned, leased or used at any time (including both land and
improvements thereon) by the Company so as to give rise to any material
liability or corrective or remedial obligation of the Company under any
Environmental Laws. For the purposes of this Section 2.22, "ENVIRONMENTAL CLAIM"
means any notice, claim, act, cause of action or investigation by any person
alleging potential liability (including potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries or penalties) arising out of, based on or
resulting from (a) the presence, or release into the environment, of any
Hazardous Materials or (b) any violation, or alleged violation, of any
Environmental Laws. "ENVIRONMENTAL LAWS" means all federal, state, local and
foreign laws and regulations relating to pollution or the environment (including
ambient air, surface water, ground water, land surface or subsurface strata) or
the protection of human health and worker safety, including, without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials. "HAZARDOUS MATERIALS" means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, asbestos-containing materials (ACM), hazardous substances, petroleum
and petroleum products or any fraction thereof, excluding, however, Hazardous
Materials contained in products typically used for office and janitorial
purposes properly and safely maintained in accordance with Environmental Laws.
2.23 Brokers' and Finders' Fees. The Company has not incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby.
2.24 Employee Matters and Benefit Plans.
(a) Definitions. With the exception of the definition of "AFFILIATE"
set forth in Section 2.24(a)(i) below (such definition shall only apply to this
Section 2.24), for purposes of this Agreement, the following terms shall have
the meanings set forth below:
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(i) "AFFILIATE" shall mean any other person or entity under
common control with the Company within the meaning of Section 414(b), (c), (m)
or (o) of the Code and the regulations thereunder;
(ii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iii) "COMPANY EMPLOYEE PLAN" shall refer to any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, deferred compensation, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits or remuneration of any kind, whether written or otherwise, funded or
unfunded, including without limitation, each "employee benefit plan", within the
meaning of Section 3(3) of ERISA which is or has been maintained, contributed
to, or required to be contributed to, by the Company or any Affiliate for the
benefit of any Employee (as defined below), or with respect to whether the
Company has or may have any liability or obligation;
(iv) "DOL" shall mean the United States Department of Labor.
(v) "EMPLOYEE" shall include any current, former or retired
employee, officer, director or consultant of the Company or any Affiliate;
(vi) "EMPLOYEE AGREEMENT" shall include each management,
employment, indemnification, severance, termination, consulting, relocation,
repatriation, expatriation, visa, work permit or other agreement, contract or
understanding between the Company or any Affiliate and any Employee;
(vii) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of 1993,
as amended;
(ix) "IRS" shall mean the Internal Revenue Service;
(x) "MULTIEMPLOYER PLAN" shall mean any "Pension Plan" (as
defined below) which is a "multiemployer plan", as defined in Section 3(37) of
ERISA; and
(xi) "PENSION PLAN" shall refer to each Company Employee Plan
which is an "employee pension benefit plan", within the meaning of Section 3(2)
of ERISA.
(b) Schedule. Schedule 2.24(b) contains an accurate and complete
list of each Company Employee Plan and each Employee Agreement. The Company does
not have any plan or commitment to establish any new Company Employee Plan or
Employee Agreement, to modify any Company Employee Plan or Employee Agreement
(except to the extent required by law or to conform any such Company Employee
Plan or Employee Agreement to the requirements of any applicable law, in each
case as previously disclosed to Parent in writing, or as required by this
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Agreement), or to enter into any Company Employee Plan or Employee Agreement nor
does it have any intention or commitment to do any of the foregoing.
(c) Documents. The Company has provided or made available to Parent
(i) correct and complete copies of all documents embodying or relating to each
Company Employee Plan and each Employee Agreement including, without limitation,
all amendments thereto, all related trust documents and written interpretations
thereof; (ii) the most recent annual actuarial valuations, if any, prepared for
each Company Employee Plan; (iii) the three most recent annual reports (Series
5500 and all schedules and financial statements attached thereto), if any,
required under ERISA or the Code in connection with each Company Employee Plan
or related trust; (iv) if the Company Employee Plan is funded, the most recent
annual and periodic accounting of Company Employee Plan assets; (v) the most
recent summary plan description together with the most recent summary(ies) of
material modifications thereto, if any, required under ERISA with respect to
each Company Employee Plan; (vi) all IRS determination, opinion, notification
and advisory letters and rulings relating to Company Employee Plans and copies
of all applications and correspondence to or from the IRS, DOL or any other
governmental agency with respect to any Company Employee Plan; (vii) all
material written agreements and contracts relating to each Company Employee
Plan, including, but not limited to, administrative service agreements, group
annuity contracts and group insurance contracts; (viii) all communications
material to any Employee or Employees relating to any Company Employee Plan and
any proposed Company Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
material liability to the Company; (ix) all correspondence to or from any
governmental agency relating to any Company Employee Plan; (x) all COBRA forms
and related notices; (xi) all policies pertaining to fiduciary liability
insurance covering the fiduciaries of for each Company Employee Plan; (xii) all
discrimination tests for each Company Employee Plan for the most recent plan
year; and (xiii) all registration statements, annual reports (Form 11-K and all
attachments thereto) and prospectuses prepared in connection with each Company
Employee Plan.
(d) Employee Plan Compliance. Except as set forth on Schedule
2.24(d), (i) the Company has performed in all material respects all obligations
required to be performed by it under, is not in default or violation of, and has
no knowledge of any default or violation of any other party to, each Company
Employee Plan, and each Company Employee Plan has been established and
maintained in all material respects in accordance with its terms and in
compliance with all applicable laws, statutes, orders, rules and regulations,
including but not limited to ERISA or the Code; (ii) each Company Employee Plan
intended to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code has either received a favorable
determination, opinion, notification or advisory letter from the IRS with
respect to each such Company Employee Plan as to its qualified status under the
Code, including all amendments to the Code effected by the Tax Reform Act of
1986 and subsequent legislation, or has a period of time remaining under
applicable Treasury regulations or IRS pronouncements in which to apply for such
a letter and make any amendments necessary to obtain a favorable determination
as to the qualified status of each such Company Employee Plan; (iii) no
"prohibited transaction", within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of
ERISA,
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has occurred with respect to any Company Employee Plan; (iv) there are no
actions, suits or claims pending, or, to the knowledge of the Company,
threatened (other than routine claims for benefits) against any Company Employee
Plan or against the assets of any Company Employee Plan; and (v) each Company
Employee Plan can be amended, terminated or otherwise discontinued after the
Effective Time in accordance with its terms, without liability to the Company,
Parent or any of its Affiliates (other than ordinary administration expenses
typically incurred in a termination event); (vi) there are no audits, inquiries
or proceedings pending or, to the knowledge of the Company or any Affiliates,
threatened by the IRS or DOL with respect to any Company Employee Plan; and
(vii) neither the Company nor any Affiliate is subject to any penalty or tax
with respect to any Company Employee Plan under Section 501(i) of ERISA or
Section 4975 through 4980 of the Code.
(e) Pension Plans. Neither the Company nor any Affiliate has ever
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA, Title
IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has the Company or any Affiliate
contributed to or been requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. Except as set forth in Schedule
2.24(g), no Company Employee Plan provides, or reflects or represents any
liability to provide, life insurance, health or other employee benefits to any
person upon his or her retirement or termination of employment for any reason,
except as may be required by statute, and the Company has never represented,
promised or contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) that such Employee(s) or any other
person would be provided with life insurance, health or other employee welfare
benefits upon their retirement or termination of employment, except to the
extent required by statute.
(h) COBRA. Neither the Company nor any Affiliate has, prior to the
Effective Time, violated any of the health care continuation requirements of
COBRA, the requirements of FMLA, the requirements of the Women's Healthcare
Cancer Rights Act, the requirements of the Newborns' and Mothers' Health
Protection Act of 1996 or any similar provisions of state law applicable to its
Employees.
(i) Effect of Transaction.
(i) Except as provided in Section 1.6 of this Agreement or as
set forth on Schedule 2.24(i)(i), the execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Company Employee Plan, Employee Agreement, trust or loan that will or
may result in any current or future payment (whether of severance or termination
pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, indemnification, increase in benefits or obligation to fund
benefits with respect to any Employee.
(ii) Except as set forth on Schedule 2.24(i)(ii), no payment or
benefit which will or may be made by the Company or Parent or any of their
respective affiliates with
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respect to any Employee resulting from the transactions contemplated by this
Agreement or otherwise will be characterized as a "parachute payment", within
the meaning of Section 280G(b)(2) of the Code.
(j) Employment Matters. Schedule 2.24(j) lists all current officers,
directors and employees of the Company as of the date hereof. The Company (i) to
its knowledge, is in compliance in all material respects with all applicable
foreign, federal, state and local laws, rules and regulations respecting
employment, employment practices, terms and conditions of employment and wages
and hours, in each case, with respect to Employees (including any immigration
laws with respect to the same); (ii) is not liable for any arrears of wages or
any taxes or any penalty for failure to comply with any of the foregoing; and
(iii) is not liable for any payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice). Schedule 2.24(j) also sets forth
all outstanding offers of employment, whether written or oral, made to any
employee or prospective employee, which offer has not been rejected by the
offeree.
(k) Labor. No work stoppage or labor strike against the Company is
pending, or to the Company's knowledge, threatened. The Company does not know of
any activities or proceedings of any labor union to organize any Employees.
Except as set forth in Schedule 2.24(k), there are no actions, suits, claims,
labor disputes or grievances pending, or, to the knowledge of the Company,
threatened relating to any labor, safety or discrimination matters involving any
Employee, including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, result in any material liability to the Company. Neither
the Company nor any of its subsidiaries has engaged in any unfair labor
practices within the meaning of the National Labor Relations Act. Except as set
forth in Schedule 2.24(k), the Company is not presently, nor has it been in the
past, a party to, or bound by, any collective bargaining agreement or union
contract with respect to Employees and no collective bargaining agreement is
being negotiated by the Company.
(l) No Interference or Conflict. To the knowledge of the Company, no
shareholder, officer, employee or consultant of the Company is obligated under
any contract or agreement subject to any judgment, decree or order of any court
or administrative agency that would interfere with such person's efforts to
promote the interests of the Company or that would interfere with the Company's
business. Neither the execution nor delivery of this Agreement, nor the carrying
on of the Company's business as presently conducted nor any activity of such
officers, directors, employees or consultants in connection with the carrying on
of the Company's business as presently conducted, will conflict with or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract or agreement under which any of such officers, directors,
employees or consultants is now bound.
2.25 Bank Accounts. Schedule 2.25 constitutes a full and complete list
of all the bank accounts and safe deposit boxes of the Company, the number of
each such account or box, and the names of the persons authorized to draw on
such accounts or to access such boxes. All cash in such
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accounts is held in demand deposits and is not subject to any restriction or
documentation as to withdrawal.
2.26 Indemnification Obligations. The Company has no knowledge of any
action, proceeding or other event pending or threatened against any officer or
director of the Company that would give rise to any indemnification obligation
of the Company to its officers and directors under its Articles of
Incorporation, Bylaws or any agreement between the Company and any of its
officers or directors.
2.27 Representations Complete. None of the representations or warranties
made by the Company (as modified by the Company Schedules), nor any statement
made in any Schedule or certificate furnished by the Company pursuant to this
Agreement, or furnished in or in connection with documents mailed or delivered
to the shareholders of the Company in connection with soliciting their consent
to the principal terms of this Agreement and the Merger (to the extent that such
documents were prepared by or include information provided by the Company),
contains or will contain at the Effective Time, any untrue statement of a
material fact, or omits or will omit at the Effective Time to state any material
fact necessary in order to make the statements contained herein or therein, in
the light of the circumstances under which made, not misleading. None of the
information supplied or to be supplied by or on behalf of the Company or the
shareholders for inclusion or incorporation by reference in the Information
Statement or any other any statement, recommendation, proposal or document
provided to the shareholders of the Company, at the time of any shareholders'
meeting or as of the Effective Time, contain any untrue statement of a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to the Company,
subject to the exceptions specifically disclosed in writing in the disclosure
letter dated as of the date hereof (the "PARENT SCHEDULES"), as follows:
3.1 Organization, Good Standing and Qualification. Parent has been
duly incorporated and organized, and is validly existing in good standing, under
the laws of the State of Delaware. Merger Sub has been duly incorporated and
organized, and is validly existing, under the laws of the State of Oregon. Each
of Parent and Merger Sub has the corporate power and corporate authority to own
and operate its properties and assets and to carry on its business as currently
conducted. Parent is duly qualified to transact business and is in good standing
in the State of California.
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3.2 Capitalization and Voting Rights.
(a) As of December 15, 1999, the authorized capital of Parent
consisted of:
(i) Preferred Stock. 51,910,282 shares of Preferred Stock
(the "PREFERRED STOCK"), 10,000,000 of which have been designated Series F
Preferred Stock (the "SERIES F PREFERRED STOCK"), all of which are issued and
outstanding prior to the Closing, 5,142,851 shares of which have been designated
Series A Preferred Stock (the "SERIES A PREFERRED STOCK"), all of which are
issued and outstanding, 8,629,992 shares of which have been designated Series B
Preferred Stock (the "SERIES B PREFERRED STOCK"), 7,999,992 of which are issued
and outstanding, 9,987,439 shares of which will have been designated Series C
Preferred Stock (the "SERIES C PREFERRED STOCK"), all of which are issued and
outstanding, and 18,150,000 shares of which have been designated Series D
Preferred Stock (the "SERIES D PREFERRED STOCK"), 14,489,215 of which are issued
and outstanding. The outstanding shares of Preferred Stock are all duly and
validly authorized and issued, fully paid and nonassessable and were issued in
compliance with applicable federal and state securities laws and have been
approved by all requisite corporate and shareholder action.
(ii) Common Stock. 100,000,000 shares of Parent Common
Stock, of which 12,324,306 shares are issued and outstanding. The outstanding
shares of Parent Common Stock are all duly and validly authorized, issued, fully
paid and nonassessable and, were issued in compliance with applicable federal
and state securities laws and have been approved by all requisite corporate and
shareholder action.
(iii) Options, Warrants, Reserved Shares. Except for (i) the
conversion privileges of the Preferred Stock, (ii) the 8,000,000 shares of
Parent Common Stock reserved for issuance under Parent's 1998 Stock Plan under
which options to purchase 5,117,837 shares are outstanding, and (iii) warrants
to purchase 630,000 shares of Series B Preferred Stock, there is no outstanding
option, warrant, right (including conversion or preemptive rights) or agreement
for the purchase or acquisition from Parent of any shares of its capital stock
or any securities convertible into or ultimately exchangeable or exercisable for
any shares of Parent's capital stock. Apart from the exceptions noted in this
Section 3.2(a), and except for rights of first refusal held by Parent to
purchase shares of its stock issued under Parent's 1998 Stock Plan, no shares of
Parent's outstanding capital stock, or stock issuable upon exercise or exchange
of any outstanding options, warrants or rights, or other stock issuable by
Parent, are subject to any preemptive rights, rights of first refusal or other
rights to purchase such stock (whether in favor of Parent or any other person),
pursuant to any agreement or commitment of Parent.
(iv) Issuance of Parent Common Stock. Upon the Closing and
the issuance and delivery of the certificates representing the Parent Common
Stock to the shareholders of the Company, the Parent Common Stock will be
validly issued, fully paid and non-assessable, and subject to no Liens.
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3.3 Subsidiaries. Parent does not presently own or control, directly
or indirectly, any interest in any other corporation, partnership, trust, joint
venture, association, or other entity.
3.4 Authorization. Parent and Merger Sub have all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of Parent and
Merger Sub and their respective officers, directors and stockholders necessary
for the authorization, execution and delivery of this Agreement, the performance
of all obligations of Parent and Merger Sub hereunder, and the authorization,
issuance (or reservation for issuance), sale and delivery of the Parent Common
Stock to be issued hereunder has been taken or will be taken prior to the
Closing, and the Agreement, when executed and delivered, will constitute valid
and legally binding obligations of Parent and Merger Sub, enforceable in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting or relating to the enforcement of creditors' rights generally and (ii)
as limited by laws relating to the availability of and/or other equitable
remedies. The Parent Common Stock to be issued hereunder, when issued, paid for
and delivered in accordance with the terms of this Agreement for the
consideration expressed herein will be duly authorized and validly issued, fully
paid and nonassessable.
3.5 Consents and Agreements. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any Governmental Entity on the part of Parent or Merger Sub is
required in order to enable Parent or Merger Sub to execute, deliver and perform
its obligations under this Agreement, except for such qualifications or filings
under applicable securities laws as may be required in connection with the
transactions contemplated by this Agreement and the filing of the Articles of
Merger with the Oregon Secretary of State. All such qualifications and filings
will, in the case of qualifications, be effective on the Closing and will, in
the case of filings, be made within the time prescribed by law.
3.6 Litigation. There is no action, suit or proceeding of any nature
pending or to Parent's knowledge threatened against Parent, its properties or
any of its officers, directors or employees (in their capacities as officers,
directors or employees, as the case may be), nor, to the knowledge of Parent, is
there any reasonable basis therefor. There is no investigation pending or, to
Parent's knowledge, threatened against Parent, its properties or any of its
officers, directors or employees (in their capacities as officers, directors or
employees, as the case may be) by or before any Governmental Entity. No
Governmental Entity has at any time challenged or questioned the legal right of
the Parent to conduct its operations as presently or previously conducted.
3.7 Proprietary Information and Inventions Agreements. Each present
and former employee, officer and consultant of Parent has executed a
Confidential Information and Inventions Assignment. Parent after reasonable
investigation is not aware that any of its employees, officers or consultants
are in violation thereof, and Parent will use its best efforts to prevent any
such violation. Parent is not aware that any officer or key employee intends to
terminate employment with Parent, nor does Parent have a present intention to
terminate the employment of any of the foregoing. Subject to general principles
relating to wrongful termination of employees, the employment of each officer
and employee of Parent is terminable at the will of Parent.
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3.8 Title to Property and Assets. Parent owns its property and
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens that arise in the ordinary course of business and do
not materially impair Parent's ownership or use of such property or assets. With
respect to the property and assets it leases, Parent is in compliance with such
leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances.
3.9 Financial Statements. Prior to the Closing, Parent has made
available to the Company its audited balance sheet and income statement at and
for the year ended January 31, 1999 and the nine months ended October 31, 1999
(collectively, the "FINANCIAL STATEMENTS"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods indicated, except that the
Financial Statements may not contain all footnotes required by GAAP. The
Financial Statements fairly present the financial condition and operating
results of Parent as of the dates, and for the periods, indicated therein,
subject to normal year-end audit adjustments which Parent does not expect to be
material. Except as set forth in the Financial Statements, Parent has no
material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to the date of the
Financial Statements and (ii) obligations under contracts and commitments
incurred in the ordinary course of business, which, in both cases, individually
or in the aggregate are not material to the financial condition or operating
results of Parent. Except as disclosed in the Financial Statements, Parent is
not a guarantor or indemnitor of any indebtedness of any other person, firm,
corporation or other entity (except for wholly owned subsidiaries of Parent).
3.10 Books and Records. The minute books of Parent contain accurate
summary records of all meetings and written consents to action of Parent's
stockholders, Parent's Board of Directors and all committees, if any, appointed
by the Board of Directors. Parent's stock ledger is complete and reflects all
issuances, transfers, repurchases and cancellations of shares of capital stock
of Parent.
3.11 Rights of Registration. Except as contemplated in the Fourth
Amended and Restated Investor Rights Agreement dated as of November 17, 1999 by
and among Parents and certain of its stockholders, Parent has not granted or
agreed to grant any registration rights, including piggyback rights, to any
person or entity.
3.12 Proprietary Rights. Parent owns, has licensed or otherwise
possesses all trademarks, trade names, copyrights and other intellectual
property rights necessary to conduct its business as now being conducted without
any known conflict with or infringement upon any intellectual property rights of
others. Parent has not received any notice alleging that Parent has infringed
upon or is conflict with the asserted rights of others, nor is Parent aware of
any reasonable basis for any such allegation. Parent has certain trade secrets,
including know-how, computer software programs and other proprietary data (the
"PROPRIETARY INFORMATION") used, or proposed to be used, in the development,
manufacture and sale of its products. Parent has the right to use the
Proprietary Information, except that the possibility exists that other persons
may have independently developed trade secrets or technical information similar
or identical to those of Parent. Parent is not aware of any rights to any
patents, trademarks, service marks, tradenames, copyrights, trade secrets
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and proprietary rights and processes held by third parties that it will be
required to obtain in order to conduct its business as proposed to be conducted
that cannot be obtained on commercially reasonable terms from such parties.
There are no outstanding options, licenses, or agreements of any kind relating
to Parent's patents or trademarks.
3.13 No Conflict of Interest. Parent is not indebted, directly or
indirectly, to any of its officers or directors or to their respective spouses
or children, in any amount whatsoever other than in connection with expenses or
advances of expenses incurred in the ordinary course of business or relocation
expenses of employees. To Parent's knowledge, none of Parent's officers or
directors, or any members of their immediate families, are, directly or
indirectly, indebted to Parent (other than in connection with purchases of
Parent's stock). To Parent's knowledge, none of Parent's officers or directors
or any members of their immediate families have, directly or indirectly, any
economic interest in any contract material to Parent other than with respect to
equity held in Parent.
3.14 Tax Returns. All tax returns, declarations, statements,
reports, schedules, forms and information returns ("RETURNS") required by all
U.S. federal, state and local and foreign jurisdictions (in each case, including
all political subdivisions thereof) relating to all U.S. federal, state, local
and foreign taxes and other assessments of a similar nature (whether imposed
directly or through withholding), including any interest, additions to tax, or
penalties applicable thereto ("TAXES"), if any, required to be filed by Parent
prior to the Closing have been (or will be) timely filed and such Returns are
(or will be) true, complete and correct in all material respects. All Taxes
shown on any such Returns to be due from Parent that are due and payable have
been paid, other than those being contested in good faith and for which an
adequate reserve or accrual has been established in accordance with GAAP. Parent
does not know of any actual or proposed material addition Tax assessments
against Parent.
3.15 Compliance with Laws. Parent has obtained and maintained in
good standing all of its licenses, permits, consents and authorizations required
to be obtained by it or them under federal, state and local laws (collectively,
"LAWS"), except for those which, individually or in the aggregate, would not
have a material adverse effect on the assets, condition, affairs or prospects of
Parent, financially or otherwise, and all such licenses, permits, consents and
authorizations remain in full force and effect. Parent is in material compliance
with such Laws, and there is no pending or, to Parent's knowledge, threatened,
action or proceeding against Parent under any of such Laws, other than any such
actions or proceedings which, individually or in the aggregate, if adversely
determined, would not have a material adverse effect on the assets, condition,
affairs or prospects of Parent, financially or otherwise.
3.16 Year 2000 Compliance. Parent's products and services have not
failed and shall not fail to perform any function specified in the product
specifications therefor, or otherwise be adversely affected in any material
respect, solely as a result of the date change from December 31, 1999 to January
1, 2000, including without limitation, date data century recognition,
calculations which accommodate same century and multi-century formulas and date
values, and date data interface values which reflect the correct century. In
addition, to the best of Parent's knowledge, all of the products and services
upon which Parent is materially reliant, either individually or in the
aggregate, including, without limitation, information technology systems such as
financial and order
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entry systems, non-information technology systems such as phones and facilities,
third party licensed software and the products and services of Parent's
customers, vendors and suppliers are designed to be used prior to, during, and
after calendar year 2000 A.D., and such products and services will operate
during each such time period without error relating to date data, including
without limitation any error relating to, or the product of, date data that
represents or references different centuries or more than one century.
3.17 No Contravention. Neither Parent nor Merger Sub is in violation
or default of any provision of its Certificate or Articles of Incorporation or
Bylaws or of any instrument, judgment, order, writ, decree, or contract to which
it is a party or by which it is bound or of any provision of federal or state
statute, rule or regulation applicable to Parent or Merger Sub. The execution,
delivery and performance by Parent and Merger Sub of this Agreement, including,
without limitation, the issuance of the Parent Common Stock: (a) do not and will
not contravene the terms of the Certificate or Articles of Incorporation, as
amended, or Bylaws, as amended, of the Parent or Merger Sub or any law, rule,
regulation or similar requirement applicable to Parent or Merger Sub or its
assets, business or properties; (b) do not and will not (i) conflict with,
contravene, result in any violation or breach of or default under (with or
without the giving of notice or the lapse of time or both), (ii) create in any
other person or entity a right or claim of termination or amendment, or (iii)
require modification, acceleration or cancellation of any agreement, contract,
or other instrument or contractual obligation of Parent or Merger Sub; and (c)
do not and will not result in the creation of any lien, charge or encumbrance
(or obligation to create a lien, charge or encumbrance) against any property,
asset or business of Parent or Merger Sub.
3.18 Disclosure. Parent has fully provided the Company with all the
information which such party has reasonably requested for deciding whether to
enter into this Agreement. Neither this Agreement nor any other statements,
exhibits or certificates made or delivered in connection herewith, when taken as
a whole, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading
in light of the circumstances under which they were made.
ARTICLE IV
SECURITIES ACT COMPLIANCE; REGISTRATION
Parent and the Company acknowledge and agree that they shall seek an
opinion from the Oregon Department of Consumer and Business Services (the
"OREGON GOVERNMENTAL AUTHORITY") approving this Agreement as being fair, just
and equitable and free from fraud under Section 59.095 of the Oregon Securities
Law (the "OREGON FAIRNESS STATUTE"). Sections 4.1 to 4.3 below shall be
applicable in the event that an exemption from federal registration is not
obtained under Section 3(a)(10) of the Securities Act with respect to the Parent
Common Stock to be issued hereunder.
4.1 Securities Act Exemption. The Parent Common Stock to be issued
pursuant to this Agreement initially will not be registered under the Securities
Act in reliance on the exemptions from the registration requirements of Section
5 of the Securities Act set forth in Section 4(2) thereof
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or Rule 506 thereunder. Prior to the Closing Date, each of the Company's
shareholders shall have provided Parent such representations, warranties,
certifications and additional information as Parent may reasonably request to
ensure the availability of such exemptions from the registration requirements of
the Securities Act.
4.2 Stock Restrictions. In addition to any legend imposed by applicable
state securities laws or by any contract that continues in effect after the
Effective Time, the certificates representing the shares of Parent Common Stock
issued pursuant to this Agreement shall bear a restrictive legend (and stop
transfer orders shall be placed against the transfer thereof with Parent's
transfer agent), stating substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OR
HYPOTHECATED EXCEPT IN COMPLIANCE WITH RULE 144 IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE ACT, OR A NO-ACTION LETTER FROM THE SECURITIES
AND EXCHANGE COMMISSION.
4.3 The Company Shareholders' Restrictions Regarding Securities Law
Matters. Each shareholder of the Company, by virtue of the Merger and the
conversion into Parent Common Stock of the Company Common Stock held by such
shareholder, shall be bound by the following provisions:
(a) Such shareholder will not offer, sell or otherwise dispose of
any shares of Parent Common Stock except in compliance with the Securities Act
and the rules and regulations thereunder.
(b) Such shareholder will not sell, transfer or otherwise dispose of
any shares of Parent Common Stock unless (i) such sale, transfer or other
disposition is within the limitations of and in compliance with Rule 144
promulgated by the SEC under the Securities Act and the shareholder furnishes
Parent with reasonable proof of compliance with such Rule, (ii) in the opinion
of counsel, reasonably satisfactory to Parent and its counsel, some other
exemption from registration under the Securities Act is available with respect
to any such proposed sale, transfer, or other disposition of Parent Common Stock
or (iii) the offer and sale of Parent Common Stock is registered under the
Securities Act.
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ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 Conduct of Business of the Company. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, the Company agrees
(except to the extent that Parent shall otherwise consent in writing) to carry
on its business in the usual, regular and ordinary course in substantially the
same manner as heretofore conducted. The Company shall promptly notify Parent of
any materially negative event involving or adversely affecting the Company or
its business.
In addition, except as permitted by the terms of this Agreement,
without the prior written consent of Parent, which consent shall not be
unreasonably withheld, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, the Company (and the Executives as to
subsection (i) only) shall not do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of any outstanding Company Options or Company
Common Stock subject to vesting, or reprice Company Options granted under the
Option Plan (or otherwise) or authorize cash payments in exchange for any such
options;
(b) Make any payments or enter into any commitment or transaction
outside of the ordinary course of business;
(c) Except in the ordinary course of business, modify, amend or
terminate any material contract or agreement to which the Company is a party or
waive, release or assign any material rights or claims thereunder;
(d) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the Company Intellectual Property Rights (other
than pursuant to end-user licenses granted to customers of the Company in the
ordinary course of business, provided that no such license shall (i) contain any
right of refusal to the license or (ii) involve the transfer of product(s) to
any person or entity in violation of applicable U.S. export laws and
regulations) or enter into grants to future patent rights;
(e) Enter into or amend any agreements pursuant to which any other
party is granted marketing, distribution or similar rights of any type or scope
with respect to any products of the Company;
(f) Amend or otherwise modify (or agree to do so), or violate the
terms of, any of the Contracts;
(g) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any Company
Capital Stock, or split, combine or
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reclassify any Company Capital Stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for any Company
Capital Stock;
(h) Purchase, redeem or otherwise acquire, directly or indirectly,
any Company Capital Stock, except repurchases of unvested shares at cost in
connection with the termination of the employment relationship with any employee
or consultant pursuant to stock option or purchase agreements in effect on the
date hereof;
(i) Issue, grant, deliver, sell, pledge or authorize, any Company
Capital Stock or securities convertible into, or subscriptions, rights, warrants
or options to acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities (except
for the issuance of any Company Capital Stock upon exercise or conversion of
presently outstanding Company Options or Warrants, the grant of stock options to
new employees pursuant to outstanding written offers of employment), or the
transfer by Xxxxx Xxxxxx of up to 40,000 shares to Xxxxx Xxxxxx;
(j) Cause or permit any amendments to its Articles of Incorporation
or Bylaws;
(k) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any assets or equity securities of, or by any other manner, any
business or any corporation, partnership, association, joint venture or other
business organization or division thereof, or otherwise acquire or agree to
acquire outside of the ordinary course of business any assets in any amount, or
in the ordinary course of business in an amount in excess of $10,000 in the case
of a single transaction or in excess of $50,000 in the aggregate;
(l) Sell, lease, license, encumber or otherwise dispose of any
properties or assets except sales of inventory in the ordinary course of
business consistent with past practice and except for the sale, lease or
disposition (other than through licensing) of a property or assets that are not
material, individually or in the aggregate, to the business of the Company;
(m) Incur individual liabilities in excess of $10,000 (in any one
case) or $50,000 (in the aggregate) or incur any indebtedness for borrowed money
or guarantee any such indebtedness of another person, issue or sell any debt
securities or options, warrants, calls or other rights to acquire any debt
securities of the Company, enter into any "keep well" or other agreement to
maintain any financial statement condition or enter into any arrangement having
the economic effect of any of the foregoing other than in connection with the
financing of ordinary course trade payables consistent with past practice;
(n) Grant any severance or termination pay (i) to any director or
officer or (ii) to any other employee except payments made pursuant to written
agreements outstanding on the date hereof and as disclosed in the Company
Schedules, or adopt any new severance plan;
(o) Adopt or amend any employee benefit plan, or enter into any
employment contract, extend employment offers, pay or agree to pay any bonus or
special or extraordinary remuneration to any director or employee, or increase
the salaries or wage rates of its employees,
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except as consistent with the ordinary course of the Company consistent with
past practice with employees who are terminable "at will," pay any special bonus
or special remuneration to any director or employee, or increase the salaries or
wage rates or fringe benefits (including rights to severance or indemnification)
of its directors, officers, employees or consultants;
(p) Effect or agree to effect, including by way of hiring or
involuntary termination, any change in the Company's directors, officers or key
employees;
(q) Revalue any of its assets, including without limitation writing
down the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business, or except as required by GAAP, make any
change in accounting methods, principles or practices;
(r) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business of
liabilities reflected or reserved against in the Company Financials (or the
notes thereto) or that arose in the ordinary course of business subsequent to
December 31, 1999, in an amount in excess of $10,000 (in any one case) or
$50,000 (in the aggregate), or expenses consistent with the provisions of this
Agreement incurred in connection with any transaction contemplated hereby;
(s) Make or change any material election in respect of Taxes, adopt
or change any accounting method in respect of Taxes, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, or consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes;
(t) Enter into any strategic alliance, joint development or joint
marketing agreement;
(u) Commence a lawsuit other than (i) for the routine collection of
bills, (ii) in such cases where it, in good faith, determines that failure to
commence suit would result in the material impairment of a valuable aspect of
its business, provided that it consults with Parent prior to the filing of such
a suit or (iii) for a breach of this Agreement;
(v) Materially reduce the amount of any insurance coverage provided
by or fail to renew any existing insurance policies;
(w) Engage in any action with the intent and purpose to directly or
indirectly adversely impact any of the transactions contemplated by this
Agreement;
(x) Engage in any action that could reasonably be expected to cause
the Merger to fail to qualify as a "reorganization" under Section 368(a) of the
Code; or
(y) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 5.1(a) through (x) above, or any other action that
would prevent the Company from performing or cause the Company not to perform
its covenants hereunder.
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5.2 Notices. The Company shall give all notices and other information
required to be given to the employees of the Company, any collective bargaining
unit representing any group of employees of the Company and any applicable
government authority under the WARN Act, the National Labor Relations Act, the
Code, the Consolidated Omnibus Budget Reconciliation Act and any other
applicable law in connection with the transaction provided for in this
Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preparation of Oregon Fairness Hearing Documents and Information
Statement. As soon as practicable after the execution of this Agreement, the
Company shall prepare, with the cooperation of Parent, the documents required in
connection with the Oregon Fairness Statute, including, but not limited to, the
hearing notice and an Information Statement for the shareholders of the Company
to approve the principal terms of this Agreement and the Merger (collectively,
the "NOTICE MATERIALS"). The purpose of the Notice Materials, which shall be
filed with the Oregon Governmental Authority as promptly as practicable, shall
be to perfect the exemption from registration provided by Section 3(a)(10) of
the Securities Act. The Information Statement shall constitute a disclosure
document for the offer and issuance of the shares of Parent Common Stock to be
received by the holders of Company Common Stock in the Merger. Parent and the
Company shall each use its best efforts to cause the Notice Materials to be
declared effective and approved for distribution to Company shareholders, and to
cause the Information Statement to comply in all material respects with
applicable federal and state securities laws requirements. Each of Parent and
the Company agrees to provide promptly to the other such information concerning
its business and financial statements and affairs as, in the reasonable judgment
of the providing party or its counsel, may be required or appropriate for
inclusion in the Notice Materials, or in any amendments or supplements thereto,
and to cause its counsel and auditors to cooperate with the other's counsel and
auditors in the preparation of the Notice Materials. The Company will promptly
advise Parent and Parent will promptly advise the Company, in writing if at any
time prior to the Effective Time either the Company or Parent shall obtain
knowledge of any facts that might make it necessary or appropriate to amend or
supplement the Notice Materials in order to make the statements contained or
incorporated by reference therein not misleading or to comply with applicable
law. The Information Statement shall contain the unanimous recommendation of the
Board of Directors of the Company that the Company shareholders approve the
principal terms of this Agreement and the Merger and the conclusion of the Board
of Directors that the terms and conditions of the Merger are fair and reasonable
to the shareholders of the Company. Anything to the contrary contained herein
notwithstanding, the Company shall not include in the Notice Materials any
information with respect to Parent or its affiliates or associates, the form and
content of which information shall not have been approved by Parent prior to
such inclusion.
6.2 Shareholder Approval. The Company shall, promptly after the date
hereof and in accordance with Oregon Law and the Company's Articles of
Incorporation and Bylaws, obtain the approval of the Company's shareholders of
the principal terms of this Agreement and the Merger.
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The Company shall ensure that the shareholder approval is solicited in
compliance with Oregon Law, the Articles of Incorporation and Bylaws of the
Company and all other applicable legal requirements. The Company agrees to use
its reasonable best efforts to secure the necessary votes required by Oregon Law
to effect the Merger. Parent will make a representative available to
shareholders to answer any questions Company shareholders may have regarding the
Parent's business, management and financial affairs.
6.3 Access to Information. Each of the Company and the Parent shall
afford the other and their respective accountants, legal counsel and other
representatives reasonable access during normal business hours during the period
prior to the Effective Time to (a) all of its properties, books, contracts,
commitments and records and (b) all other information concerning its business,
properties, and personnel as Parent or the Company may reasonably request. Each
of Parent and the Company agrees to provide the other and its accountants, legal
counsel and other representatives copies of internal financial statements
promptly upon request. No information or knowledge obtained in any investigation
pursuant to this Section 6.3 shall affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Merger.
6.4 Confidentiality. The parties acknowledge that the Company and Parent
have previously executed a Confidentiality Agreement, dated as of December 2,
1999 (the "CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will
continue in full force and effect in accordance with its terms.
6.5 Consents. The Company shall promptly apply for or otherwise seek and
use its best efforts to obtain all consents and approvals required to be
obtained by it for the consummation of the Merger, including all consents,
waivers or approvals under any of the Contracts in order to preserve the
benefits thereunder for the Surviving Corporation and otherwise in connection
with the Merger. All of such consents and approvals are set forth in Schedule
2.6.
6.6 Legal Conditions to the Merger. Each of Parent, Merger Sub and the
Company will take all reasonable actions necessary to comply promptly with all
legal requirements that may be imposed on such party with respect to the Merger
and will promptly cooperate with and furnish information to any other party
hereto in connection with any such requirements imposed upon such other party in
connection with the Merger. Each party will take all reasonable actions to
obtain (and will cooperate with the other parties in obtaining) any consent,
authorization, order or approval of or any registration, declaration or filing
with, or an exemption by, any Governmental Entity, or other third party,
required to be obtained or made by such party or its subsidiaries in connection
with the Merger or the taking of any action contemplated thereby or by this
Agreement.
6.7 Best Efforts; Additional Documents and Further Assurances. Each of
the parties agrees to use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this Agreement, including
using reasonable best efforts to accomplish the following: (a) the taking of all
acts necessary to cause the conditions precedent set
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forth in Article VII to be satisfied, (b) the obtaining of all necessary actions
or nonactions, waivers, consents, approvals, orders and authorizations from
Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity, (c) the obtaining of all necessary consents, approvals or
waivers from third parties, (d) the defending of any suits, claims, actions,
investigations or proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (e) the execution or
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement.
6.8 Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (a) the
occurrence or non-occurrence of any event that is likely to cause any
representation or warranty of the Company and Parent or Merger Sub,
respectively, contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Effective Time except as contemplated by
this Agreement (including the Company Schedules) and (b) any failure of the
Company or Parent, as the case may be, to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.9 shall not limit or otherwise affect any remedies available to
the party receiving such notice or affect the representations, warranties,
covenants or agreements of the parties or conditions to the obligation of the
parties under this Agreement.
6.9 Reorganization. It is the intent of the Company, Parent, Merger Sub
and the Surviving Corporation that this Merger qualifies as a tax-free
reorganization under Section 368(a) of the Code, and the Company, Parent, Merger
Sub and the Surviving Corporation covenant and agree not to take any actions
inconsistent with such intent.
6.10 Voting Agreements. If requested by Parent, the Company will use its
reasonable best efforts to cause each Executive and Xxxxxx X. Xxxxx, Xxxxx Xxxx,
Xxxxxx X. Xxxxxxxxxxx, Xxxxxxx Xxxxxx and Xxxxxx Xxxxx to execute a Voting
Agreement, agreeing, among other things, to vote in favor of the Merger and
against any competing proposals.
6.11 Non-Competition Agreements. On or before the Closing, the Company
will use its reasonable best efforts to cause each of the Executives to execute
a Non-Competition Agreement.
6.12 Blue Sky Laws. Parent shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of the Parent Common Stock and Parent Options
pursuant hereto. The Company shall use its best efforts to assist Parent as may
be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable in connection with the issuance of Parent
Common Stock and Parent Options pursuant hereto.
6.13 Benefit Arrangements.
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(a) Parent will consult with the Executives with respect to
determining the Company employees to be retained by Parent following the
Closing; provided, however, that Parent shall make employment offers only to
those Company employees as Parent determines in its business discretion and
shall not have any obligation to make an offer to any particular employee or
employees of the Company. Such employees of the Company who have continued as
employees of Parent or the Surviving Corporation following the Closing Date are
referred to hereinafter as "CONTINUING EMPLOYEES." Terms of employment offered
to Continuing Employees will include compensation and options to purchase Parent
Common Stock commensurate with each person's education and experience levels
relative to Parent's current employees, and shall be contingent upon the
Closing. Continuing Employees shall be eligible (without temporary or permanent
exclusion for pre-existing conditions, to the extent such Continuing Employees
are covered under applicable medical plans of the Company as of the Effective
Time) to participate in all Parent employee benefit plans. Employment of any
Company employees by Parent or the Surviving Corporation following the Closing
shall be subject to Parent's established policies generally applicable to new
employees. The Company will use its best efforts to cooperate with Parent to
ensure that Company employees that Parent wishes to retain become employees of
Parent.
(b) On or prior to the Closing Date, Parent and each of the
Executives shall negotiate mutually acceptable employment arrangements for each
of the Executives contingent upon the Closing, which agreements will contain the
principal terms set forth on Schedule 6.13.
(c) Xxxxxx Xxxxxxx, Xxxxx Xxxxxx and Xxxx Xxxxxxxx will amend their
respective stock option agreements with the Company prior to the Closing to
provide that 21,875, 10,937 and 7,500 shares, respectively, subject to such
stock option agreements will not vest until one year after the Closing
6.14 No Solicitation. From and after the date of this Agreement until
the earlier to occur of the Effective Time or termination of this Agreement
pursuant to its terms, the Company and its shareholders will not, and the
Company will instruct its directors, officers, employees, representatives,
investment bankers, agents and affiliates not to, directly or indirectly (a)
solicit, initiate, entertain or encourage submission of any "ACQUISITION
PROPOSAL" (as defined herein) by any person, entity or group (other than Parent
and its affiliates, agents, and representatives) or (b) participate in any
discussions or negotiations with, or disclose any non-public information
concerning the Company to, or afford access to the properties, books or records
of the Company, or otherwise assist or facilitate, or enter into any agreement
or understanding with, any person, entity or group (other than Parent and its
affiliates, agents, and representatives) in connection with any Acquisition
Proposal with respect to the Company. For purposes of this Agreement, an
"ACQUISITION PROPOSAL" means any proposal or offer relating to (a) any merger,
consolidation, sale or license of substantial assets or similar transactions
involving the Company (other than sales or licenses of assets or inventory in
the ordinary course of business or as permitted by this Agreement), (b)
dissolution of the Company, (c) sales by the Company of any Company Capital
Stock (including, without limitation, by way of a tender offer or an exchange
offer) or (d) sales or transfers by the Executives (other than the transfer by
Xxxxx Xxxxxx of up to 40,000 shares of Company Common Stock to Xxxxx Xxxxxx of
any Company Capital Stock or rights thereto or debt instruments of the Company.
The Company and the Executives will immediately cease any and all existing
activities,
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discussion or negotiations with any parties conducted heretofore with respect to
any of the foregoing. The Company and the Executives will promptly (a) notify
Parent if, after the date of this Agreement, it receives any proposal or written
inquiry or written request for information in connection with an Acquisition
Proposal or potential Acquisition Proposal and (b) notify Parent of the
significant terms and conditions of any such Acquisition Proposal including the
identity of the party making an Acquisition Proposal. In addition, from and
after the date of this Agreement, until the earlier to occur of the Effective
Time or termination of this Agreement pursuant to its terms, the Company and the
Executives will not, and will instruct its directors, officers, employees,
representatives, investment bankers, agents and affiliates not to, directly or
indirectly, make or authorize any public statement, recommendation or
solicitation in support of any Acquisition Proposal made by any person, entity
or group (other than Parent).
6.15 Declaration of Registration Rights; Fairness Hearing. Parent agrees
that the shareholders of the Company receiving Parent Common Stock in the Merger
pursuant to Section 1.6(b) hereto shall be entitled to the registration rights
set forth in the Declaration of Registration Rights attached as Exhibit D;
provided, however, that Parent may alternatively elect to exempt the resale of
the Parent Common Stock from registration by means of a fairness hearing
pursuant to Section 3(a)(10) of the Securities Act. If the Oregon Governmental
Authority does not issue an opinion on or before January 31, 2000 finding this
Agreement and the transactions contemplated hereby to be fair, just and
equitable and without fraud to the shareholders of Legal Anywhere, Parent and
the Company shall use their reasonable best efforts to complete the issuance of
the Niku Common Stock in the Merger pursuant to an exemption from the
registration and prospectus delivery requirements under the Securities Act
(other than the exemption afforded by Section 3(a)(10) of the Securities Act).
ARTICLE VII
CONDITIONS TO THE MERGER
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) Shareholder Approval. The principal terms of this Agreement, the
Merger and the transactions contemplated hereby shall have been approved and
adopted by the shareholders of the Company by the requisite vote under
applicable law and the Company's Articles of Incorporation.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger shall be in effect.
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(c) Closing Date Payment Schedule. Parent and the Company shall each
have reviewed and approved a schedule (the "CLOSING DATE PAYMENT SCHEDULE")
reflecting, as of the Effective Time (i) for each holder of Company Common
Stock, the number of shares of Company Common Stock held, the aggregate number
of shares of Parent Common Stock payable to such holder in the Merger, the
number of such shares payable promptly after the Effective Time (in accordance
with Section 1.6) and payable into the Escrow Fund (as defined in Section
8.2(a)), and the amount of cash payable to such holder for any fractional
shares.
(d) Executives' Employment. Each Executive and Parent shall have
entered into an employment arrangement providing for Parent's continued
employment of such Executive after the Effective Time.
(e) Fairness Opinion; Declaration of Registration Rights. The Oregon
Governmental Authority shall have issued an opinion declaring the Notice
Materials and Information Statement effective and this Agreement to be fair,
just and equitable and without fraud under the Oregon Fairness Statute, or
Parent shall have executed and delivered the Declaration of Registration Rights
if the resale of the Parent Common Stock has not otherwise been exempted from
registration.
7.2 Additional Conditions to Obligations of the Company. The obligations
of the Company to consummate the Merger and the transactions contemplated by
this Agreement shall be subject to the satisfaction at or prior to the Closing
of each of the following conditions, any of which may be waived, in writing,
exclusively by the Company:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained in this Agreement shall be true
and correct on and as of the Closing Date, except for (i) changes contemplated
by this Agreement, (ii) those representations and warranties that address
matters only as of a particular date (which shall remain true and correct as of
such date) and (iii) where the failure of such representations and warranties to
be true and correct would not have a material adverse effect on Parent, with the
same force and effect as if made on and as of the Closing Date, and the Company
shall have received a certificate to such effect signed on behalf of Parent by a
duly authorized officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied (which performance or compliance shall be subject to
Parent's or Merger Sub's ability to cure as provided in Section 9.1(e) below) in
all material respects with all covenants, obligations and conditions of this
Agreement required to be performed or complied with by them on or prior to the
Closing Date, and the Company shall have received a certificate to such effect
signed by a duly authorized officer of Parent.
(c) Legal Opinion. The Company shall have received a legal opinion
from Fenwick & West LLP, counsel to Parent, in substantially the form attached
hereto as Exhibit E.
7.3 Additional Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate the Merger and the
transactions contemplated by this
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Agreement shall be subject to the satisfaction at or prior to the Closing of
each of the following conditions, any of which may be waived, in writing,
exclusively by Parent:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement (including the Company
Schedules) shall be true and correct on and as of the Effective Time, except for
(i) changes contemplated by this Agreement, (ii) those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date) and (iii) where the failure of such
representations and warranties to be true and correct would not have a Material
Adverse Effect, with the same force and effect as if made on and as of the
Closing Date; and Parent and Merger Sub shall have received a certificate to
such effect signed on behalf of the Company by the President and Chief Financial
Officer of the Company;
(b) Agreements and Covenants. The Company and each Executive shall
have performed or complied (which performance or compliance shall be subject to
the Company's ability to cure as provided in Section 9.1(d) below) in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Closing Date, and
Parent and Merger Sub shall have received a certificate to such effect signed by
the President and Chief Financial Officer of the Company;
(c) Third Party Consents. Parent shall have been furnished with
evidence satisfactory to it that the Company has obtained the consents,
approvals and waivers set forth in Schedule 2.6.
(d) Legal Opinion. Parent shall have received a legal opinion from
legal counsel to the Company, in substantially the form attached hereto as
Exhibit F.
(e) Appraisal Rights. Holders of not more than 3% of the outstanding
shares of Company Capital Stock shall have exercised, nor shall they have any
rights or continued right to exercise, appraisal rights under Oregon Law with
respect to the transactions contemplated by this Agreement.
(f) Escrow Schedule. The Company shall have executed and delivered
to Parent the Escrow Schedule (as defined in Section 8.2 hereof).
(g) Non-Competition Agreements. The Non-Competition Agreements as
required by Section 6.11 hereof shall have been duly executed and delivered to
Parent.
(h) Release Agreements. Each employee of the Company not offered
employment by Parent following the Closing shall have executed a release
agreement on terms and conditions acceptable to Parent.
(i) Investor Representations. Each of the Company's shareholders
shall have executed and delivered an Investment Representation Letter (including
a lock-up agreement) in the form provided by Parent and have fully complied with
Section 4.1 above (as applicable). The
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availability of exemptions from registration shall have been ensured to the
satisfaction of Parent and its counsel.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW
8.1 Survival of Representations and Warranties. All of the Company's
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement (each as modified by the Company Schedules) shall
survive the Merger and continue until 5:00 p.m., California time, on the date
which is the one year anniversary of the Closing Date (the "EXPIRATION DATE").
8.2 Escrow Arrangements.
(a) Escrow Fund. At the Effective Time the Company's shareholders
will be deemed to have received and deposited with the Escrow Agent (as defined
below) the Escrow Amount (plus any additional shares as may be issued upon any
stock split, stock dividend or recapitalization effected by Parent after the
Effective Time) without any act of any shareholder. As soon as practicable after
the Effective Time, the Escrow Amount, without any act of any Company
shareholder, will be deposited with Chase Manhattan Bank and Trust Company, N.A.
(or other institution acceptable to Parent and the Securityholder Agent (as
defined in Section 8.2(h) below)) as Escrow Agent (the "ESCROW AGENT"), such
deposit to constitute an escrow fund (the "ESCROW FUND") to be governed by the
terms set forth herein. The portion of the Escrow Amount contributed on behalf
of each shareholder of the Company shall be in proportion to the aggregate
Parent Common Stock to which such holder would otherwise be entitled under
Section 1.6(b) and shall be in the respective share amounts and percentages
listed opposite each Company's shareholder's names listed in a schedule to be
executed by the Company and delivered to Parent at Closing (the "ESCROW
SCHEDULE"). The Escrow Fund shall be available to compensate Parent and its
affiliates (including the Surviving Corporation) for any claims, losses,
liabilities, damages, deficiencies, costs and expenses, including reasonable
attorneys' fees and expenses, and expenses of investigation and defense
(hereinafter individually a "LOSS" and collectively "LOSSES") incurred by
Parent, its officers, directors, or affiliates (including the Surviving
Corporation) directly or indirectly as a result of (i) any inaccuracy or breach
of a representation or warranty of the Company contained herein (or in any
certificate, instrument, schedule or document attached to this Agreement and
delivered by the Company in connection with the Merger), (ii) any failure by the
Company to perform or comply with any covenant or obligation contained herein or
(iii) any claims brought by employees or consultants of the Company who were or
are terminated prior to the Closing; provided that such claims must be asserted
on or before 5:00 p.m. (California Time) on the Expiration Date. Except as
otherwise provided herein, Parent may not receive any shares from the Escrow
Fund unless and until Officer's Certificates (as defined in Section 8.2(d)
below) identifying Losses, the aggregate amount of which exceed $50,000 (except
in the case of Losses arising from any breach or inaccuracy of Section 2.3, as
to which such threshold shall not apply), have been delivered to the Escrow
Agent as
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provided in paragraph (f) and such amount is determined pursuant to this Article
VIII to be payable; in such case, Parent may recover shares from the Escrow Fund
equal in value to all indemnified Losses (including any Losses within the
$50,000 threshold) for which there is no objection or any objection had been
resolved in accordance with the provisions of this Article VIII; provided,
however, that to the extent third-party expenses, including, without limitation,
legal and accounting fees incurred by the Company in connection with this
Agreement and the Merger exceed $125,000 in the aggregate, such excess shall be
deemed a Loss for purposes of Article VIII and shall be immediately reimbursable
to Parent in accordance with this Article VIII (without regard to the $50,000
minimum threshold for Losses and without counting toward the $50,000 threshold).
For purposes of this Article VIII, the phrases "Company shareholders" and
"shareholders of the Company" shall refer to the shareholders of the Company
immediately prior to the Effective Time.
(b) Escrow Period; Distribution upon Termination of Escrow Periods.
Subject to the following requirements, the Escrow Fund shall be in existence
immediately following the Effective Time and shall terminate at 5:00 p.m.,
California time, on the Expiration Date (the "ESCROW PERIOD"); provided,
however, that the Escrow Period shall not terminate with respect to such amount
(or some portion thereof), that together with the aggregate amount remaining in
the Escrow Fund is necessary in the reasonable judgment of Parent, subject to
the objection of the Securityholder Agent and the subsequent arbitration of the
matter in the manner provided in Section 8.2(g) hereof, to satisfy any
unsatisfied claims concerning facts and circumstances existing prior to the
termination of such Escrow Period specified in any Officer's Certificate
delivered to the Escrow Agent prior to termination of such Escrow Period. As
soon as all such claims have been resolved, as evidenced by written memorandum
of the Securityholder Agent and Parent, the Escrow Agent shall deliver to the
shareholders of the Company the remaining portion of the Escrow Fund not
required to satisfy such claims; provided, however, the Escrow Agent shall
release to the shareholders of the Company on the Expiration Date such portion
of the Escrow Fund that is in excess of the amount in dispute of any unsatisfied
claims. Deliveries of Escrow Amounts to the shareholders of the Company pursuant
to this Section 8.2(b) shall be made in proportion to their respective original
contributions to the Escrow Fund (as set forth on the Escrow Schedule). At all
times during the Escrow Period, the Company shareholders shall be deemed to be
the record holders of their respective amounts of the Parent Common Stock and
Parent Preferred Stock comprising the Escrow Amount. Securityholder Agent (as
defined below) shall provide to the Escrow Agent a current schedule of Company
shareholders' names and addresses and pro rata share of the Escrow Amount prior
to the date of distribution of the Escrow Amount.
(c) Protection of Escrow Fund.
(i) The Escrow Agent shall hold and safeguard the Escrow Fund
during the Escrow Period, shall treat such fund as a trust fund in accordance
with the terms of this Agreement and not as the property of Parent and shall
hold and dispose of the Escrow Fund only in accordance with the terms hereof.
(ii) Any shares of Parent Common Stock or other equity
securities issued or distributed by Parent (including shares issued upon a stock
split or stock dividend) ("NEW SHARES") in respect of Parent Common Stock in the
Escrow Fund which have not been released from
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the Escrow Fund shall be added to the Escrow Fund and become a part thereof. New
Shares issued in respect of shares of Parent Common Stock which have been
released from the Escrow Fund shall not be added to the Escrow Fund but shall be
distributed to the recordholders thereof. Cash dividends on Parent Common Stock
shall not be added to the Escrow Fund but shall be distributed to the
recordholders thereof.
(iii) Each Company shareholder shall be deemed the record holder
of, and shall have voting, dividend, distribution and all other rights with
respect to the shares of Parent Common Stock contributed to the Escrow Fund by
such shareholder (and on any voting securities and other equity securities added
to the Escrow Fund in respect of such shares of Parent Common Stock).
(d) Claims Upon Escrow Fund.
(i) Upon receipt by the Escrow Agent at any time on or before
the Expiration Date of a certificate signed by any officer of Parent (an
"OFFICER'S Certificate"): (A) stating that Parent has paid or properly accrued
(in accordance with GAAP) Losses, and (B) specifying in reasonable detail the
individual items of Losses included in the amount so stated, the date each such
item was paid or properly accrued, and the nature of the misrepresentation,
breach of warranty, covenant, obligation or claim to which such item is related,
the Escrow Agent shall, subject to the provisions of Section 8.2(f) hereof,
deliver to Parent out of the Escrow Fund, as promptly as practicable, shares of
Parent Common Stock held in the Escrow Fund in an amount equal to such Losses.
(ii) For the purposes of determining the number of shares of
Parent Common Stock to be delivered to Parent out of the Escrow Fund pursuant to
Section 8.2(d)(i) hereof, the shares of Parent Common Stock shall be valued at
$11.00 per share. Notwithstanding the foregoing, the Securityholder Agent shall
have the right to pay any indemnifiable Losses owed to Parent hereunder in cash,
in lieu of having the Escrow Agent release the number of Shares of Parent Common
Stock in satisfaction of such claim, and upon the Escrow Agent receiving cash in
an amount of the indemnifiable Losses, the Escrow Agent shall release to the
shareholders that number of shares as it would have released to Parent hereunder
in satisfaction of such claim.
(e) Transfers.
(i) In the event funds transfer instructions are given (other
than in writing at the time of execution of this Agreement), whether in writing,
by telecopier or otherwise, the Escrow Agent is authorized to seek confirmation
of such instructions by telephone call-back to the person or persons designated
on Exhibit G hereto, and the Escrow Agent may rely upon the confirmations of
anyone purporting to be the person or persons so designated. The persons and
telephone numbers for call-backs may be changed only in a writing actually
received and acknowledged by the Escrow Agent. The parties to this Agreement
acknowledge that such security procedure is commercially reasonable.
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(ii) It is understood that the Escrow Agent and the
beneficiary's bank in any funds transfer may rely solely upon any account
numbers or similar identifying number provided by either of the other parties
hereto to identify (i) the beneficiary, (ii) the beneficiary's bank, or (iii) an
order it executes using any such identifying number, even where its use may
result in a person other than the beneficiary being paid, or the transfer of
funds to a bank other than the beneficiary's bank, or an intermediary bank
designated.
(iii) Tax Identification Number. Each party hereto and Company
shareholder, except the Escrow Agent, shall provide the Escrow Agent with their
Tax Identification Number (TIN) as assigned by the Internal Revenue Service. All
interest or other income earned under the Escrow Agreement shall be allocated
and paid as provided herein and reported by the recipient to the Internal
Revenue Service as having been so allocated and paid.
(f) Objections to Claims. At the time of delivery of any Officer's
Certificate to the Escrow Agent, Parent shall deliver a duplicate copy of such
certificate to the Securityholder Agent and for a period of thirty (30) days
after such delivery, the Escrow Agent shall not deliver to Parent any Escrow
Amounts pursuant to Section 8.2(d) hereof unless the Escrow Agent shall have
received written authorization from the Securityholder Agent to make such
delivery. After the expiration of such thirty (30) day period, the Escrow Agent
shall make delivery of shares of Parent Common Stock from the Escrow Fund in
accordance with Section 8.2(d) hereof, provided that no such payment or delivery
may be made if the Securityholder Agent shall object in a written statement to
the claim made in the Officer's Certificate, and such statement shall have been
delivered to the Escrow Agent prior to the expiration of such thirty (30) day
period.
(g) Resolution of Conflicts; Arbitration.
(i) In case the Securityholder Agent shall so object in writing
to any claim or claims made in any Officer's Certificate, the Securityholder
Agent and Parent shall attempt in good faith to agree upon the rights of the
respective parties with respect to each of such claims. If the Securityholder
Agent and Parent should so agree, a memorandum setting forth such agreement
shall be prepared and signed by both parties and shall be furnished to the
Escrow Agent. The Escrow Agent shall be entitled to rely on any such memorandum
and distribute shares of Parent Common Stock from the Escrow Fund in accordance
with the terms thereof.
(ii) If no such agreement can be reached after good faith
negotiation, and in any event not later than sixty (60) days after receipt of
the written objection of the Securityholder Agent, either Parent or the
Securityholder Agent may demand arbitration of the matter unless the amount of
the damage or loss is at issue in pending litigation with a third party, in
which event arbitration shall not be commenced until such amount is ascertained
or both parties agree to arbitration; and in either such event the matter shall
be settled by arbitration conducted by three arbitrators. Parent and the
Securityholder Agent shall each select one arbitrator, and the two arbitrators
so selected shall select a third arbitrator, each of which arbitrators shall be
independent and have at least ten years relevant experience. The arbitrators
shall set a limited time period and establish procedures designed to reduce the
cost and time for discovery while allowing the parties an opportunity, adequate
in the sole judgment of the arbitrators, to discover relevant information from
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the opposing parties about the subject matter of the dispute. The arbitrators
shall rule upon motions to compel or limit discovery and shall have the
authority to impose sanctions, including attorneys fees and costs, to the extent
as a court of competent law or equity, should the arbitrators determine that
discovery was sought without substantial justification or that discovery was
refused or objected to without substantial justification. The decision of a
majority of the three arbitrators as to the validity and amount of any claim in
such Officer's Certificate shall be binding and conclusive upon the parties to
this Agreement, and notwithstanding anything in Section 8.2(f) hereof, the
Escrow Agent shall be entitled to act in accordance with such decision and make
or withhold payments out of the Escrow Fund in accordance therewith. Such
decision shall be written and shall be supported by written findings of fact and
conclusions which shall set forth the award, judgment, decree or order awarded
by the arbitrators.
(iii) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
San Francisco, California under the rules then in effect of the Judicial
Arbitration and Mediation Services, Inc. For purposes of this Section 8.2(g), in
any arbitration hereunder in which any claim or the amount thereof stated in the
Officer's Certificate is at issue, Parent shall be deemed to be the
Non-Prevailing Party in the event that the arbitrators award Parent the sum of
one-half (1/2) or less of the disputed amount plus any amounts not in dispute;
otherwise, the shareholders of the Company as represented by the Securityholder
Agent shall be deemed to be the Non-Prevailing Party. The Non-Prevailing Party
to an arbitration shall pay its own expenses, the fees of each arbitrator, the
administrative costs of the arbitration, and the expenses, including without
limitation, reasonable attorneys' fees and costs, incurred by the other party to
the arbitration, independent of the escrow fund.
(h) Securityholder Agent of the Shareholders; Power of Attorney.
(i) In the event that the Merger is approved, effective upon
such vote, and without further act of any shareholder, Xxxxx Xxxxxxxx shall be
appointed as agent and attorney-in-fact (the "SECURITYHOLDER AGENT") for each
shareholder of the Company (except such shareholders, if any, as shall have
perfected their appraisal rights under Oregon Law, for and on behalf of
shareholders of the Company, to give and receive notices and communications, to
authorize delivery to Parent of shares of Parent Common Stock from the Escrow
Fund in satisfaction of claims by Parent, to object to such deliveries, to agree
to, negotiate, enter into settlements and compromises of, and demand arbitration
and comply with orders of courts and awards of arbitrators with respect to such
claims, and to take all actions necessary or appropriate in the judgment of
Securityholder Agent for the accomplishment of the foregoing. Such agency may be
changed by the shareholders of the Company from time to time upon not less than
thirty (30) days prior written notice to Parent; provided that the
Securityholder Agent may not be removed unless holders of a two-thirds interest
of the Escrow Fund agree to such removal and to the identity of the substituted
agent. Any vacancy in the position of Securityholder Agent may be filled by
approval of the holders of a majority in interest of the Escrow Fund. No bond
shall be required of the Securityholder Agent, and the Securityholder Agent
shall not receive compensation for his or her services. Notices or
communications to or from the Securityholder Agent shall constitute notice to or
from each of the shareholders of the Company.
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(ii) The Securityholder Agent shall not be liable for any act
done or omitted hereunder as Securityholder Agent while acting in good faith and
in the exercise of reasonable judgment. The shareholders of the Company on whose
behalf the Escrow Amount was contributed to the Escrow Fund shall jointly and
severally indemnify the Securityholder Agent and hold the Securityholder Agent
harmless against any loss, liability or expense incurred without negligence or
bad faith on the part of the Securityholder Agent and arising out of or in
connection with the acceptance or administration of the Securityholder Agent's
duties hereunder, including the reasonable fees and expenses of any legal
counsel retained by the Securityholder Agent.
(i) Actions of the Securityholder Agent. A decision, act, consent or
instruction of the Securityholder Agent shall constitute a decision of all the
shareholders for whom a portion of the Escrow Amount otherwise issuable to them
are deposited in the Escrow Fund and shall be final, binding and conclusive upon
each of such shareholders, and the Escrow Agent and Parent may rely upon any
such written decision, consent or instruction of the Securityholder Agent as
being the decision, consent or instruction of each every such shareholder of the
Company. The Escrow Agent and Parent are hereby relieved from any liability to
any person for any acts done by them in accordance with such decision, consent
or instruction of the Securityholder Agent.
(j) Third-Party Claims.
(i) If any third party shall notify Parent or its affiliates
hereto with respect to any matter (hereinafter referred to as a "THIRD PARTY
CLAIM"), which may give rise to a claim by Parent against the Escrow Fund, then
Parent shall give notice to the Securityholder Agent within 30 days of Parent
becoming aware of any such Third Party Claim or of facts upon which any such
Third Party Claim will be based setting forth such material information with
respect to the Third party Claim as is reasonably available to Parent; provided,
however, that no delay or failure on the part of Parent in notifying the
Securityholder Agent shall relieve the Securityholder Agent and the Company
shareholders from any obligation hereunder unless the Securityholder Agent and
the Company shareholders are thereby materially prejudiced (and then solely to
the extent of such prejudice). The Securityholder Agent and the Company
shareholders shall not be liable for any attorneys fees and expenses incurred by
Parent prior to Parent's giving notice to the Securityholder Agent of a Third
Party Claim. The notice from Parent to the Securityholder Agent shall set forth
such material information with respect to the Third Party Claim as is then
reasonably available to Parent.
(ii) In case any Third Party Claim is asserted against Parent or
its affiliates, and Parent notifies the Securityholder Agent thereof pursuant to
Section 8.2(j)(i) hereinabove, the Securityholder Agent and the Company
shareholders will be entitled, if the Securityholder Agent so elects by written
notice delivered to Parent within 30 days after receiving Parent's notice, to
assume the defense thereof, at the expense of the Company shareholders
independent of the Escrow Fund, with counsel reasonably satisfactory to Parent
so long as:
(A) Parent has reasonably determined that Losses which may
be incurred as a result of the Third Party Claim do not exceed either
individually, or when aggregated with all other Third Party Claims, the total
dollar value of the Escrow Fund determined in accordance with Section 8.2(d)(ii)
hereof;
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(B) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief;
(C) settlement of, or an adverse judgment with respect to,
the Third Party Claim is not, in the good faith judgment of Parent, likely to
establish a precedential custom or practice materially adverse to the continuing
business interests of Parent; and
(D) counsel selected by the Securityholder Agent is
reasonably acceptable to Parent.
If the Securityholder Agent and the Company shareholders so assume any
such defense, the Securityholder Agent and the Company shareholders shall
conduct the defense of the Third Party Claim actively and diligently. The
Securityholder Agent and the Company shareholders shall not compromise or settle
such Third Party Claim or consent to entry of any judgment in respect thereof
without the prior written consent of Parent and/or its affiliates, as
applicable, which shall not be unreasonably withheld.
(iii) In the event that the Securityholder Agent assumes the
defense of the Third Party Claim in accordance with Section 8.2(j)(ii) above,
Parent or its affiliates may retain separate counsel and participate in the
defense of the Third Party Claim, but the fees and expenses of such counsel
shall be at the expense of Parent. Parent or its affiliates will not consent to
the entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Securityholder Agent.
Parent will cooperate in the defense of the Third Party Claim and will provide
full access to documents, assets, properties, books and records reasonably
requested by Securityholder Agent and material to the claim and will make
available all officers, directors and employees reasonably requested by
Securityholder Agent for investigation, depositions and trial.
(iv) In the event that the Securityholder Agent fails or elects
not to assume the defense of Parent or its affiliates against such Third Party
Claim, which Securityholder Agent had the right to assume under Section
8.2(j)(ii) above, Parent or its affiliates shall have the right to undertake the
defense and Parent shall not compromise or settle such Third Party Claim or
consent to entry of any judgment in respect thereof without the prior written
consent of Securityholder Agent. In the event that the Securityholder Agent is
not entitled to assume the defense of Parent or its affiliates against such
Third Party Claim pursuant to Section 8.2(j)(ii) above, Parent or its affiliates
shall have the right to undertake the defense, consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim in
any manner it may deem appropriate (and Parent or its affiliates need not
consult with, or obtain any consent from, the Securityholder Agent in connection
therewith); provided, however, that except with the written consent of the
Securityholder Agent, no settlement of any such claim or consent to the entry of
any judgment with respect to such Third Party Claim shall alone be determinative
of the validity of the claim against the Escrow Fund. In each case, Parent or
its affiliates shall conduct the defense of the Third Party Claim actively and
diligently, and the Securityholder Agent and the Company shareholders will
cooperate with Parent or its affiliates in the defense of that claim and will
provide full access to documents, assets, properties,
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books and records reasonably requested by Parent and material to the claim and
will make available all individuals reasonably requested by Parent for
investigation, depositions and trial.
(k) Escrow Agent's Duties.
(i) The Escrow Agent shall be obligated only for the performance
of such duties as are specifically set forth herein, and as set forth in any
additional written escrow instructions which the Escrow Agent may receive after
the date of this Agreement which are signed by an officer of Parent and the
Securityholder Agent and agreed to and signed by the Escrow Agent, and may rely
and shall be protected in relying or refraining from acting on any instrument
reasonably believed to be genuine and to have been signed or presented by the
proper party or parties. The Escrow Agent shall not be liable for any act done
or omitted hereunder as Escrow Agent while acting in good faith and in the
exercise of reasonable judgment, and any act done or omitted pursuant to the
advice of counsel shall be conclusive evidence of such good faith.
(ii) The Escrow Agent is hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or by any
other person, excepting only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree of any court, the Escrow Agent shall not be liable to any of the
parties hereto or to any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.
(iii) The Escrow Agent shall not be liable in any respect on
account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver this Agreement or any documents
or papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for the expiration of
any rights under any statute of limitations with respect to this Agreement or
any documents deposited with the Escrow Agent.
(v) In performing any duties under the Agreement, the Escrow
Agent shall not be liable to any party for damages, losses, or expenses, except
for gross negligence or willful misconduct on the part of the Escrow Agent. The
Escrow Agent shall not incur any such liability for (A) any act or failure to
act made or omitted in good faith, or (B) any action taken or omitted in
reliance upon any written instrument, including any written statement or
affidavit provided for in this Agreement that the Escrow Agent shall in good
faith believe to be genuine, nor will the Escrow Agent be liable or responsible
for forgeries, fraud, impersonations, or determining the scope of any
representative authority. In addition, the Escrow Agent may consult with the
legal counsel in connection with Escrow Agent's duties under this Agreement and
shall be fully protected in any act taken, suffered, or permitted by him/her in
good faith in accordance with the advice of counsel. The Escrow Agent is not
responsible for determining and verifying the authority of any person acting or
purporting to act on behalf of any party to this Agreement.
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(vi) If any controversy arises between the parties to this
Agreement, or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, the Escrow Agent will not be required to
determine the controversy or to take any action regarding it. The Escrow Agent
may hold all documents and shares of Parent Common Stock and may wait for
settlement of any such controversy by final appropriate legal proceedings or
other means as, in the Escrow Agent's discretion, the Escrow Agent may be
required, despite what may be set forth elsewhere in this Agreement. In such
event, the Escrow Agent will not be liable for damage. Furthermore, the Escrow
Agent may at its option, file an action of interpleader requiring the parties to
answer and litigate any claims and rights among themselves. The Escrow Agent is
authorized to deposit with the clerk of the court all documents and shares of
Parent Common Stock held in escrow, except all cost, expenses, charges and
reasonable attorney fees incurred by the Escrow Agent due to the interpleader
action and which the parties jointly and severally agree to pay. Upon initiating
such action, the Escrow Agent shall be fully released and discharged of and from
all obligations and liability imposed by the terms of this Agreement.
(vii) Parent and the Surviving Corporation agree jointly and
severally to indemnify and hold Escrow Agent harmless against any and all
losses, claims, damages, liabilities, and expenses, including reasonable costs
of investigation, counsel fees, and disbursements that may be imposed on Escrow
Agent or incurred by Escrow Agent in connection with the performance of his/her
duties under this Agreement, including but not limited to any litigation arising
from this Agreement or involving its subject matter; provided, however, that in
the event the Securityholder Agent shall be the Non-Prevailing Party in
connection with any claim or action initiated by a Company shareholder or
Company shareholders, then such Company shareholder or Company shareholders
shall be responsible for the indemnification of the Escrow Agent to the full
extent provided by this paragraph.
(viii) The Escrow Agent may resign at any time upon giving at
least thirty (30) days written notice to the parties; provided, however, that no
such resignation shall become effective until the appointment of a successor
escrow agent which shall be accomplished as follows: the parties shall use their
best efforts to mutually agree on a successor escrow agent within thirty (30)
days after receiving such notice. If the parties fail to agree upon a successor
escrow agent within such time, the Escrow Agent shall have the right to appoint
a successor escrow agent authorized to do business in the state of California.
The successor escrow agent shall execute and deliver an instrument accepting
such appointment and it shall, without further acts, be vested with all the
estates, properties, rights, powers, and duties of the predecessor escrow agent
as if originally named as escrow agent. The Escrow Agent shall be discharged
from any further duties and liability under this Agreement.
(ix) Anything in this Agreement to the contrary notwithstanding,
in no event shall the Escrow Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Escrow Agent has been advised of the likelihood of
such loss or damage and regardless of the form of action.
(x) It is further understood that any corporation into which the
Escrow Agent is its individual capacity may be merged or converted or with which
it may be consolidated, or
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any corporation resulting from any merger, conversion or consolidation to which
the Escrow Agent in its individual capacity shall be a party, or any corporation
to which substantially all the corporate trust business of the Escrow Agent in
its individual capacity my be transferred, shall be the Escrow Agent under this
Escrow Agreement without further act.
(l) Fees. All fees of the Escrow Agent for performance of its duties
hereunder shall be paid by Parent. It is understood that the fees and usual
charges agreed upon for services of the Escrow Agent shall be considered
compensation for ordinary services as contemplated by this Agreement. In the
event that the conditions of this Agreement are not promptly fulfilled, or if
the Escrow Agent renders any service not provided for in this Agreement, or if
the parties request a substantial modification of its terms, or if any
controversy arises, or if the Escrow Agent is made a party to, or intervenes in,
any litigation pertaining to this escrow or its subject matter, the Escrow Agent
shall be reasonably compensated for such extraordinary services and reimbursed
for all costs, attorneys' fees, and expenses occasioned by such default, delay,
controversy or litigation. Parent promises to pay these sums upon demand.
(m) Maximum Liability and Remedies. Except for fraud and willful
misconduct and Losses arising from any breach or inaccuracy of Section 2.3, the
rights of Parent to make claims upon the Escrow Fund in accordance with this
Article VIII shall be the sole and exclusive remedy of Parent and the Surviving
Corporation after the Closing with respect to any representation, warranty,
covenant, or obligation or agreement made by the Company under this Agreement
and no former shareholder, option holder, warrant holder, director, officer,
employee or agent of the Company shall have any personal liability to Parent or
the Surviving Corporation after the Closing in connection with the Merger
(except in the case of any fraud committed by the Executives).
8.3 Indemnification by Parent. Parent shall indemnify and hold the
Company shareholders, free and harmless from and against any and all Losses
incurred by the Company shareholders as a result of (i) any inaccuracy or breach
of a representation or warranty of Parent contained herein (or in any
certificate, instrument, schedule or document attached to this Agreement and
delivered by Parent in connection with the Merger) or (ii) any failure by Parent
to perform or comply with any covenant or obligation contained herein; provided
that such claim must be asserted on or before 5:00 p.m. (California time) on the
Expiration Date. Notwithstanding the foregoing, (i) Parent shall have no
obligation to indemnify a Company shareholder (if at all) until such shareholder
has incurred aggregate Losses in excess of that portion of $50,000 that the
aggregate number of shares received by such shareholder under Section 1.6 bears
to 995,000 (in which case such shareholder may seek indemnity for all Losses
subject to (ii) below) and (ii) the maximum aggregate liability of Parent under
this Section 8.3 for Losses incurred by Company shareholders is $1,000,000. Any
and all claims by Company shareholders against Parent shall be resolved in a
manner consistent with Section 8.2(g). Any amounts paid by Parent under this
Section 8.3 may, in the discretion of Parent, be paid wholly or partially in
publicly traded and listed common stock of Parent, based on the market price of
such stock at the time of payment.
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. Except as provided in Section 9.2 below, this Agreement
may be terminated and the Merger abandoned at any time prior to the Closing
Date:
(a) by mutual written consent duly authorized by the Board of
Directors of the Company and Parent;
(b) by either Parent or the Company if: (i) the Closing Date has not
occurred by February 15, 2000 (provided that the right to terminate this
Agreement under this clause 9.1(b)(i) shall not be available to any party whose
willful failure to fulfill any obligation hereunder has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such date
and such action or failure constitutes a breach of this Agreement); (ii) there
shall be a final nonappealable order of a federal or state court in effect
preventing consummation of the Merger; or (iii) there shall be any statute,
rule, regulation or order enacted, promulgated or issued or deemed applicable to
the Merger by any Governmental Entity that would make consummation of the Merger
illegal;
(c) by Parent if there shall be any action taken, or any statute,
rule, regulation or order enacted, promulgated or issued or deemed applicable to
the Merger, by any Governmental Entity, which would: (i) prohibit Parent's or
the Company's ownership or operation of any portion of the business of the
Company or (ii) compel Parent or the Company to dispose of or hold separate, as
a result of the Merger, any portion of the business or assets of the Company or
Parent;
(d) by Parent if it is not in material breach of its obligations
under this Agreement and there has been a breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of the
Company and as a result of such breach the conditions set forth in Section
7.3(a) or 7.3(b), as the case may be, would not then be satisfied; provided,
however, that if such breach is curable by the Company prior to February 15,
2000 through the exercise of its reasonable best efforts, then for so long as
the Company continues to exercise such reasonable best efforts Parent may not
terminate this Agreement under this Section 9.1(d) unless such breach is not
cured prior to February 15, 2000 (but no cure period shall be required for a
breach which by its nature cannot be cured);
(e) by the Company if it is not in material breach of its
obligations under this Agreement and there has been a breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of Parent or Merger Sub and as a result of such breach the conditions
set forth in Section 7.2(a) or 7.2(b), as the case may be, would not then be
satisfied; provided, however, that if such breach is curable by Parent or Merger
Sub prior to February 15, 2000 through the exercise of its reasonable best
efforts, then for so long as Parent or Merger Sub continues to exercise such
reasonable best efforts the Company may not terminate this Agreement under this
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Section 9.1(e) unless such breach is not cured prior to February 15, 2000 (but
no cure period shall be required for a breach which by its nature cannot be
cured).
Where action is taken to terminate this Agreement pursuant to Section
9.1, it shall be sufficient for such action to be authorized by the Board of
Directors (as applicable) of the party taking such action.
9.2 Effect of Termination. Except as set forth in Section 10.2, any
termination of this Agreement under Section 9.1 above will be effective
immediately upon the delivery of written notice of the terminating party to the
other parties hereto. In the event of the termination of this Agreement as
provided in Section 9.1, this Agreement shall be of no further force or effect,
except (a) as set forth in this Section 9.2 and Article X (general provisions,
including expenses), each of which shall survive the termination of this
Agreement, and (b) nothing herein shall relieve any party from liability for any
breach of this Agreement. Notwithstanding the foregoing, upon termination of
this Agreement, neither Parent nor the Company shall be liable for the breach or
inaccuracy of any representation or warranty resulting from the occurrence of
any event after the date hereof. No termination of this Agreement shall affect
the obligations of the parties contained in the Confidentiality Agreement, all
of which obligations shall survive termination of this Agreement.
9.3 Amendment. Except as is otherwise required by applicable law, prior
to the Closing, this Agreement may be amended by the parties hereto at any time
by execution of an instrument in writing signed by Parent and the Company.
Except as is otherwise required by applicable law, after the Closing, this
Agreement may be amended by the parties hereto at any time by execution of an
instrument in writing signed by Parent and by Company shareholders who receive
more than 50% of the Parent Common Stock issued or to be issued pursuant to
Section 1.6, or by all of the Company shareholders in the case of an amendment
to Articles VIII.
9.4 Extension; Waiver. At any time prior to the Effective Time, Parent
and Merger Sub, on the one hand, and the Company, on the other, may, to the
extent legally allowed, (a) extend the time for the performance of any of the
obligations of the other party hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of
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complete transmission) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Niku Corporation
000 Xxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
President, Vertical Markets
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. XxXxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to the Company, to:
Legal Anywhere, Inc.
0000 XX Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Stoel Rives LLP
000 XX Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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(c) if to the Securityholder Agent:
Xxxxx Xxxxxxxx
Conifer Investments, LLC
0000 XX Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(d) if to the Escrow Agent:
Chase Manhattan Bank and Trust Company, N.A.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
10.2 Expenses.
(a) In the event the Merger is not consummated, all fees and
expenses incurred in connection with the Merger including, without limitation,
all legal, accounting, financial advisory, consulting and all other fees and
expenses of third parties ("THIRD PARTY EXPENSES") incurred by a party in
connection with the negotiation and effectuation of the terms and conditions of
this Agreement and the transactions contemplated hereby, shall be the obligation
of the respective party incurring such fees and expenses.
(b) Subject to the provisions of Section 8.2, in the event the
Merger is consummated, the Surviving Corporation shall be responsible for the
payment of all Third Party Expenses, including Third Party Expenses incurred by
the Company.
10.3 Interpretation. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The word "AGREEMENT" when used herein shall be deemed in
each case to mean any contract, commitment or other agreement, whether oral or
written, that is legally binding. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
10.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
10.5 Entire Agreement; Assignment. Except for the Confidentiality
Agreement, this Agreement, the schedules and Exhibits hereto, and the documents
and instruments and other agreements among the parties hereto referenced herein:
(a) constitute the entire agreement among
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the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof; (b) are not intended to confer upon any
other person any rights or remedies hereunder; and (c) shall not be assigned by
operation of law or otherwise except as otherwise specifically provided, except
that Parent and Merger Sub may assign their respective rights and delegate their
respective obligations hereunder to their respective affiliates.
10.6 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
10.7 Other Remedies. Except as otherwise provided herein (including as
set forth in Section 8.2(l)), any and all remedies herein expressly conferred
upon a party will be deemed exclusive, and no party hereto shall have any other
remedy conferred by law or equity upon such party, where a remedy or remedies
have been expressly conferred upon such party herein. No party shall be able to
avoid the limitations expressly set forth in Article VIII.
10.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Each of the parties hereto agrees that process may be served upon them in any
manner authorized by the laws of the State of California or Oregon, as
applicable, for such persons and waives and covenants not to assert or plead any
objection which they might otherwise have to such jurisdiction and such process.
10.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
10.10 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, Parent, Merger Sub, the Company, the Executives, the
Securityholder Agent (as to Article VIII only) and the Escrow Agent (as to
matters set forth in Article VIII only) have caused this Agreement to be signed
by their duly authorized respective officers, all as of the date first written
above.
LEGAL ANYWHERE, INC. NIKU CORPORATION
an Oregon corporation a Delaware corporation
By: By:
-------------------------------- ----------------------------------
Xxxxxx Xxxxxxx Xxxxxx Xxxxxx
Chief Executive Officer President, Vertical Markets
EXECUTIVES: LA ACQUISITION CORPORATION
an Oregon corporation
By:
---------------------------------------- ----------------------------------
Xxxxxx Xxxxxxx Xxxxxx Xxxxxx
President
----------------------------------------
Xxxxx Xxxxxx
----------------------------------------
Xxxx Xxxxxxxx
SECURITYHOLDER AGENT:
----------------------------------------
Name: Xxxxx Xxxxxxxx
ESCROW AGENT
CHASE MANHATTAN BANK AND TRUST COMPANY, N.A.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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EXHIBIT A
VOTING AGREEMENT
This VOTING AGREEMENT (this "AGREEMENT") is entered into as of January
___, 2000 (the "AGREEMENT DATE") by and between Niku Corporation, a Delaware
corporation ("PARENT") and [Legal Anywhere Stockholder] ("STOCKHOLDER").
RECITALS
A. Parent, LA Acquisition Corporation, an Oregon corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"), Legal Anywhere, Inc., an
Oregon corporation (the "COMPANY") and certain executives of the Company are
entering into an Agreement and Plan of Reorganization dated as of January __,
2000, as such may be hereafter amended from time to time (the "PLAN") that
provides (subject to the conditions set forth therein) for the merger of Merger
Sub with and into the Company (the "MERGER") with the Company to survive the
Merger. Upon the effectiveness of the Merger, the outstanding shares of the
Company's Common Stock will be converted into shares of Parent Common Stock, all
as more particularly set forth in the Plan. Capitalized terms used but not
otherwise defined in this Agreement will have the same meanings ascribed to such
terms in the Plan.
B. As of the Agreement Date, Stockholder owns in the aggregate (including
shares held both beneficially and of record and other shares held either
beneficially or of record) the number of shares of Company Common Stock set
forth below Stockholder's name on the signature page of this Agreement (all such
shares, together with any shares of Company Capital Stock or any other shares of
capital stock of the Company that may hereafter be acquired by Stockholder,
being collectively referred to herein as the "SUBJECT SHARES"). If, between the
Agreement Date and the Expiration Date (as defined herein), the outstanding
shares of Company Common Stock are changed into a different number or class of
shares by reason of any stock split, stock dividend, reverse stock split,
reclassification, recapitalization or other similar transaction, then the shares
constituting the Subject Shares shall be appropriately adjusted, and shall
include any shares or other securities of the Company issued on, or with respect
to, the Subject Shares in such a transaction.
C. As a condition to the willingness of Parent and Merger Sub to enter
into the Plan, Parent and Merger Sub have required that Stockholder agree, and
in order to induce Parent and Merger Sub to enter into the Plan, Stockholder has
agreed to enter into this Agreement.
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The parties to this Agreement, intending to be legally bound by this
Agreement, hereby agree as follows:
SECTION 1. TRANSFER OF SUBJECT SHARES
1.1 NO DISPOSITION OR ENCUMBRANCE OF SUBJECT SHARES.
(a) Stockholder hereby covenants and agrees with Parent and Merger
Sub that, prior to the Expiration Date (as defined below), Stockholder will not,
directly or indirectly, (i) offer, sell, offer to sell, or contract or agree to
sell any of the Subject Shares, (ii) grant any option to purchase or otherwise
dispose of any Subject Shares, (iii) pledge, encumber or transfer any Subject
Shares or (iv) announce any offer, sale, offer of sale, contract of sale or
grant of any option to purchase or otherwise dispose of, or any pledge,
encumbrance or transfer of, any of the Subject Shares, to any person or entity
other than Parent [; provided, however, that Stockholder Xxxxx Xxxxxx may
transfer up to 40,000 shares of Company Common Stock to Xxxxx Xxxxxx.]
(b) As used in this Agreement, the term "EXPIRATION DATE" shall mean
the earlier of (i) the date upon which the Plan is validly terminated in
accordance with its terms or (ii) the Effective Time of the Merger.
1.2 TRANSFER OF VOTING RIGHTS. Stockholder covenants and agrees that,
prior to the Expiration Date, Stockholder will not deposit any of the Subject
Shares into a voting trust or grant a proxy or enter into an agreement of any
kind with respect to any of the Subject Shares, except for the Proxy called for
by Section 2.2 of this Agreement.
SECTION 2. VOTING OF SUBJECT SHARES
2.1 AGREEMENT. Stockholder hereby agrees that, prior to the Expiration
Date, at any meeting of the stockholders of the Company, however called, and in
any action taken by the written consent of stockholders of the Company without a
meeting, unless otherwise directed in writing by Parent, Stockholder shall vote
the Subject Shares:
(i) in favor of the Merger, the execution and delivery by the
Company of the Plan and the adoption and approval of the terms thereof
and in favor of each of the other actions contemplated by the Plan and
any action required in furtherance hereof and thereof;
(ii) against any action or agreement that would result in a breach
of any representation, warranty, covenant or obligation of the Company
in the Plan or that would
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preclude fulfillment of a condition precedent under the Plan to the
Company's, Parent's or Merger Sub's obligation to consummate the Merger;
and
(iii) in favor of the termination (by amendment of any such
agreement or otherwise), effective immediately prior to the
effectiveness of the Merger, of any rights of first refusal, rights of
notice, rights of co-sale, information rights, registration rights,
preemptive rights or similar rights of Stockholder under any agreement,
arrangement or understanding applicable to the Subject Shares.
Prior to the Expiration Date, Stockholder shall not enter into any
agreement or understanding with any Person to vote or give instructions in any
manner inconsistent with clause "(i)", "(ii)" or "(iii)" of this Section 2.1.
2.2 PROXY. Contemporaneously with the execution of this Agreement,
Stockholder shall deliver to Parent a proxy with respect to the Subject Shares
in the form attached hereto as Exhibit 1, which proxy shall be irrevocable to
the fullest extent permitted by law (the "PROXY").
SECTION 3. WAIVERS
3.1 APPRAISAL RIGHTS. Stockholder hereby agrees not to exercise any
rights of appraisal and any dissenters' rights that Stockholder may have
(whether under applicable law or otherwise) or could potentially have or acquire
in connection with the Merger.
3.2 RIGHTS OF FIRST REFUSAL, ETC. Stockholder hereby waives any rights
of first refusal, rights of co-sale, registration rights, preemptive rights,
rights of redemption or repurchase, rights to notice and similar rights of
Stockholder under any agreement, arrangement of understanding applicable to the
Subject Shares or any other shares of Company Capital Stock, in each case as the
same may apply to the execution and delivery of the Plan and the consummation of
the Merger and the other transactions contemplated by the Plan. Effective
immediately prior to the effectiveness of the Merger, Stockholder hereby agrees
and consents to the termination of any such rights and agreements. Stockholder
agrees to take such actions, and execute and deliver such agreements and
documents, as may reasonably be requested by Parent in order to effect, confirm
or evidence the foregoing waivers and terminations.
SECTION 4. NO SOLICITATION
Stockholder covenants and agrees that, during the period commencing on
the date of this Agreement and ending on the Expiration Date, Stockholder shall
not, directly or indirectly, and shall not authorize or permit any agent or
representative of Stockholder, directly or indirectly, to:
70
(i) solicit, initiate, cooperate with, facilitate, encourage or induce the
making, submission or announcement of, any offer, or any effort or attempt
concerning any Acquisition Proposal (as defined in the Plan) or take any action
that could reasonably be expected to lead to an Acquisition Proposal; (ii)
furnish any information regarding the Company to any person or entity in
connection with or in response to any Acquisition Proposal or potential
Acquisition Proposal or any proposal for an Acquisition Proposal; (iii) consider
any inquiries or proposals received from any party concerning any Acquisition
Proposal; (iv) participate or engage in any discussions or negotiations with any
person or entity with respect to any Acquisition Proposal; (v) approve, endorse
or recommend any Acquisition Proposal; or (vi) enter into any letter of intent
or other similar document or any written, oral or other agreement, contract or
legally binding commitment contemplating or otherwise relating to any
Acquisition Proposal. Stockholder shall immediately cease any existing
discussions with any person or entity that relate to any potential Acquisition
Proposal, provided, however, that the foregoing agreements and covenants are
made by Stockholder solely in such Stockholder's capacity as a stockholder of
the Company and not as a director of the Company, it being understood and agreed
that nothing in this Section 4 shall prevent any Stockholder from discharging
any fiduciary obligations that such Stockholder may have as a director of the
Company.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
Stockholder hereby represents and warrants to Parent as follows:
5.1 DUE ORGANIZATION, AUTHORIZATION, ETC. Stockholder has all requisite
power and capacity to execute and deliver this Agreement and to perform
Stockholder's obligations hereunder. This Agreement has been duly executed and
delivered by Stockholder and constitutes a legal, valid and binding obligation
of Stockholder, enforceable against Stockholder 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.
5.2 NO CONFLICTS OR CONSENTS.
(a) The execution and delivery of this Agreement by Stockholder do
not, and the performance of this Agreement by Stockholder will not: (i) conflict
with or violate any order applicable to Stockholder or by which Stockholder or
any of Stockholder's properties or Subject Shares is bound or affected; or (ii)
result in any breach of or constitute a default (with notice or lapse of time,
or both) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any lien,
restriction, adverse claim, encumbrance or security interest in or to any of the
Subject Shares pursuant to, any written, oral or other agreement, contract or
legally binding commitment to which Stockholder is a party or by which
Stockholder or any of Stockholder's properties (including but not limited to the
Subject
71
Shares) is bound or affected.
(b) The execution and delivery of this Agreement by Stockholder do
not, and the performance of this Agreement by Stockholder will not, require any
written, oral or other agreement, contract or legally binding commitment of any
third party.
5.3 TITLE TO SUBJECT SHARES. As of the Agreement Date, Stockholder owns
of record and beneficially the Subject Shares set forth under Stockholder's name
on the signature page hereof free and clear of any restrictions (other than
restrictions under applicable federal and state securities laws), liens,
encumbrances, security interests or adverse claims, and does not directly or
indirectly own, either beneficially or of record, any shares of capital stock of
the Company, or rights to acquire any shares of capital stock of the Company,
other than the Subject Shares set forth below Stockholder's name on the
signature page hereof.
5.4 ACCURACY OF REPRESENTATIONS. The representations and warranties
contained in this Agreement are accurate in all respects as of the date of this
Agreement, will be accurate in all respects at all times through the Expiration
Date and will be accurate in all respects as of the date of the consummation of
the Merger as if made on that date.
SECTION 6. COVENANTS OF STOCKHOLDER
6.1 FURTHER ASSURANCES. From time to time and without additional
consideration, Stockholder will execute and deliver, or cause to be executed and
delivered, such additional or further transfers, assignments, endorsements,
proxies, consents and other instruments, and perform such further acts, as
Parent may reasonably request for the purpose of effectively carrying out and
furthering the intent of this Agreement and the Proxy.
6.2 LEGEND. Upon the request of Parent, Stockholder shall instruct the
Company to cause each certificate of Stockholder evidencing the Subject Shares
to bear a legend in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE AND THE RIGHT TO VOTE
THESE SHARES ARE SUBJECT TO THE TERMS OF A VOTING AGREEMENT, DATED
JANUARY ____, 2000 (THE "VOTING AGREEMENT"), BETWEEN PARENT AND THE
REGISTERED HOLDER OF THIS CERTIFICATE. THESE SHARES MAY NOT BE VOTED,
SOLD, EXCHANGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE VOTING AGREEMENT, AS IT
MAY BE AMENDED. A COPY OF THE VOTING AGREEMENT IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER. SUCH AGREEMENT IS BINDING ON
ALL TRANSFEREES OF THESE SHARES.
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SECTION 7. MISCELLANEOUS
7.1 EXPENSES. All costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid as provided in the
Plan.
7.2 GOVERNING LAW. The internal laws of the State of California
(irrespective of its choice of law principles) will govern the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement
of the rights and duties of the parties hereto.
7.3 ASSIGNMENT, BINDING EFFECT, THIRD PARTIES. Except as provided
herein, neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by either of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party, except that Parent may assign all or any of its rights hereunder to any
wholly-owned subsidiary of Parent. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of (i)
Stockholder and Stockholder's heirs, successors and assigns and (ii) Parent and
its successors and assigns. Notwithstanding anything contained in this Agreement
to the contrary, nothing in this Agreement, expressed or implied, is intended to
confer on any person or entity other than the parties hereto or their respective
heirs, successors and assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
7.4 SEVERABILITY. If any provision of this Agreement, or the application
thereof, will for any reason and to any extent be invalid or unenforceable, then
the remainder of this Agreement and application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto.
7.5 COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument.
7.6 AMENDMENT; WAIVER. This Agreement may be amended by the written
agreement of the parties hereto. No waiver by any party hereto of any condition
or of any breach of any provision of this Agreement will be effective unless
such waiver is set forth in a writing signed by such party. No waiver by any
party of any such condition or breach, in any one instance, will be deemed to be
a further or continuing waiver of any such condition or breach or a waiver of
any other condition or breach of any other provision contained herein.
7.7 NOTICES. All notices and other communications required or permitted
under this Agreement will be in writing and will be either hand delivered in
person, sent by telecopier, sent by certified or registered first class mail,
postage pre-paid, or sent by nationally recognized express courier service. Such
notices and other communications will be effective upon receipt if
73
hand delivered or sent by telecopier, four (4) days after mailing if sent by
mail, and one (l) business day after dispatch if sent by express courier, to the
following addresses, or such other addresses as any party may notify the other
parties in accordance with this Section:
if to Stockholder:
at the address set forth below Stockholder's signature
on the signature page hereto;
if to Parent:
Niku Corporation
000 Xxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Attn: Chief Financial Officer
Facsimile: (000) 000-0000
or to such other address as a party designates in a writing delivered to
each of the other parties hereto.
7.8 ENTIRE AGREEMENT. This Agreement and any documents delivered by the
parties in connection herewith constitute the entire agreement and understanding
between the parties with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings between the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon either party hereto unless made in writing and
signed by both parties hereto. The parties hereto waive trial by jury in any
action at law or suit in equity based upon, or arising out of, this Agreement or
the subject matter hereof.
7.9 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that, in addition to any other remedy to which Parent
is entitled at law or in equity, Parent shall be entitled to injunctive relief
to prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any California court or in any other court of competent
jurisdiction.
7.10 OTHER AGREEMENTS. Nothing in this Agreement shall limit any of the
rights or remedies of Parent or any of the obligations of Stockholder under any
other agreement.
7.11 CONSTRUCTION. This Agreement has been negotiated by the respective
parties
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hereto and their attorneys and the language hereof will not be construed for or
against either party. Unless otherwise indicated herein, all references in this
Agreement to "Sections" refer to sections of this Agreement. The titles and
headings herein are for reference purposes only and will not in any manner limit
the construction of this Agreement which will be considered as a whole.
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK.]
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IN WITNESS WHEREOF, Parent and Stockholder have caused this Agreement to
be executed as of the Agreement Date first written above.
NIKU CORPORATION STOCKHOLDER
By: Name:
------------------------- ---------------------------------
(Please Print)
Title: By:
------------------------- ---------------------------------
(Signature)
Title:
-------------------------------
Address:
-----------------------------
Facsimile: ( )
--------------------
Number of Shares of Company Common
Stock owned by Stockholder as of the
Agreement Date: ________________
[SIGNATURE PAGE TO VOTING AGREEMENT]
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EXHIBIT 1
IRREVOCABLE PROXY
The undersigned stockholder of Legal Anywhere, Inc., an Oregon
corporation (the "COMPANY"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes the members of the Board of Directors of Niku
Corporation, a Delaware corporation ("PARENT"), and each of them, the attorneys
and proxies of the undersigned, with full power of substitution and
resubstitution, to the fullest extent of the undersigned's rights with respect
to (i) the shares of capital stock of the Company owned by the undersigned as of
the date of this proxy, which shares are specified on the final page of this
proxy and (ii) any and all other shares of capital stock of the Company which
the undersigned may acquire after the date hereof. (The shares of the capital
stock of the Company referred to in clauses (i) and (ii) of the immediately
preceding sentence are collectively referred to as the "SHARES.") Upon the
execution hereof, all prior proxies given by the undersigned with respect to any
of the Shares are hereby revoked, and no subsequent proxies will be given with
respect to any of the Shares.
This proxy is irrevocable, is coupled with an interest and is granted in
connection with that certain Voting Agreement, dated as of the date hereof,
between Parent and the undersigned (the "VOTING AGREEMENT"), and is granted in
consideration of Parent entering into the Agreement and Plan of Reorganization,
dated as of January ___, 2000, among Parent, LA Acquisition Corporation, an
Oregon corporation and wholly-owned subsidiary of Parent ("MERGER SUB"), the
Company and certain executives of the Company (the "PLAN"). Capitalized terms
used but not otherwise defined in this proxy have the meanings ascribed to such
terms in the Plan.
The attorneys and proxies named above will be empowered, and may exercise
this proxy, to vote the Shares at any time until the Expiration Date (as defined
in the Plan) at any meeting of the stockholders of the Company, however called,
or in any action by written consent of stockholders of the Company:
(i) in favor of the Merger, the execution and delivery by the
Company of the Plan, the adoption and approval of the terms thereof and
in favor of each of the other actions contemplated by the Plan, and any
action required in furtherance hereof and thereof;
(ii) against any action or agreement that would result in a breach
of any representation, warranty, covenant or obligation of the Company
in the Plan or that would preclude fulfillment of a condition precedent
under the Plan to the Company's, Parent's or Merger Sub's obligation to
consummate the Merger; and
77
(iii) in favor of the termination (by amendment of any such
agreement or otherwise), effective immediately prior to the
effectiveness of the Merger, of any rights of first refusal, rights of
co-sale, information rights, registration rights, preemptive rights or
similar rights of Stockholder under any agreement, arrangement or
understanding applicable to the Subject Shares.
Prior to the Expiration Date (as such term is defined in the Voting
Agreement), at any meeting of the stockholders of the Company without a meeting,
however called, and in any action by written consent of stockholders of the
Company, the attorneys and proxies named above may, in their sole discretion,
elect to abstain from voting on any matter covered by the foregoing
subparagraphs (i) through (iv) above.
The undersigned stockholder may vote the Shares on all other matters.
This proxy shall be binding upon the heirs, successors and assigns of
the undersigned (including any transferee of any of the Shares).
Any obligation of the undersigned hereunder shall be binding upon the
heirs, successors and assigns of the undersigned (including any transferee of
any of the Shares).
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
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This proxy shall terminate upon the Expiration Date.
Dated: January ___, 2000
Stockholder Name:
--------------------------
Signature:
--------------------------
Title (If Applicable):
--------------
Number of Shares of Company Common
Stock Owned:
------------------------------
79
EXHIBIT B
FORM OF NON-COMPETITION AGREEMENT
This Non-Competition Agreement (this "AGREEMENT") is made and entered
into as of January 19, 2000 (the "EXECUTION DATE") by and among Niku
Corporation, a Delaware corporation ("PARENT") and Legal Anywhere, Inc., an
Oregon corporation (the "COMPANY"), on the one hand, and ______________________
("EMPLOYEE"), on the other hand.
R E C I T A L S
A. Concurrently with the execution of this Agreement, Parent, LA
Acquisition Corporation, an Oregon corporation that is a wholly-owned subsidiary
of Parent ("MERGER Sub"), Company, Employee and certain other executives of the
Company have entered into an Agreement and Plan of Reorganization dated as of
January 19, 2000 (the "PLAN"), which provides for the merger (the "MERGER") of
Merger Sub with and into the Company, with the Company to be the surviving
corporation of the Merger. Upon the effectiveness of the Merger, the outstanding
capital stock of the Company will be converted into shares of Parent Common
Stock in the manner and on the basis set forth in the Plan. Capitalized terms
that are used in this Agreement and that are not defined herein shall have the
same respective meanings that are given to such terms in the Plan.
B. Employee owns Company Common Stock and is an officer and key employee
of the Company, and upon the effectiveness of the Merger, will receive shares of
Parent Common Stock having substantial value by virtue of the conversion of
Employee's Company Common Stock in the Merger. Employee's talents and abilities
are critical to the Company's ability to continue to successfully carry on its
business.
C. One of the material conditions precedent to the obligation of Parent
to consummate the Merger under the Plan is that Employee has executed, entered
into and is bound by this Agreement with Parent and the Company. Employee is
therefore entering into this Agreement as a material inducement and
consideration to Parent to enter into the Plan, to issue the consideration
payable to Employee and the other Company shareholders in the Merger and to
consummate the Merger, and to ensure that Parent effectively acquires the
goodwill of the Company through the Merger.
NOW, THEREFORE, in consideration of the facts stated in the foregoing
recitals and the promises made herein, Parent, the Company and Employee hereby
agree as follows:
1. EFFECTIVENESS OF OBLIGATIONS. This Agreement shall become effective
if and only if the Merger is consummated, and shall become effective upon the
date and time that the Merger is consummated and becomes legally effective (such
date and time being hereinafter referred to as the "EFFECTIVE TIME").
80
2. CERTAIN DEFINITIONS.
(a) Affiliate. As used herein, the term "AFFILIATE" will have the
meaning given to such term in Rule 405 of Regulation C promulgated under the
Securities Act of 1933, as amended, and refers both to a present and future
Affiliate.
(b) Competing Business. As used herein, the term "COMPETING
BUSINESS" means the business of developing, marketing, licensing, or
distributing any technology products or web-based services to the legal
profession.
(c) Covenant Period. As used herein, the term "COVENANT PERIOD"
means that period of time commencing on the Effective Time and ending eighteen
(18) months after the Effective Time.
(d) Engaging in Business. As used in Section 3 of this Agreement,
each of the following activities, without limitation, shall be deemed to
constitute "ENGAGING IN A BUSINESS": to engage in, carry on, work with, be
employed by, consult for, invest in, solicit customers for, own stock or any
other equity or ownership interest in, advise, lend money to, guarantee the
debts or obligations of, contribute, sell or license intellectual property to,
or permit one's name or any part thereof to be used in connection with, any
enterprise or endeavor, either individually, in partnership or in conjunction
with any person, firm, association, partnership, joint venture, limited
liability company, corporation or other business, whether as principal, agent,
stockholder, lender, partner, joint venturer, member, director, officer,
employee or consultant. However, nothing contained in this Agreement shall
prohibit Employee from: (i) being employed by or serving as a consultant to
Parent (or any other Affiliate of Parent); (ii) acquiring or holding at any one
time less than five percent (5%) of the outstanding securities of any publicly
traded company (other than any publicly traded company with respect to which
Employee is engaged in any business (as defined in this Section) in violation of
Employee's covenants in Section 3 hereof); (iii) holding stock of Parent; or
(iv) acquiring or holding an interest in a mutual fund, limited partnership,
venture capital fund or similar investment entity of which Employee is not an
employee, officer or general partner and has no power to make, participate in or
directly influence the investment decisions of such mutual fund, limited
partnership, venture capital fund or investment entity.
(e) Surviving Corporation. As used herein, the term "SURVIVING
CORPORATION" means the Company, the surviving corporation of the Merger.
3. NON-COMPETITION AND NON-SOLICITATION COVENANTS.
(a) Non-Competition. Employee hereby covenants and agrees with
Parent and the Company that, at all times during the Covenant Period, Employee
shall not, either directly or indirectly, engage in any Competing Business (i)
in any state of the United States of America or (ii) in any country in which the
Company has conducted business on or before the Effective Time (including,
without limitation, any county, state, territory, possession or country in which
any customer of the Company who utilizes the Company's products or services is
located or in which the Company has solicited business as of the Effective
Time). Employee acknowledges and agrees with
81
Parent and the Company that the Company shall be deemed for the purpose of this
Section 3 to have engaged in business at a national level in the United States
of America, in each state of the United States of America and in the country of
Canada.
(b) Non-Solicitation of Customers. In addition to, and not in
limitation of, the non-competition covenants of Employee in Section 3(a) above,
Employee agrees with Parent and the Company that, at all times during the
Covenant Period, Employee will not, either for Employee or for any other person
or entity, directly or indirectly (other than for Parent and any of its
Affiliates), solicit business relating to the Competing Business from, or
attempt to market, sell, distribute, license or otherwise provide technology
products or web-based services to the legal profession, or attempt to market or
provide training, support, consulting and other services with respect to the
installation, implementation or use of technology products or web-based services
to the legal profession to, any customer of the Company, Parent or any of their
respective Affiliates.
(c) Non-Solicitation of Employees or Consultants. In addition to,
and not in limitation of, the non-competition covenants of Employee in Section
3(a) above, Employee agrees with Parent and the Company that, at all times
during the Covenant Period, Employee will not, either for Employee or for any
other person or entity, directly or indirectly, solicit, induce or attempt to
induce any director, employee, consultant or contractor of Parent, the Surviving
Corporation or any of their Affiliates to terminate his or her employment or
his, her or its services with, Parent, the Surviving Corporation or any of their
respective Affiliates or to take employment with any other party.
4. SEVERABILITY. Should a court or other body of competent jurisdiction
determine that any term or provision of this Agreement is excessive in scope or
duration or is unenforceable, then the parties agree that such term or provision
shall not be voided or made unenforceable, but rather shall be modified to the
extent necessary to be enforceable, in accordance with the purposes stated in
this Agreement and with applicable law, and all other terms and provisions of
this Agreement shall remain valid and fully enforceable.
5. SPECIFIC PERFORMANCE. Employee agrees that, in the event of any
breach or threatened breach by Employee of any covenant or obligation contained
in this Agreement, each of Parent and the Company shall be entitled (in addition
to any other remedy that may be available to it, including monetary damages) to
seek and obtain (a) a decree or order of specific performance to enforce the
observance and performance of such covenant or obligation, and (b) an injunction
restraining such breach or threatened breach. Employee further agrees that
neither Parent nor the Company shall be required to obtain, furnish or post any
bond or similar instrument in connection with or as a condition to obtaining any
remedy referred to in this Section 5, and employee irrevocably waives any right
he may have to require Parent or the Company to obtain, furnish or post any such
bond or similarly instrument.
6. NON-EXCLUSIVITY. The rights and remedies of Parent and the Company
under this Agreement are not exclusive of or limited by any other rights or
remedies which they may have, whether at law, in equity, by contract or
otherwise, all of which shall be cumulative (and not alternative). Without
limiting the generality of the foregoing, the rights and remedies of Parent and
82
the Company under this Agreement, and the obligations and liabilities of
Employee under this Agreement, are in addition to their respective rights,
remedies, obligations and liabilities under the law of unfair competition, under
laws relating to misappropriation of trade secrets, under other laws and common
law requirements and under all applicable rules and regulations. Nothing in this
Agreement shall limit any of Employee's obligations, or the rights or remedies
of Parent or the Company, under the Plan or any other agreement delivered in
connection therewith or shall limit any of Employee's obligations, or any of the
rights or remedies of Parent or the Company, under this Agreement. No breach on
the part of Parent, the Company or any other party of any covenant or obligation
contained in the Plan or any other agreement shall limit or otherwise affect any
right or remedy of Parent or the Company under this Agreement.
7. GOVERNING LAW. The internal laws of the State of Oregon (irrespective
of its choice of law principles) will govern the validity of this Agreement, the
construction of its terms, and the interpretation and enforcement of the rights
and duties of the parties hereto.
8. SUCCESSORS AND ASSIGNS. This Agreement and the rights and obligations
of Employee hereunder are personal to Employee and shall not be assignable,
delegable or transferable by Employee in any respect. This Agreement shall inure
to the benefit of the permitted successors and assigns of Parent and the
Company, including any successor to or assignee of all or substantially all of
the business and assets of Parent or the Company or any other part of the
business or assets of Parent and/or the Company.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, bear the signatures of all
parties reflected hereon as signatories.
10. AMENDMENT; WAIVER. This Agreement may be amended only by the written
agreement of Parent and Employee. No waiver by any party hereto of any condition
or of any breach of any provision of this Agreement will be effective unless
such waiver is set forth in a writing signed by such party. No waiver by any
party of any such condition or breach, in any one instance, will be deemed to be
a further or continuing waiver of any such condition or breach or a waiver of
any other condition or breach of any other provision contained herein.
11. NOTICES. All notices and other communications required or permitted
under this Agreement will be in writing and will be either hand delivered in
person, sent by telecopier, sent by certified or registered first class mail,
postage pre-paid, or sent by nationally recognized express courier service. Such
notices and other communications will be effective upon receipt if hand
delivered or sent by telecopier, four (4) days after mailing if sent by mail,
and one (l) business day after dispatch if sent by express courier, to the
following addresses, or such other addresses as any party may notify the other
parties in accordance with this Section:
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If to Parent or the Company: With a copy to:
Niku Corporation Fenwick & West LLP
000 Xxxx Xxxxxx Two Palo Alto Square, Suite 800
Redwood City, CA Xxxx Xxxx, XX 00000
Attention: President, Vertical Markets Attention: Xxxxxx X. XxXxxxxx, Esq.
Fax Number: (000) 000-0000 Fax Number: (000) 000-0000
If to Employee: With a copy to:
Stoel Rives LLP
Parties: 000 XX Xxxxx Xxxxxx, Xxxxx 0000
------- Xxxxxxxx, XX 00000
Xxxx Xxxxxxxx Attention: Xxxx Xxxxxx, Esq.
Xxxxx X. Xxxxxx Fax Number: (000) 000-0000
Xxxxxx X. Xxxxxxx
or to such other address as Parent, the Company or the Employee, as the case may
be, designates in a writing delivered to the other parties hereto.
12. COSTS OF ENFORCEMENT. If any party to this Agreement seeks to
enforce its rights under this Agreement by legal proceedings or otherwise, the
non-prevailing party shall pay all costs and expenses incurred by the prevailing
party, including, without limitation, all reasonable attorneys' and experts'
fees.
13. ENTIRE AGREEMENT. This Agreement contains all of the terms and
conditions agreed upon by the parties relating to the subject matter of this
Agreement and, effective upon the Effective Time of the Merger, shall supersede
any and all prior and contemporaneous agreements, negotiations, correspondence,
understandings and communications of the parties, whether oral or written, with
respect to such subject matter; provided, however, that notwithstanding the
foregoing, any non-competition, non-solicitation or other covenants of the type
set forth in Section 3 of this Agreement that are contained in (a) any agreement
entered into between the Company and Employee prior to the date of this
Agreement, or (b) any employment agreement or in any employee invention
assignment and/or confidentiality agreement executed by Employee with Parent or
the Surviving Corporation that is in effect at any time during the Covenant
Period, shall each be construed to be a separate, independent and concurrent
covenant and obligation of Employee that is cumulative and in
84
addition to, and not in lieu of or in conflict with, any of the covenants in
Section 3 of this Agreement, and the existence of any such separate, independent
and concurrent covenant or covenants shall have no effect on the covenants
contained in Section 3 of this Agreement.
14. RULES OF CONSTRUCTION. This Agreement has been negotiated by the
respective parties hereto and their attorneys and the language hereof will not
be construed for or against either party. Unless otherwise indicated herein, all
references in this Agreement to "Sections" refer to sections of this Agreement.
The titles and headings herein are for reference purposes only and will not in
any manner limit the construction of this Agreement which will be considered as
a whole.
IN WITNESS WHEREOF, Employee, Parent and the Company have executed and
entered into this Agreement effective as of the Execution Date.
NIKU CORPORATION EMPLOYEE
By:
----------------------------------------- ------------------------------
Title:
------------------------------
LEGAL ANYWHERE, INC.
By:
----------------------------------------- ------------------------------
Title:
------------------------------
85
EXHIBIT C
ARTICLES OF MERGER
OF
LA ACQUISITION CORPORATION
WITH AND INTO
LEGAL ANYWHERE, INC.
Pursuant to Section 60.494 of the Oregon Business Corporation Act, Legal
Anywhere, Inc., an Oregon corporation ("Legal Anywhere"), the surviving
corporation of the merger of LA Acquisition Corporation, an Oregon corporation
and wholly-owned subsidiary of Niku Corporation ("Niku"), a Delaware corporation
("Merger Sub"), with and into Legal Anywhere ("the Merger"), files these
Articles of Merger with the office of the Secretary of State.
1. THE PLAN OF MERGER. The plan of merger is set forth as Exhibit A and
is incorporated by reference. The Plan has been duly adopted and approved by the
Board of Directors of each of Legal Anywhere, Merger Sub and Niku.
2. SHAREHOLDER APPROVAL. The Merger required the approval of the
shareholders.
A. Legal Anywhere shareholders approved the Merger as follows:
(1) 3,657,280 shares of common stock were outstanding and
entitled to vote on the Plan.
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(2) ________ shares of common stock voted in favor of the Plan
and _______ shares voted against the Plan.
B. Merger Sub shareholder vote
(1) 1,000 shares of common stock of Merger Sub were outstanding
and entitled to vote on the Plan of Merger.
(2) 1,000 shares of common stock were voted for the Plan of
Merger, and no shares of Common Stock were voted against the
Plan of Merger.
3. EFFECTIVE DATE. These Articles of Merger are effective when filed with
the Secretary of State of the state of Oregon.
4. CONTACT. The person to contact about this filing is:
Xxxxxxxx X. Xxxxxx
Stoel Rives LLP
000 X.X. Xxxxx Xxx., Xxxxx 0000
Xxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Dated: January 31, 2000
LEGAL ANYWHERE, INC.
an Oregon corporation
By:
------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------
Title: President
---------------------
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EXHIBIT A
PLAN OF MERGER OF
LA ACQUISITION CORPORATION
WITH AND INTO
LEGAL ANYWHERE, INC.
1. PARTIES.
(a) The name of the surviving corporation is Legal Anywhere, an
Oregon corporation (the "Company").
(b) The name of the corporation merging with and into the surviving
corporation is LA Acquisition Corporation, an Oregon corporation ("Merger Sub")
and a wholly-owned subsidiary of Niku Corporation, a Delaware corporation
("Niku").
2. TERMS AND CONDITIONS. The Merger shall become effective when the Plan
of Merger and Articles of Merger are filed with the Secretary of State of the
state of Oregon (the "Effective Time"). At the Effective Time, Merger Sub will
be merged with and into the Company (the "Merger"). The separate corporate
existence of Merger Sub will cease, and the Company will be the Surviving
Corporation of the Merger (the "Surviving Corporation"), and the Surviving
Corporation shall continue in existence under the laws of the state of Oregon.
pursuant to the Merger, Niku will issue, in exchange for all of the outstanding
common stock of the Company ("Company Common Stock"), a number of shares of Niku
common stock ("Niku Common Stock") as set forth in section 3 below.
3. CONVERSION OF SHARES. At the effective time, by virtue of the Merger
and without any action on the part of the holders thereof, each share of the
company Common Stock issued and outstanding immediately prior to the Effective
Time shall be automatically converted into the right to receive 0.233429 shares
of Niku Common Stock plus, in lieu of the fractional shares, cash equal to the
product of such fraction multiplied by $11.00 ("MERGER CONSIDERATION").
At the Effective Time, each outstanding option to acquire Company Common
Stock (the "OPTIONS") shall be assumed by Niku and simultaneously converted into
a right to receive nonqualified options under Niku's 1998 Stock Plan to purchase
a number of shares of Niku Common Stock equal to the product of the number of
shares of Company Common Stock subject to the original Option multiplied by
0.233429, at an exercise price equal to the quotient of the exercise price of
the original Option divided by 0.233429.
As soon as reasonably practicable after the Effective Time, Niku will mail
to each holder of a certificate or certificates that before the Effective Time
represented shares of Company Common Stock ("LEGAL ANYWHERE CERTIFICATES"), (i)
a notice and letter of transmittal specifying that delivery will be effected
only upon proper delivery of the Legal Anywhere Certificates to Niku and (ii)
instructions for exchanging the Legal Anywhere Certificates for the Merger
Consideration.
Upon proper surrender of a Legal Anywhere Certificate to Niku, the holder
of such Legal Anywhere Certificate will receive in exchange the Merger
Consideration for each share of Company Common Stock represented thereby.
4. ARTICLES OF INCORPORATION. At the Effective Time, the Articles of
Incorporation of the Company shall be the Articles of Incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
Articles of Incorporation.
5. BYLAWS. At the Effective Time, the Bylaws of the Company, as in effect
immediately prior the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended.
88
EXHIBIT D
NIKU CORPORATION
DECLARATION OF REGISTRATION RIGHTS
This Declaration of Registration Rights ("Declaration") is made as of
January ___, 2000, by Niku Corporation, a Delaware corporation ("Parent"), for
the benefit of shareholders of Legal Anywhere, Inc., an Oregon corporation (the
"Company"), acquiring shares of Parent Common Stock pursuant to that Agreement
and Plan of Reorganization dated as of January __, 2000 (the "Reorganization
Agreement"), among the Company, Parent, LA Acquisition Corporation, an Oregon
corporation and wholly-owned subsidiary of Parent ("Merger Sub"), and certain
executives of the Company, and in consideration of such shareholders' approving
the principal terms of the Reorganization Agreement and the transactions
contemplated thereby.
DEFINITIONS. AS USED IN THIS DECLARATION:
"Effective Date" means the date of expiration of the lock-up period as
agreed to by Parent and its underwriters in connection with Parent's initial
public offering of common stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Form S-3" means such form under the Securities Act as is in effect on
the date hereof or any registration form under the Securities Act subsequently
adopted by the SEC which similarly permits inclusion or incorporation of
substantial information by reference to other documents filed by Parent with the
SEC.
"Holder" means a shareholder of the Company to whom shares of Common
Stock of Parent are issued pursuant to the Reorganization Agreement or a
transferee to whom registration rights granted under this Declaration are
assigned pursuant to Section 6 of this Declaration.
"Registrable Securities" means for each Holder the number of shares of
Parent Common Stock issued to such Holder pursuant to the Reorganization
Agreement, and for all Holders the sum of the Registrable Securities held by
them; provided, however, that such shares of Parent Common Stock held by a
particular Holder shall cease to be Registrable Securities (i) after Parent has
satisfied its obligations to register for resale and maintain the effectiveness
of a registration statement relation to such shares on the terms and conditions
set forth in Section 2 hereof or (ii) at such time as such Holder is able to
sell such shares (including all Registrable Securities held by Affiliates of
such Holder, as defined pursuant to Rule 144 of the Securities Act) in their
entirety within a single 90 day period under Rule 144 of the Securities Act;
provided further, however, any shares of Parent
89
Common Stock subject to the escrow provisions of Article VIII of the
Reorganization Agreement shall not be deemed Registrable Securities for purposes
of this Declaration.
"Securities Act" means the Securities Act of 1933, as amended.
"SEC" means the United States Securities and Exchange Commission.
Terms not otherwise defined herein have the meanings given to them in
the Reorganization Agreement.
REGISTRATION ON FORM S-1 OR S-3.
Parent shall use its best efforts to cause the Registrable Securities
then held by each Holder to be registered under the Securities Act so as to
permit the sale thereof following the Effective Date, and in connection
therewith shall use its best efforts to prepare and file with the SEC within 60
days after the Effective Date, a registration statement on Form S-1 or S-3, if
available (or any successor form) covering all Registrable Securities; provided,
that each Holder shall provide all such information and materials regarding such
Holder and take all such action as may be required by a Holder under applicable
laws and regulations in order to permit Parent to comply with all applicable
requirements of the Securities Act and the Exchange Act and to obtain any
desired acceleration of the effective date of such registration statement, such
provision of information and materials to be a condition precedent to the
obligations of Parent pursuant to this Declaration to register the Registrable
Securities held by each such Holder. The offerings made pursuant to such
registration shall not be underwritten.
Parent shall (i) use its best efforts to prepare and file with the SEC
the registration statement in accordance with Section 2 hereof with respect to
the Registrable Securities and shall use its best efforts to cause such
registration statement to become effective as promptly as practicable after
filing and to keep such registration statement effective until the sooner to
occur of (A) the date on which all Registrable Securities included within such
registration statement have been sold or (B) the 12 month anniversary of the
Effective Time; (ii) prepare and file with the SEC such amendments to such
registration statement and amendments or supplements to the prospectus used in
connection therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all securities
registered by such registration statement; (iii) furnish to each Holder such
number of copies of any prospectus (including any preliminary prospectus and any
amended or supplemented prospectus) in conformity with the requirements of the
Securities Act, and such other documents, as each Holder may reasonably request
in order to effect the offering and sale of the Registrable Securities to be
offered and sold, but only while Parent shall be required under the provisions
hereof to cause the registration statement to remain effective; (iv) use its
reasonable best efforts to register or qualify the Registrable Securities
covered by such registration statement under the securities or blue sky laws of
such jurisdictions as each Holder shall reasonably request (provided that Parent
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such jurisdiction where
90
it has not been qualified or is not otherwise subject to a general consent for
service of process), and do any and all other acts or things which may be
necessary or advisable to enable each Holder to consummate the public sale or
other disposition of such Registrable Securities in such jurisdictions; and (v)
notify each Holder, promptly after it shall receive notice thereof, of the date
and time the registration statement and each post-effective amendment thereto
has become effective or a supplement to any prospectus forming a part of such
registration statement has been filed.
(c) Parent shall use its best efforts to amend its Fourth Amended
and Restated Investor Rights Agreement dated as of November 17, 1999 to provide
that the stockholder parties thereto be prevented from selling their shares
under the registration statement contemplated hereunder.
SUSPENSION OF PROSPECTUS. PRIOR TO ANY PROPOSED DISPOSITION BY HOLDER OF ANY
REGISTRABLE SECURITIES UNDER ANY REGISTRATION STATEMENT FILED PURSUANT TO
SECTION 2 HEREOF, HOLDER SHALL NOTIFY PARENT IN WRITING OF SUCH PROPOSED
DISPOSITION. PARENT MAY RESTRICT DISPOSITION OF REGISTRABLE SECURITIES, AND A
HOLDER WILL NOT BE ABLE TO DISPOSE OF SUCH REGISTRABLE SECURITIES, IF PARENT
SHALL HAVE DELIVERED WITHIN THREE (3) BUSINESS DAYS THEREOF A NOTICE IN WRITING
TO SUCH HOLDER STATING THAT A DELAY IN THE DISPOSITION OF SUCH REGISTRABLE
SECURITIES IS NECESSARY BECAUSE PARENT, IN ITS REASONABLE JUDGMENT, HAS
DETERMINED IN GOOD FAITH THAT SUCH SALES WOULD REQUIRE PUBLIC DISCLOSURE BY
PARENT OF MATERIAL NONPUBLIC INFORMATION THAT IS NOT INCLUDED IN SUCH
REGISTRATION STATEMENT. IN THE EVENT OF THE DELIVERY OF THE NOTICE DESCRIBED
ABOVE BY PARENT, PARENT SHALL USE ITS REASONABLE BEST EFFORTS TO AMEND SUCH
REGISTRATION STATEMENT AND/OR AMEND OR SUPPLEMENT THE RELATED PROSPECTUS IF
NECESSARY AND TO TAKE ALL OTHER ACTIONS NECESSARY TO ALLOW THE PROPOSED SALE TO
TAKE PLACE AS PROMPTLY AS POSSIBLE, SUBJECT, HOWEVER, TO THE RIGHT OF PARENT TO
DELAY FURTHER SALES OF REGISTRABLE SECURITIES UNTIL THE CONDITIONS OR
CIRCUMSTANCES REFERRED TO IN THE NOTICE HAVE CEASED TO EXIST OR HAVE BEEN
DISCLOSED. SUCH RIGHT TO DELAY SALES OF REGISTRABLE SECURITIES SHALL NOT EXCEED
90 DAYS IN THE AGGREGATE AND NO LONGER THAN 30 DAYS AS TO ANY SINGLE DELAY.
EXPENSES. ALL OF THE OUT-OF-POCKET EXPENSES INCURRED IN CONNECTION WITH ANY
REGISTRATION OF REGISTRABLE SECURITIES PURSUANT TO THIS DECLARATION, INCLUDING,
WITHOUT LIMITATION, ALL SEC, NASDAQ NATIONAL MARKET AND BLUE SKY REGISTRATION
AND FILING FEES, PRINTING EXPENSES, TRANSFER AGENTS' AND REGISTRARS' FEES AND
THE REASONABLE FEES AND DISBURSEMENTS OF PARENT'S OUTSIDE COUNSEL AND
INDEPENDENT ACCOUNTANTS SHALL BE PAID BY PARENT. PARENT SHALL NOT BE RESPONSIBLE
TO PAY ANY LEGAL FEES FOR ANY HOLDER OR ANY SELLING EXPENSES OF ANY HOLDER
(INCLUDING, WITHOUT LIMITATION, ANY BROKER'S FEES OR COMMISSIONS).
91
INDEMNIFICATION. IN THE EVENT OF ANY OFFERING REGISTERED PURSUANT TO THIS
DECLARATION:
Parent will indemnify each Holder, each of its officers, directors and
partners and such Holder's legal counsel, and each person controlling such
Holder within the meaning of Section 15 of the Securities Act (each, a "Seller
Indemnified Party"), with respect to which registration, qualification or
compliance has been effected pursuant to this Declaration, against all expenses,
claims, losses, damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any amendment or
supplement thereto, incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they are made, not misleading,
or any violation by Parent of any rule or regulation promulgated under the
Securities Act, or state securities laws, or common law, applicable to Parent in
connection with any such registration, qualification or compliance, and will
reimburse each Seller Indemnified Party for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action; provided, however, that Parent
will not be liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based in any untrue statement
or omission or alleged untrue statement or omission, made in reliance upon and
in conformity with written information furnished to Parent in an instrument duly
executed by such Seller Indemnified Party and stated to be specifically for use
therein.
Each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify Parent, each of its directors and
officers and its legal counsel and independent accountants, and each other such
Holder, each of its officers and directors and each person controlling such
Holder within the meaning of Section 15 of the Securities Act (each a "Parent
Indemnified Party"), against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
each Parent Indemnified Party for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to Parent by an instrument duly executed by such Holder and stated to
be specifically for use therein; provided, however, that the obligations of such
Holders hereunder shall be limited to an amount equal to the gross proceeds
(after deducting reasonable commissions) received by each such Holder of
Registrable Securities sold as contemplated herein.
Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly
92
after such Indemnified Party has written notice of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (whose approval shall
not be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Declaration, except to the
extent, but only to the extent, that the Indemnifying Party's ability to defend
against such claim or litigation is compared as a result of such failure to give
notice. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to the Indemnified Party of
a release from all liability in respect to such claim or litigation.
The obligations of Parent and each Holder under this Section 5 shall
survive the completion of any offering of Registrable Securities in a
registration statement under this Declaration and otherwise.
Notwithstanding the foregoing, to the extent the provisions of this
Section 5 are inconsistent with or conflict with the terms of any
indemnification, selling or similar agreement entered into by a Holder in
connection with the offer and sale of Registrable Securities pursuant to a
registration effected pursuant to this Declaration, the terms of such agreement
shall govern and shall supersede the provisions of this Declaration.
LIMITATION ON ASSIGNMENT OF REGISTRATION RIGHTS. THE RIGHTS TO CAUSE PARENT TO
REGISTER REGISTRABLE SECURITIES PURSUANT TO THIS DECLARATION MAY NOT BE ASSIGNED
BY A HOLDER UNLESS SUCH A TRANSFER IS TO SHAREHOLDERS, PARTNERS OR RETIRED
PARTNERS, OR MEMBERS OR RETIRED MEMBERS OF A HOLDER (INCLUDING SPOUSES AND
ANCESTORS, LINEAL DESCENDANTS, AND SIBLINGS OF SUCH SHAREHOLDERS, PARTNERS,
MEMBERS OR SPOUSES WHO ACQUIRE REGISTRABLE SECURITIES BY RIGHT, WILL OR
INTESTATE SUCCESSION) AND ALL SUCH TRANSFEREES OR ASSIGNEES AGREE IN WRITING TO
APPOINT A SINGLE REPRESENTATIVE AS THEIR ATTORNEY-IN-FACT FOR THE PURPOSE OF
RECEIVING ANY NOTICES AND EXERCISING THEIR RIGHTS UNDER THIS DECLARATION. PRIOR
TO A PERMITTED TRANSFER OF REGISTRATION RIGHTS UNDER THIS DECLARATION, HOLDER
MUST FURNISH PARENT WITH WRITTEN NOTICE OF THE NAME AND ADDRESS OF SUCH
TRANSFEREE AND THE REGISTRABLE SECURITIES WITH RESPECT TO WHICH SUCH
REGISTRATION RIGHTS ARE BEING ASSIGNED AND A COPY OF A DULY EXECUTED WRITTEN
INSTRUMENT IN FORM REASONABLY SATISFACTORY TO PARENT BY WHICH SUCH TRANSFEREE
ASSUMES ALL OF THE OBLIGATIONS AND LIABILITIES OF ITS TRANSFEROR HEREUNDER AND
AGREES ITSELF TO BE BOUND HEREBY. NO TRANSFER OF REGISTRATION RIGHTS UNDER THIS
DECLARATION SHALL BE PERMITTED IF IMMEDIATELY FOLLOWING SUCH TRANSFER THE
DISPOSITION OF SUCH REGISTRABLE SECURITIES BY THE TRANSFEREE IS NOT RESTRICTED
UNDER THE SECURITIES ACT.
93
REPORTS UNDER EXCHANGE ACT. PARENT AGREES TO:
use its commercially reasonable efforts to file with the SEC in a timely
manner all reports and other documents required of Parent under the Securities
Act and the Exchange Act; and
furnish to each Holder, forthwith upon request (i) a written statement
by Parent that it has complied with the reporting requirements of the Securities
Act and the Exchange Act, or that it qualifies as a registrant whose securities
may be resold pursuant to Form S-3 (at any time after it so qualifies), and (ii)
a copy of the most recent annual or quarterly report of Parent.
AMENDMENT OF REGISTRATION RIGHTS. HOLDERS OF A MAJORITY OF THE REGISTRABLE
SECURITIES FROM TIME TO TIME OUTSTANDING MAY, WITH THE CONSENT OF PARENT, AMEND
THE REGISTRATION RIGHTS GRANTED HEREUNDER.
GOVERNING LAW. THIS DECLARATION SHALL BE GOVERNED IN ALL RESPECTS BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
94
IN WITNESS WHEREOF, this Declaration of Registration Rights is executed
as of the date first above written.
NIKU CORPORATION
By:
---------------------------
Xxxxxx Xxxxxx
President, Vertical Markets
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
95
EXHIBIT E
MATTERS TO BE COVERED IN THE OPINION
OF COUNSEL TO NIKU CORPORATION AND LA ACQUISITION CORPORATION
NOTE: Except as otherwise defined below, all capitalized terms used
below shall have the same meanings given to such terms in this Agreement and
Plan or Reorganization.
l. Parent has been duly incorporated and organized, and is validly
existing and in good standing, under the laws of the State of Delaware. Merger
Sub has been duly organized and is validly existing under the laws of the State
of Oregon. Parent has the corporate power and corporate authority to enter into
and perform the Agreement and each agreement to be entered into by Parent in
connection therewith (the "PARENT ANCILLARY AGREEMENTS"), to own and operate its
properties and to carry on its business as currently conducted. Merger Sub has
the corporate power and corporate authority to enter into and perform the
Agreement and each agreement to be entered into by Merger Sub in connection
therewith (the "MERGER SUB ANCILLARY AGREEMENTS"), to own and operate its
properties, and to carry on its business as currently conducted. To our
knowledge, neither Parent nor Merger Sub is in violation of any of the
provisions of its Certificate or Articles of Incorporation (as the case may be)
or Bylaws, each as amended and currently in effect.
2. Parent is qualified to do business as a foreign corporation in good
standing in the State of California.
3. The capitalization of Parent as of December 15, 1999 consists of the
following:
(a) Preferred Stock: A total of 51,910,282 authorized shares of
Preferred Stock (the "Preferred Stock"), of which 10,000,000 shares have
been designated Series F Preferred Stock, 5,142,851 shares have been
designated Series A Preferred Stock, 8,629,992 shares have been
designated Series B Preferred Stock, 9,987,439 shares have been
designated Series C Preferred Stock and 18,150,000 shares have been
designated as Series D Preferred Stock. To our knowledge, there are
issued and outstanding 10,000,000 shares of Series F Preferred Stock,
5,142,851 shares of Series A Preferred Stock, 7,999,992 shares of Series
B Preferred Stock, 9,987,439 shares of Series C Preferred Stock and
14,489,215 shares of Series D Preferred Stock. All of such issued and
outstanding shares are duly authorized, validly issued, fully paid and
nonassessable.
(b) Common Stock. A total of 100,000,000 authorized shares of
Common Stock. To our knowledge, 12,324,306 shares of such Common Stock
are issued and outstanding.
96
All of such issued and outstanding shares are duly authorized, validly
issued, fully paid and nonassessable.
(c) Options, Etc. To our knowledge, there are no preemptive
rights or any options, warrants, conversion privileges or other rights
(or agreements for any such rights) outstanding to acquire any of
Parent's securities from Parent, except for (i) the conversion
privileges of the Preferred Stock, (ii) outstanding warrants to purchase
630,000 shares of Series B Preferred Stock, (iii) options to purchase an
aggregate of 8,000,000 shares of Common Stock reserved for issuance
pursuant to Parent's 1998 Stock Plan of which options to purchase
5,117,837 shares are outstanding, (iv) rights of first refusal pursuant
to the Fourth Amended and Restated Investor Rights Agreement dated as of
November 17, 1999 between Parent and certain holders of its equity
securities, and (v) any options granted following December 15, 1999.
4. The authorized capital stock of Merger Sub consists entirely of 1,000
shares of Merger Sub Common Stock, $[.001] par value, all of which are validly
issued and outstanding and, nonassessable, owned of record by Parent and, to our
knowledge, fully paid.
5. The Agreement and the Parent Ancillary Agreements have been duly
adopted and authorized, respectively, by all necessary corporate action on the
part of Parent's Board of Directors. The Agreement constitutes the valid and
binding obligation of Parent enforceable against Parent in accordance with its
terms [THIS OPINION MAY BE GIVEN SUBJECT TO LEGAL OPINION EXCEPTIONS AS TO
ENFORCEABILITY THAT ARE MUTUALLY AGREEABLE TO COUNSEL TO THE COMPANY AND
COUNSEL TO PARENT].
6. The Agreement and the Articles of Merger have been duly authorized
by all necessary corporate action on the part of Merger Sub's Board of
Directors and sole shareholder. The Agreement constitutes the valid and binding
obligation of Merger Sub enforceable against Merger Sub in accordance with its
terms [THIS OPINION MAY BE GIVEN SUBJECT TO LEGAL OPINION EXCEPTIONS AS TO
ENFORCEABILITY THAT ARE MUTUALLY AGREEABLE TO COUNSEL TO THE COMPANY AND
COUNSEL TO PARENT].
7. The execution and delivery of the Agreements and Ancillary
Agreements by Parent and Merger Sub, as applicable, and the performance by
Parent and Merger Sub of their respective obligations under the Agreements and
Ancillary Agreements to be performed as of the date hereof do not conflict
with, or result in a violation of: (a) the Certificate or Articles of
Incorporation (as the case may be) or Bylaws of Parent or Merger Sub, each as
amended and currently in effect; (b) to our knowledge, any statute, law,
ordinance, rule, regulation, or any judgment, order or decree of any court or
arbitrator to which Parent or Merger Sub is a party or is subject, or as to
which any assets or properties of Parent or Merger Sub are bound or subject.
8. The Parent Common Stock, when issued and paid for as provided in the
Agreement, will be duly authorized and validly issued, fully paid and
nonassessable.
97
9. To our knowledge, all approvals, consents or authorizations of, and
filings with, any U.S. Federal, California State or Delaware State governmental
authority required on the part of Parent in order to enable Parent to execute,
deliver and (as of the date hereof) perform its obligations under the Agreement
have been made, except for (a) such as may be required under applicable federal
and state securities laws and (b) the filing of the Articles of Merger with the
Oregon Secretary of State.
10. To our knowledge, Parent is not a party to any pending or
threatened action, suit, proceeding, arbitration, investigation or claim in or
by any court, arbitrator or governmental authority. To our knowledge, Parent is
not subject to any currently effective order, writ, judgment, decree or
injunction naming Parent as subject thereto.
[IN ADDITION TO THE FOREGOING OPINIONS, COUNSEL FOR PARENT WILL ALSO
PROVIDE AN OPINION REGARDING THE EXEMPTION OF THE OFFER AND SALE OF THE NIKU
COMMON STOCK FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SECTION 5 OF THE SECURITIES ACT AND THE QUALIFICATION REQUIREMENTS OF THE
CALIFORNIA CORPORATE SECURITIES LAW OF 1968, AS AMENDED. IF A SECTION 3(a)(10)
EXEMPTION IS NOT AVAILABLE, PARENT'S COUNSEL ANTICIPATES THAT SUCH OPINION WILL
BE SUBSTANTIALLY SIMILAR TO PARAGRAPH 9 OF THE OPINION GIVEN TO PROAMICS
CORPORATION. IF A SECTION 3(a)(10) EXEMPTION IS AVAILABLE AND RELIED ON BY
PARENT, SUCH OPINION WILL BE SUBJECT TO SUCH EXCEPTIONS, QUALIFICATIONS AND
ASSUMPTIONS AS ARE DEEMED NECESSARY AND APPROPRIATE BY PARENT'S COUNSEL.]
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EXHIBIT F
MATTERS TO BE COVERED IN THE OPINION OF COUNSEL FOR LEGAL ANYWHERE, INC.
NOTE: Except as otherwise defined below, all capitalized terms used
below shall have the same meanings give to such terms in this Agreement and Plan
of Reorganization.
1. The Company is a corporation duly organized and validly existing
under the laws of the State of Oregon.
2. The Company has the requisite corporate power and corporate authority
to own, lease and operate its properties and to carry on its business as
presently conducted, and to execute and enter into the Agreement and Plan of
Reorganization dated as of January ___, 2000 among the Company, Parent, Merger
Sub and the Executives (the "PLAN") and each agreement to be entered into by the
Company in connection therewith (the "COMPANY ANCILLARY AGREEMENTS"), and to
perform its obligations under the Plan and under each Company Ancillary
Agreement. To our knowledge, the Company is not in violation of any of the
provisions of its Articles of Incorporation or Bylaws.
3. To our knowledge, all consents, approvals or authorizations of and
filings with any U.S. Federal or Oregon State governmental authority required on
the part of the Company for, or in connection with, the execution, delivery or
performance by the Company of the Plan or any of the Company Ancillary
Agreements have been made, except for (a) such as may be required under
applicable securities laws and (b) the filing of the Articles of Merger with the
Oregon Secretary of State.
4. The Plan and each of the Company Ancillary Agreements have each been
duly authorized, executed and delivered by the Company, and are valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms [THIS OPINION MAY BE GIVEN SUBJECT TO
LEGAL OPINION EXCEPTIONS AS TO ENFORCEABILITY THAT ARE MUTUALLY AGREEABLE TO
COUNSEL TO THE COMPANY AND COUNSEL TO PARENT].
5. The authorized capital stock of the Company consists entirely of
10,000,000 shares of Common Stock, of which, to our knowledge, a total of
3,657,280 shares are issued and outstanding, and 5,000,000 shares of preferred
stock, none of which are issued and outstanding.
6. The outstanding shares of the Company's Common Stock have been duly
authorized, validly issued and are fully paid and non-assessable. To our
knowledge, the outstanding shares of the Company's Common Stock are not subject
to any preemptive right, right of first refusal, right of first offer or right
of rescission created by law or arising from the Company's Articles of
Incorporation or Bylaws or to any agreements to which the Company is a party or
by which it is bound.
7. To such counsel's knowledge, as of immediately prior to the Effective
Time of
99
the Merger there are (a) no outstanding subscriptions, warrants, options (except
for 605,250 Company Options), calls, rights, equity securities, partnership
interests, claims, commitments, convertible securities or other agreements or
arrangements under which the Company is or may be obligated to issue any shares
of its capital stock, and (b) no preemptive rights to subscribe for or to
purchase capital stock of the Company.
8. Neither the execution and delivery of the Plan or any Company
Ancillary Agreement, nor the consummation of any of the Merger or any of the
other transactions provided for therein or contemplated thereby, are in conflict
with any provision of: (a) the Articles of Incorporation or the Bylaws of the
Company, both as amended and currently in effect; (b) to such counsel's
knowledge, any statute, law, ordinance, rule or regulation or, any judgment,
order, or decree of any court or arbitrator to which the Company or any Company
stockholder is a party or subject, or to which any assets or properties of the
Company are bound or subject; or (c) to such counsel's knowledge, the Contracts
listed on Schedule 2.16(a).
9. To such counsel's knowledge, the Company is not a party to any
pending or threatened, action, suit, proceeding, arbitration, investigation, or
claim in or by any court, arbitrator or governmental authority. To such
counsel's knowledge, the Company is not subject to any currently effective
order, writ, judgment, decree or injunction.
100
EXHIBIT G
Telephone Number(s) for Call Backs and
Person(s) Designated to Confirm Funds Transfer Instructions
IF TO COMPANY:
NAME TELEPHONE NUMBER
1.
---------------------------------- --------------------------------------
2.
---------------------------------- --------------------------------------
3.
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IF TO PARENT:
NAME TELEPHONE NUMBER
1.
---------------------------------- --------------------------------------
2.
---------------------------------- --------------------------------------
3.
---------------------------------- --------------------------------------
Telephone call-backs shall be made to each of the Company and Parent is joint
instructions are required pursuant to the Agreement.
101
COMPANY NAME: NIKU CORPORATION
DATE:
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AUTHORIZE COMPANY REPRESENTATIVES
PRINTED NAME TITLE SIGNATURE
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----------------------- ----------------------- ------------------------
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THE ABOVE DESIGNATION OF AN "AUTHORIZED COMPANY REPRESENTATIVE" ON BEHALF OF THE
COMPANY MAY BE AMENDED OR RESCINDED AT ANY TIME HEREAFTER BY A REPLACEMENT
CERTIFICATE.
DATED:
BY:
-------------------------
NAME:
-----------------------
TITLE:
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