Agreement and Plan of Reorganization
This Agreement and Plan of Reorganization ("Agreement") dated as of
July 7, 2000 is entered into by NetObjects, Inc., a Delaware corporation
("NetObjects"), Neto Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of NetObjects ("Subsidiary"), Rocktide, Inc., a Delaware corporation
(the "Company"), and the undersigned holders of substantially all outstanding
capital stock of the Company. Such holders of outstanding capital stock of the
Company are herein collectively referred to as the "Stockholders" and
individually as a "Stockholder." The Company is a developer of software
applications consisting of an embedded ASP platform and an embeddable online Web
builder (the "Business").
Capitalized terms used herein have the meanings stated in Section 9.
NetObjects desires to acquire the Company through a merger (the
"Merger") of the Company with and into Subsidiary (the "Surviving Company") for
a total value of $4,000,000 consisting of NetObjects common stock, $0.01 par
value per share, ("NetObjects Stock") and $400,000 cash (the "Cash
Consideration", and collectively with the shares of NetObjects stock, the
"Merger Consideration"), and the Company and the Stockholders desire to
consummate the Merger, under the terms of this Agreement.
The Merger is intended to qualify as a reorganization within the
meaning of Section 368 of the Code.
Therefore, in consideration of the mutual agreements contained herein,
the parties hereby agree as follows:
Section 1 The Merger
1.1 Closing. The closing (the "Closing") under this Agreement shall
take place at the offices of McCutchen, Doyle, Xxxxx & Xxxxxxx, LLP, Palo Alto,
within five business days after the satisfaction (or waiver by the party
entitled to waive) of all conditions stated in Sections 5 and 6, or at such
other place or on such other date as the parties may agree in writing.
1.2 Effective Time of Merger. The Merger shall take effect upon filing
of a Certificate of Merger, substantially in the form attached as Exhibit A (the
"Certificate of Merger"), with the Delaware Secretary of State in accordance
with Delaware Law (the "Merger Effective Time").
1.3 Effects of Merger. The effects of the Merger are as follows:
(a) Certificate of Incorporation. At the Merger Effective Time, the
Certificate of Incorporation of the Subsidiary shall be the Certificate of
Incorporation of the Surviving Company, subject always to the right of the
Subsidiary to amend its Certificate of Incorporation after the Merger Effective
Time in accordance with the laws of the State of Delaware, and shall not be
amended by virtue of the Merger.
(b) By-Laws. At the Merger Effective Time, the Bylaws of the Subsidiary
shall be the Bylaws of the Surviving Company and shall not be amended by the
Merger.
(c) Directors and Officers. At the Merger Effective Time, the directors
of Subsidiary immediately prior to the Merger Effective Time shall become the
directors of the Surviving Company, and the officers of the Subsidiary
immediately prior to the Merger Effective Time shall remain as the officers of
the Surviving Company, in each case until their successors have been elected and
qualified or until otherwise provided by law.
(d) Company Shares Owned by Company or NetObjects. At the Merger
Effective Time, all of the shares of Common Stock of the Company that are owned
directly or indirectly by the Company or any subsidiary of the Company and any
Shares owned by NetObjects, Subsidiary or any other subsidiary of NetObjects
(the "Excluded Shares") shall be canceled and no NetObjects Stock or any other
consideration shall be delivered therefor.
(e) Other Company Common Shares. At the Merger Effective Time, each
share of Common Stock of the Company ("Common Shares"), other than the Excluded
Shares, shall be converted into the right to receive Merger Consideration of
$0.4371585 per Common Share (based on total Common Shares and Common Shares
subject to Company stock options equal to 9,150,000 shares divided into the
total Merger Consideration value of $4,000,000) consisting of the following:
(i) an amount of cash per outstanding Common Share equal to
the Cash Consideration divided by the total number of Common
Shares outstanding (excluding shares subject to unexercised
stock options) immediately prior to the Merger Effective Time;
and
(ii) a fraction of one share of NetObjects Stock which equals
the quotient of (x) $0.4371585 minus the amount determined in
(i), above divided by (y) the "Merger Price", which is the
average reported closing price per share of NetObjects Stock
on the Nasdaq National Market (the "Reported Price") for the
ten consecutive trading days immediately preceding the date
that is two full business days before the date of Closing;
subject, however, to Section 1.3(g) and Section 1.3(i).
(f) Fractional Shares. NetObjects shall not be required to issue or
deliver any fractional shares of NetObjects Stock or any certificates
representing fractional shares of NetObjects Stock for certificates representing
the Excluded Shares; however, NetObjects shall pay to each person who would
otherwise be entitled to receive a certificate representing a fractional share
of NetObjects Stock an amount in cash (rounded to the nearest whole cent) equal
to the Merger Price multiplied by the fraction of a share of NetObjects Stock to
which such Stockholder would otherwise be entitled.
(g) Escrow Deposit. Notwithstanding anything in this Section 1., (i) a
number of shares of NetObjects Stock equal to one-tenth of the number of shares
of NetObjects Stock into which the Common Shares held by each Stockholder shall
be converted by virtue of the Merger, rounded up (if a fractional share amount)
to the next highest whole number of shares (the "Escrow Stock"), and (ii) an
amount equal to one-tenth the amount of cash which each
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Stockholder is entitled to receive by virtue of the Merger, rounded up to the
nearest whole cent (the "Escrow Dollars"), shall be subject to the escrow
agreement dated the date hereof in the form attached as Exhibit B (the "Escrow
Agreement"). Certificates representing the Escrow Stock and the Escrow Dollars
shall be delivered to the escrow agent under the Escrow Agreement (the "Escrow
Agent") rather than such Stockholder.
(h) Rocktide Options. At the Merger Effective Time, there shall be
substituted for each option to acquire Common Shares then outstanding under the
Rocktide, Inc. 2000 Stock Plan (the "Rocktide Option Plan") an option under the
NetObjects Amended and Restated 1997 Stock Option Plan (the "NetObjects Option
Plan") to acquire a number of shares of NetObjects Stock equal to the number of
Common Shares subject to such option under the Rocktide Option Plan immediately
prior to the Merger Effective Time multiplied by an amount equal to the quotient
of (x) $0.4371585 divided by (y) the Merger Price (the "Option Exchange Ratio"),
rounded down to the nearest whole number of shares of NetObjects Stock. The per
share exercise price for the NetObjects Stock issuable upon exercise of each
substituted option shall be determined by dividing the exercise price per Common
Share subject to the option, as in effect immediately prior to the Merger
Effective Time, by the Option Exchange Ratio, and rounding the resulting
exercise price up to the nearest whole cent. For purpose of the vesting
provisions of the NetObjects Option Plan, the period of required time-based
vesting, and the commencement date of the actual vesting period (with an
acceleration of vesting as to no more than 50% of the shares of NetObjects Stock
issuable upon exercise of each substituted option) applicable to options under
the Rocktide Option Plan will also be applicable to the options under the
NetObjects Option Plan substituted therefor. Promptly after the Merger Effective
Time, NetObjects and such holders shall enter into option agreements reflecting
the terms of such options issued in substitution. A number of shares of
NetObjects Stock equal to one-tenth of the number of shares of NetObjects issued
upon any exercise of the substituted NetObjects option during the term of the
Escrow Agreement will be deposited by NetObjects with the Escrow Agent and will
be subject to the terms of the Escrow Agreement.
(i) Restricted Stock. Notwithstanding any other provision of this
Section 1.3 to the contrary, 25% of the shares of NetObjects Stock received by
Xxxx Xxxx and Xxxx Xxxxxxxxxxxx pursuant to Section 1.3(e) will remain subject
to the provisions of the Common Stock Purchase Agreement among them and Rocktide
dated March 14, 2000 and shall constitute "Non-Vested Shares" as defined
therein.
1.4 Surrender of Certificates
(a) Certificate Surrender Required. Notwithstanding any other provision
of this Agreement, no certificate for NetObjects Stock and no cash amount
otherwise payable to a Stockholder who has not theretofore surrendered its, his
or her certificates formerly evidencing the Common Shares registered in its, his
or her name shall be issued or paid until the surrender of such certificates to
NetObjects, in which case it will be paid to such holder. Until properly
surrendered, certificates formerly evidencing the Common Shares shall be deemed
for all purposes to evidence only the shares of NetObjects Stock or amount of
Cash Consideration into which such Common Shares were converted by virtue of the
Merger and the right to receive the payments specified in Section 1.3(f). No
interest shall accrue after the Merger Effective Time or be paid on any cash
payment upon surrender of certificates which immediately prior to the Merger
Effective Time represented the Common Shares.
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(b) Notice. As soon as practicable after the Merger Effective Time, the
Company shall notify each Stockholder who has not already surrendered all its,
his or her certificates formerly evidencing the Common Shares registered in its,
his or her name, that the Merger has become effective and that such certificates
may be surrendered to the Company in order to receive certificates representing
the NetObjects Shares into which such Common Shares were converted by virtue of
the Merger and the amount of the Cash Consideration or other amounts then
payable to such holder in accordance with this Agreement.
(c) Nonregistered Certificate Holders. If any part of the NetObjects
Stock or right to receive cash issuable or payable to a Stockholder is to be
issued or paid to a person other than the person in whose name the certificates
surrendered in exchange therefor are registered, it shall be a condition to such
issuance or payment that the certificate so surrendered shall be properly
endorsed or accompanied by appropriate stock powers and otherwise in proper form
for transfer, that such transfer otherwise be proper and that the person
requesting such transfer pay to the Company any transfer or other taxes payable
by reason of the foregoing or establish to the satisfaction of the Company that
such taxes have been paid or are not required to be paid.
(d) Lost, Stolen or Destroyed Certificates. In the event any
certificate formerly representing the Common Shares shall have been lost, stolen
or destroyed, upon the making of any affidavit of that fact by the registered
holder thereof or his duly authorized attorney-in-fact, NetObjects shall issue
the certificate for NetObjects Stock and pay the portion of the Cash
Consideration to which such Common Shares are then entitled by virtue of the
Merger, provided that NetObjects may, in its discretion and as a condition
precedent to such issuance and payment, require the owner of such lost, stolen
or destroyed certificate to give NetObjects a bond in such sum as it may direct
as indemnity against any claim that may be made against NetObjects or the
Company with respect to the certificate alleged to have been lost, stolen or
destroyed.
1.5 Other Agreements.
(a) The Escrow Agreement attached in the form of Exhibit B sets forth
the terms on which (i) the portion specified therein of the shares of NetObjects
Stock to be issued to each stockholder of the Company pursuant to this Agreement
and (ii) the specified portion of the Cash Consideration to be paid to each
stockholder pursuant to this Agreement will be held by the escrow agent
designated therein and the authority of the Stockholders to act on behalf of all
stockholders of the Company thereunder as the "Holders' Agents." The
Stockholders hereby confirm the terms of the Escrow Agreement and agree to act
as the agent for all stockholders of the Company.
(b) At or prior to the Closing, each of the Stockholders agrees to
enter into releases in favor of the Company in the form attached as Exhibit C.
(c) At or prior to the Closing, each of the Stockholders agrees to
enter into noncompetition agreements with NetObjects in the form attached as
Exhibit D.
(d) Each of the Stockholders hereby waives his appraisal rights
underss. 262 of Delaware General Corporation Law.
(e) Each of the stockholders agrees to sign and deliver to NetObjects
an agreement substantially in the form of the Confirmation Agreement and
Assignment of Rights attached as Exhibit E.
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Section 2 Transactional Representations and Warranties of the Stockholders and
the Company
A. The Stockholders and the Company represent and warrant to NetObjects
that, on and as of the date hereof:
2.1 Capital Stock.
(a) The authorized and outstanding capital stock of the Company is as
follows:
Shares Shares
Designation of Class Authorized Outstanding
Common Stock 25,000,000 8,625,000
Preferred Stock 25,000,000 0
There is no capital stock of the Company outstanding except as stated in this
Section 2.1(a). The outstanding Stock Rights of the Company are as follows:
Shares
Subject
Class of to Stock
Stock Right
Designation of Stock Right
Options under Rocktide Option Plan Common 525,000
There are no Stock Rights outstanding with respect to the Company except as set
forth in this Section 2.1(a), and the terms of such Stock Rights are as set
forth in Schedule 2.1. Except as disclosed in Schedule 2.1, the Company is not a
party to any stockholders agreement, registration rights agreement, repurchase
agreement or other Contract with respect to capital stock or Stock Right issued
or to be issued by it.
(b) All of the issued and outstanding capital stock of the Company has
been duly and validly authorized and issued and is fully paid and
non-assessable, and has not been issued in violation of any preemptive or
similar rights of any stockholder or any applicable securities law. Except as
disclosed in Schedule 2.1, no Person has any right to require the Company to
redeem, purchase or otherwise reacquire any capital stock issued by the Company
or any Stock Rights with respect to any capital stock issued by the Company.
There are no preemptive or similar rights in respect of any capital stock of the
Company except as set forth in Schedule 2.1.
(c) The Company has never declared or paid any dividend or made any
distribution in respect of any of its capital stock or any Stock Rights with
respect thereto, or, except as set forth in Schedule 2.1, directly or indirectly
redeemed, purchased or otherwise acquired any of the capital stock issued by it
or any Stock Rights with respect thereto.
2.2 Organization; Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
has all requisite corporate power and authority to own, lease and operate its
Properties and to conduct the Business as currently conducted. The Company is
duly qualified and in good standing under the laws of California and has all
requisite corporate power and authority to own, lease and operate its Properties
and to conduct its
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Business as currently conducted. The Company is not required to be qualified to
do business as a foreign corporation in any jurisdiction other than California.
The Company is not a partner in any general or limited partnership or a member
in any limited liability company.
2.3 Authority. The Company has all requisite power and authority under
applicable corporate law to execute and deliver this Agreement and to perform
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all requisite corporate action on the part of the Company
(including without limitation all required shareholder approvals) and no other
approval on the part of the Company is necessary under applicable corporate law
for the execution, delivery and performance of this Agreement.
2.4 No Violation. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby (i) will not violate or
conflict with the articles of incorporation or by-laws of the Company, (ii) do
not require any Third-Party Action with respect to the Company, (iii) to the
knowledge of the Company, do not violate any Legal Requirement or Order
applicable to the Company, (iv) do not conflict with or constitute a default
under, or result in the acceleration or right of acceleration of any obligations
under, or result in the creation or imposition of any Third-Party Right under,
any Contract, excluding Minor Contracts, to which the Company is a party or (v)
to the knowledge of the Company, do not conflict with or constitute a default
under, or result in the acceleration or right of acceleration of any obligations
under, or result in the creation or imposition of any Third-Party Right under,
any Minor Contract to which the Company is a party.
B. Each Stockholder, with respect to itself, himself or herself only,
hereby represents and warrants to NetObjects that, on and as of the date hereof:
2.5 Power and Authority. Such Stockholder has all requisite power and
authority to execute and deliver this Agreement and to perform the transactions
contemplated hereby.
2.6 Title. Such Stockholder is the sole record and beneficial owner of
the shares of Company stock set forth opposite such Stockholder's name on
Schedule 2.6. Such shares are free and clear of all Third-Party Rights, and such
Stockholder has the full and unrestricted right, power and authority to vote
such shares in favor of, and have such shares participate in, the Merger.
2.7 Authority; Enforceability; Approval. Such Stockholder has full
right and power and all authorization and approval required by any Legal
Requirement, and by any Contract to which such Stockholder is a party to vote
his, her or its shares in favor of the Merger. The execution, delivery and
performance of this Agreement by such Stockholder have been duly authorized by
all necessary action. This Agreement is legally binding on and enforceable
against such Stockholder in accordance with its terms. The execution, delivery
and performance of this Agreement by such Stockholder and the consummation by
such Stockholder of the Merger and all of other transactions contemplated hereby
(x) to the knowledge of such Stockholder, do not violate any Legal Requirement
or Order applicable to such Stockholder, (y) do not conflict with or constitute
a default (with or without the giving of notice or the passage of time or both)
under or result in any acceleration or right of acceleration of any obligations
under, any Contract, excluding Minor Contracts, to which such Stockholder is a
party, and (z) to the knowledge of such Stockholder, do not conflict with or
constitute a default (with or without the giving of notice or the passage of
time or both) under, or result in any acceleration or right of acceleration of
any obligations under, any Minor
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Contract to which such Stockholder is a party. Such Stockholder has voted all of
his, her or its shares of Company capital stock fully and irrevocably in favor
of the Merger.
2.8 Investment Intent. Such Stockholder is acquiring NetObjects Stock
under the terms of this Agreement for such Stockholder's own account and not
with the view to, or for resale in connection with, any distribution or public
offering thereof within the meaning of the Act. Such Stockholder understands
that the NetObjects Stock is characterized as "restricted securities" under the
federal securities laws inasmuch as the NetObjects Stock is being acquired from
NetObjects in a transaction not involving a public offering. Such Stockholder
understands that the NetObjects Stock has not been registered under the Act by
reason of its issuance or contemplated issuance in a transaction exempt from the
registration and prospectus delivery requirements of the Act, that it must be
held indefinitely unless a subsequent disposition thereof is registered under
the Act or is exempt from registration, and that the reliance of NetObjects and
others on this exemption is predicated in part on such Stockholder's
representations and warranties.
2.9 Investment Experience. Such Stockholder has carefully reviewed this
Agreement, including the Exhibits and Schedules hereto, and has carefully
reviewed all NetObjects Information provided to all Company stockholders, other
available materials concerning NetObjects, including, but not limited to the
NetObjects Annual Report on SEC Form 10-K and amendments thereto for the year
ended September 30, 1999 and NetObjects Quarterly Reports on SEC Form 10-Q for
the three and six months ended December 31, 1999 and March 31, 2000, and has
asked NetObjects all questions he, she or it deemed appropriate, and
acknowledges that he, she or it is experienced in evaluating and investing in
companies similar to NetObjects, can bear the economic risk of owning the
NetObjects Stock, including a complete loss of the investment, for an indefinite
period of time, and has enough knowledge and experience in financial and
business matters to evaluate the merits and risks of owning the NetObjects
Stock.
2.10 Transfer and Assignment. Any transfer or assignment of the
NetObjects Stock must be made in compliance with the Act and applicable state
securities laws. No such assignment or transfer will be valid unless NetObjects
first receives notice of such assignment or transfer and an opinion of counsel
(which opinion of counsel must be reasonably satisfactory to NetObjects) to the
effect that such assignment or transfer does not violate the registration
requirements of the Act or any applicable state securities law. There are no
agreements, refusal rights or arrangements of any kind between such Stockholder
and any other party that require such Stockholder to offer or sell the
NetObjects Stock to any Person, whether in connection with the transaction
contemplated by this Agreement, any resale of the NetObjects Stock in the future
or otherwise.
2.11 Legends. Such Stockholder understands that the certificate(s)
evidencing the NetObjects Stock may bear a legend substantially as follows:
The shares represented by this certificate have not been registered
under the Securities Act of 1933. The shares have been acquired not
with a view to distribution and may not be offered, sold, transferred,
pledged or hypothecated in the absence of an effective registration
statement for the shares under the Act and under any applicable state
securities laws, or an opinion of counsel satisfactory to NetObjects
that the proposed transfer can be made in compliance with federal and
state securities laws.
and any legend required by any applicable state laws or regulations.
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2.12 Tax Status. Each Stockholder understands and acknowledges that the
qualification of the Merger as a reorganization under Section 368 of the Code is
dependent on a number of factors outside the control of NetObjects, including
without limitation, actions taken after the Closing by such Stockholder and
other Stockholders, and that, subject to Section 7.12, NetObjects will have no
responsibility with respect to any such matter and is not assuring such
Stockholder that such qualification will be achieved. Each Stockholder confirms
that he, she or it has relied upon his, her or its own tax counsel, and not on
NetObjects or any representative of NetObjects, with respect to such
qualification.
Section 3 Business Representations and Warranties of the Stockholders and the
Company
The Stockholders and the Company represent and warrant to NetObjects
that, on and as of the date hereof:
3.1 Subsidiaries, Etc. Except as set forth in Schedule 3.1, the Company
has does not beneficially own any equity or debt interest (except as a creditor
in the ordinary course of business), direct or indirect, in any Person.
3.2 Financial Statements, Etc.
(a) Financial Statements. Schedule 3.2(a) contains copies of the
unaudited balance sheets and statements of operations and retained earnings and
of cash flows for the Company at and for the period ended May 31, 2000 (the
"Interim Statements"). The Interim Statements fairly present the consolidated
financial condition of the Company at the dates indicated and the consolidated
results of operations for the periods indicated in accordance with GAAP
consistently applied throughout the periods indicated (except as stated therein
and, in the case of the Interim Statements, for the absence of statements of
retained earnings and cash flows and footnotes and subject to normal year-end
adjustments).
(b) Absence of Certain Liabilities. The Company has no liability or
obligation of any nature, whether absolute, accrued, contingent or otherwise,
arising out of acts or omissions heretofore occurring, or circumstances
currently or heretofore existing, except: (i) as expressly set forth in this
Agreement (including without limitation disclosures in Schedule 3.2(b) and any
other Schedules hereto); (ii) as accrued in the balance sheet included in the
Financial Statements; (iii) for liabilities and obligations incurred since May
31, 2000 in the ordinary course of business consistent in nature and amount with
past practice; and (iv) liabilities and obligations of a kind not required to be
accrued in a balance sheet at the date hereof prepared in accordance with GAAP
which individually (or in the aggregate for related matters) will not subject
the Company to Damages in excess of $50,000.
(c) Absence of Certain Changes. Since May 31, 2000, except as set forth
in Schedule 3.2(c):
(i) The Company has operated its business in the ordinary
course.
(ii) There has been no material adverse change in the assets,
business, liabilities, financial condition, results of operations or
customer base of the Company.
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(iii) There has not been any damage, destruction or
condemnation known to the Company with respect to Property having an
aggregate net book value on the Company's books in excess of $50,000,
net of any insurance recoveries.
(iv) There has not been any material change in the accounting
methods, practices or principles of the Company.
(v) The Company has not sold, transferred or otherwise
disposed of (or agreed or committed to sell, transfer or otherwise
dispose of) any Property other than the sale of inventory in the
ordinary course, or canceled, compromised, released or assigned any
debt or claim in its favor, where the aggregate amount of such sales,
transfers, dispositions, cancellations, compromises, releases or
assignments exceeds $50,000.
(vi) The Company has not instituted, settled or agreed to
settle any litigation, action or proceeding before any Governmental
Agency.
(vii) The Company has not assumed, guaranteed, endorsed or
otherwise become responsible (or otherwise agreed to become
responsible) for the obligations of any other Person, except for the
endorsement of negotiable instruments in the ordinary course of
business.
(viii) The Company has not granted (or agreed or committed to
grant) any increase in compensation or fringe benefits other than
normal salary increases consistent with prior periods.
3.3 Taxes.
(a) The Company has filed no federal or state income or franchise Tax
returns. The Company has filed, within the time and in the manner prescribed by
law, all Tax returns and other documents required to be filed in respect of all
Taxes, and all such returns and other documents are true, correct and complete
in all material respects. The Company has, within the time and in the manner
prescribed by law, paid all Taxes that are due and payable. The Company has
established reserves on its books that are adequate for the payment of all Taxes
not yet due and payable.
(b) (i) None of such returns contained a disclosure statement under
Section 6662 of the Code or any similar provision of foreign law;
(ii) The Company has not received written notice from any
federal or foreign taxing authority asserting any deficiency against
the Company or any claim for additional Taxes in connection therewith,
other than any deficiency or claim which has been previously settled or
for which appropriate reserves are included in the Interim Statements;
(iii) To the knowledge of the Company, there is no pending
action, audit, proceeding or investigation with respect to the
assessment or collection of federal or foreign Taxes or a claim for
refund made by the Company with respect to federal or foreign Taxes
previously paid;
(iv) All amounts that are required to be collected or withheld
by the Company with respect to federal or foreign Taxes have been duly
collected or withheld, and all such
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amounts that are required to be remitted to any federal or foreign
taxing authority have been duly remitted;
(v) No audit has been conducted of any federal or foreign
income tax return filed by the Company;
(vi) The Company has not requested nor been granted any
currently effective waiver or extension of any statute of limitations
with respect to the assessment or filing of any federal or foreign Tax
or return with respect thereto;
(vii) No consent has been filed under Section 341(f) of the
Code with respect to the Company;
(viii) The Company is not required to include in income any
adjustment pursuant to Section 481(a) of the Code (or similar
provisions of foreign laws or regulations) by reason of a change in
accounting method nor does the Company have any knowledge that the
Internal Revenue Service (or other federal or foreign taxing authority)
has proposed, or is considering, any such change in accounting method;
(ix) The Company is not a party to any agreement, contract or
arrangement in the nature of a tax-sharing agreement, whether in
writing or otherwise. No consent has been filed under Section 341(f) of
the Code with respect to the Company. The Company is not required to
include in income any adjustment pursuant to Section 481(a) of the Code
(or similar provisions of other law or regulations) in its current or
in any future taxable period by reason or a change in accounting method
nor does the Company have any knowledge that the IRS (or other taxing
authority) has proposed, or is considering, any such change in
accounting method. The Company is not a party to any agreement,
contract or arrangement that would result in the payment of any "excess
parachute payment" within the meaning of Section 280G of the Code. The
disclosure provided to the Company in respect of each and every
transaction to be consummated in connection with this Agreement,
whether performed prior to, at or following the Closing, and the
resolutions adopted after review of the foregoing, are sufficient to
comply with the provisions of Section 280G of the Code (and both its
adopted and proposed Treasury Regulations) that allow for approval by
appropriate persons and exemption from the provisions of Section 280G
of the Code of transactions that might otherwise result in the payment
of any "excess parachute payment" within the meaning of Section 280G of
the Code; and
(x) The Company and its stockholders made a valid election for
the Company to be an S Corporation, within the meaning of Section
1361(a)(1) of the Code, for its calendar year beginning March 2, 2000,
and said election has not been terminated or revoked at any time, and
will not be terminated or revoked at Closing, provided that the Company
makes no representation or warranty with respect to the tax
consequences of the transactions contemplated in this Agreement or the
other Transaction Agreements.
3.4 Title to Properties.
(a) The Company owns no real Property.
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(b) Schedule 3.4(b) is a true and complete summary based on the books
and records of the Company of all items of personal Property owned by the
Company with a net book value in excess of $5,000 per item.
(c) Except as set forth in Schedule 3.4(c), the Company has good title
to all of its Properties, in each case free and clear of all Third-Party Rights.
(d) The Company owns all material items of non-inventory tangible and
intangible personal Property used in generating the revenue shown in the Interim
Statement of the Company previously delivered to NetObjects, subject to any
sales or dispositions of tangible personal Property since May 31, 2000 in the
ordinary course of business.
3.5 Inventories. The Company has no inventory.
3.6 Accounts Receivable. The Company has no accounts receivable.
3.7 Leases, Etc. Schedule 3.7 lists all leases, rental agreements,
conditional sales contracts and other similar Contracts under which the Company
leases (as lessor or lessee) any real or personal Property with rental payments
exceeding $5,000 per year (collectively, the "Disclosable Leases"). All
Disclosable Leases are, in all material respects, valid and enforceable by the
Company in accordance with their terms. Neither the Company nor, to the
knowledge of the Company, any other party to any Disclosable Lease is in
material breach thereof. The Company enjoys peaceable possession of all real
estate premises subject to Disclosable Leases to which it is a party and to all
personal Property subject to Disclosable Leases to which it is a party.
3.8 Facilities, Equipment. The Company owns or leases all material
land, buildings and equipment used in the operation of its business. The Company
has not received any notice of any material violation of any Legal Requirement
or Order by the Company's facilities which has not been corrected, and no
facility of the Company is in material violation of any Legal Requirement or
Order.
3.9 Insurance. Schedule 3.9 lists and describes briefly all binders and
policies of liability, theft, life, fire and other forms of insurance and surety
bonds, insuring the Company or any of its Properties, assets and business as of
the date hereof. Except as noted in Schedule 3.9, all listed policies and
binders insure on an occurrence, rather than claims-made, basis. All policies
and binders listed in Schedule 3.9 are valid and in good standing and in full
force and effect and the premiums have been paid when due. Except for any claims
set forth in Schedule 3.9, there are no outstanding unpaid claims under such
policy or binder, and, except as set forth in Schedule 3.9, the Company has not
received any notice of cancellation, general disclaimer of liability or
non-renewal of any such policy or binder.
3.10 Employment and Benefit Matters.
(a) Schedule 3.10(a) lists each of the following for each employee of
the Company: name, hire date, current salary and currently held options
(including the vesting schedule applicable to such options). None of the
employees listed on Schedule 3.10(a) has given the Company notice of his or her
intention to resign his or her position with the Company and the Company has no
present intention to terminate such employees.
11
(b) Schedule 3.10(b) lists all of the following items which are
applicable to the Company: (i) employment Contracts with any employee, officer
or director; and (ii) Contracts or arrangements with any Person providing for
bonuses, profit sharing payments, deferred compensation, stock options, stock
purchase rights, retainer, consulting, incentive, severance pay or retirement
benefits, life, medical or other insurance, payments triggered by a change in
control or any other employee benefits or any other payments, "fringe benefits"
or perquisites which are not terminable at will without liability to the Company
or which are subject to ERISA. The contracts or arrangements referred to in the
foregoing clause (ii) are herein called "Benefit Plans."
(c) The Company has no Benefit Plans subject to ERISA; all Benefit
Plans subject to ERISA are provided by Execustaff, Inc., a professional employer
organization with whom the Company contracts to provide human resources staffing
and to provide benefits to Company employees.
3.11 Contracts. Except as shown on Schedules 3.7 and 3.11, and except
for Contracts fully performed or terminable at will without liability to the
Company, the Company is not a party to any Contract that affects the Company,
its business, Properties, assets, operations or financial condition and which
contemplates performance by the Company during a remaining period of more than
one year (90 days in the case of any purchase Contract) or involves remaining
commitments for sale or purchase in excess of $5,000. True and complete copies
of each Contract disclosable on Schedule 3.11 (a "Disclosable Contract") have
been delivered to NetObjects. Each Disclosable Contract is, in all material
respects, valid and enforceable by the Company in accordance with its terms.
Neither the Company nor, to the knowledge of the Company, any other party to any
Disclosable Contract is in material breach thereof.
3.12 Officers and Directors, Etc. Schedule 3.12 is a true and complete
list of:
(a) the names and addresses of each of the Company's officers and
directors;
(b) the name of each bank or other financial institution in which the
Company has an account, deposit or safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto; and
(c) the name of each bank or other financial institution in which the
Company has a line of credit or other loan facility.
3.13 Corporate Documents. The Company has furnished or made available
to NetObjects or its representatives true, correct and complete copies of (i)
the articles or certificate of incorporation and bylaws of the Company, (ii) the
minute books of the Company containing all records required to be set forth of
all proceedings, consents, actions and meetings of the stockholders and board of
directors of the Company; (iii) all material Permits and Orders with respect to
the Company and (iv) the stock transfer books of the Company setting forth all
transfers of any capital stock.
3.14 Legal Proceedings. There is no action, suit, proceeding or
investigation pending in any court or before any arbitrator or before or by any
Governmental Agency against the Company or any of its Properties or business,
and to the knowledge of the Company, there is no such action, suit, proceeding
or investigation threatened.
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3.15 Compliance with Instruments, Orders and Legal Requirements. The
Company is not in material violation of, or in default in any material respect
with respect to, any term or provision of its articles or certificate of
incorporation or bylaws, or, to the knowledge of the Company, any Order or any
Legal Requirement applicable to the Company.
3.16 Permits. The Company holds all Permits material to the conduct of
its business as and where now conducted. To the knowledge of the Company, there
is not pending nor threatened any proceedings to terminate, revoke, limit or
impair any material Permit.
3.17 Intellectual Property.
(a) Schedule 3.17(a) sets forth a true and complete list of all
patents, patent applications, trademarks, trade names, service marks and
registered copyrights and applications therefor, if any, owned or claimed by or
licensed to the Company. Except as set forth on Schedule 3.17(a), the Company
owns or is licensed or otherwise has the right to use, without future payment to
any other Person, all patents, patent applications, patent rights, trademarks,
trademark registrations, trademark applications, licenses, service marks,
business marks, trade names, brand names, copyright registrations, copyrights
(including those in computer programs, software, including all source code and
object code, development documentation, programming tools, drawings,
specifications and data), designs, trade secrets, technology, inventions,
discoveries and improvements, know-how, proprietary rights, formulae, processes,
software, data, methods, technical information, confidential and proprietary
information and all other intellectual property rights whether or not subject to
statutory registration or protection, and licenses to any or all of the
foregoing (collectively, the "Intellectual Property"), used in or necessary for
the conduct of its business as presently conducted and as proposed to be
conducted by the Company, free and clear of any Third-Party Right. Except as
otherwise indicated on Schedule 3.17(a), all patents, patent applications,
trademarks, trade names, service marks and copyrights of the Company have been
duly registered and filed with or issued by each appropriate Governmental Agency
in the jurisdictions indicated in Schedule 3.17(a), all necessary affidavits of
use or continuing use have been filed, and all necessary maintenance fees have
been paid to continue all such rights in effect. Except as disclosed in Schedule
3.17(a), the conduct of the Company's business, as presently conducted and as
proposed to be conducted by the Company, does not violate, conflict with or
infringe any Contract (other than any Minor Contract) between the Company and
any Person or any Contract (other than any Minor Contract), license (other than
any Minor License) or, to the knowledge of the Company, any Minor Contract,
Minor License or other Intellectual Property rights or proprietary, privacy,
publicity or similar rights, of any other Person. Except as otherwise indicated
on Schedule 3.17(a), the Company does not have any notice or knowledge of any
objection or claim being asserted by any Person with respect to the ownership,
validity, enforceability or use of any Intellectual Property or any names or
slogans embodying business or product goodwill (or both), or challenging or
questioning the validity or effectiveness of any license relating thereto. There
are no unresolved conflicts with, or pending claims by or against the Company,
whether in Litigation or otherwise, involving any Intellectual Property or any
names or slogans embodying business or product goodwill (or both), and there are
no Liens or rights of any other Person with respect to Intellectual Property
that would prevent the Company from fulfilling its obligations under this
Agreement.
(b) Schedule 3.17(b) sets forth a true and complete list of all
material options, rights (including marketing rights), licenses or interests of
any kind relating to Intellectual Property granted to the Company and all
material options, rights (including marketing rights), licenses or interests of
any kind relating to Intellectual Property of the Company or any portions
thereof, granted by the
13
Company to any other Person. To the knowledge of the Company, no such Person is
in breach of or default under its obligations.
(c) All software, other than generally available software (such as Word
for Windows, Excel, WordPerfect and the like) and generally available system
development tools, that is either marketed to customers of the Company as a
program or as part of a service or is used by the Company to support its
business:
(i) is owned by the Company or the Company has the right to
use, modify, copy, sell, distribute, sublicense and make derivative
works free and clear of any limitations or encumbrances except as may
be set forth in any license agreement listed in Schedule 3.17(b); and
(ii) is free from any interest of any former or present
employees of, or contractors or consultants to, the Company.
(d) Except as disclosed in Schedule 3.17(a), the execution and delivery
of this Agreement, compliance with its terms and the consummation of the
transactions contemplated hereby do not and will not conflict with, or result in
any violation or breach of, or default (with or without notice or lapse of time
or both) or give rise to any right, license or Lien relating to any material
Intellectual Property owned by the Company or with respect to which the Company
now has or has had any Contract (to the knowledge of the Company, in the case of
any Minor Contract or Minor License) with any Person, or right of termination,
cancellation or acceleration of any material Intellectual Property right or
obligation set forth in any Contracts (to the knowledge of the Company, in the
case of any Minor Contract or Minor License) to which the Company is a party, or
the loss or encumbrance of any material Intellectual Property or material
benefit related thereto, or result in or require the creation, imposition or
extension of any Lien upon any material Intellectual Property or right or
otherwise impair the Company's right to use any material Intellectual Property
of the Company in the same manner as such Intellectual Property is currently
being used by the Company or the customers of the Company.
(e) To the extent third party software is marketed to customers of the
Company together with the Intellectual Property of the Company, (i) the third
party rights have been identified (or the Contracts and the specific third party
software have been listed) on Schedule 3.17(b), (ii) all necessary licenses have
been obtained and are being complied with and (iii) no royalties or payments are
due (or such royalties and payments are identified on Schedule 3.17(e)).
(f) None of the trade secrets (as defined in the Uniform Trade Secrets
Act) of the Company has been published or disclosed by the Company, or to the
knowledge of the Company by any other Person, to any Person except pursuant to
licenses or Contracts requiring such other Persons to keep such trade secrets
confidential.
(g) Except as disclosed in Schedule 3.17(b), the Company is not, and to
the knowledge of the Company, no other party to any licensing or other similar
arrangements with the Company relating to any Intellectual Property (other than
Minor Licenses of freeware, shareware or opensource) is in breach of or default
under its material obligations under such arrangements. Except as disclosed in
Schedule 3.17(b), to the knowledge of the Company, neither it nor any other
party to a Minor License of freeware, shareware or opensource is in breach of or
default under its material obligations under such arrangements. Except as
disclosed in Schedule 3.17(b), the Company is not,
14
and to the knowledge of the Company, no other party to any distributorship or
other similar arrangements with the Company relating to any material
Intellectual Property is, in breach of or default under its material obligations
under such arrangements.
(h) Except as set forth in Schedule 3.17(a), there exists no litigation
pending or, to the Company's knowledge, threatened against the Company with
regard to any patent, copyright, trade secret, trademark, trade name, service
xxxx or other Intellectual Property. There is no outstanding order, writ,
injunction, decree, judgment or stipulation by or with any court, administrative
agency or arbitration panel regarding patent, copyright, trade secret,
trademark, trade name or other claims relating to Intellectual Property by which
the Company is bound.
(i) Except as disclosed in Schedule 3.17(a) or Schedule 3.17(i), the
Company has not received any communications alleging the Company has infringed
or violated or, by conducting its businesses as proposed by the Company, would
infringe or violate any of the patents, trademarks, service marks, trade names,
copyrights, trade secrets or other proprietary rights, processes or other
Intellectual Property of any other Person.
(j) Except as disclosed in Schedule 3.17(j), to the knowledge of the
Company, no Person is infringing on or otherwise violating any right of the
Company with respect to any Intellectual Property owned by or licensed to the
Company.
(k) The Company has taken reasonable and necessary steps to protect the
Intellectual Property of third parties received by the Company under obligation
of confidentiality and its material Intellectual Property and its rights
thereunder, and to the knowledge of the Company no such rights have been lost or
are in jeopardy of being lost through failure to act by the Company. Except as
disclosed in Schedule 3.17(k), all current and former employees of the Company,
and all current and former independent contractors of the Company furnishing
services related to software and data, have signed confidentiality/proprietary
rights agreements substantially in the form attached as Schedule 3.17(k).
Schedule 3.17(k) lists all current and former independent contractors of the
Company furnishing services related to software and data.
(l) Except as disclosed in Schedule 3.17(l), no licenses or rights have
been granted to distribute or use the source code of, or to create Derivative
Works (as hereinafter defined) or, any product currently marketed by,
commercially available from or under development by the Company for which the
Company possesses the source code. As used herein, "Derivative Work" shall mean
a work that is based upon one or more preexisting works, such as a revision,
enhancement, modification, abridgment, condensation, expansion or any other form
in which such preexisting works may be recast, transformed or adapted, and
which, if prepared without authorization of the owner of the copyright in such
preexisting work, would constitute a copyright infringement. For purposes
hereof, a Derivative Work shall also include any compilation that incorporates
such a preexisting work as well as translations from one human language to
another and from one type of code to another.
(m) Except as disclosed in Schedule 3.17(m), the Company has not
assigned, sold or otherwise transferred ownership of or the right to use any
patent, patent application, trademark or service xxxx.
(n) Neither the Company nor any of its officers nor, to the knowledge
of the Company, any of its employees has any patents issued or patent
applications pending for any device, process,
15
method, design or invention of any kind now used or needed by the Company in the
furtherance of its business operations as presently conducted or as proposed to
be conducted by the Company, which patents or applications have not been
assigned to the Company with such assignment duly recorded in the United States
Patent Office or with the applicable foreign Governmental Agency.
(o) Without limiting the generality of this Section 3.17, the software
and related licenses referred to herein shall include freeware, shareware and
opensource.
3.18 Capital Expenditures. Schedule 3.18 sets forth, by nature and
amount, all budgeted capital expenditures of the Company for which commitments
have been made, or for which payments or current liabilities have been made or
incurred, in excess of $5,000.
3.19 Environmental Matters. To the knowledge of the Company, there are
no Hazardous Materials used or present at any location used by the Company in
the conduct of the Business, except for any Hazardous Materials constituting
normal office supplies. To the knowledge of the Company, no location currently
or previously used by the Company is contaminated by any Hazardous Material, and
no event has occurred and no activity has been or is being conducted by the
Company which has resulted or could reasonably result in contamination of any
location currently or previously used by the Company by any Hazardous Material.
To the knowledge of the Company, no Government Agency has commenced any
investigation or proceeding with respect to the contamination of any location
currently or previously used by the Company by any Hazardous Material.
3.20 Illegal Payments. To the best knowledge the Company, none of the
Company or any director, officer, employee, or agent of the Company has,
directly or indirectly, paid or delivered any fee, commission, or other sum of
money or item of property however characterized to any broker, finder, agent,
government official, or other person, in the United States or any other country,
in any manner related to the business or operations of the Company, which the
Company or any such director, officer, employee, or agent knows or has reason to
believe to have been illegal under any law.
3.21 Confidentiality Obligations. The Company is not in possession of
any information, documents or materials under an obligation of confidentiality
or use to any other Person other than pursuant to a Contract described in
Schedule 3.11. The conduct of the Business as presently conducted does not
violate or conflict with the obligation of confidentiality or use to any other
Person.
3.22 Representations. No representation or warranty by the Company in
this Agreement, or in any Schedule, Exhibit or document furnished by the Company
at the Closing pursuant hereto contains any untrue statement of a material fact
or omits to state a fact necessary to make the statements contained herein and
therein not misleading.
Section 4 Representations and Warranties of NetObjects
NetObjects hereby represents and warrants to the Stockholders and the
Company that, on and as of the date hereof:
4.1 Organization, Standing, Etc. of NetObjects and Subsidiary.
NetObjects is a corporation duly organized, validly existing and in good
standing under the laws of the State of
16
Delaware. Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and duly qualified and in
good standing under the laws of California and has all requisite corporate power
and authority to own, lease and operate its Properties and to conduct its
Business as currently conducted. NetObjects and Subsidiary have full power and
authority under applicable corporate law to own, lease and operate their
Properties and to carry on the business in which they are engaged.
4.2 Authority; Enforceability. NetObjects and Subsidiary have all
necessary power and authority under applicable corporate law to execute, deliver
and perform their obligations under this Agreement. The execution, delivery and
performance of this Agreement by NetObjects and Subsidiary has been duly
authorized by all necessary action under applicable corporate law. This
Agreement is legally binding on and enforceable against NetObjects and
Subsidiary in accordance with its terms. The execution, delivery and performance
of this Agreement by NetObjects and Subsidiary and the consummation by
NetObjects and Subsidiary of all of the transactions contemplated hereby, (x) do
not require any Third-Party Action relating to NetObjects or Subsidiary except
those listed on Schedule 4.2, (y) do not violate any Legal Requirement or Order
applicable to NetObjects or Subsidiary and (z) do not conflict with or
constitute a default (with or without the giving of notice or the passage of
time or both) under, or result in any acceleration or right of acceleration of
any obligations under, any Contract to which NetObjects or Subsidiary is a
party, where, in each case, the absence of such Third-Party Action or such
violation, conflict, default or acceleration would in any way adversely affect
the transactions contemplated hereby.
4.3 SEC Information. As of their respective filing dates (except as
thereafter amended) all documents that NetObjects has filed with the SEC (the
"NetObjects SEC Documents") have complied in all material respects with the
applicable requirements of the Act or the Exchange Act, and none of the
NetObjects SEC Documents has contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading except to the extent corrected by a
subsequently filed NetObjects SEC Document filed prior to the date hereof.
4.4 Litigation. There are no claims, actions, suits or other
proceedings pending, or to the knowledge of NetObjects, threatened, at law or in
equity, by or before any Governmental Agency or any arbitrator against
NetObjects which could reasonably be expected to have an adverse effect on the
ability of NetObjects to perform its obligations under this Agreement.
4.5 Material Adverse Change. No violation or other matter having a
material adverse affect on in NetObjects's business, condition, assets,
liabilities, operations, financial performance or prospects has occurred since
NetObjects's last SEC report.
Section 5 Conditions to Obligations of NetObjects at Closing
The obligations of NetObjects hereunder to be performed at the Closing
are subject to the satisfaction at or prior to the Closing of the following
conditions, except for any condition NetObjects may waive in writing in
accordance with Section 8.3.
5.1 Representations and Warranties. The representations and warranties
contained in Sections 2 and 3 shall have been true in all material respects on
the date of this Agreement and shall
17
be true in all material respects at and as of immediately prior to the Closing
with the same effect as though made at and as of immediately prior to the
Closing.
5.2 Performance. The Stockholders and the Company shall have performed
and complied in all material respects with all covenants required herein to be
performed or complied with by them or it on or before the Closing.
5.3 Third-Party Action. All Third-Party Action required in order to
consummate the Closing on the terms hereof.
5.4 Opinion of Counsel. NetObjects shall have received from Xxxxxxx &
Xxxxxx, counsel to the Company, an opinion dated the date of the Closing, in
form and substance substantially as set forth in Exhibit F.
5.5 Transactional Litigation. No action, suit or proceeding before any
Governmental Agency shall have been commenced, and no investigation by any
Governmental Agency shall have been commenced or overtly threatened, against the
Company, NetObjects, Subsidiary, or any of their respective principals,
officers, directors or shareholders seeking to restrain, prevent or change the
transactions contemplated hereby or questioning the validity or legality of any
of such transactions or seeking damages in connection with any of such
transactions.
5.6 Interim Events. None of the events listed in Sections 7.9(a)
through (h) shall have occurred without NetObject's written consent.
5.7 Management Changes. No change in the directors or officers of the
Company or any employees of the Company listed on Schedule 5.8 shall have
occurred from May 26, 2000.
5.8 Releases. The Stockholders, the directors and officers, and all
other holders of Common Shares and options or other Stock Rights to acquire
Common Shares of the Company shall have entered into releases in favor of the
Company in the form attached as Exhibit C.
5.9 Exercise of Options. Xxxxxxx Xxxxxxxxx shall have exercised all of
his vested options to purchase shares of Common Stock of the Company.
5.10 Noncompetition Agreements. Each of the Stockholders and Xxxxxxx
Xxxxxxxxx shall have entered into a Noncompetition Agreement with NetObjects
substantially in the form attached as Exhibit D.
5.11 Employment Agreements. Key employees of the Company designated by
NetObjects shall have entered into employment agreements with NetObjects in
forms satisfactory to NetObjects.
5.12 Corporate and Other Proceedings. All corporate and other
proceedings on the part of the Company and the Stockholders in connection with
the transactions to be consummated at the Closing, and all documents and
instruments incident to such transactions, shall be reasonably satisfactory in
substance and form to NetObjects.
5.13 Appraisal Rights. Each Stockholder and all other holders of Common
Shares and options or other rights to acquire Common Shares of the Company shall
have voted to approve or consented to the Merger, shall not have elected to
exercise any appraisal rights pursuant to Section
18
262 of the Delaware General Corporation Law, and shall have executed and
delivered to NetObjects the Stockholder Investment Representations and Waiver of
Appraisal Rights attached hereto as Exhibit J.
5.14 Confirmation Agreement and Assignment of Rights. Each current and
former Company employee or consultant to the Company shall have executed and
delivered to NetObjects a Confirmation Agreement and Assignment of Rights in the
form attached as Exhibit E.
Section 6 Conditions to Stockholders' and Company's Obligations at Closing
The obligations of the Stockholders and the Company hereunder to be
performed at the Closing are subject to the satisfaction at or prior to the
Closing of the following conditions, except for any condition the Holders' Agent
may waive in accordance with Section 8.3.
6.1 Representations and Warranties. The representations and warranties
of NetObjects contained in Section 4 shall have been true in all material
respects on the date of this Agreement and shall be true in all material
respects at and as of immediately prior to the Closing with the same effect as
though made at and as of immediately prior to the Closing.
6.2 Performance. NetObjects shall have performed and complied in all
material respects with all covenants required herein to be performed or complied
with by NetObjects on or before the Closing.
6.3 Third-Party Action. All Third-Party Action required in order to
consummate the Closing on the terms hereof, other than any the absence of which
in the aggregate would not have a material effect on the transactions
contemplated hereby, shall have been taken.
6.4 Opinion of Counsel. The Stockholders and the Company shall have
received at the Closing from McCutchen, Doyle, Xxxxx & Xxxxxxx, LLP, counsel to
NetObjects and Subsidiary, an opinion dated the date of the Closing, in form and
substance substantially as set forth in Exhibit G.
6.5 Transactional Litigation. No action, suit or proceeding before any
Governmental Agency shall have been commenced, and no investigation by any
Governmental Agency shall have been commenced or overtly threatened, against the
Company, NetObjects, Subsidiary or any of their respective principals, officers,
directors or stockholders seeking to restrain, prevent or change the
transactions contemplated hereby or questioning the validity or legality of any
of such transactions or seeking damages in connection with any of such
transactions.
6.6 Additional Options. NetObjects shall have authorized and issued
options to purchase 200,000 shares of NetObjects Stock, to be granted at the
Merger Effective Time to such employees of the Company and in such allocation as
is mutually agreed by NetObjects and the Company. The options shall have an
exercise price equal to the fair market value at the Merger Effective Time, and
will vest over four years as follows: 1/4 of the options shall vest at the
one-year anniversary of the Merger Effective Time, and 1/48 of the options shall
vest on the last day of each successive month; provided, however, that any
employee holding such options must be continuously employed by NetObjects or the
Subsidiary from the Merger Effective Time through the date of vesting for any
option.
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6.7 Corporate and Other Proceedings. All corporate and other
proceedings on the part of NetObjects and Subsidiary in connection with the
transactions to be consummated at the Closing, and all documents and instruments
incident to such transactions, shall be reasonably satisfactory in substance and
form to the Company.
Section 7 Covenants of the Stockholders, the Company, Subsidiary and NetObjects
7.1 Non-Disclosure. Each party agrees not to divulge or communicate, or
use for any purpose other than evaluating this transaction or exercising rights
as a party hereto, any information or materials concerning this Agreement, the
negotiation between the parties hereto and the transactions contemplated hereby,
except to the extent that such information (w) is or hereafter becomes lawfully
obtainable from other sources, (x) is required to be disclosed to a Governmental
Agency having jurisdiction over the party or its Affiliates, (y) is otherwise
required by law to be disclosed or (z) is disclosed following a waiver in
writing from the other parties. Promptly after the Merger Effective Time,
NetObjects and the Company will issue a mutually agreeable press release
concerning the transactions contemplated hereby. The parties also hereby ratify
and confirm the provisions of paragraphs 12 and 14 of the Letter of Intent dated
May 26, 2000, by and among NetObjects, the Company, Xxxx Xxxxxxxxxxxx and Xxxx
Xxxx, both in their capacities as directors and as stockholders of the Company
which shall continue in effect until the Merger Effective Time.
7.2 Survival of Representations and Warranties; Indemnification.
(a) Survival. All representations and warranties made under Section 2,
3 or 4 shall survive the Closing and any investigation with respect thereto by
an authorized party until the Last Escrow Claim Date. Following the Closing,
however, the Company shall have no liability with respect to any representation
or warranty and shall not be subject to any contribution, indemnity or similar
claims with respect thereto by any Stockholder or any other Person.
(b) Representations and Warranties in Section 3. In the event of any
misrepresentation or breach of warranty in Section 2 or Section 3 (it being
agreed that for purposes of determining the existence of any such
misrepresentation, all such representations, warranties or covenants of the
Stockholders and the Company that are qualified as to materiality or as to a
specified threshold or minimum amounts shall be deemed to be not so qualified),
NetObjects shall be entitled to recover the related Recoverable Amount from the
Escrow Account, provided that NetObjects gives notice of such misrepresentation
or breach in accordance with the Escrow Agreement, in reasonable detail,
specifying the amount of the claim, on or before 5:00 p.m. Pacific Time on the
Last Escrow Claim Date, it being understood that no recovery may be had against
the Escrow Account with respect to any claim which is not the subject of such a
notice given by such time.
"Recoverable Amount" means Damages, if any, proximately resulting to
NetObjects on account of any misrepresentation, breach of warranty or breach of
covenant.
The Company, the Stockholders, any Affiliate of the Company or any
Affiliate of the Stockholders shall not have any liability or obligation of any
kind to NetObjects, or any other Person on account of the breach of any
representation or warranty made in Section 3, except as stated in this Section
7.2. The sole recourse of NetObjects on account of the breach of any
representation or warranty made in Section 3 shall be with respect to the
property in the Escrow Account.
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Notwithstanding the foregoing, any liability or obligation resulting from the
knowing personal fraud of an individual shall not be subject to any of the
limitations or thresholds stated in this Section 7.2(b).
(c) Pre-Closing Taxes. NetObjects shall be entitled to recover against
the Escrow Account for Damages to it resulting from the failure of the Company
to pay Taxes payable, or accruing under GAAP, on or before the Closing.
(d) Limitations. Nothing in this Section 7.2 shall limit the
indemnification available to NetObjects and the Stockholders under Sections 7.11
or 8.1.
7.3 Disputed and Third-Party Claims.
(a) If NetObjects shall give notice of a claim in accordance with
Section 7.2, and NetObjects and the Holders' Agents do not resolve such matter
by written agreement within 45 days after such notice is given, the dispute will
be settled exclusively by arbitration before a single arbitrator appointed by
JAMS/Endispute. If the total amount (not including interest) of the dispute and
any counterclaim exceeds $100,000, the arbitration will be conducted in
accordance with the Comprehensive Arbitration Rules and Procedures of
JAMS/Endispute; any other arbitration under this Section will be conducted in
accordance with the Streamlined Arbitration Rules and Procedures of
JAMS/Endispute. NetObjects and the Holders' Agents shall each bear their own
expenses (including without limitation the fees and expenses of legal counsel
and accountants) in connection with such arbitration. The arbitral award shall
allocate the arbitrator's fees and expenses according to the relative success of
NetObjects and the Holders' Agents in the arbitration, as determined by the
arbitrator.
(b) To the extent a claim by NetObjects under Section 7.2 relates to a
claim asserted against a party to this Agreement (other than to enforce this
Agreement) (a "Third-Party Claim") and NetObjects gives notice of the assertion
of the Third-Party Claim, then the Holders' Agents will have the option,
exercisable by written notice to NetObjects within 20 days after receipt of
NetObjects' notice, to control the defense of such Third-Party Claim. All
expenses (including, without limitation, attorneys' fees) incurred by the
Holders' Agents in connection with his assumption of control of the defense of a
Third-Party Claim shall be paid by the Holders' Agents. If the Holders' Agents
has not assumed the defense of a Third-Party Claim, then NetObjects shall have
the right to control the defense of the Third-Party Claim, and the expenses
reasonably incurred by NetObjects in connection with such defense shall be
recoverable as part of the underlying claim on the same basis and subject to the
same limitations as stated in Section 7.2 and this Section.
(c) The party controlling the defense may use counsel selected by it,
but if the other party reasonably objects (within 20 days after designation of
counsel initially selected) on account of such counsel's representation or
potential representation of the designating party in matters in which
NetObjects's and the Stockholders' or the Company's interests are adverse or
potentially adverse, the designating party shall select other counsel free of
any such adverse representation. The party controlling the defense shall have
the right, in its discretion exercised in good faith and upon the advice of
counsel, to settle such matter, either before or after the initiation of
litigation, at such time and upon such terms as they deem fair and reasonable,
provided that (i) at least 10 days' prior notice shall be given to the other
party of the intention to settle the Third-Party Claim, (ii) no settlement by
the controlling party shall include any equitable relief binding on the
noncontrolling party, and (iii) the controlling party shall not agree to any
settlement of such Third-Party Claim without the
21
prior written consent of the other party, which consent shall not be
unreasonably withheld. The noncontrolling party will have the right to be
represented by counsel, solely at its own expense. The controlling party shall
keep the other party advised of the status of the Third-Party Claim and the
defense thereof and shall consider in good faith recommendations made by the
other party with respect thereto.
(d) Unless otherwise agreed by the parties, arbitration under Section
7.3(a) of a claim by NetObjects with respect to a Third-Party Claim shall be
deferred until the resolution of the Third-Party Claim.
7.4 Termination of this Agreement. If any condition of the Closing
stated in Section 5 is not satisfied on or before July __, 2000 (2 business days
prior to Closing), then, provided NetObjects is not in material default
hereunder, NetObjects may at any time thereafter terminate any further
obligations under this Agreement by giving written notice thereof to the Company
and the Holders' Agent. If any condition of the Closing stated in Section 6 is
not satisfied on or before such date, then, provided the Company and the
Stockholders are not in material default hereunder, the Company and the Holders'
Agents may at any time thereafter terminate any further obligations under this
Agreement by giving written notice thereof to NetObjects. Any such termination
will not, however, terminate or otherwise affect the obligations of the parties
under Sections 7.1, 8.1 or 8.2. This Agreement may be so terminated, or
terminated by mutual agreement of the parties upon the authorization of their
respective boards of directors, notwithstanding approval of this Agreement by
the stockholders of any or all parties.
7.5 Reasonable Business Efforts, No Inconsistent Action. Each party
will use its, his or her reasonable business efforts to cause the conditions
over which it has control to be satisfied on or before the Closing. No party
will take any action which will foreseeably result in the nonsatisfaction of any
condition stated in Section 5 or 6 on or before the Closing.
7.6 Access. Between the date of this Agreement and the Closing or any
earlier termination of this Agreement in accordance with its terms, the Company
will (i) give NetObjects and its authorized representatives access to its books,
records, Properties, officers, attorneys and accountants and permit NetObjects
to make inspections and copies of such books and records, and (ii) furnish
NetObjects with such financial information and operating data and other
information with respect to its business and Properties, and to discuss with
NetObjects and its authorized representative its affairs, all as NetObjects may
from time to time reasonably request for the purposes of this Agreement, during
normal office hours. Any on-site visit shall be subject to reasonable advance
notice and to being accompanied by an officer or designated employee of the
Company.
7.7 No Solicitation or Negotiation. The Company and the Stockholders
agree that, between the date of this Agreement and the Closing or any earlier
termination of this Agreement in accordance with its terms, they will not (and
will not permit any person or entity which they control to) seek or entertain,
or negotiate any terms of, a Strategic Transaction with any party other than
NetObjects and its affiliates, or give any information concerning its business
to any such party, or enter into any agreement inconsistent with this Agreement
or the proposed transaction with NetObjects. A "Strategic Transaction" means (i)
any form of acquisition, direct or indirect, whether by purchase, merger, stock
sale (primary or secondary), or any other structure, of any portion of the
Company's consolidated business or any equity interest therein, (ii) any
arrangement whereby effective operating control of the Company's consolidated
business or a portion thereof is granted to another party or (iii) any
transaction involving the recapitalization, restructuring, liquidation,
22
dissolution or other similar type of transaction involving the Company. During
such period, the Company will promptly notify NetObjects of the content and
identity of any proposal or communication it receives from any such person
concerning any Strategic Transaction.
7.8 Interim Financial Information. The Company will supply to
NetObjects unaudited consolidated monthly financial statements as of June 30,
2000 and within 30 business days of the end of each month ending between the
date of this Agreement and the Closing or any earlier termination of this
Agreement in accordance with its terms, prepared on a basis consistent with the
unaudited consolidated financial statements for the preceding months, together
with additional monthly reports substantially in the form heretofore delivered
to the Company's major stockholder. For purposes of these statements, employee
bonuses and similar expenses may be accrued based on actual results for the year
to date and budgeted results for the balance of the year.
7.9 Interim Conduct of Business. From the date of this Agreement until
the Closing or any earlier termination of this Agreement in accordance with its
terms, unless approved by NetObjects in writing, the Company will operate its
business consistently with past practice and in the ordinary course of business,
and will not:
(a) merge or consolidate with or agree to merge or consolidate
with, or sell or agree to sell all or substantially all of its Property
to, or purchase or agree to purchase all or substantially all of the
Property of, or otherwise acquire, any other Person or a division
thereof, except as provided in this Agreement;
(b) amend its Certificate of Incorporation or Bylaws;
(c) make any changes in its accounting methods, principles or
practices, except as required by GAAP;
(d) sell, consume or otherwise dispose of any Property, except
in the ordinary course of business consistent with past practices;
(e) authorize for issuance, issue, sell or deliver any
additional shares of its capital stock of any class or any securities
or obligations convertible into shares of its capital stock or issue or
grant any option, warrant or other right to purchase any shares of its
capital stock of any class, other than, in each case, the issuance of
Common Stock pursuant to the exercise of the outstanding stock options
held by Xxxxxxx Xxxxxxxxx prior to the Merger Effective Time;
(f) declare any dividend on, make any distribution with
respect to, or redeem or repurchase, its capital stock except under
existing repurchase agreements or obligations as set forth in Schedule
2.1;
(g) modify, amend or terminate any Benefit Plans, except as
required under Legal Requirements or any Disclosable Contract; or
(h) authorize or enter into an agreement to do any of the
foregoing.
7.10 Registration. The holders of NetObjects Stock issued under this
Agreement and NetObjects shall sign a Registration Rights Agreement in the form
attached as Exhibit I.
23
7.11 Indemnification of Company Indemnitees. All rights to
indemnification for acts or omissions occurring prior to the Merger Effective
Time in favor of the directors or executive officers of the Company (the
"Company Indemnitees") as provided in the Company's Certificate of Incorporation
and Bylaws immediately prior to the Merger Effective Time shall terminate upon
the Merger as of the Merger Effective Time, except as to claims brought against
the indemnitee as an agent of the Company (i) which no Indemnitee know of or had
any reason to know of as of date of the Closing, (ii) that will not constitute a
breach of any representation or warranty under Section 2 or Section 3 and (iii)
that would otherwise be entitled to indemnity under the Company's Bylaws.
7.12 Tax Matters. NetObjects and the Company agree to report the Merger
as a tax-free reorganization within the meaning of Sections 368(a) of the Code
and neither NetObjects nor the Company shall take any action prior to or
following the Closing that would cause this Merger to fail to qualify as a
"reorganization" within the meaning of Section 368(a) of the Code.
7.13 Continuing Employees. NetObjects agrees that following the Merger
Effective Time: for the purposes of employment plans and arrangements which
NetObjects or the Company may extend to Continuing Employees (as defined below),
NetObjects shall give full credit to each Continuing Employee for such
Continuing Employee's period of service with the Company prior to the Merger
Effective Time to the extent such service was recognized under any comparable
employment plans or arrangements of the Company prior to the Merger Effective
Time. NetObjects will identify the Continuing Employees on a schedule to be
delivered to the Company at the Closing.
7.14 Stock Option Agreements. Following the Closing, NetObjects and all
holders of Rocktide stock options under the Rocktide Option Plan who are
receiving substitute NetObjects stock options under the NetObjects 1997 Stock
Option Plan in accordance with Section 1.3(h) of this Agreement, shall sign a
NetObjects Stock Option Agreement in the form attached as Exhibit H.
Section 8 Miscellaneous
8.1 No Brokers, Finders, Etc.
(a) Company. Neither the Company nor the Stockholders have engaged any
agent, broker, finder or investment or commercial banker in connection with the
negotiation, execution or performance of this Agreement or the transactions
contemplated hereby. The Company and the Stockholders (severally and not
jointly) shall, indemnify, defend and hold NetObjects harmless against and in
respect of any claim for brokerage fees or other commissions incurred or owing
due to any such engagement or alleged engagement , including without limitation,
any fees and expenses of counsel incurred by NetObjects in connection with
enforcing this Section 8.1(a).
(b) NetObjects. NetObjects has not engaged any agent, broker, finder or
investment or commercial banker in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated hereby.
NetObjects shall indemnify, defend and hold the Company and the Stockholders
harmless against and in respect of any claim for brokerage fees or other
commissions incurred or owing due to any such engagement or alleged engagement,
including without limitation, any fees and expenses of counsel incurred by the
Company and the Stockholders in connection with enforcing this Section 8.1(b).
8.2 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, the Company and NetObjects shall each pay their own
fees and expenses incident to
24
the negotiation, preparation, execution, delivery and performance hereof,
including, without limitation, the fees and expenses of their respective
counsel, accountants and other experts. If the Closing does not occur, the
Stockholders and/or the Company shall bear the Company's portion of such fees
and expenses.
8.3 Complete Agreement; Waiver and Modification, Etc. This Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings of the parties. There are no representations or warranties by any
party except those expressly stated or provided for herein, any implied
warranties being hereby expressly disclaimed. There are no covenants or
conditions except those expressly stated herein. No amendment, supplement or
termination of or to this Agreement, and no waiver of any of the provisions
hereof, shall be binding on a party unless made in a writing signed by such
party. This Agreement may be terminated prior to the Merger Effective Time by
mutual agreement of NetObjects, Subsidiary and Rocktide, as authorized by their
respective boards of directors, notwithstanding approval hereof by the
stockholders of such parties. This Agreement may be amended prior to the Merger
Effective Time by mutual agreement of NetObjects, Subsidiary and Rocktide, as
authorized by their respective boards of directors, notwithstanding approval
hereof by the stockholders of such parties; provided, however, that such
amendment shall not (i) alter or change the amount or kind of shares,
securities, cash, property and/or rights to be received in exchange for or on
conversion of all or any of the shares of any class or series thereof of
Rocktide, (ii) alter or change any term of the certificate of incorporation of
the Surviving Corporation to be effected by the Merger or (iii) alter or change
any of the terms and conditions of the Agreement if such alteration or change
would adversely affect the holders of any class or series thereof of such party.
Nothing in this Agreement shall be construed to give any Person other than the
express parties hereto any rights or remedies.
8.4 Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and shall be given by delivery (by
mail or otherwise) or transmitted to the address or facsimile number listed
below, and will be effective (in all cases) upon receipt. Without limiting the
generality of the foregoing, a mail, express, messenger or other receipt signed
by any Person at such address shall conclusively evidence delivery to and
receipt at such address, and any printout showing successful facsimile
transmission of the correct total pages to the correct facsimile number shall
conclusively evidence transmission to and receipt at such facsimile number.
(a) If to NetObjects or Subsidiary:
000 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
facsimile: 650 - 482-3600
with copies to:
McCutchen, Doyle, Xxxxx & Xxxxxxx, LLP
0000 Xxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx Xxxxx
facsimile: 650 - 849-4800
25
(b) If to the Company:
Rocktide, Inc.
0000 Xxxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attention: Xxxx Xxxx
[facsimile: ]
with copies to:
Xxxxxxx & Xxxxxx
The Xxxxxxx Building
00 X. Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxxx Xxxxxxx
facsimile: 408 - 998-4790
(c) If to the Stockholders:
c/o Rocktide, Inc.
0000 Xxxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attention: Xxxx Xxxx
[facsimile: ]
Any party may change its address or facsimile number for purposes of
this Section 8.4 by giving the other party written notice of the new address or
facsimile number in accordance with this Section 8.4, provided it is a normal
street address, or normal operating facsimile number, in the continental United
States.
8.5 Law Governing. This Agreement shall be interpreted in accordance
with and governed by the laws of the State of California, without regard to
principles of conflicts of laws.
8.6 Headings; References; "Hereof," Etc. The Section headings in this
Agreement are provided for convenience only, and shall not be considered in the
interpretation hereof. References herein to Sections, Exhibits, Schedules or
Appendices refer, unless otherwise specified, to the designated Section of or
Exhibit, Schedule or Appendix to this Agreement. Terms such as "herein,"
"hereto" and "hereof" refer to this Agreement as a whole.
8.7 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the heirs, executors, administrators and successors of
the parties hereto, but no right or liability or obligation arising hereunder
may be assigned by any party hereto.
8.8 Counterparts; Separate Signature Pages. This Agreement may be
executed in any number of counterparts, or using separate signature pages. Each
such executed counterpart and each counterpart to which such signature pages are
attached shall be deemed to be an original instrument, but all such counterparts
together shall constitute one and the same instrument.
26
8.9 Severability. In the event any of the provisions of this Agreement
shall be declared by a court or arbitrator to be void or unenforceable, then
such provision shall be severed from this Agreement without affecting the
validity and enforceability of any of the other provisions hereof, and the
parties shall negotiate in good faith to replace such unenforceable or void
provisions with a similar clause to achieve, to the extent permitted under law,
the purpose and intent of the provisions declared void and unenforceable.
8.10 Attorneys' Fees. In the event any suit, counterclaim, arbitration
or other proceeding is brought to enforce or interpret the provisions of this
Agreement, the prevailing side (NetObjects, on the one hand, and the Company
and/or the Stockholders on the other hand) shall be entitled to recover from the
nonprevailing side, in addition to all other remedies available at equity and
law, the cost, including but not limited to reasonable attorneys' fees, incurred
by the prevailing side therein, including any appeal or other subsequent
proceeding. A side shall be considered to prevail if it secures a more favorable
result than the other side (who shall be considered the nonprevailing party), as
determined by the arbitrator or judge.
Section 9 Glossary
Act - the Securities Act of 1933, as amended.
Affiliate - a Person who controls, is controlled by or is under common
control with another Person, or who directly or indirectly owns 10% or more of
the voting power in such other Person, or of whose voting power such other
Person (or a Person holding 10% or more of the voting power in such other
Person) owns 10% or more. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
Agreement - this Agreement and Plan of Reorganization, including the
Exhibits and Schedules hereto.
Benefit Plans - Section 3.10(b).
Business - introductory paragraphs.
Cash Consideration - introductory paragraphs.
Certificate of Merger - Section 1.2.
Closing - Section 1.1.
Code - the Internal Revenue Code of 1986, as amended.
Common Shares - Section 1.3(e).
Common Stock - the Common Stock of the Company.
Company - introductory paragraphs.
Company Indemnitees - Section 7.11.
27
Confirmation Agreement and Assignment of Rights - Section 1.5.
Continuing Employee - Section 7.13.
Contract - any agreement, written or oral, or any promissory note or
other instrument of a contractual nature, which is intended to be enforceable
against the Person in question or against any Property of such Person. Any
Person which is, or any of whose Property is, subject to enforcement of a
Contract shall, for purposes of this Agreement, be deemed a party to it.
Damages - any loss, loss in value, cost, liability or expense actually
incurred, including without limitation, costs and expenses of litigation and
reasonable attorneys' fees, but excluding in each case incidental, consequential
or punitive damages. (The foregoing exclusion of punitive damages does not
apply, however, to any punitive damages awarded in a Third-Party Claim.) All
Damages shall be net of (i) any applicable insurance recovery (net of any
retrospective premium adjustment), (ii) any related net realized tax benefit
(taking any applicable recovery into account), (iii) any related refund or
recovery realized by NetObjects, (iv) any related reserve included in the
Interim Statements, and (v) any other reserve (whether or not related to the
Damages in question) included in the Interim Statements, to the extent that, at
the time of determination of Damages under this Agreement, such other reserve
has proved to be in excess of the Company's actual losses or liabilities
reserved against (provided, that such other reserves shall thereafter be reduced
by the excess thus utilized for netting).
Derivative Work - Section 3.17(l).
Disclosable Contract - Section 3.11.
Disclosable Leases - Section 3.7.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute.
Escrow Account - the Property held by the escrow agent under the Escrow
Agreement.
Escrow Agent - Section 1.3(g).
Escrow Agreement - Section 1.5(a).
Escrow Dollars - Section 1.3(g).
Escrow Stock - Section 1.3(g).
Exchange Act - the Securities Exchange Act of 1934, as amended.
Excluded Shares - Section 1.3(d).
GAAP - generally accepted accounting principles applied on a consistent
basis, as set forth in authoritative pronouncements which are applicable to the
circumstances as of the date in question. The requirement that such principles
be applied on a "consistent basis" means that accounting principles observed in
the period in question are comparable in all material respects to those applied
28
in the preceding periods, except as change is permitted or required under or
pursuant to such accounting principles.
Governmental Agency - any agency, department, board, commission,
district or other public organ, whether federal, state, local or foreign.
Hazardous Material - all or any of the following: (i) any substance the
presence of which requires investigation or remediation under any applicable law
or regulation; (ii) substances that are defined or listed in, or otherwise
classified pursuant to, any applicable laws or regulations as "hazardous
substances," "hazardous materials," "hazardous wastes," "toxic substances," or
any other formulation intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity or "EP toxicity;" (iii) any petroleum
products, explosives or radioactive materials; and (iv) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty parts per million.
Holders' Agents - Section 1.5(a).
Interim Statements - Section 3.2(a).
Knowledge - with respect to the Company shall mean the knowledge, as of
the time the applicable representation or warranty is made, of the officers and
directors of the Company.
Last Escrow Claim Date - the same numerical day in the month as the
numerical day on which the Closing occurs, in the 12th month following the month
in which the Closing occurs. If there is no corresponding numerical day in such
12th month, the Last Escrow Claim Date will be the first day of the 13th month
following the month in which the Closing occurs.
Legal Requirement - a statute, regulation, ordinance or similar legal
requirement, whether federal, state, local or foreign, or any requirement of a
permit or other authorization issued by a Governmental Agency.
Lien - any lien, security interest, mortgage, deed of trust, pledge,
hypothecation, capitalized lease or interest or right for security purposes.
Material Adverse Effect - a violation or other matter will be deemed to
have a "Material Adverse Effect" on the Company if such violation or other
matter (considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in the Agreement or
in the Stockholders' Closing Certificate but for the presence of "Material
Adverse Effect" or other materiality qualifications, or any similar
qualifications, in such representations and warranties) would have a material
adverse effect on the Company's business, condition, assets, liabilities,
operations, financial performance or prospects.
Merger Consideration - introductory paragraphs.
Merger Effective Time - Section 1.2.
Merger Price - Section 1.3(e).
29
Minor Contract - any Contract that is not a Partner Contract and that
involves no more than $5,000 in annual payments due or owed under its terms.
Minor License - any license, without limitation including any freeware,
shareware and opensource license, that is immaterial and can be easily replaced
in the ordinary course of business without liability in excess of $5,000.
NetObjects - introductory paragraphs.
NetObjects Information - Section 2.9.
NetObjects SEC Documents - Section 4.3.
NetObjects Stock - introductory paragraphs.
Option Exchange Ratio - Section 1.3(h).
Order - any judgment, injunction, order or similar mandatory direction
of, or stipulation or agreement filed with, a Governmental Agency, court,
judicial body, arbitrator or arbitral body.
Permit - a permit, license, franchise, certificate of authority or
similar instrument issued by a Governmental Agency.
Person - an individual, or a corporation, partnership, limited
liability company, trust, association or other entity of any nature, or a
Governmental Agency.
Property - any interest in any real, personal or mixed property,
whether tangible or intangible.
Recoverable Amount - Section 7.2(b).
Reported Price - the closing price per share of NetObjects Stock on the
Nasdaq National Market as reported in the Western edition of the Wall Street
Journal.
SEC - the Securities and Exchange Commission.
Stock Right - any right (including without limitation any option or
warrant or subscription right) to acquire any capital stock or any other Stock
Right or any instrument convertible into or exchangeable for any capital stock
or any other Stock Right.
Stockholders - introductory paragraphs.
Strategic Transaction - Section 7.7.
Subsidiary - introductory paragraphs.
Surviving Company - introductory paragraphs.
Tax - any federal, state, local or foreign tax, assessment, duty, fee
and other governmental charge or imposition of any kind, whether measured by
properties, assets, wages, payroll, purchases,
30
value added, payments, sales, use, business, capital stock, surplus or income,
and any addition, interest, penalty, deficiency imposed with respect to any Tax.
Third-Party Action - any consent, waiver, approval, license or other
authorization of, or notice to, or filing with, any other Person, whether or not
a Governmental Agency, and the expiration of any associated mandatory waiting
period.
Third-Party Claim - Section 7.3(b).
Third-Party Right - any Lien on any Property of the Person in question,
or any right (other than the rights of NetObjects hereunder) (i) to acquire,
lease, use, dispose of, vote or exercise any right or power conferred by any
Property of such Person, or (ii) restricting the Person's right to lease, use,
dispose of, vote or exercise any right or power conferred by any Property of
such Person.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
31
IN WITNESS WHEREOF, the parties have executed this Agreement and Plan
of Reorganization.
NetObjects: NETOBJECTS, INC.
By: ____________________________
Xxxxx Xxxxx, President
Subsidiary: NETO ACQUISITION CORP.
By: ____________________________
Xxxxx Xxxxx, President
Company: ROCKTIDE, INC.
By: ____________________________
Name:
Title:
Stockholders:
____________________________
Xxxx Xxxx
___________________ [spouse]
____________________________
Xxxx Xxxxxxxxxxxx
___________________ [spouse]
32
