Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
by and among
PRIMUS KNOWLEDGE SOLUTIONS, INC.
AL ACQUISTION, INC.
ANSWERLOGIC, INC.
Dated as of May 21, 2001
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, DATED AS OF May 21, 2001 (this
"Agreement"), by and among Primus Knowledge Solutions, Inc., a Washington
corporation ("Parent"), AL Merger Corp., a wholly-owned Delaware subsidiary of
Parent ("Sub"), and AnswerLogic Inc., a Delaware corporation ("Company").
RECITALS
INTENDING TO BE LEGALLY BOUND, and in consideration of the premises
and the mutual representations, warranties, covenants and agreements contained
herein, Parent, Sub, and Company hereby agree as follows:
ARTICLE I
THE MERGER
1.1 Effective Time of the Merger. Subject to the provisions of this
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Agreement, Company will be merged into Sub (the "Merger"). A Certificate of
Merger and any other required documents (collectively the "Merger Documents"),
substantially in the form attached as Exhibit 1.1 shall be duly prepared,
executed and acknowledged by Company, Parent, and Sub, and delivered to the
Secretary of State of Delaware for filing, as provided in the Delaware General
Corporation Law (the "DGCL") at the Closing (as defined in Section 1.2 of this
Agreement). The Merger shall become effective at such time as the Merger
Documents have been filed with the Secretary of State of Delaware (the
"Effective Time").
1.2 Closing. The closing of the Merger (the "Closing") will take
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place on the date as soon as reasonably practicable after the satisfaction or
waiver of the conditions set forth in Article VI (the "Closing Date"), at the
offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ llp, Seattle, Washington, unless another time,
date or place is agreed to by the parties hereto.
1.3 Effects of the Merger. At the Effective Time: (i) Company shall
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be merged with and into Sub (Sub after the Merger is sometimes referred to
herein as the "Surviving Corporation"), (ii) the Certificate of Incorporation of
Sub shall be the Certificate of Incorporation of the Surviving Corporation,
(iii) the Bylaws of Sub shall be the Bylaws of the Surviving Corporation, (iv)
the directors of Sub shall become the directors of the Surviving Corporation,
(v) the officers of Sub shall be the officers of the Surviving Corporation, (vi)
the issued and outstanding capital stock of Company shall be converted as set
forth in Section 1.4 below, and (vii) the Merger shall, from and after the
Effective Time, have all the effects provided by the DGCL.
1.4 Conversion of Company Securities.
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1.4.1 Company Shares. Company is indebted to ▇▇▇▇▇ ▇▇▇▇▇▇
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Venture Partners II, L.P., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, E. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, JMI, Inc. and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (each, a "Noteholder" and collectively,
the "Noteholders") pursuant to 7%
Subordinated Notes of Company, due July 11, 2001 (each a "Note," and
collectively the "Notes") in the aggregate principal amount of One Million
Dollars ($1,000,000) issued pursuant to that certain Amended and Restated Note
Purchase Agreement effective as of the 12/th/ day of April, 2001 among the
Noteholders and the Company (the "Note Purchase Agreement"). Simultaneously with
the execution of this Agreement, the Company, Parent and the Noteholders are
entering into that certain Note Retirement Agreement (the "Note Retirement
Agreement") and the Company, Parent, Noteholders, certain Stockholders and other
parties are entering into that certain Release and Settlement Agreement (the
"Release and Settlement Agreement"). Upon the effectiveness of the Merger, the
outstanding securities of Company (each of which is defined in Section 2.1.2 and
collectively referred to as "Company Shares") shall, by virtue of the Merger, be
converted, without any action on the part of the holders thereof, into the right
to receive, and Parent shall thereupon issue to the holders of the Company
Shares (the "Stockholders") in the proportions set forth in Schedule 1.4.1
(subject to the escrow provisions set forth in Section 1.4.4 below), 750,000
shares of Parent's common stock, par value $.025 per share ("Parent Common
Shares") subject to adjustment in the event of any stock split, stock dividend,
reverse stock split, or other similar change in the number of shares of Parent
Common Stock issued and outstanding, less such number of Parent Common Shares to
be issued to the Noteholders pursuant to the Note Retirement Agreement,.
Schedule 1.4.1 sets forth as of the date hereof: (i) the Company Shares and all
other rights to purchase any securities convertible into Company Shares, (the
"Company Options") and (ii) the number of Parent Common Shares to be issued as
of the Closing to the eligible holders of Company Shares pursuant to and in
accordance with the liquidation preference provisions of the Company's Restated
Certificate of Incorporation and the number of Parent Common Shares to be
delivered to the Noteholders pursuant to the Note Retirement Agreement
(collectively, the "Share Recipients"). By their approval of the Merger and this
Agreement, the Share Recipients agree that the distribution of the Parent Common
Shares as set forth on Schedule 1.4.1 is in accordance with the Notes and the
provisions of the Company's Restated Certificate of Incorporation.
1.4.2 Dissenters' Rights. Any holder of Company Shares that are
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outstanding on the record date for the determination of the stockholders
entitled to vote for or against the Merger who do not vote such shares in favor
of the Merger, or do not sign and deliver a written consent thereto with respect
to such shares (the Company Shares then outstanding that are not thus voted or
as to which such consents are not signed and delivered are referred to as
"Eligible Dissenting Shares"), will be entitled to exercise dissenters' rights
pursuant to Sections 262 et. seq. of the DGCL ("Section 262") with respect to
such Eligible Dissenting Shares, provided that such shareholder meets all the
requirements of Section 262 with respect to such shares.
1.4.3 Fractional Securities. No fraction of a Parent Common Share
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will be issued in connection with the Merger. In lieu of such issuance, all
Parent Common Shares issued to the Company shareholders shall be rounded to the
closest whole Parent Common Share.
1.4.4 Escrow Securities. To secure claims by Parent for
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indemnification pursuant to Article VII, fifteen percent (15%) of the Parent
Common Shares issuable to each Share Recipient (whether a Noteholder or
Stockholder) shall be held in escrow ("Escrow
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Shares") pursuant to the Escrow Agreement substantially in the form attached as
Exhibit 1.4.4 ("Escrow Agreement").
1.5 Delivery of Certificates. At Closing, each holder of a
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certificate or other documentation representing Company Shares, other than
Eligible Dissenting Shares, shall surrender such certificates or other
documentation to Parent or exchange agent designated by Parent, together with a
duly executed counterpart of the Escrow Agreement and such other duly executed
documentation as may be reasonably required by Parent or the exchange agent to
comply with applicable laws to effect a transfer of such shares or options and
upon such surrender each such holder shall be entitled to receive, and shall
receive at Closing, a certificate or other documentation for the applicable
number of Parent Common Shares calculated pursuant to Section 1.4; provided,
however, that the delivery of the certificate of certificates representing the
Escrow Shares shall be made pursuant to the terms of the Escrow Agreement.
1.6 No Further Ownership Rights in Company Shares. All Parent Common
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Shares issued on or after the Effective Time upon cancellation of the Company
Shares in accordance with the terms hereof shall respectively be deemed to have
been delivered in full satisfaction of all rights pertaining to such Company
Shares. After the Effective Time there shall be no transfers on the stock
transfer books of Company of such Company Shares.
1.7 Regulation D and Form S-3 Registration Statement.
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1.7.1 Regulation D Offering. Each Share Recipient shall execute
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a counterpart to the Investment Agreement (as defined in Section 5.1) and such
other documents as may be reasonably required by Parent to determine such
holder's qualification as an "accredited investor," as that term is defined in
Rule 501 of Regulation D under the Securities Act of 1933 (the "1933 Act") or as
a person with the financial sophistication required to be a purchaser pursuant
to Rule 506(b)(2)(ii) of Regulation D.
1.7.2 S-3 Registration Statement. Not later than fifteen (15)
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days after the date of this Agreement, Parent shall request in writing from the
Share Recipients information about the Share Recipients that Parent reasonably
requires to prepare the S-3 (as defined below). Not later than thirty (30) days
after all of the Share Recipients provide Parent with the information requested
to prepare the S-3 (or in the event that Parent is not eligible to use form S-3
under the 1933 Act, reasonably promptly after the date that Parent becomes
eligible to use Form S-3 under the 1933 Act), but in any event within sixty (60)
days after Parent's request for information from the Share Recipients, Parent
shall prepare, and file with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (such registration statement
and the prospectus included therein being referred to as the "S-3") for resale
of Parent Common Shares issued in connection with the Merger to the Share
Recipients (the "Registrable Securities") provided that such Share Recipients
have executed the Investment and Escrow Agreements. Company will not file with
the Commission any registration statement on Form S-3 for any party other than
the Share Recipients prior to filing the S-3 contemplated under this Section
1.7.2. In connection with the filing of the S-3 pursuant to this Section 1.7.2,
Parent shall:
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(1) prepare and file with the Commission such amendments and
supplements to the S-3 and the prospectus used in connection with such S-3 as
may be necessary to comply with the provisions of the 1933 Act with respect to
the disposition of the Registrable Securities;
(2) furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as the
Share Recipients may from time to time reasonably request;
(3) use its commercially reasonable efforts to qualify the Registrable
Securities for offer and sale under such other securities or blue sky laws of
such jurisdictions in the United States as the Share Recipients reasonably
request;
(4) use its commercially reasonable efforts to cause all such
Registrable Securities to be initially listed on each securities exchange or
quoted on each inter-dealer quotation system on which the Parent Common Shares
are then listed or quoted; and
(5) pay all expenses incurred in connection with such registration,
including but not limited to, registration and filing fees with the Commission,
fees and expenses of compliance with securities or blue sky laws and fees and
expenses incurred in connection with the listing or quotation of the Registrable
Securities.
Notwithstanding anything to the contrary in this Agreement, Parent may
delay the filing of S-3 if: (i) in the good faith and reasonable judgment of the
Board of Directors of Parent, such registration would be seriously detrimental
to Parent, and the Board of Directors of Parent concludes, as a result, that it
is essential to defer the filing of such registration statement at such time,
and (ii) Parent shall furnish to such Share Recipients a certificate signed by
the President of Parent stating that in the good faith judgment of the Board of
Directors of Parent, it would be seriously detrimental to Parent for such
registration statement to be filed in the near future and that it is, therefore,
essential to defer the filing of such registration statement; provided, however,
that Parent shall have the right to defer such filing for a period of not more
than 90 days, and, provided further, that Parent shall not defer its obligation
in this manner more than once. Parent shall use commercially reasonable efforts
to have the S-3 declared effective under the 1933 Act as promptly as practicable
after such filing. Parent shall use commercially reasonable efforts to cause the
S-3 to continue to be effective until the earlier to occur of (i) the second
anniversary of the Closing and (ii) the date that all Share Recipients have
either disposed of or have the ability to dispose of all their Registrable
Securities within a single three (3) month period pursuant to Rule 144 of the
▇▇▇▇ ▇▇▇ ("▇-▇ Effective Period"), and, during such period, to cause the
registration statement and the prospectus contained therein to be updated as
reasonably deemed necessary by Parent to enable the Share Recipients to resell
the Registrable Securities. Any Share Recipient selling stock registered under
the S-3 shall indemnify Parent, its officers and directors, each underwriter and
selling broker, if any, and each person, if any, who controls Parent, against
liability (including liability under the 1933 Act and the Securities and
Exchange Act of 1934 ("1934 Act")) arising by reason of any statement contained
in the S-3, that such Share Recipient provided to Parent in writing explicitly
for use in the S-3, being false or misleading or omitting to state a material
fact necessary to be stated in order that the statements made in the S-3, in the
circumstances in which they are made, not be misleading. Parent shall
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indemnify each Share Recipient selling stock registered under the S-3, and each
underwriter and selling broker, if any, against liability (including liability
under the 1933 and 1934 Acts) arising by reason of any statement (other than a
statement provided by any Share Recipient as described above) in or incorporated
by reference in the S-3 being false or misleading or omitting to state a
material fact necessary to be stated in order that the statements made in or
incorporated by reference in the S-3, in the circumstances in which they are
made, not be misleading. In addition, Parent shall indemnify each Share
Recipient selling stock registered under the S-3 against liability arising by
reason of any violation by Parent of the 1933 Act or the 1934 Act or any rule or
regulation promulgated thereunder applicable to Parent, or any blue sky or other
state securities laws or any rule or regulation promulgated thereunder
applicable to Parent, relating to any action or inaction required of Parent in
connection with the S-3. Upon receipt of any notice (a "Suspension Notice") from
Parent of the happening of any event which makes any statement made in the S-3
or related prospectus untrue or which requires the making of any changes in such
S-3 or prospectus so that they will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein in light of the circumstances under
which they were made not misleading, each Share Recipient shall forthwith
discontinue disposition of shares pursuant to such S-3 until such Share
Recipient's receipt of the copies of the supplemented or amended prospectus
(which Parent shall use commercially reasonable efforts to prepare and
distribute promptly) or until it is advised in writing (the "Advice") by Parent
that the use of the prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
prospectus. The obligations of Parent pursuant to this Section 1.8.2 shall
expire on the earlier of (i) the sale or other disposition of all of the
Registrable Securities (including Parent Common Shares released pursuant to the
Escrow Agreement) or (ii) the termination of the S-3 Effective Period.
1.7.3 Piggyback Rights. If the Parent proposes to register any
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equity security (as defined in Section 3(a)(11) of the ▇▇▇▇ ▇▇▇) under the 1933
Act, on any registration form prescribed by the Commission other than Form S-4
or S-8 (and other than a registration filed in connection with an exchange
offering or an offering of securities solely to existing holders of the Parent's
securities), not less than 30 days prior to the filing of any registration
statement with respect to each such registration, the Parent shall give to the
Share Recipients written notice of such proposal which shall describe in detail
the proposed registration and distribution (including those jurisdictions where
registration or qualification under the securities or blue sky laws is intended)
and, upon the written request of any Share Recipient given within 15 days after
the date of any such notice, proceed to include in such registration such
Registrable Securities as have been requested by any such holder(s) to be
included in such registration. The Parent will in each instance use its
commercially reasonable best efforts to cause any such shares (the holders of
which shall have so requested registration thereof) to be registered under the
1933 Act and qualified under the securities or blue sky laws of any jurisdiction
requested by a prospective seller; provided, that in the event such registration
is an underwritten primary offering on behalf of the Parent and the managing
underwriters advise the Parent in writing that, in their opinion, the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering, the Parent will include in such registration
(i) first, the aggregate number of securities to be issued by the Parent, (ii)
second, the shares requested to be included in
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such registration by holders of exercising demand registration rights with
respect to such registration and (iii) third, other securities requested to be
included in such registration, including the shares issued in connection with
the Merger, pro rata based on the total number of shares requested to be
included in such registration by each such holder. If a holder of Registrable
Securities decided not to include all of such holder's Registrable Securities in
any registration statement hereafter filed by Parent pursuant to this Section
1.7.3, such holder shall nevertheless continue to have the right to include any
Registrable Securities in any subsequent registration statement or registration
statements as may be filed by Parent with respect to offerings of its
securities, all upon the terms and conditions set forth herein. The obligations
of Parent pursuant to this Section 1.7.3 shall expire on the earlier of (i) the
sale or other disposition of all of the Registrable Securities (including Parent
Common Shares released pursuant to the Escrow Agreement) or (ii) the second
anniversary of the Closing.
1.8 Tax-Free Reorganization. The Merger is intended to be a
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"reorganization" within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code"), and this Agreement is intended to constitute a
"plan of reorganization" within the meaning of the regulations promulgated under
Section 368 of the Code.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Company. Except as disclosed in
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a document referring specifically to the representations and warranties in this
Agreement which identifies by section number the section and subsection to which
such disclosure relates and is delivered by Company to Parent simultaneous with
the execution of this Agreement and is attached hereto (the "Company Disclosure
Schedule"), Company represents and warrants to Parent as follows:
2.1.1 Organization, Standing and Power. Company is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Delaware, has all requisite corporate power and corporate authority to
own, lease and operate its properties and to carry on its businesses as now
being conducted, and is duly qualified and in good standing to do business in
each jurisdiction in which a failure to so qualify would have a material adverse
effect on the Business Condition (as hereinafter defined) of Company. As used in
this Agreement, "Business Condition" with respect to any entity shall mean the
business, financial condition, results of operations, assets or prospects (as
defined below) (without giving effect to the consequences of the transactions
contemplated by this Agreement) of such entity or entities including
Subsidiaries taken as a whole. Company has no Subsidiaries. In this Agreement, a
"Subsidiary" of any corporation or other entity means a corporation,
partnership, limited liability company or other entity of which such corporation
or entity directly or indirectly owns or controls voting securities or other
interests which are sufficient to elect a majority of the Board of Directors or
other managers of such corporation, partnership, limited liability company or
other entity and "prospects" shall mean events, conditions, facts or
developments which are known to such entity and which in the reasonable course
of events are expected to have a material effect on future operations of the
business as presently conducted by such entity. Company has delivered
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to Parent complete and correct copies of the articles, bylaws, and/or other
primary charter and organizational documents ("Charter Documents") of Company,
in each case, as amended to the date hereof. The minute books and stock records
of Company contain correct and complete records of all material proceedings and
actions taken at all meetings of, or effected by written consent of, the
stockholders of Company and its Board of Directors, and all original issuances
and subsequent transfers, repurchases, and cancellations of Company's capital
stock. The Company Disclosure Schedule contains a complete and correct list of
the officers and directors of Company.
2.1.2 Capital Structure.
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(a) The authorized capital stock of Company consists of (i)
20,000,000 shares of Company Common Stock, par value $0.01 per share, ("Company
Common Shares") of which 5,716,662 shares are issued and outstanding and (ii)
7,357,463 shares of preferred stock, par value $0.01 per share ("Company
Preferred Shares") of which (A) 3,435,894 shares have been designated Series A
Convertible Preferred Stock ("Series A Preferred") all of which are outstanding
and (B) 3,921,569 shares have been designated Series B Convertible Preferred
Stock ("Series B Preferred") all of which are outstanding. For purposes of this
Agreement, the Company Common Shares, the Series A Preferred and the Series B
Preferred shall collectively be referred to as the "Company Shares". As of the
date hereof, 829,159 Company Common Shares are reserved for issuance upon the
exercise of outstanding Company options pursuant to Company's Stock Option Plan
(the "Company Option Plan") and an additional 23,815 Company Common Shares are
reserved for issuance upon exercise of outstanding warrants. All Company Common
Shares and any options, warrants and other securities convertible into, or
exchangeable for equity securities of the Company outstanding as of the date of
this Agreement are set forth on Schedule 1.4.1, and no Company Common Shares are
held by Company in its treasury.
(b) All outstanding Company Shares are validly issued, fully
paid, nonassessable and not subject to any preemptive rights, or to any
agreement to which Company is a party or by which Company may be bound. Except
as set forth on Schedule 1.4, there are not any options, warrants, calls,
conversion rights, commitments, agreements, contracts, understandings,
restrictions, arrangements or rights of any character to which Company is a
party or by which Company may be bound obligating Company to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of the capital
stock of Company, or obligating Company to grant, extend or enter into any such
option, warrant, call, conversion right, conversion payment, commitment,
agreement, contract, understanding, restriction, arrangement or right. Company
does not have outstanding any bonds, debentures, notes or other indebtedness the
holders of which (i) have the right to vote (or convertible or exercisable into
securities having the right to vote) with holders of Company Shares on any
matter ("Company Voting Debt") or (ii) are or will become entitled to receive
any payment as a result of the execution of this Agreement or the completion of
the transactions contemplated hereby.
2.1.3 Authority. The execution, delivery, and performance of this
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Agreement by Company has been duly authorized by all necessary action of the
Board of Directors of
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Company. Certified copies of the resolutions adopted by the Board of Directors
of Company approving this Agreement and the Merger have been, or at the Closing
will be, provided to Parent. Company has duly and validly executed and delivered
this Agreement, and this Agreement constitutes a valid, binding, and enforceable
obligation of Company in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the enforcement of creditors' rights generally and except
that the availability of equitable remedies is subject to the discretion of the
court before which any proceeding therefor may be brought.
2.1.4 Compliance with Laws and Other Instruments. Company holds, and
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at all times has held, all licenses, permits, and authorizations from all
Governmental Entities, (as defined below) necessary for the lawful conduct of
its business pursuant to all applicable statutes, laws, ordinances, rules, and
regulations of all such authorities having jurisdiction over it or any part of
its operations, excepting, however, when such failure to hold, or have held,
would not have, or have had, a material adverse effect on Company's Business
Condition. There are no violations or claimed violations known by Company of
any such license, permit, or authorization or any such statute, law, ordinance,
rule or regulation. Neither the execution and delivery of this Agreement by
Company nor the performance by Company of its obligations under this Agreement
will, in any material respect, violate any provision of laws or will conflict
with, result in the material breach of any of the terms or conditions of,
constitute a material breach of any of the terms or conditions of, constitute a
material default under, permit any party to accelerate any right under,
renegotiate, or terminate, require consent, approval, or waiver by any party
under, or result in the creation of any lien, charge, encumbrance, or
restriction upon any of the properties, assets of Company, or Company Shares
pursuant to, any of the Charter Documents or any material agreement (including
government contracts), indenture, mortgage, franchise, license, permit, lease or
other instrument of any kind to which Company is a party or by which Company or
any of its assets is bound or affected. No consent, approval, order or
authorization of or registration, declaration or filing with or exemption
(collectively "Consents") by, any court, administrative agency or commission or
other governmental authority or instrumentality, whether domestic or foreign
(each a "Governmental Entity") is required by or with respect to Company in
connection with the execution and delivery of this Agreement by Company or the
consummation by Company of the transactions contemplated hereby, except for the
filing of the appropriate Merger Documents with the Secretary of State of
Delaware and except for such other Consents, which if not obtained or made would
not have a material adverse effect on Company's Business Condition.
2.1.5 Technology and Intellectual Property Rights.
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(a) The "Company Intellectual Property" consists of the following:
(i) all patents, trademarks, trade names, service marks,
mask works, domain names, copyrights and any renewal rights, applications and
registrations for any of the foregoing, and all trade dress, net lists,
schematics, technology, manufacturing processes, supplier lists, trade secrets,
know-how, moral rights, computer software programs or applications (in both
source and object code form) owned by Company;
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(ii) all goodwill associated with trademarks, trade names
service marks and trade dress owned by Company;
(iii) all software and firmware listings, and updated software
source code, and complete system build software and instructions related to all
software described herein owned by Company;
(iv) all documents, records and files relating to design, end
user documentation, manufacturing, quality control, sales, marketing or customer
support for all intellectual property described herein owned by Company;
(v) all other tangible or intangible proprietary information
and materials owned by Company; and
(vi) all license and other rights in any third party product,
intellectual property, proprietary or personal rights, documentation, or
tangible or intangible property, including without limitation the types of
intellectual property and tangible and intangible proprietary information
described in (i) through (v) above;
that are being, and/or have been, used, or are currently under development for
use, in the business of Company as it has been, is currently or is currently
anticipated to be (up to the Closing), conducted. Company Intellectual Property
described in clauses (i) to (v) above is referred to herein as "Company Owned
Intellectual Property" and Company Intellectual Property described in clause
(vi) above is referred to herein as "Company Licensed Intellectual Property".
Unless otherwise noted, all references to "Company Intellectual Property" shall
refer to both Company Owned Intellectual Property and Company Licensed
Intellectual Property.
(b) The Company Disclosure Schedule lists: (i) all patents,
registered copyrights, mask works, trademarks, service marks, trade dress, any
renewal rights for any of the foregoing, and any applications and registrations
for any of the foregoing, that are included in the Company Owned Intellectual
Property; (ii) all hardware products and tools, software products and tools, and
services that are currently published, offered, or under development by Company;
(iii) all licenses, sublicenses and other agreements to which Company is a party
and pursuant to which any other person is authorized to have access to or use
the Company Owned Intellectual Property or exercise any other right with regard
thereto; (iv) all Company Licensed Intellectual Property (other than license
agreements for standard "shrink wrapped, off the shelf," commercially available,
third party products used by the Company); and (v) any obligations of
exclusivity, noncompetition, nonsolicitation, or first negotiation with respect
to Company Intellectual Property to which Company is subject under any agreement
that does not fall within the ambit of (iii) or (iv) above.
(c) The Company Intellectual Property consists solely of items and
rights that are either: (i) owned by Company, (ii) in the public domain, or
(iii) rightfully used and authorized for use by Company and its successors
pursuant to a valid license or other agreement.
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Company has all rights in the Company Intellectual Property reasonably necessary
to carry out Company's current, and, to the knowledge of the Company,
anticipated future (up to the Closing) activities and has or had all rights in
the Company Intellectual Property reasonably necessary to carry out Company's
former activities, including without limitation, if necessary to carry out such
activities, rights to make, use, exclude others from using, reproduce, modify,
adapt, create derivative works based on, translate, distribute (directly and
indirectly), transmit, display and perform publicly, license, rent, lease,
assign, and sell the Company Owned Intellectual Property in all geographic
locations and fields of use, and to sublicense any or all such rights to third
parties, including the right to grant further sublicenses.
(d) Company is not, nor as a result of the execution or delivery of
this Agreement, or performance of Company's obligations hereunder, will Company
be, in a material violation of any license, sublicense or other agreement
relating to the Company Intellectual Property to which Company is a party or
otherwise bound. Except pursuant to the terms of the agreements listed in the
Company Disclosure Schedule, Company is not obligated to provide any
consideration (whether financial or otherwise) to any third party, nor is any
third party otherwise entitled to any consideration, with respect to any
exercise of rights by Company or its successors in the Company Intellectual
Property.
(e) The use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights in any Company Owned
Intellectual Property by Company and its Licensees or any other authorized
exercise of rights in or to the Company Owned Intellectual Property by Company
or its licensees does not and will not infringe any copyright, patent, trade
secret, trademark, service ▇▇▇▇, trade name, firm name, logo, trade dress, mask
work, moral right, other intellectual property right, right of privacy, right of
publicity or right in personal or other data of any person. Further, the
authorized use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights in any Company Licensed
Intellectual Property by Company or its licensees or any other authorized
exercise of rights in or to the Company Licensed Intellectual Property by
Company or its licensees does not and will not infringe any copyright, patent,
trade secret, trademark, service ▇▇▇▇, trade name, firm name, logo, trade dress,
mask work, moral right, other intellectual property right, right of privacy,
right of publicity or right in personal or other data of any person. No claims
(i) challenging the validity, effectiveness, or ownership by Company of any of
the Company Owned Intellectual Property, or (ii) to the effect that the use,
reproduction, modification, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in any Company Owned
Intellectual Property by Company or its licensees infringes, or will infringe
on, any intellectual property or other proprietary or personal right of any
person, have been asserted or, to the knowledge of Company, are threatened by
any person nor, to the knowledge of the Company, are there any valid grounds for
any bona fide claim of any such kind. To the knowledge of Company, there is no
unauthorized use, infringement or misappropriation of any of the Company Owned
Intellectual Property by any third party, employee or former employee.
-10-
(f) No parties other than Company possess any current or
contingent rights to any source code that is part of the Company Owned
Intellectual Property (including, without limitation, through any escrow
account).
(g) The Company Disclosure Schedule lists all parties who
have created any material portion of, or otherwise have any rights in or to, the
Company Owned Intellectual Property other than employees of Company whose work
product was created by them entirely within the scope of their employment by
Company and constitutes works made for hire owned by Company. Company has
secured from all parties who have created any material portion of, or otherwise
have any rights in or to, the Company Owned Intellectual Property valid and
enforceable written assignments or licenses of any such work or other rights to
Company and has provided true and complete copies of such assignments or
licenses to Parent.
(h) The Company Disclosure Schedule includes a true and
complete list of support and maintenance agreements relating to Company Owned
Intellectual Property or to which Company is a party as to Company Licensed
Intellectual Property including the identity of the parties and the respective
dates of such agreements.
2.1.6 Financial Statement. Company has delivered to Parent (i) an
-------------------
audited balance sheet dated as of December 31, 1999 together with an audited
statement of operations and cash flows for the year ended December 31, 1999 (ii)
an unaudited balance sheet dated as of December 31, 2000 together with an
unaudited statement of operations and cash flows for the year ended December 31,
2000 and (iii) an unaudited balance sheet as of April 30, 2001 (such materials
referred to in (i), (ii) and (iii) are collectively referred to as the
"Financial Statements"). Such Financial Statements: (i) are in accordance with
the books and records of Company, (ii) present fairly, in all material respects,
the financial position of Company as of the date indicated and the results of
its operations for each of the periods indicated, and (iii) have been prepared
in accordance with generally accepted accounting principles consistently
applied; provided, however, that the unaudited Financial Statements are subject
to normal reoccurring year-end audit adjustments (which are not expected to be
material), and do not contain all footnotes required under generally accepted
accounting principles. There are no material off-balance sheet liabilities,
claims or obligations of any nature, whether accrued, absolute, contingent,
anticipated, or otherwise, whether due or to become due, that are not shown or
provided for either in the Financial Statements or the Company Disclosure
Schedule. The liabilities of Company were incurred in the ordinary course of
Company's business except as otherwise indicated in the Company Disclosure
Schedule. At Closing, a "Final Closing Balance Sheet" will be prepared on a
basis consistent with the Financial Statements delivered to Parent. The "Net
Assets" (defined as total current assets less total liabilities excluding the
liabilities under the Notes and the long term portion of the loan from Silicon
Valley Bank as calculated on a consistent basis in accordance with past
practice) of the Company as shown on the Final Closing Balance sheet will be
greater than $1,000. In the event that the Net Assets as shown on the Final
Closing Balance Sheet is less than $1,000, Parent will be entitled to make a
claim against, and solely against, the Escrow Shares in an amount equal to the
amount by which the Net Assets are less than $1,000 (the "Net Asset Deficit
Amount") in the manner set forth in the Escrow Agreement.
-11-
2.1.7 Taxes. As of the date hereof, neither Company nor any of its
-----
predecessors in interest, failed to file any federal, state, local and foreign
tax returns, reports and information statements required to be filed by it
through the date of the Closing (taking into account any extensions of time to
file granted with respect to such returns). No deficiencies or adjustments for
any tax have been claimed, proposed or assessed, or to the best of Company's
knowledge, threatened by any relevant taxing authority. Except as disclosed,
Company is not subject to any pending or, to the best of Company's knowledge,
threatened, tax audit or examination and Company has not waived any statute of
limitation with respect to the assessment of any tax which waiver remains in
effect. For the purposes of this Agreement, the terms "tax" and "taxes" shall
include all federal, state, local and foreign taxes, assessments, duties,
tariffs, registration fees, and other similar governmental charges including
without limitation all income, franchise, property, production, sales, use,
payroll, license, windfall profits, severance, withholding, excise, gross
receipts and other taxes, as well as any interest, additions or penalties
relating thereto and any interest in respect of such additions or penalties.
Company has provided Parent true and correct copies of all information,
statements, reports, work papers and other tax data reasonably requested by
Parent. No consent or agreement has been made under Section 341 of the Code by
or on behalf of Company or any predecessor thereof.
There are no liens for taxes upon the assets of Company except for taxes
that are not yet payable. Company has withheld all taxes required to be
withheld in respect of wages, salaries and other payments to all employees,
officers and directors and timely paid all such amounts withheld to the proper
taxing authority.
Except with respect to transactions contemplated by this Agreement, Company
has not participated in, or cooperated with, an international boycott within the
meaning of Section 999 of the Code. 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 of a change in accounting method; nor does Company have any
knowledge that the IRS (or other taxing authority) has proposed; or is
considering, any such change in accounting method. 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 (or,
in the case of any such agreement or arrangement to which it may be a party,
shareholder approval of any such payments shall be obtained in accordance with
Section 280G). None of the assets of Company is property that is required to be
treated as owned by any other person pursuant to the "safe harbor lease"
provisions of former Section 168(f)(8) of the Internal Revenue Code of 1954 as
amended and in effect immediately prior to the enactment of the Tax Reform Act
of 1986 and none of the assets of Company is "tax exempt use property" within
the meaning of Section 168(h) of the Code. None of the assets of Company
secures any debt the interest on which is tax exempt under Section 103 of the
Code.
2.1.8 Absence of Certain Changes and Events. Since December 31, 2000,
-------------------------------------
there has not been:
-12-
(a) Any transaction involving more than $15,000 entered into
by Company other than in the ordinary course of business; any change (or any
development or combination of developments of which Company has knowledge which
is reasonably likely to result in such a change) in Company's Business
Condition, other than changes in the ordinary course of business which in the
aggregate have not been materially adverse to Company's Business Condition; or,
without limiting the foregoing, any loss of or damage to any of the properties
of Company due to fire or other casualty, or any other loss, whether or not
insured, amounting to more than $15,000 in the aggregate;
(b) Any declaration, payment, or setting aside of any
dividend or other distribution to or for the holders of any Company Shares;
(c) Any termination, modification, or rescission of, or
waiver by Company of rights under, any existing contract having or likely to
have a material adverse effect on Company's Business Condition;
(d) Any discharge or satisfaction by Company of any lien or
encumbrance, or any payment of any obligation or liability (absolute or
contingent) other than current liabilities shown on the balance sheet included
in the Financial Statements as of December 31, 2000, in the ordinary course of
business; or
(e) Any mortgage, pledge, imposition of any security
interest, claim, encumbrance, or other restriction on any of the assets,
tangible or intangible, of Company.
2.1.9 Leases in Effect. Neither Company nor any predecessor in
----------------
interest of Company has ever been party to any real property leases or
subleases.
2.1.10 Personal Property. Company has good and marketable title,
-----------------
free and clear of all title defects, security interests, pledges, options,
claims, liens, encumbrances, and restrictions of any nature whatsoever
(including, without limitation, leases, chattel mortgages, conditional sale
contracts, purchase money security interests, collateral security arrangements,
and other title or interest-retaining agreements) to all inventory, receivables,
furniture, machinery, equipment, and other personal property, tangible or
otherwise, reflected on the balance sheet included in the Financial Statements
or used in Company's business as of the date of such balance sheet even if not
reflected thereon, except for acquisitions and dispositions since December 31,
2000 in the ordinary course of business. Company owns no computer equipment or
other personal property having a book value of $5,000 or more, which are used by
Company in the conduct of its business. All such equipment and property are in
good operating condition and repair, reasonable wear and tear excepted.
2.1.11 Certain Transactions. None of the directors, officers, or
--------------------
stockholders of Company, or any member of any of their families, is presently a
party to, or was a party to during the year preceding the date of this
Agreement, any transaction with Company, including, without limitation, any
contract, agreement, or other arrangement (i) providing for the furnishing of
services to or by, (ii) providing for rental of real or personal property to or
from, or (iii) otherwise
-13-
requiring payments to or from, any such person or any corporation, partnership,
trust, or other entity in which any such person has or had a 5%-or-more interest
(as a shareholder, partner, beneficiary, or otherwise) or is or was a director,
officer, employee, or trustee. None of Company's officers or directors has any
material interest in any property, real or personal, tangible or intangible,
including inventions, copyrights, trademarks or trade names, used in or
pertaining to the business of Company, or any supplier, distributor or customer
of Company, except for the normal rights of a stockholder, and except for rights
under existing employee benefit plans.
2.1.12 Litigation and Other Proceedings. Neither Company nor any of
--------------------------------
its officers, directors, or, to the best knowledge of Company, employees is a
party to any pending or, to the best knowledge of Company, threatened action,
suit, labor dispute (including any union representation proceeding), proceeding,
investigation, or discrimination claim in or by any court or governmental board,
commission, agency, department, or officer, or any arbitrator, arising from the
actions or omissions of Company or, in the case of an individual, from acts in
his or her capacity as an officer, director, or employee of Company which
individually or in the aggregate would be materially adverse to Company.
Company is not subject to any order, writ, judgment, decree, or injunction that
has a material adverse effect on Company's Business Condition.
2.1.13 No Defaults. Company is not, nor has Company received notice
-----------
that it would be with the passage of time, in default or violation of any term,
condition or provision of (i) the Certificate of Incorporation or Bylaws of
Company or any comparable governing instrument of Company; (ii) any judgment,
decree or order applicable to Company; or (iii) any loan or credit agreement,
note, bond, mortgage, indenture, contract, agreement, lease, license or other
instrument to which Company is now a party or by which it or any of its
properties or assets may be bound, except for defaults and violations which,
individually or in the aggregate, would not have a material adverse effect on
the Business Condition of Company.
2.1.14 Major Contracts. Company is not a party to or subject to:
---------------
(a) Any union contract, or any employment contract or
arrangement providing for future compensation, written or oral, with any
officer, consultant, director or employee;
(b) Any plan or contract or arrangement, written or oral,
providing for bonuses, pensions, deferred compensation, retirement payments,
profit-sharing, or the like;
(c) Any joint venture contract or arrangement or any other
agreement which has involved or is expected to involve a sharing of profits;
(d) Any OEM agreement, distribution agreement, volume
purchase agreement, corporate end user sales or service agreement or
manufacturing agreement in which the amount involved exceeds annually, or is
expected to exceed in the aggregate over the life of the contract $25,000 or
pursuant to which Company has granted or received manufacturing
-14-
rights, most favored nation pricing provisions or exclusive marketing,
reproduction, publishing or distribution rights related to any product, group of
products or territory;
(e) Any lease for real or personal property in which the
amount of payments which Company is required to make on an annual basis exceeds
$10,000;
(f) Any material agreement, license, franchise, permit,
indenture or authorization which has not been terminated or performed in its
entirety and not renewed which may be, by its terms, terminated, impaired or
adversely affected by reason of the execution of this Agreement, the Closing of
the Merger, or the consummation of the transactions contemplated hereby or
thereby;
(g) Except for trade indebtedness incurred in the ordinary
course of business, any instrument evidencing or related in any way to
indebtedness incurred in the acquisition of companies or other entities or
indebtedness for borrowed money by way of direct loan, sale of debt securities,
purchase money obligation, conditional sale, guarantee, or otherwise which
individually is in the amount of $15,000 or more;
(h) Any material license agreement, either as licensor or
licensee (excluding nonexclusive hardware and software licenses granted to
distributors or end-users and trademark licenses granted to co-marketing
partners in the ordinary course of business consistent with prior practice); or
(i) Any contract containing covenants purporting to limit
Company's freedom to compete in any line of business in any geographic area.
All contracts, arrangements, plans, agreements, leases, licenses,
franchises, permits, indentures, authorizations, instruments and other
commitments which are listed in the Company Disclosure Schedule pursuant to this
Section 2.1.14 are valid and in full force and effect and Company has not, nor,
to the best knowledge of Company, has any other party thereto, breached any
material provisions of, or is in default in any material respect under the terms
thereof.
2.1.15 Material Relations. To Company's knowledge, as of the date of
------------------
this Agreement, none of the parties to any of the contracts identified in the
Company Disclosure Schedule pursuant to Section 2.1.14 have terminated, or
expressed to the Company an intent to materially reduce or terminate the amount
of its business with Company in the future.
2.1.16 Insurance and Banking Facilities. The Company Disclosure
--------------------------------
Schedule contains a complete and correct list of (i) all contracts of insurance
or indemnity of Company in force at the date of this Agreement (including name
of insurer or indemnitor, agent, annual premium, coverage, deductible amounts,
and expiration date) and (ii) the names and locations of all banks in which
Company has accounts or safe deposit boxes, the designation of each such account
and safe deposit box, and the names of all persons authorized to draw on or have
access to each such account and safe deposit box. All premiums and other
payments due from Company with respect to any such contracts of insurance or
indemnity have been paid, and
-15-
Company does not know of any fact, act, or failure to act which has or might
cause any such contract to be canceled or terminated. All known claims for
insurance or indemnity have been presented.
2.1.17 Employees. Company is not a party to any pending, or to
---------
Company's knowledge, threatened, labor dispute. Company has complied in all
material respects with all applicable federal, state, and local laws,
ordinances, rules and regulations and requirements relating to the employment of
labor, including but not limited to the provisions thereof relating to wages,
hours, collective bargaining, payment of Social Security, unemployment and
withholding taxes, and ensuring equality of opportunity for employment and
advancement of minorities and women. There are no claims pending, or to the
Company's knowledge threatened to be brought, in any court or administrative
agency by any former or current Company employees for compensation, pending
severance benefits, vacation time, vacation pay or pension benefits, or any
other claim pending from any current or former employee or any other person
arising out of Company's status as employer, whether in the form of claims for
employment discrimination, harassment, unfair labor practices, grievances,
wrongful discharge or otherwise.
2.1.18 Employee Benefit Plans. Each employee benefit plan ("Plan")
----------------------
covering active, former, or retired employees of Company is listed in the
Company Disclosure Schedule. Company has made available to Parent a copy of
each Plan, and where applicable, any related trust agreement, annuity, or
insurance contract, and the most recent annual reports (Form 5500) filed with
the IRS. To the extent applicable, each Plan complies, in all material
respects, with the requirements of the Employee Retirement Income Security Act
of 1974 as amended ("ERISA"), and the Code. Any Plan intended to be qualified
under Section 401(a) of the Code either is the subject of a favorable
determination, opinion, notification or advisory letter from the IRS as to its
qualified status under the Code or has remaining a period of time under the Code
or applicable Treasury Regulations or IRS pronouncements in which to apply for
such letter and to make any amendments necessary to obtain such a letter from
the IRS, and nothing has occurred since the issuance of the most recent
favorable determination letter issued by the IRS with respect to any such Plan
that could reasonably be expected to cause the loss of the tax-qualified status
of such Plan. No Plan is covered by Title IV of ERISA or Section 412 of the
Code. No "prohibited transaction," as defined in ERISA Section 406 or Code
Section 4975, for which an exemption is not available, has occurred with respect
to any Plan. Each Plan has been maintained and administered in all material
respects in compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations, including but not limited
to ERISA and the Code, which are applicable to such Plan. There are no pending
or anticipated (by Company) claims against or otherwise involving any of the
Plans (excluding claims for benefits incurred in the ordinary course of Plan
activities) and no suit, action, or other litigation has been brought against or
with respect to any Plan. All contributions, reserves, or premium payments to
the Plan, accrued to the date hereof have been made or provided for. Company
has not incurred any liability under Subtitle C or D of Title IV of ERISA with
respect to any "single-employer plan," within the meaning of Section 4001(a)(15)
of ERISA, currently or formerly maintained by Company, or any entity which is
considered one employer with Company under Section 4001 of ERISA. Company has
not incurred any withdrawal liability under Subtitle E of Title IV of ERISA with
respect to any "multiemployer plan," within the meaning of Section 4001(a)(3) of
-16-
ERISA. There are no restrictions (other than customary advance notice
requirements) on the rights of Company to amend or terminate any Plan without
incurring any material liability thereunder. Company has not engaged in, nor is
it a successor or parent corporation to an entity that has engaged in, a
transaction described in ERISA Section 4069. There have been no amendments to,
written interpretation of, or announcement (whether or not written) by Company
relating to, or change in employee participation or coverage under, any Plan
which would materially increase the expense of maintaining such Plan above the
level of expense incurred with respect to such Plan for the most recent fiscal
year included in the Financial Statements. The Company does not have any current
or projected liability in respect of post-employment or post-retirement welfare
benefits for retired or former employees of Company other than health care
continuation benefits required to be provided under applicable law. No tax under
Section 4980B of the Code has been incurred in respect of any Plan that is a
group health plan, as defined in Section 5000(b)(1) of the Code. Except as
disclosed on the Company Disclosure Schedule, Company has administered the
Company Stock Option Plans and other executive compensation Plans in a manner
which will not result in a compensation charge against earnings or the loss of
deductions for federal and state income tax purposes.
2.1.19 Certain Agreements. Except as contemplated by this Agreement,
------------------
neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated hereby will: (i) result in any payment by Company
(including, without limitation, severance, unemployment compensation, parachute
payment, bonus or otherwise) becoming due to any director, employee or
independent contractor of Company under any Plan, agreement or otherwise, (ii)
materially increase any benefits otherwise payable under any Plan or agreement,
or (iii) result in the acceleration of the time of payment or vesting of any
such benefits.
2.1.20 Guarantees and Suretyships. Company has no powers of attorney
--------------------------
outstanding (other than those issued in the ordinary course of business with
respect to tax matters), Company has no obligations or liabilities (absolute or
contingent) as guarantor, surety, cosigner, endorser, co-maker, indemnitor, or
otherwise respecting the obligations or liabilities of any person, corporation,
partnership, joint venture, association, organization, or other entity.
2.1.21 Brokers and Finders. Company has not retained any broker,
-------------------
finder, or investment banker in connection with this Agreement or any of the
transactions contemplated by this Agreement, nor does or will Company owe any
fee or other amount to any broker, finder, or investment banker in connection
with this Agreement or the transactions contemplated by this Agreement.
2.1.22 Certain Payments. Neither Company nor to the best knowledge
----------------
of Company, any stockholders of Company or any other person or entity acting on
behalf of Company has, directly or indirectly, on behalf of or with respect to
Company: (i) made an unreported political contribution, (ii) made or received
any payment which was not legal to make or receive, (iii) engaged in any
transaction or made or received any payment which was not properly recorded on
the books of Company, (iv) created or used any "off-book" bank or cash account
or "slush fund", or (v) engaged in any conduct constituting a violation of the
Foreign Corrupt Practices Act of 1977.
-17-
2.1.23 Disclosure. Neither the representations or warranties made by
----------
Company in this Agreement, nor the Company Disclosure Schedule or any other
certificate executed and delivered by Company pursuant to this Agreement, when
taken together, contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading in light of the circumstances under which they were
furnished.
2.1.24 Reliance. The foregoing representations and warranties are
--------
made by Company with the knowledge and expectation that Parent and Sub are
placing reliance thereon.
2.2 Representations and Warranties of Parent and Sub. Except as disclosed
------------------------------------------------
in a document referring specifically to the representations and warranties in
this Agreement which identifies by section number the section and subsection to
which such disclosure relates and is delivered by Parent to Company simultaneous
with the execution of this Agreement and is attached hereto (the "Parent
Disclosure Schedule"), Parent and Sub represent and warrant to Company as
follows:
2.2.1 Organization, Standing and Power. Parent is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of Washington
and Sub is a corporation duly organized, validly existing and in good standing
under the laws of Delaware. Each of Parent and Sub has all requisite power and
authority to own, lease and operate its properties and to carry on its
businesses as now being conducted, and is duly qualified and in good standing to
do business in each jurisdiction in which a failure to so qualify would have a
material adverse effect on the Business Condition of Parent.
2.2.2 Authority. The execution, delivery, and performance of this
---------
Agreement by Parent and Sub has been duly authorized by all necessary corporate
action of Parent and Sub. Each of Parent and Sub has duly and validly executed
and delivered this Agreement, and this Agreement constitutes a valid, binding,
and enforceable obligation of each of Parent and Sub in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies is subject to the discretion of the court before which any
proceeding may therefor be brought.
2.2.3 Compliance with Laws and Other Instruments. Neither the
------------------------------------------
execution and delivery of this Agreement by Parent or Sub nor the performance by
Parent or Sub of its obligations under this Agreement will violate any provision
of law or will conflict with, result in the breach of any of the terms and
conditions of, constitute a default under, permit any party to accelerate any
right under, renegotiate or terminate, require consent, approval, or waiver by
any party under, or result in the creation of any lien, charge, or encumbrance
or restriction upon any of the properties, assets, or shares of capital stock of
Parent or Sub pursuant to any charter document of Parent or Sub or any agreement
(including government contracts), indenture, mortgage, franchise, license,
permit, lease, or other instrument of any kind to which Parent or Sub is a party
or by which Parent or any of their assets are bound or affected. No Consent of
any
-18-
Governmental Entity or third party is required by or with respect to Parent
or Sub in connection with the execution and delivery of this Agreement by Parent
or Sub or the consummation by Parent or Sub of the transactions contemplated
hereby or thereby, except for the filing of the Merger Documents with the
Secretary of State of Delaware, and such other consents, authorizations,
filings, approvals and registrations which if not obtained or made would not
have a material adverse effect on Parent's Business Condition.
2.2.4 Financial Statements and SEC Documents. All documents filed
--------------------------------------
with the Commission by Parent (including without limitation Parent's
Registration Statement on Form S-1 with respect to its initial public offering,
as declared effective by the Commission, and Parent's other reports or
registration statements filed by it under the 1933 Act, or under Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act, in the form filed with the Commission
(collectively the "SEC Documents"), as of the date filed, (a) complied in all
material respects as to form and timing with the applicable requirements under
the 1933 Act or the 1934 Act and the rules and regulations thereunder, as the
case may be, and (b) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of Parent included in such
reports comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except as may be indicated in the notes to such financial
statements and, in the case of unaudited statements, as permitted by Form 10-Q
of the Commission, and except that unaudited financial statements may not
contain footnotes and are subject to year-end audit adjustments) and fairly
present the financial position of Parent as and at the date thereof and the
results of its operations and cash flows for the periods then ended. Since
December 31, 2000, neither Parent nor any of its subsidiaries has incurred any
liabilities or obligations of any nature (whether absolute, accrued, fixed,
contingent, liquidated or unliquidated, known or unknown) except liabilities,
obligations and contingencies (a) which are reflected in the consolidated
balance sheet of Parent at December 31, 2000, or (b) which (i) were incurred in
the ordinary course of business since December 31, 2000 and consistent with past
practices, (ii) are disclosed in the SEC Documents filed since December 31, 2000
or (iii) would not individually or in the aggregate have a material adverse
effect on Parent. Since December 31, 2000, except as described in any SEC
Documents, there has been no change in any of the significant accounting
policies, practices or procedures of Parent except changes resulting from
changes in accounting pronouncements of the Financial Accounting Standards Board
or changes in applicable laws. The description of the Parent Common Shares
included in the SEC Documents are, as of the time made, accurate and complete
and contain no material misstatement or omit to state any fact necessary to make
the statements therein not misleading. Since March 31, 2000, Parent has timely
filed all documents required to be filed with the Commission pursuant to the
1934 Act and otherwise satisfies all applicable requirements for the use of the
Form S-3 Registration Statement. There are no "legal proceedings," as defined
in Item 103 of Regulation S-K, to which Parent or any of its subsidiaries is a
party which are required to be disclosed in the SEC Documents and have not been
so disclosed. The Company is eligible to use Form S-3 for the registration of
the Registrable Securities contemplated by Section 1.7.
-19-
2.2.5 Capital Shares. The Parent Common Shares issuable upon the
--------------
Merger will be, at the time of Closing, duly authorized and reserved for
issuance and, when issued in accordance with the terms of this Agreement and the
Merger Documents will be validly issued, fully paid, nonassessable and not
subject to any preemptive rights. The authorized, issued and outstanding
capital shares of Parent are as set forth in the SEC Documents as of the dates
of the financial statements or other information included in the SEC Documents.
Since March 31, 2001, there has been no material change to the issued and
outstanding capital shares of Parent other than the issuances of shares of
Parent common stock under Parent's Employee Stock Purchase Plan and Stock Option
Plan.
2.2.6 Disclosure. Neither the representations or warranties made by
----------
Parent or Sub in this Agreement, nor the final Parent Disclosure Schedule or any
other certificate executed and delivered by Parent pursuant to this Agreement,
nor the SEC Documents when taken together, contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the
circumstances under which they were furnished.
2.2.7 Brokers or Finders. Parent and Sub have not incurred, and will
------------------
not incur, directly or indirectly, as a result of any action taken by or on
behalf of Parent or Sub, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with the Merger, this Agreement
or any transaction contemplated hereby that would result in a claim against
Company or its stockholders.
2.2.8 No Material Adverse Event. Since December 31, 2000, no event
-------------------------
has occurred and no state of facts has developed or is continuing that has had
or could reasonably be expected to have, individually or in the aggregate, a
material adverse effect on Parent's Business Condition, except for such events
or facts that have been disclosed in filings made with the Commission.
2.2.9 Reliance. The foregoing representations and warranties are
--------
made by Parent and Sub with the knowledge and expectation that Company is and
the Share Recipients are placing reliance thereon.
ARTICLE III
COVENANTS OF COMPANY
During the period from the date of this Agreement (except as otherwise
indicated) and continuing until the earlier of the termination of this Agreement
or the Effective Time (or later where so indicated), Company agrees (except as
expressly contemplated by this Agreement, as specifically permitted by the
Company Disclosure Schedule or otherwise permitted by Parent's prior written
consent, which consent will not be unreasonably delayed):
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3.1 Conduct of Business.
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3.1.1 Ordinary Course. Company shall carry on its business in the
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usual, regular and ordinary course in substantially the same manner as
heretofore conducted and, to the extent consistent with such business, use all
reasonable efforts consistent with past practice and policies to preserve intact
its present business organizations, keep available the services of its present
officers, consultants, and employees and preserve its relationships with
customers, suppliers, distributors and others having business dealings with it.
Company shall consult with Parent regarding its business activities during the
term of this Agreement. Company shall promptly notify Parent of any event or
occurrence or emergency which is not in the ordinary course of business of
Company and which is material and adverse to Company's Business Condition. The
foregoing notwithstanding, Company shall not, except as approved in writing by
Parent:
(a) enter into any commitment or transaction (i) to be
performed over a period longer than six months in duration, or (ii) to purchase
assets (other than raw materials, supplies, or cash equivalents) for a purchase
price in excess of $5,000;
(b) grant any bonus, severance, or termination pay to any
officer, director, independent contractor or employee of Company;
(c) enter into or amend any agreements pursuant to which any
other party is granted marketing, publishing or distribution rights of any type
or scope with respect to any hardware or software products of Company;
(d) except in the ordinary course of business consistent with
prior practice, enter into or terminate any material contracts, arrangements,
plans, agreements, leases, licenses, franchises, permits, indentures
authorizations, instruments or commitments, or amend or otherwise change the
terms thereof;
(e) commence a lawsuit other than: (i) for the routine
collection of bills, (ii) in such cases where Company in good faith determines
that failure to commence suit would result in a material impairment of a
valuable aspect of Company's business, provided Company consults with Parent
prior to filing such suit, or (iii) for a breach of this Agreement;
(f) materially modify existing discounts or other terms and
conditions with dealers, distributors and other resellers of Company's products;
(g) materially modify the terms and conditions of existing
corporate end user licenses or service agreements or enter into new corporate
end user licenses or service agreements except in the case of agreements
presently being negotiated where such agreements do not require the Company to
provide hosted services for more than six months;
(h) accelerate the vesting or otherwise modify any Company
Option, restricted stock, or other outstanding rights or other securities; or
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(i) distribute or sell any asset or other valuable right of
the Company to any Company Stockholder, director, employee or consultant.
3.1.2 Dividends, Issuance of or Changes in Securities. Company shall
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not without the prior written consent of Parent: (i) declare or pay any
dividends on or make other distributions to its stockholders (whether in cash,
shares or property), (ii) issue, deliver, sell, or authorize, propose or agree
to, or commit to the issuance, delivery, or sale of any shares of its capital
stock of any class, any Company Voting Debt or any securities convertible into
its capital stock, any options, warrants, calls, conversion rights, commitments,
agreements, contracts, understandings, restrictions, arrangements or rights of
any character obligating Company to issue any such shares, Company Voting Debt
or other convertible securities except as any of the foregoing is required by
outstanding Company Options or Company Preferred Shares, (iii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
capital stock of Company, (iv) repurchase or otherwise acquire, directly or
indirectly, any shares of its capital stock, or (v) propose any of the
foregoing.
3.1.3 Charter Documents. Company shall not amend its Charter
-----------------
Documents.
3.1.4 No Acquisitions. Company shall not acquire or agree to acquire
---------------
by merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to make any such acquisition.
3.1.5 No Dispositions. Company shall not sell, lease, license,
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transfer, mortgage, encumber or otherwise dispose of any of its assets or
cancel, release, or assign any indebtedness or claim, except in the ordinary
course of business consistent with prior practice.
3.1.6 Indebtedness. Company shall not incur any indebtedness for
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borrowed money by way of direct loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee, or otherwise.
3.1.7 Compensation. Company shall not adopt or amend any Plan or pay
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any pension or retirement allowance not required by any existing Plan. Company
shall not enter into or modify any employment contracts, increase the salaries,
wage rates or fringe benefits of its officers, directors or employees or pay
bonuses or other remuneration except for current salaries and other remuneration
for which Company is obligated pursuant to a written agreement a copy of which
has been provided to Parent.
3.1.8 Claims. Company shall not settle any claim, action or
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proceeding, except in the ordinary course of business consistent with past
practice.
3.2 Access to Properties and Records. Throughout the period between the
--------------------------------
date of this Agreement and the earliest of the Closing or the termination of
this Agreement, Company
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shall give Parent and its representatives full access, during reasonable
business hours but in such a manner as not unduly to disrupt the business of
Company, to its premises, properties, contracts, commitments, books, records,
and affairs, and shall provide Parent with such financial, technical, and
operating data and other information pertaining to its business as Parent may
reasonably request. With Company's prior consent, which shall not be
unreasonably withheld or delayed, Parent shall be entitled to make appropriate
inquiries of third parties in the course of its investigation. All information
disclosed by Company to Parent shall be subject to the terms of the Mutual Non-
Disclosure Agreement dated as of January 21, 2001 entered into between Parent
and the Company (the "Confidentiality Agreement").
3.3 Breach of Representations and Warranties. Except as specifically
----------------------------------------
permitted by this Agreement, Company will not take any action that would cause
or constitute a breach of any of the representations and warranties set forth in
Section 2.1 or that would cause any of such representations and warranties to be
inaccurate in any material respect, in each case as of the date hereof and as of
the Closing Date. In the event of, and promptly after becoming aware of, the
occurrence of or the pending or threatened occurrence of any event that would
cause or constitute such a breach or inaccuracy, Company will give detailed
notice thereof to Parent and will use its commercially reasonable best efforts
to prevent or promptly remedy such breach or inaccuracy.
3.4 Consents. Company will promptly apply for or otherwise seek, and use
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its commercially reasonable best efforts to obtain, all consents and approvals,
and make all filings, required with respect to the consummation of the Merger.
3.5 Tax Returns. Company shall promptly provide Parent with copies of all
-----------
tax Returns that are filed on or after the date hereof and prior to the Closing
Date. Company shall properly and timely file all tax Returns with respect to
Company required to be filed prior to the Closing Date (taking into account any
extension of time to file granted with respect thereof) and shall pay or accrue
all taxes required to be paid prior to the Closing Date. All such Returns shall
be prepared consistent with past practice and shall be subject to the approval
of Parent, which shall not be unreasonably withheld or delayed. Company shall
(i) notify Parent promptly if it receives notice of any tax audit, the
assessment of any tax, the assertion of any tax lien, or any request, notice or
demand for taxes by any taxing authority, (ii) provide Parent a description of
any such matter in reasonable detail (including a copy of any written materials
received from the taxing authority), and (iii) take no action with respect to
such matter without the consent of Parent, which consent shall not be
unreasonably withheld. Company shall not (x) make or revoke any tax election
which may affect Company, (y) execute any waiver of restrictions on assessment
of any tax, or (z) enter into any agreement or settlement with any taxing
authority with respect to any tax without the approval of Parent, which shall
not be unreasonably withheld or delayed.
3.6 Preparation of Disclosure and Solicitation Materials. As promptly as
----------------------------------------------------
practicable after the execution of this Agreement, Company will promptly submit
to its stockholders, information and documents relating to Company, its business
or operations, Parent, its business or operations, the terms of the Merger and
this Agreement. Company will not
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provide or publish to its stockholders any material concerning it or its
affiliates that violates the DGCL, the 1933 Act or the 1934 Act with respect to
the transactions contemplated hereby.
3.7 Exclusivity; Acquisition Proposals. Unless and until this Agreement
----------------------------------
shall have been terminated by either party pursuant to Article VIII hereof,
Company shall not (and each shall use its commercially reasonable best efforts
to ensure that none of its officers, directors, agents, representatives or
affiliates) take or cause or permit any person to take, directly or indirectly,
any of the following actions with any party other than Parent and its designees:
(i) solicit, encourage, initiate or participate in any negotiations, inquiries
or discussions with respect to any offer or proposal to acquire all or any
significant part of its business, assets or capital shares whether by merger,
consolidation, other business combination, purchase of assets, tender or
exchange offer or otherwise (each of the foregoing, an "Acquisition
Transaction"), (ii) disclose, in connection with an Acquisition Transaction, any
information not customarily disclosed to any person other than Parent or its
representatives concerning Company's business or properties or afford to any
person other than Parent or its representatives or entity access to its
properties, books or records, except in the ordinary course of business and as
required by law or pursuant to a governmental request for information (and then
only after giving prior notice to Parent), (iii) enter into or execute any
agreement relating to an Acquisition Transaction, or (iv) make or authorize any
public statement, recommendation or solicitation in support of any Acquisition
Transaction or any offer or proposal relating to an Acquisition Transaction
other than with respect to the Merger; provided, however, that if, at any time
prior to the approval of the Merger by the stockholders of the Company, the
Board of Directors of Company determines in good faith, based on the written
advice of outside counsel a copy of which is delivered to Parent, that failure
to do so would be reasonably likely to constitute a breach of its fiduciary
duties to Company's stockholders under applicable law, the Company, in response
to a written proposal with respect to an Acquisition Transaction that was (a)
unsolicited or that did not otherwise result from a breach of this Section 3.7,
and (b) is reasonably likely to lead to a Superior Proposal (as defined below),
may (I) furnish non-public information with respect to Company to the person who
made such written proposal with respect to an Acquisition and (II) participate
in negotiations regarding such written proposal with respect to an Acquisition
Transaction. For purposes hereof, a "Superior Proposal" shall mean a proposal
with respect to an Acquisition Transaction that (x) the Board of Directors of
Company, in good faith, based on the advice of outside legal counsel and an
investment banker, determines to be more favorable than the Parent's offer, and
(y) is already financed or readily financeable.
3.8 Employees and 401(k) Plan. Prior to Closing, Company agrees to
-------------------------
terminate the employees identified by Parent and mutually acceptable to the
Company and will use its commercially reasonable best efforts to obtain releases
from such employees substantially in the form attached hereto as Exhibit 3.8.
The Company shall terminate the AnswerLogic, Inc. 401(k) Plan prior to Closing
in a manner that maintains the qualified status of the plan.
3.9 Notice of Events. Throughout the period between the date of this
----------------
Agreement and the Closing, Company shall promptly advise Parent of any and all
material events and developments concerning its financial position, results of
operations, assets, liabilities, or
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business or any of the items or matters concerning Company covered by the
representations, warranties, and covenants of Company contained in this
Agreement.
3.10 Stockholder Approval. Unless this Agreement is terminated in
--------------------
accordance with its terms, the Board of Directors of Company shall unanimously
recommend to the Stockholders that the Stockholders vote in favor of the
adoption of this Agreement and the Merger and the Board of Directors and
officers of Company shall use their reasonable best efforts to obtain such
Stockholders' approval. Regardless of whether the Board of Directors of Company
recommends or withdraws its recommendation to the Stockholders that the
Stockholders vote in favor of the adoption of this Agreement and the Merger,
unless this Agreement is terminated in accordance with Article VII hereof,
Company and its Board of Directors shall take all action necessary and in
accordance with DGCL and its Charter and Bylaws to convene a meeting of
Company's Stockholders (or solicit written consents of the Stockholders in lieu
of such meeting) to consider adoption and approval of this Agreement and
approval of the Merger to be held as promptly as practicable.
3.11 Best Efforts. Company will use its commercially reasonable best
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efforts to effectuate the transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to Closing under this Agreement.
ARTICLE IV
COVENANTS OF PARENT
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time (or later
where so indicated), each of Parent and Sub agrees (except as expressly
contemplated by this Agreement or with Company's prior written consent):
4.1 Breach of Representations and Warranties. Neither Parent nor Sub will
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take any action which would cause or constitute a breach of any of the
representations and warranties set forth in Section 2.2 or which would cause any
of such representations and warranties to be inaccurate in any material respect,
in each case as of the date hereof and as of the Closing Date. In the event of,
and promptly after becoming aware of, the occurrence of or the pending or
threatened occurrence of any event which would cause or constitute such a breach
or inaccuracy, Parent will give detailed notice thereof to Company and will use
its commercially reasonable best efforts to prevent or promptly remedy such
breach or inaccuracy.
4.2 Regulation D. Parent shall provide Company and its stockholders with
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the information relating to Parent as required by Rule 502(b) of Regulation D
and the information relating to Parent referred to in Section 3.6. In addition,
Parent will use all commercially reasonable efforts to assist the Company in
submitting to the Company's stockholders, information and documents relating to
Parent, its business and operations. If at any time prior to the Effective Time
any event relating to or affecting Parent shall occur as a result of which it is
necessary to supplement or amend such information or documents in order to make
such information or documents not misleading in light of the circumstances
existing at the time
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approval of the stockholders of Company is sought, Parent will forthwith prepare
and distribute an amendment or supplement so that such document, as so
supplemented or amended, will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.3 Consents. Each of Parent and Sub will promptly apply for or otherwise
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seek, and use commercially reasonable efforts to obtain, all consents and
approvals, and make filings, required with respect to the consummation of the
Merger.
4.4 Best Efforts. Each of Parent and Sub will use its commercially
------------
reasonable best efforts to effectuate the transactions contemplated hereby and
to fulfill and cause to be fulfilled the conditions to Closing under this
Agreement.
4.5 Nasdaq Listing. Parent agrees to authorize for listing on the Nasdaq
--------------
National Market the Parent Common Shares to be issued pursuant to this
Agreement, by filing with the Nasdaq National Market a Notification of Listing
of Additional Shares (or such other form as may be required by the Nasdaq
National Market) as soon as reasonably practicable and in accordance with the
rules and regulations of the Nasdaq National Market.
4.6 Non-Solicitation of Company Employees. In the event that this
-------------------------------------
Agreement is terminated and the Merger is not consummated, for a period of six
(6) months following the termination of this Agreement, Parent agrees that it
shall not, either individually or on behalf of or through any person, business,
company, enterprise or entity, directly or indirectly, employ or retain, or
knowingly permit any company or business organization directly or indirectly
controlled by Parent to employ or retain, or solicit, entice, encourage or
persuade or attempt to solicit, entice, encourage or persuade to leave the
services of Company for any reason, any employee of the Company employed by the
Company as of April 1, 2001.
ARTICLE V
ADDITIONAL AGREEMENTS
In addition to the foregoing, Parent, Sub and Company each agree to take
the following actions after the Closing.
5.1 Investment Agreements. All resale of Parent Common Shares by the
---------------------
Share Recipients shall be subject to the restrictions imposed by the investment
agreements in the form attached as Exhibit 5.1 which shall be entered into by
Share Recipients and Parent (the "Investment Agreements").
5.2 Form 8-K. The Company and its officers prior to the Merger agree to
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assist Parent, its auditors and counsel, after the Closing, in the preparation
of a Form 8-K disclosing the transactions contemplated by this Agreement. In
addition, Parent agrees and covenants that it shall use its commercially
reasonable efforts to remain eligible to use Form S-3 until such time as its
obligations under Section 1.8.2 of this Agreement have terminated.
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5.3 Expenses. All costs and expenses incurred in connection with this
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Agreement and the transactions contemplated hereby and thereby shall be paid by
the party incurring such expense; except that in the event the Merger is
consummated, Parent shall bear the fees and expenses of counsel to the Company
and Share Recipients in connection with this Agreement and the transactions
contemplated hereby up to a maximum amount of $60,000.
5.4 Additional Agreements. In case at any time after the Effective Time
---------------------
any further action is reasonably necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
Company, the proper officers and directors of each corporation which is a party
to this Agreement shall take all such necessary action.
5.5 Public Announcements. Neither Parent, Company nor the stockholders of
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the Company shall disseminate any press release or other announcement concerning
this Agreement or the transactions contemplated herein to any third party
(except to the directors, officers and employees of the parties to this
Agreement whose direct involvement is necessary for the consummation of the
transactions contemplated under this Agreement, to the attorneys and accountants
of the parties hereto, or except as Parent determines in good faith to be
required by the federal securities laws after consultation with Company) without
the prior written consent of each of the other parties hereto, which consent
shall not be unreasonably withheld. It is anticipated that a mutually
acceptable joint press release shall be issued only after the Closing.
5.6 Tax-Free Reorganization. Neither Parent, Surviving Corporation nor
-----------------------
Company shall take any action, either prior to or following the Closing, that
would cause the Merger to fail to qualify as a "reorganization" within the
meaning of Section 368 of the Code. Parent agrees that it will not merge the
Surviving Corporation into Parent until after the six month anniversary of the
Effective Time. Parent agrees that it shall and shall cause the Surviving
Corporation to file any tax returns, reports or information returns consistent
with treating the Merger as a reorganization within the meaning of Section 368
of the Code.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
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respective obligation of each party to effect the Merger and to consummate the
actions required to be performed by it in connection with the Closing shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:
6.1.1 Governmental Approvals. Other than the filing of the Merger
----------------------
Documents with the Secretary of State of Delaware, all Consents of Governmental
Entities legally required for the consummation of the Merger and the
transactions contemplated by this Agreement shall have been filed, occurred, or
been obtained, other than such Consents, for which the failure to obtain would
have no material adverse effect on the consummation of the Merger or the other
transactions contemplated hereby or on the Business Condition of Parent or
Company.
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6.1.2 No Restraints. No statute, rule, regulation, executive order,
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decree or injunction shall have been enacted, entered, promulgated or enforced
by any United States court or Governmental Entity of competent jurisdiction
which enjoins or prohibits the consummation of the Merger.
6.2 Conditions of Obligations of Parent. The obligation of Parent to
-----------------------------------
effect the Merger are subject to the satisfaction of the following conditions
unless waived by Parent:
6.2.1 Representations and Warranties of Company. The representations
-----------------------------------------
and warranties of Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement. Parent shall have received a certificate signed
by the President of Company to such effect on the Closing Date.
6.2.2 Performance of Obligations of Company. Company shall have
-------------------------------------
performed in all material respects all agreements and covenants required to be
performed by them under this Agreement prior to the Closing Date, and Parent
shall have received a certificate signed by the President of Company to such
effect on the Closing Date.
6.2.3 Investment Agreements. Parent shall have received duly
---------------------
executed Investment Agreements substantially in the form attached as Exhibit 5.1
from each Share Recipient which shall include representations, warranties and
agreements regarding the issuance and Sales (as defined in the Investment
Agreements) of Parent Common Shares.
6.2.4 Employment and Stay Bonus Agreements. Each of the employees
------------------------------------
identified on Schedule 6.2.4(a) shall have executed an Employment Agreement in
the form attached as Exhibit 6.2.4(a) and each of the Company employees
identified on Schedule 6.2.4(b) shall have executed a Stay Bonus Agreement in
the form attached as Exhibit 6.2.4(b), and no such employee shall have taken any
action or expressed any intent to terminate or modify such agreement. Upon
closing Parent will issue options to purchase 600,000 shares of Parent Common
Stock under applicable option plans as set forth on and as allocated and with
vesting schedules according to Schedule 6.2.4(b).
6.2.5 Legal Action and Dissenters. Holders of no more than 5% of the
---------------------------
outstanding Company Shares shall have exercised dissenters rights under Section
262. There shall not be overtly threatened or pending any action, proceeding or
other application before any court or Governmental Entity brought by any person
or Governmental Entity: (i) challenging or seeking to restrain or prohibit the
consummation of the transactions contemplated by this Agreement, or seeking to
obtain any damages caused by such transactions which if successful would have a
material adverse effect on the viability of such transactions; or (ii) seeking
to prohibit or impose any limitations on Parent's ownership or operation of all
or any portion of Company's business or assets, or to compel Parent to dispose
of or hold separate all or any portion of its or Company's business or assets as
a result of the transactions contemplated by the
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Agreement which if successful would have a material adverse effect on the
viability of such transactions.
6.2.6 Opinion of Company Counsel. Parent shall have received an
--------------------------
opinion dated as of the Closing Date of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, LLP,
counsel to Company, substantially in the form attached as Exhibit 6.2.6.
6.2.7 Employees. Prior to Closing, Company shall have terminated the
---------
employees and contractors listed on Schedule 3.8(a) attached hereto and shall
have made its commercially reasonable best efforts to obtain releases from such
employees substantially in the form attached hereto as Exhibit 3.8(b).
6.2.8 Approvals and Consents. Parent shall have received duly
----------------------
executed copies of all third-party consents, approvals, assignments, waivers,
authorizations or other certificates contemplated by this Agreement or the
Company Disclosure Schedule or reasonably deemed necessary by Parent's legal
counsel to provide for the continuation in full force and effect of any and all
material contracts and leases of Company and for Parent to consummate the
transactions contemplated hereby in form and substance reasonably satisfactory
to Parent, except for such thereof as Parent and Company shall have agreed in
writing shall not be obtained.
6.2.9 Termination of Rights and Certain Securities. Any warrants,
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options, convertible securities or other rights to purchase or acquire any
securities of Company and any registration rights, rights of refusal, rights to
any liquidation preference or redemption rights relating to any security of
Company shall have been terminated and waived as of the Closing.
6.2.10 Final Closing Balance Sheet. Company shall have provided
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Parent with the Final Closing Balance Sheet (as defined in Section 2.1.6) which
shall have been prepared in good faith, in a form reasonably satisfactory to
Parent and shall (i) reflect Net Assets of $1,000 or more and (ii) not reflect a
material adverse change in Company from the Pro Forma Balance Sheet attached as
Schedule 2.1.6.
6.2.11 Note Retirement Agreement and Voting Agreements. Each
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Noteholder shall have executed and delivered to Parent a counterpart signature
page to the Note Retirement Agreement and the Escrow Agreement. Shareholders
holding a majority of the outstanding Company securities entitled to vote on the
Merger, including CMGI@Ventures Technology Fund, LLC and ▇▇▇▇▇ ▇▇▇▇▇▇ Venture
-------------
Partners II, L.P., shall have executed and delivered to Parent a counterpart
signature page to the Voting Agreement (each, a "Voting Agreement") in the form
attached hereto as Exhibit 6.2.11, and no such Shareholder shall have revoked or
sought to rescind its Voting Agreement or its obligations thereunder.
6.3 Conditions of Obligation of Company. The obligation of Company to
-----------------------------------
effect the Merger and consummate the actions required to be performed by it in
connection with the Closing is subject to the satisfaction of the following
conditions unless waived by Company and the Share Recipients:
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6.3.1 Representations and Warranties of Parent and Sub. The
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representations and warranties of each of Parent and Sub set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement, except as otherwise contemplated by this Agreement. For
purposes of affirming the accuracy of the representations and warranties of
Parent made as of the Closing, the term "SEC Documents" shall be deemed to
include all registration statements, reports and proxy statements, including all
amendments thereto, filed by Parent with the Commission after the date of this
Agreement and prior to Closing.
6.3.2 Performance of Obligations of Parent and Sub. Each of the
--------------------------------------------
Parent and Sub shall have performed in all material respects all agreements and
covenants required to be performed by it under this Agreement prior to the
Closing Date, and Company shall have received certificates signed on behalf of
Parent and Sub by an officer of Parent and Sub to such effect on the Closing
Date.
6.3.3 Opinion of Parent's Counsel. Company shall have received an
---------------------------
opinion dated the Closing Date of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP, special counsel to
Parent, substantially in the form attached as Exhibit 6.3.3.
6.3.4 Legal Action. There shall not be overtly threatened or pending
------------
any action, proceeding or other application before any court or Government
Entity brought by any person, entity or Governmental Entity: (i) challenging or
seeking to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain any material damages from
the Company as a result of the transactions contemplated by this Agreement, or
(ii) seeking to prohibit or impose any limitations on Company's ownership or
operation of all or any portion of its business or assets, or to compel Company
to dispose of or hold separate all or any portion of its business or assets as a
result of the transactions contemplated by this Agreement which if successful
would have a material adverse effect on the viability of such business or
assets; provided that Company shall automatically be deemed to waive this
condition if Parent agrees to indemnify, defend and hold any such named party
harmless against any such action.
6.3.5 Consents. The Company shall have received duly executed copies
--------
of all third-party consents, approvals, assignments, waivers, authorizations or
other certificates contemplated by this Agreement or the Company Disclosure
Schedule.
6.3.6 Company Stockholder Approval of Agreement and Merger. This
----------------------------------------------------
Agreement and the Merger shall have been approved by the affirmative vote (or
written consent in lieu thereof) of holders of a majority of the issued and
outstanding shares of capital stock of Company entitled to vote on the Merger.
6.3.7 Parent Agreements. Parent shall have executed and delivered to
-----------------
Company and the other parties thereto a counterpart signature page to the Escrow
Agreement, the Note Retirement Agreement, the Investment Agreements, the
Employment Agreements identified in Section 6.2.4(a) hereof, and the Stay Bonus
Agreements identified in Section 6.2.4(b) hereof.
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ARTICLE VII
INDEMNIFICATION
7.1 Indemnification Relating to Agreement.
-------------------------------------
7.1.1 Indemnification of Parent. Subject to Section 7.5, the Share
-------------------------
Recipients (other than those holders of Eligible Dissenting Shares), by reason
of the approval by the Company's stockholders of the Merger and each Share
Recipient's acceptance of the consideration provided for in Section 1.4 hereof
or Section 1.1.1 of the Note Retirement Agreement and by the execution of the
Escrow Agreement pursuant to Section 1.4.6 which is a condition to receiving
such consideration shall, severally but not jointly (it being understood that
with respect to the Share Recipients, the term "severally" means that each Share
Recipient's total indemnification obligation shall be limited to such Share
Recipient's pro rata share of the indemnification obligations of the Share
Recipients, with the understanding that such pro rata share shall be based upon
the respective amount of consideration payable to such Share Recipient under
Section 1.4 hereof), agree to defend, indemnify, and hold Parent harmless from
and against, and to reimburse Parent with respect to, any and all losses,
damages, liabilities, claims, judgments, settlements, fines, costs, and expenses
(including attorneys' fees) ("Indemnifiable Amounts") of every nature whatsoever
incurred by Parent by reason of or arising out of or in connection with (i) any
breach, or any claim (including claims by parties other than Parent) that if
true, would constitute a breach, by Company of any representation or warranty of
Company contained in this Agreement or in any certificate or other document
delivered to Parent pursuant to the provisions of this Agreement, (ii) the
failure, partial or total, of Company to perform any agreement or covenant
required by this Agreement to be performed by it, (iii) any tax liability, or
asserted liability of the Company relating to any period of time prior to and
through the Closing which is not disclosed in the Financial Statements or the
Closing Balance Sheet, and in each case without giving effect to any
"materiality" limitations or references to "Material Adverse Effect" set forth
therein. The obligations of any Share Recipient to indemnify Parent shall be
determined without regard to any right to indemnification to which any Share
Recipient may have in his or her capacity as an officer, director, employee,
agent or any other capacity of Company and no Share Recipient shall be entitled
to any indemnification from Company or the Surviving Corporation for amounts
paid hereunder. There shall be no right of contribution from Company or any
successor to Company.
7.1.2 Indemnification of Share Recipients. Subject to Section 7.5,
-----------------------------------
Parent and the surviving corporation each agrees to defend, indemnify, and hold
each Share Recipient (other than those holders of Eligible Dissenting Shares)
harmless from and against, and to reimburse such Share Recipient (other than
those holders of Eligible Dissenting Shares) with respect to, any and all
Indemnifiable Amounts of every nature whatsoever incurred by such Share
Recipient by reason of or arising out of or in connection with (i) any breach,
or any claim (including claims by parties other than such Share Recipient) that
if true, would constitute a breach, by Parent or Sub of any representation or
warranty of Parent or Sub contained in this Agreement or in any certificate or
other document delivered to Company pursuant to the provisions of this
Agreement, (ii) the failure, partial or total, of Parent to perform any
agreement or covenant required by this
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Agreement to be performed by Parent or Sub, (iii) any action or omission by
Parent, or Sub, or their stockholders, affiliates, agents or representatives
relating to this Agreement. In no event shall the liability of the Parent or the
Surviving Corporation to indemnify the Share Recipients under this Section 7.1.2
exceed the value of the Parent Common Stock issued in connection with the Merger
valued on the Closing Date.
7.2 Third Party Claims.
------------------
7.2.1 Claims for which Parent is the Indemnified Party. With respect
------------------------------------------------
to any claims or demands by third parties upon which Parent is entitled to
indemnification hereunder, other than claims or demands covered by Section 7.3,
whenever Parent shall have received a written notice that such a claim or demand
has been asserted or threatened, Parent shall notify the "Holders'
Representative"' (as designated in the Escrow Agreement) of such claim or demand
and of the facts within Parent's knowledge that relate thereto within a
reasonable time after receiving such written notice. The Holders'
Representative shall then have the right to contest, negotiate or settle any
such claim or demand through counsel of their own selection, satisfactory to
Parent and solely at their own cost, risk, and expense. Notwithstanding the
preceding sentence, the Holders' Representative shall not settle, compromise, or
offer to settle or compromise any such claim or demand without the prior written
consent of Parent, which consent shall not be unreasonably withheld or delayed.
By way of illustration and not limitation it is understood that Parent may
object to a settlement or compromise which includes any provision which in its
reasonable judgment may have an adverse impact on or establish an adverse
precedent for the Business Condition of Parent or any of its Subsidiaries.
Parent shall not have the right to object to a settlement which consists solely
of the payment of a monetary damage amount and which is subject to full
indemnification under this Agreement. If the Holders' Representative fails to
give written notice to Parent of their intention to contest or settle any such
claim or demand within twenty (20) calendar days after Parent has notified the
Holders' Representative that any such claim or demand has been made in writing
and received by Parent, or if any such notice is given but any such claim or
demand is not promptly contested by the Holders' Representative, Parent shall
have the right to satisfy and discharge the same by payment, compromise, or
otherwise, in accordance with the procedures set forth in the Escrow Agreement.
7.2.2 Claims for which the Share Recipients are the Indemnified
---------------------------------------------------------
Parties. With respect to any claims or demands by third parties upon which a
-------
Share Recipient is entitled to indemnification hereunder, whenever any Share
Recipient shall have received a written notice that such a claim or demand has
been asserted or threatened for which such Share Recipient is entitled to seek
indemnification under Section 7.1.2, such Share Recipient shall notify Parent of
such claim or demand and of the facts within such Share Recipient's knowledge
that relate thereto within a reasonable time after receiving such written
notice. Parent shall then have the right to contest, negotiate or settle any
such claim or demand through counsel of its own selection, and solely at its own
cost, risk and expense.
7.3 Tax Contests. Notwithstanding any of the foregoing, Parent shall have
------------
the sole right to conduct any tax audit or other tax contest ("Tax Contest")
relating to or which may
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affect a Parent Return; provided, however, that Parent shall not settle any Tax
Contest or otherwise compromise any issue that affect or may affect the tax
liability of Company without Company's prior written consent, which consent
shall not be unreasonably withheld or delayed. In the event an Indemnifiable
Amount is reasonably expected to arise out of any such Tax Contest, Parent will
notify the Holders' Representative and allow him to comment on any written
submissions relating to any Indemnifiable Amounts. Parent will consult in good
faith with the Holders' Representative regarding the conduct of any such Tax
Contest. Each of the Company's stockholder agrees to furnish or cause to be
furnished to Parent, upon request, as promptly as practicable, such information
and assistance relating to Company as is reasonably necessary for the
preparation for any audit or Tax Contest and each shall execute and deliver such
powers of attorney and other documents as are necessary to carry out the intent
of this Section 7.3.
7.4 Binding Effect. The indemnification obligations of each of the Share
--------------
Recipients, Parent and Sub contained in this Article VII are an integral part of
this Agreement and Merger in the absence of which neither Parent nor Company
would have entered into this Agreement.
7.5 Limitations. The liability of the Share Recipients or Parent for any
-----------
breach of representation, warranty or covenant or any claim, cause of action or
right of any nature in connection with this Agreement (including without
limitation any claims for indemnification with respect to Sections 7.3 and 7.4
hereof) shall be subject to the following limitations:
7.5.1 Time Limit. The provisions of this Article VII shall apply
----------
only to Indemnifiable Amounts which are incurred or relate to claims which are
asserted or overtly threatened within one (1) year from the Closing Date;
provided that the Holders' Representative or Parent, as the case may be, shall
have received notice of such claims no later than thirty (30) days after the
first anniversary of the Closing; provided further (i) that the obligation of
the Share Recipients to indemnify Parent for breaches of the representations,
warranties and covenants in Sections 2.1.7 relating to taxes (as defined in
Section 2.1.7) shall continue until thirty (30) days after the expiration of all
statutes of limitations applicable to such taxes and (ii) that obligations of
Share Recipients for Indemnifiable Amounts arising out of fraud or willful
misstatements or willful omissions of Company will have no time limit.
7.5.2 Escrow. The sum of all Indemnifiable Amounts to be paid by
------
each Share Recipient shall be satisfied by, and the maximum amount of
indemnification payments payable under this Article VII by such Share Recipient
shall not exceed, the consideration held by the Custodian pursuant to the Escrow
Agreement on behalf of such Share Recipient, provided that the obligations of
Share Recipients for Indemnifiable Amounts arising out of breaches of the
representations and warranties in Section 2.1.7 relating to taxes (as defined in
Section 2.1.7), and fraud or willful misstatements or willful omissions by
Company shall not be subject to the foregoing limitation.
7.6 Other Remedies. This Article VII shall set forth the sole exclusive
--------------
remedy and recourse of the parties for monetary damages arising from any claim,
cause of action or right of any nature under this Agreement; provided, that
nothing contained in this Article VII shall be in lieu of, or constitute a
waiver of, any remedies in equity that any party may otherwise have for
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wrongful action by either of such parties. Notwithstanding anything herein to
the contrary, the parties to this Agreement agree that, in the event of any
breach or threatened breach by any party to this Agreement of any covenant,
obligation or other provision set forth in this Agreement for the benefit of any
other party to this Agreement, such other party shall be entitled to (a) a
decree or order of specific performance or mandamus to enforce the observance
and performance of such covenant, obligation or other provision, and (b) an
injunction restraining such breach or threatened breach.
7.7 Tax Consequences. As stated in Sections 1.7 and 5.6, it is the intent
----------------
of the parties that the Merger is intended to be a "reorganization" within the
meaning of Section 368 of the Code, and no party shall take any position
inconsistent with this interpretation. However no party or its counsel shall
have any obligation, of indemnification or otherwise, in the event it is
determined that the tax consequences differ from those intended other than as a
result of a beach by Parent of the covenant set forth in Section 5.6.
ARTICLE VIII
TERMINATION
8.1 Mutual Agreement. This Agreement may be terminated at any time prior
----------------
to the Effective Time by the written consent of Parent and Company.
8.2 Termination by Parent. This Agreement may be terminated by Parent
---------------------
alone, by means of written notice to Company, if there has been a material
breach by Company of any of its representations, warranties, covenants or
agreement set forth in the Agreement or other ancillary agreements, which breach
has not been cured within (10) ten business days following receipt by Company of
notice of such breach.
8.3 Termination by Company. This Agreement may be terminated by Company
----------------------
alone, by means of written notice to Parent, if there has been a material breach
by Parent of any representation, warrant, covenant or agreement set forth in the
Agreement or other ancillary agreements, which breach has not been cured within
(10) ten business days following receipt by Parent of notice of such breach.
8.4 Outside Date. In the event that the Effective Time has not occurred
------------
on or prior to August 31, 2001 as a result of the conditions specified in
Section 6.1 or 6.2 not having been satisfied, this Agreement may be terminated
by Parent alone by means of written notice to Company. In the event that the
Effective Time has not occurred on or prior to August 31, 2001 as a result of
the conditions specified in Sections 6.3.1, 6.3.2, 6.3.3 or 6.3.7 not having
been satisfied, this Agreement may be terminated by Company alone by means of
written notice to Parent.
8.5 Effect of Termination. In the event of termination of this Agreement
---------------------
by either Company or Parent as provided in this Article, this Agreement shall
forthwith become void and have no effect, and there shall be no liability or
obligation on the part of Parent, Company, Sub or their respective officers or
directors or the Principal Stockholders, except that (i) the
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provisions of Sections 4.6, 5.3, 9.2 and 9.11, and the Confidentiality
Agreement, and any other confidentiality agreement between the parties shall
survive any such termination and abandonment, and (ii) no party shall be
released or relieved from any liability arising from the willful breach by such
party of any of its representations, warranties, covenants or agreements as set
forth in this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 Entire Agreement. This Agreement, including the exhibits and
----------------
schedules delivered pursuant to this Agreement, the Note Retirement Agreement,
the Release and Settlement Agreement and the Confidentiality Agreement between
the parties, contain all of the terms and conditions agreed upon by the parties
relating to the subject matter of this Agreement and supersede all prior
agreements, negotiations, correspondence, undertakings, and communications of
the parties, whether oral or written, respecting that subject matter.
9.2 Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of Delaware. Company and Stockholders
consent to jurisdiction and venue in the state and federal courts in King
County, Washington.
9.3 Notices. All notices, requests, demands or other communications which
-------
are required or may be given pursuant to the terms of this Agreement will be in
writing and will be deemed to have been duly given: (i) on the date of delivery
if personally delivered by hand; (ii) upon the third day after such notice is
deposited in the United States mail, if mailed by registered or certified mail,
postage prepaid, return receipt requested; (iii) on the first day after such
notice is sent by a nationally recognized overnight express courier, specifying
next day delivery; or (iv) by facsimile upon written confirmation (other than
the automatic confirmation that is received from the recipient's facsimile
machine) of receipt by the recipient of such notice:
If to Parent or Sub Primus Knowledge Solutions, Inc.
------------------- ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP
-------------- 5000 Bank of America Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Company: AnswerLogic Inc.
------------- ▇▇▇▇ ▇▇/▇▇/ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, LLP
-------------- ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 9.3.
9.4 Severability. If any provision of this Agreement is held to be
------------
unenforceable for any reason, it shall be modified rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement shall be
deemed valid and enforceable to the full extent.
9.5 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties contained in this Agreement, including the exhibits and schedules
delivered pursuant to this Agreement, shall survive the Closing Date; provided
that except as otherwise set forth in Section 7.5.1, such survival shall
terminate one (1) year from the Effective Time.
9.6 Assignment. No party to this Agreement may assign, by operation of
----------
law or otherwise, all or any portion of its rights, obligations, or liabilities
under this Agreement without the prior written consent of the other party to
this Agreement, which consent may be withheld in the absolute discretion of the
party asked to grant such consent. Any attempted assignment in violation of
this Section 9.6 shall be voidable and shall entitle the other party to this
Agreement to terminate this Agreement at its option.
9.7 Counterparts. This Agreement may be executed in two or more partially
------------
or fully executed counterparts each of which shall be deemed an original and
shall bind the signatory, but all of which together shall constitute but one and
the same instrument. The execution and delivery of a Signature Page - Agreement
and Plan of Reorganization in the form annexed to this Agreement by any party
hereto who shall have been furnished the final form of this Agreement shall
constitute the execution and delivery of this Agreement by such party.
9.8 Amendment. This Agreement may not be amended except by an instrument
---------
in writing signed on behalf of each of the parties hereto.
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9.9 Extension, Waiver. At any time prior to the Effective Time, any party
-----------------
hereto may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements, covenants or conditions for the
benefit of such party contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
9.10 Interpretation. When a reference is made in this Agreement to
--------------
Sections, Exhibits or Schedules, such reference shall be to a Section, Exhibit
or Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes," and "including" when used therein shall be deemed in each case to be
followed by the words "without limitation." The "knowledge of," "the best of
knowledge of," or other derivations of "know" with respect to Company will mean
the actual knowledge of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇
▇▇▇▇▇▇ in each case assuming the exercise of reasonable inquiry. The table of
contents, index to defined terms, and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.11 Confidentiality. Company and the Stockholders agree to use their
---------------
commercially reasonable efforts to keep confidential and not to disclose to
third parties (except to shareholders, employees, and Company advisors for the
purposes of evaluating and consummating the Merger) the terms and conditions of
this Agreement specifically including without limitation the Final Valuation and
number of Parent Common Shares to be issued and to advise all Company officers,
directors and employees of this obligation and to indemnify and hold Parent
harmless from any breach of this agreement in accordance with the provisions of
Article V. Notwithstanding the foregoing, after having given prior notice to
Parent, the Stockholders may disclose such terms and conditions as is reasonably
necessary to comply with applicable laws, regulations, or government rules, or
orders of any court or governmental entity. To the extent that this Section
9.11 is inconsistent with, or conflicts with, any term or terms, of the
Confidentiality Agreement, the Confidentiality Agreement shall govern.
[remainder of page intentionally blank]
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SIGNATURE PAGE - AGREEMENT AND PLAN OF REORGANIZATION
IN WITNESS WHEREOF, Parent, Sub and Company have executed this Agreement as
of the date first written above.
PRIMUS KNOWLEDGE SOLUTIONS, INC. ANSWERLOGIC INC.
By________________________________ By_________________________________
AL MERGER CORP.
By________________________________
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