EXHIBIT 2.5
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BRIDGELINE SOFTWARE, INC.,
BRIDGELINE ACQUISITION CORP.,
AND
STREAMLINE COMMUNICATIONS, INC.
DECEMBER 13, 2000
INDEX
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ARTICLE I
THE MERGER
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1.1 The Merger...........................................................
1.2 Officers and Directors...............................................
1.3 Conversion of Shares.................................................
1.4 Exchange of Certificates.............................................
1.5 Tax-Free Transaction.................................................
1.6 Closing..............................................................
1.7 Other Agreements.....................................................
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS AND THE CORPORATION
---------------------------------------
2.1 Ownership of Shares..................................................
2.2 Organization and Corporate Power.....................................
2.3 Authorization........................................................
2.4 No Contravention.....................................................
2.5 Government Approvals.................................................
2.6 Authorized and Outstanding Stock.....................................
2.7 Subsidiaries.........................................................
2.8 Financial Information/Accounts Payable...............................
2.9 Events Subsequent to the Date of the Financial Statements............
2.10 Litigation...........................................................
2.11 Compliance with Laws and Other Instruments...........................
2.12 Taxes................................................................
2.13 Real Property........................................................
2.14 Environmental Matters................................................
2.15 Personal Property/ Capital Equipment.................................
2.16 Patents, Trademarks, etc.............................................
2.17 Agreements of Directors, Officers, Employees and Consultants.........
2.18 Governmental Approvals...............................................
2.19 List of Material Contacts and Commitments............................
2.20 Accounts Receivable..................................................
2.21 Securities Acts......................................................
2.22 Insurance Coverage...................................................
2.23 Employee Matters.....................................................
2.24 Suppliers and Customers..............................................
2.25 No Brokers or Finders................................................
2.26 Transactions with Insiders...........................................
2.27 Assumptions, Guarantees..............................................
2.28 Bank Accounts, Signing Authority, Powers of Attorney.................
2.29 Corporate Books......................................................
2.30 Disclosures..........................................................
ARTICLE III
THE SHAREHOLDERS' INVESTMENT AND OTHER REPRESENTATIONS
AND AGREEMENTS RELATING TO THE ACQUIRER'S SHARES
------------------------------------------------
3.1 Shareholders' Representations........................................
3.2 Right of First Refusal...............................................
3.3 Agreements Required in a Public Offering.............................
3.4 Survival.............................................................
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE ACQUIRER AND THE ACQUISITION SUB
------------------------------------
4.1 Organization and Qualification.......................................
4.2 Authority............................................................
4.3 No Conflicts.........................................................
4.4 Governmental Authorities.............................................
4.5 Litigation...........................................................
ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF
OF THE ACQUIRER AND THE ACQUISITION SUB AT THE CLOSING
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5.1 Accuracy of Representations and Warranties...........................
5.2 Performance..........................................................
5.3 Opinion of Counsel...................................................
5.4 No Litigation........................................................
5.5 Instruments of Transfer..............................................
5.6 Tax Matters..........................................................
5.7 Compliance Certificate...............................................
5.8 Employment Agreements................................................
5.9 Closing Deliveries...................................................
5.10 Other Matters........................................................
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS
-------------------------------------------------
6.1 Accuracy of Representations and Warranties...........................
ii
6.2 Performance..........................................................
6.3 Opinion of Counsel...................................................
6.4 No Litigation........................................................
6.5 Employment Agreements................................................
6.6 Compliance Certificate...............................................
6.7 Closing Deliveries...................................................
6.8 Other Matters........................................................
ARTICLE VII
COVENANTS OF THE CORPORATION
----------------------------
7.1 Legal Existence......................................................
7.2 Payment of Taxes.....................................................
7.3 Limitation on Liens..................................................
7.4 Carrying on Business in the Ordinary Course..........................
ARTICLE VIII
GENERAL RELEASE AND INDEMNIFICATIONS
------------------------------------
8.1 Shareholders' Releases...............................................
8.2 Shareholders' Indemnification........................................
8.3 Acquirer's Indemnification...........................................
8.4 Third Party Claims...................................................
8.5 Limitations of Liability.............................................
8.6 Expenses, Reimbursement..............................................
8.7 Notice...............................................................
8.8 Survival.............................................................
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
------------------------------------------
ARTICLE X
TERMINATION
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10.1 Termination by Mutual Written Consent................................
10.2 Termination for Breach...............................................
ARTICLE XI
MISCELLANEOUS
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11.1 Cross Disclosure.....................................................
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11.2 Parties in Interest..................................................
11.3 Amendments and Waivers...............................................
11.4 Notices..............................................................
11.5 Expenses.............................................................
11.6 Severability.........................................................
11.7 Counterparts.........................................................
11.8 Effect of Headings...................................................
11.9 Governing Law........................................................
11.10 Press Releases and Public Announcements..............................
11.11 Post-Closing Tax Matters.............................................
11.11.1 Assistance to Shareholders...................................
11.11.2 Access to Records............................................
11.12 Conflict Waiver......................................................
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AGREEMENT AND PLAN OF MERGER
----------------------------
This Agreement and Plan of Merger (the "Agreement") is made this 13th
day of December, 2000 by and among Bridgeline Software, Inc., a Delaware
corporation, with a principal place of business at ▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Acquirer"), Bridgeline Acquisition Corp., a
Massachusetts corporation, a wholly-owned subsidiary of the Acquirer, with a
principal place of business at ▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Acquisition Sub"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇, an individual, with a mailing
address of ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, an individual with a mailing address of ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, an individual with a
mailing address of ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (together
the "Shareholders") and individually, a ("Shareholder").
PRELIMINARY STATEMENT
WHEREAS, the Shareholders own all of the issued and outstanding shares
of common stock (the "Shares") of Streamline Communications, Inc., a
Massachusetts corporation, with a principal place of business at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Corporation", "Target", or
"Streamline").
WHEREAS, the Boards of Directors of the Acquirer, the Acquisition Sub
and the Corporation have, in accordance with the laws of the Commonwealth of
Massachusetts, approved the merger of the Corporation with and into the
Acquisition Sub, pursuant to which all of the Shares will be converted into
common stock of Acquirer and the Corporation will merge with and into the
Acquisition Sub, with the Acquisition Sub being the surviving corporation; and;
WHEREAS, it is the intention of the parties that the merger shall
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (hereinafter the Code) and in particular
qualify as a forward triangular merger under Code Sections 368(a)(1)(A) and 368
(a)(2)(D) and that this Agreement shall constitute a "plan of reorganization"
for the purposes of Section 368 of the Code; and
WHEREAS, each of the parties to the Agreement desires to make certain
representations, warranties, and agreements in connection with the transaction
between the parties and to prescribe various conditions thereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
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1.1 The Merger. Subject to and upon the terms and conditions of this
Agreement, at the effective time of the merger of the Corporation with and into
the Acquisition Sub (the "Merger Date"), and pursuant to the Massachusetts
Business Corporation Law, the Corporation will be merged with and into the
Acquisition Sub (the "Merger") and the separate existence of the Corporation
shall thereupon cease, in accordance with the applicable provisions of the
General Corporate Law of the Commonwealth of Massachusetts. As a result of the
Merger, the Acquisition Sub will be the surviving corporation. The Articles of
Organization and Bylaws of the surviving corporation shall be that of the
Acquisition Sub as it is in existence immediately prior to the Merger. The
separate corporate existence of the Acquisition Sub with all its rights,
privileges, powers, and franchises shall continue unaffected by the Merger. On
or immediately following the Closing Date, the parties shall cause Articles of
Merger meeting the requirements of the corporate laws of the Commonwealth of
Massachusetts to be promptly executed and filed. The Merger shall become
effective at the time and on the date that the filing of the Articles of Merger
with the Secretary of State for the Commonwealth of Massachusetts has been
completed.
1.2 Officers and Directors. The officers and directors of the
Acquisition Sub immediately prior to the Effective Time shall be the officers
and directors of the Surviving Corporation and will hold office until their
successors are duly elected and qualified in the manner provided in the Articles
of Organization or as otherwise provided by law, or until their earlier death,
resignation, or removal.
1.3 Conversion of Shares. The manner of converting the shares of the
capital stock of the Corporation shall, by virtue of the Merger and without any
action on the part of the Shareholders, be as follows: the Shares outstanding
immediately prior to the Merger Date (the "Converted Shares"), shall be
converted into shares of the Acquirer Stock based on the formula set forth in
Schedule 1.3 the "Conversion Ratio" and six hundred thousand dollars
($600,000.00) in cash.
1.4 Exchange of Certificates. From and after the Merger Date, each
holder of a certificate which prior thereto represented Shares shall be entitled
to receive in exchange therefor, upon surrender thereof to the Acquirer, (i) a
certificate or certificates representing the number of shares of Acquirer Stock
into which the Shares shall have been converted, and (ii) Forty Dollars ($40)
per Share. Until so surrendered to the Acquirer, each certificate formerly
representing Shares shall be deemed for all corporate purposes to evidence only
the right to receive the number of shares of Acquirer Stock and cash payment
determined in accordance with this Section 1.4 and Section 1.3 above.
All of the Shares, by virtue of the Merger and upon surrender at the
Closing, shall no longer be outstanding and shall be canceled and retired and
shall cease to exist, and the holders thereof shall cease to have any rights
with respect to the Shares.
Each share of the Corporation's common stock, if any held in the
treasury of the Corporation on the Closing Date shall be canceled and retired
and shall cease to exist, and no consideration shall be paid with respect
thereto.
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1.5 Tax-Free Transaction. It is the intention of the Parties that the
Merger shall qualify as a "reorganization" within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (hereinafter the Code) and in
particular qualify as a so-called "forward triangular merger" under Code
Sections 368(a)(1)(A) and 368(a)(2)(D) and that this Agreement shall constitute
a "plan of reorganization" for the purposes of Section 368 of the Code. All
aspects of the transactions contemplated by this Agreement shall be implemented
in a manner consistent with this intent.
1.6 Closing. The closing (the "Closing") of this transaction shall take
place at the offices of Cohan, Rasnick, ▇▇▇▇▇▇▇, & ▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or as shall be mutually agreed
upon by the parties. The Closing shall occur on December 13, 2000 or such other
time as shall be mutually agreed upon by the parties.
1.7 Other Agreements. At the Closing, the Acquirer and the Shareholders
will enter into certain employment agreements in the form set forth in Schedule
1.7 (the "Employment Agreements") setting forth the terms and conditions of each
Shareholder's employment with the Acquirer.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
--------------------------------------------------
In order to induce the Acquirer to enter into this transaction, each
Shareholder makes the following representations and warranties which are true,
correct and complete in all material respects as of the date hereof and as of
the Closing, and each disclosure on a schedule attached hereto shall be deemed a
disclosure for all purposes hereunder. The representations and warranties set
forth in Sections 2.1, 2.3(b), 2.4 (as to the Shareholders), 2.25 and 3.1 are
made severally, but not jointly, by each Shareholder. The remaining
representations and warranties set forth in Article II are made jointly and
severally by each Shareholder.
2.1 Ownership of Shares. Such Shareholder has valid title to and owns
beneficially and of record all of the Shares set forth opposite his name on
Schedule 2.1 attached hereto, and has good and marketable title to such Shares,
free and clear of any and all restrictive legends, options, liens, claims,
pledges, voting trusts and agreements, security interests, charges and other
restrictions or encumbrances of any kind. Such Shareholder has the absolute and
unconditional right, power, authority and capacity to execute and perform this
Agreement and to sell and transfer the Shares to the Acquirer. No such
Shareholder has granted any option or other commitment or is otherwise a party
to or bound by any agreement obligating such Seller to sell, pledge or otherwise
grant any interest in the Shares to any person or entity, except the Acquirer.
2.2 Organization and Corporate Power. Streamline is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts to carry on its business as presently conducted.
Streamline is duly licensed or qualified to do business as a foreign corporation
in each jurisdiction set forth on Schedule 2.2 attached hereto and there is no
other jurisdiction wherein the character of its property, or the nature of the
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activities presently conducted by it, makes such qualification necessary, except
where the failure to be so qualified will not have a material adverse effect on
the business and operations of Streamline. For purposes of this Agreement, the
term "material adverse effect" means a material adverse effect upon the results
of operations, financial condition, assets, properties or business of
Streamline, taken as a whole.
2.3 Authorization.
(a) The Corporation. The Corporation has all necessary corporate
power and has taken all necessary corporate action required for the due
authorization, execution, delivery and performance by the Corporation of this
Agreement and any other agreement or instrument executed by the Corporation in
connection herewith (collectively, the "Transaction Documents"), and the
consummation of the transactions contemplated herein or therein. To the extent
that the Corporation is a party thereto, each of the Transaction Documents is a
valid and binding obligation of the Corporation enforceable in accordance with
their respective terms, except to the extent that such enforcement may be
subject to applicable bankruptcy, reorganization, insolvency, fraudulent
conveyance or other laws affecting creditors' rights generally and to the
application of general equitable principles.
(b) Shareholders. The Transaction Documents shall include all
documents executed and delivered at the Closing to which the Shareholders are a
party, and each of the Transaction Documents has been duly executed and
delivered by each Shareholder and constitutes the valid and binding obligations
of each Shareholder enforceable against each Shareholder in accordance with
their respective terms, except to the extent that such enforcement may be
subject to applicable bankruptcy, reorganization, insolvency, fraudulent
conveyance or other laws affecting creditors' rights generally and to the
application of general equitable principles.
2.4 No Contravention. The execution, delivery and performance of the
Transaction Documents and consummation of the transactions contemplated hereby
and thereby by the Corporation and the Shareholders do not and will not violate,
conflict with, result in a breach of or constitute a default under (or which
with notice or lapse of time, or both, would constitute a breach of or default
under), or result in the creation of any lien, security interest or other
encumbrance under (a) any material note, agreement, contract, license,
instrument, lease or other obligation to which the Corporation or the
Shareholders are a party or by which the Corporation or the Shareholders are
bound and for which the Corporation or the Shareholders have not previously
obtained a written waiver of such breach or default, which waiver has been
delivered to the Acquirer, (b) any judgment, order, decree, ruling or injunction
known and applicable to the Corporation or the Shareholders, (c) any statute,
law, regulation or rule of any governmental agency or authority, or (d) the
Corporation's Articles of Organization or Bylaws. The Shareholders have no
reason to believe that the execution, delivery or performance of the Transaction
Documents or the consummation of the transactions contemplated hereby or
thereby, will cause the Corporation to lose the benefit of any right or
privilege it presently enjoys. The transaction does not require any further
corporate action and is not and will not be subject to any right of first
refusal, put, call or similar right.
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2.5 Government Approvals. No consent, approval, license or
authorization of, or designation, declaration or filing with, any court or
governmental authority is or will be required on the part of the Shareholders or
the Corporation in connection with the execution, delivery and performance of
this Agreement, any of the Transaction Documents and any other agreements or
instruments executed by the Corporation or the Shareholders in connection
herewith or therewith.
2.6 Authorized and Outstanding Stock. Before giving effect to the
transactions to be effected at Closing, the authorized capital stock of the
Corporation consists of 200,000 shares of $0.01 par value common stock, of which
15,000 shares are validly issued and outstanding and held of record and owned
beneficially as set forth in Schedule 2.1 attached hereto. The Shares are all of
the issued and outstanding shares of capital stock of the Corporation, and the
Shares are duly and validly authorized, validly issued and fully paid and
non-assessable and free from any restrictions on transfer, except for
restrictions imposed by federal or state securities or "blue-sky" laws. There
are no outstanding warrants, options, commitments, preemptive rights, rights to
acquire or purchase, conversion rights or demands of any character relating to
the capital stock or other securities of the Corporation. All issued and
outstanding shares of capital stock of the Corporation were issued (i) in
transactions complying with or exempt from the registration provisions of the
Securities Act of 1933, as amended (the "Act"), and (ii) in compliance with or
in transactions exempt from the registration provisions of applicable state
securities or "blue-sky" laws.
2.7 Subsidiaries. The Corporation does not have, and during the past
ten (10) years has not had, any subsidiaries. The Corporation does not have any
investment or other interest in, or any outstanding loan or advance to or from,
any person or entity, including, without limitation, any officer, director or
shareholder.
2.8 Financial Information/Accounts Payable. Schedule 2.8 sets forth a
full and complete list of the Corporation's accounts payable as of October 31,
2000. The Shareholders have previously delivered to the Acquirer the unaudited
balance sheets of the Corporation at both May 31, 2000 and October 31, 2000 and
the related statements of earnings for the years ending May 31, 1998, May 31,
1999 and May 31, 2000 and for the five (5) month period ending October 31, 2000
(the "Unaudited Financial Statements"). The Unaudited Financial Statements
present fairly, in all material respects, the financial condition and results of
operations of the Corporation in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods. The Unaudited
Financial Statements do not contain footnotes and are subject to normal year-end
adjustments, which adjustments are neither individually nor in the aggregate
material. The Corporation has no liability, contingent or otherwise, which is
not adequately reflected in or reserved against in the Unaudited Financial
Statements (subject to normal year-end adjustments) that could materially and
adversely affect the financial condition of the Corporation. Except as set forth
in the Unaudited Financial Statements or Schedule 2.9, since January 1, 2000,
(i) there has been no change in the business, assets, liabilities, condition
(financial or otherwise) or operations of the Corporation except for changes in
the ordinary course of business which, in the aggregate, have not been
materially adverse, and (ii) none of the business, prospects, condition
(financial or otherwise), operations, property or affairs of the
5
Corporation have been materially adversely affected by any occurrence or
development, in the aggregate, whether or not insured against.
2.9 Events Subsequent to the Date of the Financial Statements. Except
as set forth on Schedule 2.9, and on the Unaudited Financial Statements, since
January 1, 2000, the Corporation has not (i) issued any stock, bond or other
corporate security, (ii) borrowed any amount or incurred or become subject to
any material liability (absolute, accrued or contingent), except liabilities
under contracts entered into in the ordinary course of business, (iii)
discharged or satisfied any lien or encumbrance or incurred or paid any
obligation or liability (absolute, accrued or contingent) other than current
liabilities shown on the Unaudited Financial Statements and incurred in the
ordinary course of business, (iv) declared or made any payment, other than
ordinary payments of compensation in amounts consistent with the historic
levels, or distribution to stockholders or purchased or redeemed any shares of
its capital stock or other securities, (v) mortgaged, pledged or subjected to
lien any of its assets, tangible or intangible, other than liens of current real
property taxes not yet due and payable, (vi) sold, assigned or transferred any
of its tangible assets except in the ordinary course of business, or canceled
any material debt or claim, except in the ordinary course of business, (vii)
sold, assigned, transferred or granted any license with respect to any patent,
trademark, trade name, service ▇▇▇▇, copyright, trade secret or other intangible
asset, except pursuant to license or other agreements entered into in the
ordinary course of business, (viii) suffered any material loss of property or
waived any right of substantial value whether or not in the ordinary course of
business, (ix) made any change in officer compensation, (x) made any material
change in the manner of business or operations of the Corporation, (xi) entered
into any transaction except in the ordinary course of business or as otherwise
contemplated hereby, or (xii) entered into any commitment (contingent or
otherwise) to do any of the foregoing.
2.10 Litigation. Except as otherwise set forth on Schedule 2.10, there
is no litigation or governmental proceeding or investigation, pending or
threatened, against the Corporation or affecting any of the Corporation's
properties or assets, or against any officer, key employee, shareholder or
former shareholder of the Corporation in his capacity as such, nor has there
occurred any event or does there exist any condition on the basis of which any
litigation, proceeding or investigation might properly be instituted. Except as
set forth on Schedule 2.10, each incident or proceeding described on Schedule
2.10 is fully covered by insurance. Neither the Corporation nor any officer, key
employee or shareholder of the Corporation in his capacity as such is in default
with respect to any order, writ, injunction, decree, ruling or decision of any
court, commission, board or other government agency.
2.11 Compliance with Laws and Other Instruments. The Corporation is in
compliance with all of the provisions of this Agreement, its Articles of
Organization and Bylaws, and in all material respects with the provisions of
each mortgage, indenture, lease, license, other agreement or instrument,
judgment, decree, judicial order, statute and regulation by which it is bound or
to which its properties are subject.
2.12 Taxes. The Corporation has filed all federal, state, local and
foreign tax returns (including statements of estimated taxes owed) required to
be filed within the applicable periods for such filings, such filings are
complete and accurate in all material respects, and the
6
Corporation has paid all taxes required to be paid, and has established adequate
accrual reserves (net of estimated tax payments already made) for the payment of
all taxes payable in respect to the period subsequent to the last periods
covered by such returns. Except as set forth on Schedule 2.12, no deficiencies
for any tax are currently assessed against the Corporation, and no tax returns
of the Corporation have been audited during the last three (3) years, and, to
the knowledge of the Shareholders, there is no such audit pending or
contemplated or any reasonable basis for the assessment of additional tax
against the Corporation. There is no tax lien, whether imposed by any federal,
state or local taxing authority, outstanding against the assets, properties or
business of the Corporation. For the purposes of this Agreement, the term "tax"
shall include all federal, state and local taxes, including income, franchise,
property, sales, use, withholding, payroll and employment taxes and all deposits
required to be made by the Corporation with the Internal Revenue Service on
account of the Corporation's election to utilize a fiscal year end.
2.13 Real Property.
(a) Schedule 2.13 sets forth the addresses and uses of all real
property that the Corporation owns, leases or subleases, and any lien or
encumbrance on any such owned real property or the Corporation's leasehold
interest therein, specifying in the case of each such lease or sublease, the
name of the lessor or sublessor, as the case may be, the lease term and the
rental obligations of the lessee thereunder.
(b) Except as set forth on Schedule 2.13, to the knowledge of the
Shareholders, there is no material violation of any law, regulation or ordinance
(including without limitation laws, regulations or ordinances relating to
zoning, environmental, city planning or similar matters) relating to any real
property owned by the Corporation.
(c) There are no defaults by the Corporation, and to the
knowledge of the Shareholders, by any other party, which might curtail in any
material respect the present use of the Corporation's property listed on
Schedule 2.13.
2.14 Environmental Matters.
(a) Except as set forth on Schedule 2.14, to the knowledge of the
Shareholders, the Corporation: (1) has not caused any releases of any Hazardous
Substance (as defined in Subsection 2.14(b), below) anywhere which requires
remediation or clean-up pursuant to any applicable Environmental Law (as defined
in Subsection 2.14(c), below), and (2) has not disposed of Hazardous Substances
anywhere except in compliance in all material respects with applicable
Environmental Laws, and (3) has not received any notice from any governmental
authority of any violation of any Environmental Law. The Corporation has not
conducted or engaged in any operation or activity involving the use, storage or
disposal of any Hazardous Substance except as authorized by and fully in
accordance with applicable Environmental Laws. There is no pending or, to
Shareholders' knowledge, threatened, lawsuit, action, claim or proceeding by any
third party alleging or asserting that the Corporation has violated or is about
to violate any applicable Environmental Law.
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(b) "Hazardous Substances" means and shall include any hazardous
waste, as defined by 42 U.S.C. ss. 6903(5), any hazardous substance as defined
by 42 U.S.C. ss. 9601(14), any pollutant or contaminant as defined by 42 U.S.C.
ss. 9601(33) or any toxic substance, oil or hazardous material or other chemical
or substance regulated by any Environmental Laws.
(c) "Environmental Law" means and shall include any judgment,
decree, order, law, license, permit, rule or regulation pertaining to
environmental matters, including, without limitation, those arising under the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986 ("▇▇▇▇"), the Federal Water
Pollution Control Act, the Solid Waste Disposal Act, as amended, the Federal
Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or
any applicable state or local statute, regulation, ordinance, order or decree
relating to health, safety or the environment.
2.15 Personal Property/Capital Equipment. Schedule 2.15 sets forth a
full and complete list of all personal property, including capital equipment,
owned or leased by the Corporation. Except as set forth on Schedule 2.15,and
except for property sold or otherwise disposed of in the ordinary course of
business, the Corporation owns free and clear of any lien or encumbrance, all of
such personal property. All material items of such personal property used in the
operation of the business of the Corporation are in good operating condition,
normal wear and tear excepted.
2.16 Patents, Trademarks, etc. Set forth on Schedule 2.16 is a list of
all patents, patent rights, patent applications, trademarks, trademark
applications, service marks, service ▇▇▇▇ applications, trade names and
registered copyrights, and all applications for such that are in the process of
being prepared, owned by or registered in the name of the Corporation, or of
which the Corporation is a licensor or licensee or in which the Corporation has
any right, and in each case a brief description of the nature of such right. The
Corporation owns or possesses adequate licenses or other rights to use all the
items set forth on Schedule 2.16, manufacturing processes, formulae, trade
secrets and know how (collectively, (the "Intellectual Property") necessary to
the conduct of its business as conducted and as proposed to be conducted, and no
claim is pending or, to the knowledge of the Corporation, threatened to the
effect that the operations of the Corporation, its products or services,
infringe, or have infringed, upon or conflict with the asserted rights of any
other person or entity under any Intellectual Property, and there is no known
basis for any such claim (whether or not pending or threatened). No claim is
pending or, to the knowledge of the Corporation, threatened to the effect that
any such Intellectual Property owned or licensed by the Corporation, or which
the Corporation otherwise has the right to use, is invalid or unenforceable by
the Corporation, except as set forth on Schedule 2.16, and there is no known
basis for any such claim (whether, or not pending or threatened). Except in the
ordinary course of business, the Corporation has not granted or assigned to any
other person or entity any right to manufacture, have manufactured, assemble or
sell the products or proposed products or to provide the services or proposed
services of the Corporation. No current or former stockholder, employee, officer
or director of the Corporation has (directly or indirectly) any right, title or
interest in any of the rights described on Schedule 2.16 other than such right
which such person or entity may enjoy as a stockholder of the Corporation.
8
2.17 Agreements of Directors, Officers, Employees and Consultants. No
director, officer or employee of or consultant to the Corporation is in
violation of any term of any employment contract, non-competition agreement,
non-disclosure agreement, patent disclosure or assignment agreement or other
contract or agreement containing restrictive covenants relating to the right of
any such director, officer, employee, or consultant to be employed or engaged by
the Corporation because of the nature of the business conducted or proposed to
be conducted by the Corporation, or relating to the use of trade secrets or
proprietary information of others. Schedule 2.17 hereto sets forth the name and
address of each person currently serving as an officer or a director of the
Corporation, and each person listed on Schedule 2.17 was duly elected and is
presently serving as such officer or director. Set forth on Schedule 2.17 is a
list of all employees and consultants of the Corporation who have (i) executed a
non-disclosure agreement with the Corporation or (ii) executed a non-competition
agreement with the Corporation.
2.18 Governmental Approvals. The Corporation has all the material
permits, licenses, orders, franchises and other rights and privileges of all
federal, state, local or foreign governmental or regulatory bodies necessary for
the Corporation to conduct its business as presently conducted. All such
permits, licenses, orders, franchises and other rights and privileges are in
full force and effect and no suspension or cancellation of any of them is
threatened, and none of such permits, licenses, orders, franchises or other
rights and privileges will be affected by the consummation of the transactions
contemplated in the Transaction Documents.
2.19 List of Material Contracts and Commitments. Schedule 2.19 sets
forth a complete and accurate list of all material contracts to which the
Corporation is a party or by or to which any of its assets or properties is
bound or subject. As used in this Section 2.19, the phrase "material contract"
means and includes every material agreement or material understanding of any
kind, written or oral, which is legally enforceable by or against the
Corporation, and specifically includes (a) contracts and other agreements with
any current or former officer, director, employee, consultant or shareholder or
any partnership, corporation, joint venture or any other entity in which any
such person or entity has an interest; (b) agreements with any labor union or
association representing any employee; (c) contracts and other agreements for
the provision of services other than by employees of the Corporation with a
value in excess of twenty-five thousand dollars ($25,000.00); (d) bonds or other
security agreements provided by any party in connection with the business of the
Corporation; (e) contracts and other agreements for the sale of any of the
assets or properties of the Corporation other than in the ordinary course of
business or for the grant to any person or entity of any preferential rights to
purchase any of said assets or properties; (f) joint venture agreements relating
to the assets, properties or business of the Corporation or by or to which any
of its assets or properties are bound or subject; (g) contracts or other
agreements under which the Corporation agrees to indemnify any party, to share
tax liability of any party, or to refrain from competing with any party; (h) any
contracts or other agreements with regard to any indebtedness of the
Corporation; or (i) any other contract or other agreement whether or not made in
the ordinary course of business and involving the payment by or to the
Corporation of more than twenty-five thousand dollars ($25,000.00). The
Shareholders have delivered to the Acquirer true, correct and complete copies of
all such contracts, together with all modifications and supplements thereto.
Except as set forth on
9
Schedule 2.19, each of the contracts listed on Schedule 2.19 is in full force
and effect. The Corporation is not in breach of any of the material provisions
of any such contract, nor, to the knowledge of the Shareholders, is any other
party to any such contract in default thereunder, nor does any event or
condition exist which with notice or the passage of time or both would
constitute a default of a material provision thereunder, except for any such
breach or default that individually and in the aggregate would not have a
material adverse effect to the business of the Corporation. The Corporation has
performed in all material respects all obligations required to be performed by
it to date pursuant to each such contract.
2.20 Accounts Receivable. Schedule 2.20 sets forth a full and complete
list of the Corporation's accounts receivable as of October 31, 2000. Except as
set forth in Schedule 2.9, all accounts and notes receivable reflected on the
Corporation's balance sheets provided to the Acquirer, and all accounts and
notes receivable arising subsequent to the date of such balance sheets, have
arisen in the ordinary course of business and represent valid obligations owing
to the Corporation
2.21 Securities Acts. The Corporation and the Shareholders have
complied and will comply with all applicable federal or state securities laws in
connection with this transaction. Neither the Shareholders nor, to the
Shareholders' knowledge, anyone acting on their behalf has offered any of the
Shares, or similar securities, or solicited any offer to purchase any of such
securities, so as to bring this transaction within the scope of the registration
provisions of the Securities Act of 1933, as amended.
2.22 Insurance Coverage. Schedule 2.22 hereto contains an accurate
summary of the insurance policies currently maintained by the Corporation.
Except as described on Schedule 2.22, there are currently no claims pending
against the Corporation pursuant to any insurance policy currently in effect and
covering the property, the business or the employees of the Corporation. All
such policies (a) are in full force and effect and (b) are sufficient for
compliance by the Corporation with all requirements of all agreements to which
the Corporation is a party. The Corporation is not in default in any material
respect with respect to its obligations pursuant to any of such insurance
policies and has not received any notification of cancellation of any such
insurance policies.
2.23 Employee Matters. Except as set forth on Schedule 2.23, the
Corporation has in effect no other employment agreement, consulting agreement,
deferred compensation, pension or retirement agreement or arrangement, bonus,
incentive or profit-sharing plan or arrangement, or labor or collective
bargaining agreement, written or oral. The Shareholders have no knowledge that
any of the officers or other key employees of the Corporation presently intends
to terminate his or her employment. The Corporation is in compliance in all
material respects with all applicable laws and regulations relating to labor,
employment, fair employment practices, terms and conditions of employment, and
wages and hours. The Corporation is in material compliance with the terms of all
plans, programs and agreements listed on Schedule 2.23, and each such plan,
program or agreement is in compliance in all material respects with all of the
requirements and provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). No such plan or program has engaged in any
"prohibited transaction" as defined in Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code"), or has incurred any "accumulated funding
deficiency" as defined in Section 302 of ERISA, nor has any
10
reportable event as defined in Section 4043(b) of ERISA occurred with respect to
any such plan or program. With respect to each plan listed on Schedule 2.23, all
required filings, including all filings required to be made with the United
States Department of Labor and Internal Revenue Service, have been timely filed.
2.24 Suppliers and Customers. To the Shareholder's knowledge, the
relationships of the Corporation with its materially significant suppliers and
customers are good commercial working relationships and no supplier or customer
of material importance to the Corporation has canceled or otherwise terminated,
or to the Shareholders' knowledge, threatened to cancel or otherwise to
terminate its relationship with the Corporation, or has during the last twelve
(12) months decreased materially, or threatened to decrease or limit materially,
its services, supplies or materials for use by the Corporation or its usage or
purchase of the services or products of the Corporation except for normal
cyclical changes related to customers' businesses and except for changes which
have not had a material adverse effect on the Corporation. The Shareholders have
no knowledge that any such supplier or customer intends to cancel or otherwise
substantially modify its relationship with the Corporation or to decrease
materially or limit its services, supplies or materials to the Corporation, or
its usage or purchase of the services of the Corporation, and, to the knowledge
of the Shareholders, the communication of the transactions contemplated hereby
will not materially adversely affect the relationship of the Acquirer with any
such supplier or customer.
2.25 No Brokers or Finders. No person or entity has or will have, as a
result of the actions of the Shareholders any right, interest or claim against
or upon the Shareholders, the Corporation or the Acquirer for any commission,
fee or other compensation as a finder or broker arising from the transactions
contemplated by this Agreement.
2.26 Transactions with Insiders. Except as set forth on Schedule 2.26,
there are no loans, leases or other contracts between the Corporation and any
officer or director of the Corporation, or any person or entity owning five
percent (5%) or more of the total Shares of the Corporation, or any respective
family member or affiliate of such officer, director or shareholder.
2.27 Assumptions, Guarantees. The Corporation has not assumed,
guaranteed, endorsed or otherwise become directly or contingently liable on or
for any indebtedness of any other person or entity, except guarantees by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business. Schedule 2.27 is a complete
list of all guaranties by the Corporation.
2.28 Bank Accounts, Signing Authority, Powers of Attorney. Except as
set forth on Schedule 2.28, the Corporation has no account or safe deposit box
in any bank and no person or entity has any power, whether singly or jointly, to
sign any checks on behalf of the Corporation, to withdraw any money or other
property from any bank, brokerage or other account of the Corporation, or to act
pursuant to any power of attorney granted by the Corporation at any time for any
purpose.
11
2.29 Corporate Books. The minute books of the Corporation made
available to the Acquirer for inspection accurately record therein in all
material respects all actions taken by the Board of Directors and shareholders
of the Corporation.
2.30 Disclosures. Nothing in this Agreement, any Schedule or Exhibit to
this Agreement or the Unaudited Financial Statements contains any untrue
statement of material fact or omits to state any material fact necessary to make
the statements contained herein or therein not misleading.
ARTICLE III
THE SHAREHOLDERS' INVESTMENT AND OTHER REPRESENTATIONS
AND AGREEMENTS RELATING TO THE ACQUIRER'S SHARES
------------------------------------------------
3.1 Shareholders' Representations. Each Shareholder represents that his
present intention is to acquire the Acquirer's stock for his own account and
that the Acquirer's stock is being and will be acquired for the purpose of
investment and not with a view to distribution or resale thereof. Each
Shareholder represents that he has had an opportunity to ask questions of and
receive answers from the authorized representatives of the Acquirer and to
review any relevant documents and records concerning the business of the
Acquirer and the terms and conditions of this investment and that any such
questions have been answered to each Shareholder's full satisfaction. Each
Shareholder acknowledges that it has been called to his attention that this
investment involves a high degree of risk and that the Acquirer is in a start up
stage and does not have any operating history. Each Shareholder understands and
acknowledges that no federal or state agency has passed upon or made any
recommendation or endorsement with respect to the shares of the Acquirer being
sold to each Shareholder herein. Each Shareholder understands that the
Acquirer's stock has not been registered under the Securities Act of 1933, as
amended (the "Act") and that the Acquirer's stock must be held indefinitely
unless a subsequent disposition thereof is permitted under the Act or is exempt
from such registration. Each Shareholder further represents that he understands
and agrees that until transferred as herein provided, or transferred pursuant to
the provisions of Rule 144, all certificates evidencing the Acquirer's stock,
whether upon initial issuance or upon transfer thereof, shall bear a legend (and
the Acquirer will make a notation on its transfer books to such effect)
prominently stamped or printed thereon reading substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO DISTRIBUTION OR RESALE AND MAY NOT BE SOLD,
MORTGAGED, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS
12
AMENDED, OR UNLESS AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
3.2 Right of First Refusal. Until there is (i) a public offering of the
Acquirer's shares registered with the Securities and Exchange Commission on Form
S-1, or any comparable subsequent form, (ii) a sale of all or substantially all
of the assets or stock of the Acquirer if after such sale, management of the
Acquirer is not in effective control of the buyer of the assets or stock, or
(iii) if there is a change of control of the Acquirer of more than 50% in a
single transaction and after such change of control the management of the
Acquirer is not in effective control of the Acquirer, if any of the Shareholders
desire to sell any of the Acquirer's shares acquired by such Shareholder, the
Acquirer shall have a right of first refusal as hereinafter provided to purchase
any such shares which the Shareholder wishes to sell or transfer, except that
the Acquirer shall not have such right with respect to permitted transfers as
hereinafter provided. The right of first refusal as provided herein shall
require the Shareholder wishing to sell Acquirer's shares to give notice to the
Acquirer that it has an offer to buy any or all of the Acquirer's shares which
the Shareholder wishes to accept, and at the same time, the Shareholder giving
the notice shall provide to the Acquirer a copy of all reasonably required
documentation to substantiate such offer and the terms thereof (the "Offer
Terms"). The Acquirer shall have 30 days from the date of delivery of such
notice to purchase the shares that the Shareholder wishes to sell on terms no
less favorable than the Offer Terms. If the Acquirer does not purchase said
shares within said 30 days, paying cash in exchange therefor, the Shareholder
shall have the right to sell his shares in accordance with the Offer Terms,
provided, however, that if the Shareholder does not sell such shares pursuant to
the Offer Terms within 120 days following the expiration of the 30 day period
during which the Acquirer has its option to purchase, then the Shareholder shall
no longer have the right to sell the shares described in the offer, without
first complying with the provisions of this Section 3.2 such that if the
Shareholder thereafter wants to sell shares of the Acquirer, it must engage in
the same process. Permitted transfers as described herein are transfers made to
family members of the Shareholders or estate planning trusts or vehicles
established by any Shareholder for the benefit of his family.
3.3 Agreements Required in a Public Offering. Each Shareholder agrees
that upon request by any underwriter managing a public offering of shares of the
Acquirer, such Shareholder will agree to any lock up or other provisions
affecting the transferability of the Acquirer's shares owned by the Seller which
are usual and customary and generally imposed on other similarly situated
holders of shares of the Acquirer, taking into account the number and class of
shares and the relationship of each Shareholder to the Acquirer, and will
provide such underwriter and its counsel with such information with respect to
the Shareholder as is reasonably required to carry out such public offering.
3.4 Survival. The obligations of the Shareholders under this Article
III shall survive the Closing of the transactions contemplated hereby.
ARTICLE IV
13
REPRESENTATIONS AND WARRANTIES OF THE ACQUIRER
AND THE ACQUISITION SUB
-----------------------
4.1 Organization and Qualification. The Acquirer is a corporation duly
organized, validly existing and in corporate good standing in the State of
Delaware. The Acquisition Sub is a corporation duly organized, validly existing
and in corporate good standing in the Commonwealth of Massachusetts. At the
Closing, the outstanding Shares of the Acquirer's stock shall not exceed
6,000,000 shares out of the 15,000,000 shares of $.001 par value common stock
which is authorized. The Acquirer and the Acquisition Sub are duly qualified to
do business and are in good standing in all jurisdictions in which their
ownership of property or the character of their business requires such
qualification.
4.2 Authority. This Agreement has been duly authorized, executed and
delivered by each of the Acquirer and the Acquisition Sub and constitutes a
legal, valid and binding obligation of the Acquirer and the Acquisition Sub,
enforceable against them in accordance with its terms. The Acquirer and the
Acquisition Sub have the right, power and authority to enter into this Agreement
and to carry out the terms and provisions of this Agreement, and to enter into
and carry out the terms of all agreements and instruments required to be
delivered by the terms of this Agreement, without obtaining the consent of any
third parties or authorities.
4.3 No Conflicts. The execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby, and compliance with the
provisions hereof, will not: (a) violate, conflict with or result in a breach of
any provision or constitute a default under (i) the Certificate of Incorporation
or Bylaws of the Acquirer or the Articles of Organization or Bylaws of the
Acquisition Sub, or (ii) any contract or agreement to which the Acquirer or the
Acquisition Sub is a party or to which the assets or business of the Acquirer or
the Acquisition Sub may be subject; or (b) violate any judgment, ruling, order,
writ, injunction, award, decree, statute, law, ordinance, code, rule or
regulation of any court or foreign, federal, state, county or local government
or any other governmental, regulatory or administrative agency or authority
which is applicable to the assets, properties or business of the Acquirer or the
Acquisition Sub.
4.4 Governmental Authorities. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof do not require the permission of any
governmental authority.
4.5 Litigation. There are no outstanding judgments, rulings, orders,
writs, injunctions, awards or decrees of any court or any foreign, federal,
state, county or local government or any other governmental, regulatory or
administrative agency or authority or arbitral tribunal against or involving the
Acquirer or the Acquisition Sub, and neither the Acquirer nor the Acquisition
Sub is a party to, or, to the knowledge of either of them, threatened with, any
litigation or judicial, governmental, regulatory, administrative or arbitration
proceeding which, if decided adversely, (a) could have a material adverse effect
on the business of the Acquirer or the Acquisition Sub, or, (b) relate to the
transactions contemplated by this Agreement.
14
4.6 Capital. The Acquirer is engaging in a private placement to raise
up to One Million, Five Hundred Thousand ($1,500,000) Dollars for which it will
issue an amount of its common stock equal to the number of dollars invested
under the private placement. At the Closing, the Acquirer has raised at least
Five Hundred Thousand ($500,000) Dollars and has non-binding commitments for
another Five Hundred Thousand ($500,000) Dollars of investment under the private
placement.
ARTICLE V
CONDITIONS TO THE OBLIGATIONS
OF THE ACQUIRER AND THE ACQUISITION SUB AT THE CLOSING
------------------------------------------------------
The obligation of the Acquirer to purchase the Shares at the Closing is
subject to the fulfillment, or the waiver by the Acquirer, of each of the
following conditions on or before the Closing:
5.1 Accuracy of Representations and Warranties. Each representation and
warranty contained in Article II shall be true on and as of the Closing in all
material respects with the same effect as though such representation and
warranty had been made on and as of that date.
5.2 Performance. The Shareholders shall have performed and complied
with all agreements and conditions contained herein and required to be performed
or complied with by the Shareholders prior to or at the Closing.
5.3 Opinion of Counsel. The Acquirer and the Acquisition Sub shall have
received an opinion from ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Green, P.C., counsel for the
Shareholders, dated the date of the Closing and addressed to the Acquirer, in
substantially the form attached as Exhibit A hereto.
5.4 No Litigation. There shall be no action, suit, investigation or
proceeding pending, or to the knowledge of the Shareholders threatened, which
seeks to restrain, enjoin or prevent the consummation of the transactions
contemplated by this Agreement or which challenges the validity of, or seeks to
recover damages or to obtain other relief in connection with the transactions
contemplated by such agreements.
5.5 Instruments of Transfer. The Shareholders shall have delivered to
the Acquirer the Shares with good and sufficient instruments of transfer as
shall be necessary to vest in the Acquirer good, clear marketable title to the
Shares, free and clear of any liens, charges or encumbrances, together with the
complete books and records of the Corporation.
5.6 Tax Matters. The Corporation shall have delivered to the Acquirer
satisfactory evidence that all tax returns of the Corporation have been filed
with the Commonwealth of Massachusetts and the Internal Revenue Service and no
tax is due with respect to the Corporation.
15
5.7 Compliance Certificate. The Shareholders shall have delivered to
the Acquirer a certificate, dated the Closing Date, certifying to the
fulfillment of the conditions specified above in this Article V.
5.8 Employment Agreement. The Employment Agreements between each
Shareholder and the Acquirer shall be executed and delivered contemporaneous
with the Closing.
5.9 Closing Deliveries. The Acquirer shall have received at or prior
to Closing the following documents, instruments and certificates:
(a) a certificate of the Secretary of State of Massachusetts as
to the legal existence and good standing of Streamline in Massachusetts;
(b) a certificate of the Clerk or Assistant Clerk of Streamline
attesting to the incumbency of the Corporation's officers;
(c) the resignation of all of the directors of Streamline.
5.10 Other Matters. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to the Acquirer and its counsel, and the Acquirer and its
counsel shall have received all such originals or certified or other copies of
such documents as they may reasonably request at or prior to the Closing.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS
-------------------------------------------------
The obligations of the Shareholders to transfer, convey and deliver the
Shares at the Closing are subject to fulfillment, on or before the Closing Date,
of each of the following conditions:
6.1 Accuracy of Representations and Warranties. The representations and
warranties of the Acquirer contained in Article IV shall be true in all material
respects on and as of the date of the Closing with the same effect as though
such representations and warranties had been made on and as of that date.
6.2 Performance. The Acquirer shall have performed and complied with
all agreements and conditions contained herein to be performed or complied with
by the Acquirer prior to or at the Closing.
6.3 Opinion of Counsel. The Shareholders shall have received an opinion
from Cohan, Rasnick, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, counsel for the Acquirer, dated the
Closing Date and addressed to the Shareholders, in substantially the form
attached as Exhibit B hereto.
16
6.4 No Litigation. There shall be no action, suit, investigation or
proceeding pending, or to the knowledge of the Acquirer or the Acquisition Sub
threatened, which seeks to restrain, enjoin or prevent the consummation of the
transactions contemplated by this Agreement or which challenges the validity of,
or seeks to recover damages or to obtain other relief in connection with the
transactions contemplated by such agreements.
6.5 Employment Agreement. The Employment Agreements between each
Shareholder and the Acquirer shall be executed and delivered contemporaneous
with the Closing.
6.6 Compliance Certificate. The Acquirer shall have delivered to the
Shareholders a certificate, dated the Closing Date, certifying to the
fulfillment of the conditions specified above in this Article VI.
6.7 Closing Deliveries. The Shareholders shall have received at or
prior to Closing the following payments, documents, instruments and
certificates:
(a) the certificates representing the Bridgeline Shares duly
endorsed;
(b) payment of the cash portion of the Purchase Price by wire
transfer of immediately available funds;
(c) a certificate of the Secretary of State of Delaware as to the
legal existence and good standing of the Acquirer in Delaware;
(d) a certificate of the Secretary of State of Massachusetts as
to the legal existence and good standing of the Acquisition Sub;
(e) a certificate of the Secretary or Assistant Secretary of the
Acquirer and a certificate of the Clerk or Assistant Clerk of the Acquisition
Sub attesting to the incumbency of the officers of the Acquirer and the
Acquisition Sub and the authenticity of the resolutions authorizing the
transactions contemplated by this Agreement;
(f) appointment of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as a member of the Acquirer's
Board of Directors.
6.8 Other Matters. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to the Shareholders and their counsel, and the Shareholders
and their counsel shall have received all such originals or certified or other
copies of such documents as they may reasonably request at or prior to the
Closing.
ARTICLE VII
COVENANTS OF THE CORPORATION
----------------------------
17
The Corporation hereby covenants with the Acquirer and the Acquisition
Sub that until the Closing, the Corporation will perform all of its obligations
under this Agreement and comply with the representations and warranties set
forth herein, and without limiting the generality of the foregoing, the
following covenants shall remain in effect:
7.1 Legal Existence. The Corporation will maintain in full force and
effect its legal existence and comply in all material respects with all
applicable laws and regulations.
7.2 Payment of Taxes. The Corporation will pay and discharge all lawful
taxes, assessments and governmental charges or levies imposed upon its income or
profits, or upon any property belonging to the Corporation before the same shall
become in default, as well as all lawful claims for labor, materials and
supplies which, if not paid when due, might become a lien or charge upon the
assets of the Corporation or any part thereof; provided, however, that the
Corporation shall not be required to pay and discharge any such tax, assessment,
charge, levy or claim so long as the validity thereof shall be contested in good
faith by appropriate proceedings, and the Corporation shall pay such tax,
assessment, charge, levy or claim before the property subject thereto shall be
sold to satisfy any lien which has attached as security therefor.
7.3 Limitation on Liens. The Corporation will not create, incur, assume
or allow to be created, incurred or assumed, any pledge of, or any mortgage,
lien, charge or encumbrance of any kind on any of the assets of the Corporation.
7.4 Carrying on Business in the Ordinary Course. Until the Closing, the
Corporation will carry on its business in the ordinary course and will not take
any extraordinary or unusual action without the express written consent of the
Acquirer and the Acquisition Sub.
ARTICLE VIII
GENERAL RELEASE AND INDEMNIFICATIONS
------------------------------------
8.1 Shareholders' Releases. The Shareholders, effective at the Closing,
hereby release and discharge the Corporation from and against any and all
claims, demands and liabilities which they may have against the Corporation as
of the date of the Closing, and specifically agree to indemnify, defend and hold
the Corporation harmless against any and all obligations, debts, bills,
liabilities, causes of action and claims of every nature of the Shareholders
against the Corporation which accrue or have arisen prior to the date of the
Closing.
8.2 Shareholders' Indemnification. Subject to the overall limitations,
the minimum amounts and the time limitations set forth in Section 8.5, the
Shareholders agree to indemnify and hold harmless the Acquirer and the
Acquisition Sub to the fullest extent lawful, from and against any and all
actions, suits, claims, proceedings, costs, losses, damages, judgments, amounts
paid in settlement and reasonable expenses (including, without limitation,
reasonable attorneys' fees and disbursements) (hereinafter collectively referred
to as a "Loss" or "Losses") suffered or incurred by the Acquirer or the
Acquisition Sub to the extent relating to or arising out
18
of any inaccuracy in or breach, violation or nonobservance of the
representations or warranties made by the Shareholders herein.
8.3 Acquirer's Indemnification. Subject to the overall limitations,
the minimum amounts, and the time limitations set forth in Section 8.5, the
Acquirer agrees to indemnify and hold harmless the Shareholders, and each of
them, to the fullest extent lawful, from and against any and all actions, suits,
claims, proceedings, costs, losses, damages, judgments, amounts paid in
settlement and reasonable expenses (including, without limitation, reasonable
attorneys' fees and disbursements) (hereinafter collectively referred to as a
"Loss" or "Losses") suffered or incurred by any of the Shareholders to the
extent relating to or arising out of any inaccuracy in or breach, violation or
nonobservance of the representations or warranties made by the Acquirer or the
Acquisition Sub herein.
8.4 Third Party Claims. In the event that a party (the "Indemnitee")
desires to make a claim against another party (the "Indemnitor") hereunder in
connection with any action, suit, proceeding or demand at any time instituted
against or made upon the Indemnitee by any third party for which the Indemnitee
may seek indemnification hereunder (a "Third Party Claim"), the Indemnitee shall
promptly notify the Indemnitor of such Third Party Claim and of the Indemnitee's
claim of indemnification with respect thereto. The Indemnitor shall have thirty
(30) days after receipt of such notice to notify the Indemnitee if he has
elected to assume the defense of such Third Party Claim. If the Indemnitor
elects to assume the defense of such Third Party Claim, the Indemnitor shall be
entitled at his own expense to conduct and control the defense and settlement of
such Third Party Claim through counsel of his own choosing; provided that the
Indemnitee may participate in the defense of such Third Party Claim with his own
counsel at his own expense. If the Indemnitor fails to notify the Indemnitee
within thirty (30) days after receipt of the Indemnitee's notice of a Third
Party Claim, the Indemnitee shall be entitled to assume the defense of such
Third Party Claim at the expense of the Indemnitor, provided that the Indemnitee
may not settle any Third Party Claim without the Indemnitor's consent.
8.5 Limitations of Liability.
(a) No Indemnitor shall be required to indemnify an Indemnitee
hereunder except to the extent that the aggregate amount of Losses for which the
Indemnitee is otherwise entitled to indemnification exceeds $75,000 (the
"Minimum Amount") it being understood and agreed that the Minimum Amount is
intended as a deductible, and no Indemnitor shall be liable for any Losses less
than the Minimum Amount. Moreover, if any Losses exceed the Minimum Amount, an
Indemnitor shall be liable for such Losses only to the extent they exceed the
Minimum Amount, and not otherwise.
(b) Other than as set forth in Section 8.5 (c), the aggregate
Losses payable by the Indemnitors collectively with respect to all claims for
indemnification shall not exceed an amount equal to One Hundred and Eighty
Thousand ($180,000) Dollars.
(c) Notwithstanding Section 8.5(b) above, the aggregate Losses
payable by the Indemnitors collectively relating to or arising out of any
inaccuracy in or breach, violation or non-observance of the representations or
warranties made by the Shareholders in Sections 2.1
19
and 2.12 hereof shall not exceed an amount equal to Three Hundred Thousand
($300,000) Dollars.
(d) Notwithstanding the scheduling of items on Schedule 2.16, to
the extent that any claim is made for a matter set forth on Schedule 2.16, such
claim shall be indemnified by the Shareholders as if such claim were a Loss
under Section 8.2 above and subject to the Minimum Amount and time limitations
set forth in Section 8.5.
(e) To the extent claims for indemnification are made against the
Shareholders, the limitations set forth in subsections 8.5(a), (b), (c) and (d)
shall apply to the Shareholders collectively and not individually.
(f) No action or claim for Losses pursuant to this Article VIII
shall be brought or asserted after the relevant date referred to in Article IX
hereof (the "Rep Expiration Date").
(g) Acquirer and Shareholders acknowledge and agree that except
as to fraud their sole remedy against the other for any matter arising out of a
breach, violation or nonobservance of any representation or warranty contained
in this Agreement is set forth in this Article VIII, and that except to the
extent a party has asserted a claim for indemnification prior to the Rep
Expiration Date, neither party shall have any remedy against the other party for
any breach, violation or nonobservance of a representation or warranty made by
such other party in this Agreement. The parties acknowledge that this Section
8.5 has been negotiated fully by the Acquirer and Shareholders and that neither
party would have entered into this Agreement but for the inclusion of this
Section 8.5.
8.6 Expenses, Reimbursement. The Indemnitor promptly shall reimburse
the Indemnitee for all Losses constituting reasonable expenses (including
reasonable attorneys' fees and disbursements) as they are incurred in connection
with investigating, preparing to defend or defending any such action, suit,
claim or proceeding (including any inquiry or investigation) for which indemnity
is available under Section 8.2 or 8.3.
8.7 Notice. Each party shall provide written notice to the other of
any claim with respect to which it seeks indemnification promptly after the
discovery of any matters giving rise to a claim for indemnification, provided
that the failure of such party to give notice as provided herein shall not
relieve the Indemnitor of its obligations under this Article VIII, except if and
to the extent the Indemnitor has been materially prejudiced thereby.
8.8 Survival. Subject to the provisions of Article IX below, the
obligations of the Acquirer and the Shareholders under this Article VIII shall
survive the Closing of the transactions contemplated hereby.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
------------------------------------------
20
Except as provided herein, all agreements, representations and
warranties contained herein shall survive the execution and delivery of this
Agreement and the Closing of the transactions contemplated hereby for a period
commencing on the date of the Closing and ending on a date one year after the
date of the Closing, except that the representations set forth in Section 2.12
with respect to taxes shall survive until the expiration of the statute of
limitations relating to any applicable tax return referred to in such Section.
The agreements of each Shareholder under Article III shall survive the Closing
of the transactions.
ARTICLE X
TERMINATION
-----------
10.1 Termination by Mutual Written Consent. This Agreement may be
terminated and the transactions contemplated hereby abandoned, at any time prior
to the Closing Date by the written agreement of all of the parties hereto.
10.2 Termination for Breach. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned as of the Closing by a
non-breaching party without liability to the non-breaching party if the
conditions for its benefit set forth in Article V or Article VI, as the case may
be, have not been satisfied on or prior to the Closing, by delivery of written
notice of termination by the non-breaching party to the breaching party.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Cross Disclosure. Any matter disclosed on any of the Schedules
hereto shall be deemed to be disclosed on each other Schedule hereto relating to
such matters.
11.2 Parties in Interest. Except as otherwise set forth herein, all
covenants, agreements, representations, warranties and undertakings contained in
this Agreement shall be binding on and shall inure to the benefit of the
respective heirs, successors and assigns of the parties hereto (including
permitted transferees of any of the Shares). Except as may be required to be
disclosed by order of a court or otherwise required by law, the parties agree to
maintain in confidence the terms of the purchase of the Shares hereunder, except
that the parties hereto may disclose such terms to its accountants, lawyers,
bankers and advisors in the ordinary course. Except as otherwise specifically
provided herein, this Agreement shall not confer any rights or remedies upon any
person other than the parties hereto and their respective heirs, successors and
assigns.
11.3 Amendments and Waivers. Amendments or additions to this Agreement
may be made and compliance with any term, covenant, agreement, condition or
provision set forth herein may be omitted or waived (either generally or in a
particular instance and either retroactively or prospectively) upon the written
consent of the parties hereto. This Agreement (including the
21
Schedules and Exhibits annexed hereto, which are an integral part of this
Agreement) constitutes the full and complete agreement of the parties with
respect to the subject matter hereof.
11.4 Notices. All notices, requests, consents, reports and demands
shall be in writing and shall be hand delivered, sent by facsimile or other
electronic medium, or sent by Federal Express or other overnight courier service
providing proof of delivery, to the Acquirer or to the Shareholders at the
address set forth below or to such other address as may be furnished in writing
to the other parties hereto:
The Acquirer: Bridgeline Software, Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Cohan, Rasnick, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP ("CRMM")
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The Shareholders: The address set forth with respect to each of the
Shareholders in the Preamble of this Agreement.
With copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Green, P.C. ("EBG")
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
11.5 Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby, provided however that
reasonable legal and accounting expenses of the Shareholders shall be considered
expenses of the Corporation and shall be paid by the Corporation.
11.6 Severability. All agreements and covenants contained in this
Agreement are severable, and in the event that any of them shall be held to be
invalid or unenforceable by any court of competent jurisdiction, then this
Agreement shall be interpreted as if such invalid agreements or covenants were
not contained herein.
11.7 Counterparts. This Agreement and any exhibit hereto may be
executed in multiple counterparts, each of which shall constitute an original,
but all of which shall constitute but one and the same instrument. One or more
counterparts of this Agreement or any exhibit hereto may be delivered via
telecopier, with the intention that they shall have the same effect as an
original counterpart hereof.
11.8 Effect of Headings. The article and section headings herein are
for convenience only and shall not affect the construction or interpretation
hereof.
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11.9 Governing Law. This Agreement shall be deemed a contract made
under the laws of the Commonwealth of Massachusetts and together with the rights
and obligations of the parties hereunder, shall be construed under and governed
by the laws of such state.
11.10 Press Releases and Public Announcements. No party hereto shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the other party.
11.11 Post-Closing Tax Matters.
11.11.1 Assistance to Shareholders. The Acquirer agrees that
it will cooperate with the preparation of all tax returns of the Corporation for
the period up to the Closing Date. The Shareholders shall cause such tax returns
to be prepared, and agree that such tax returns shall be prepared in a manner
consistent with the Corporation's historical practices.
11.11.2 Access to Records. Until December 31, 2005, the
Acquirer agrees to permit the Shareholders, and their attorneys, accountants,
agents and designees, such access to, and right to copy, such Buyer Records as
the Shareholders, or any of them, may deem reasonably necessary or reasonably
desirable in connection with the defense of any litigation or the preparation of
any tax returns of any Shareholder. Any such examination and copying shall be at
the expense of the Shareholder seeking such examination, shall be performed at
the place where the Buyer Records are regularly maintained by the Acquirer and
shall not unreasonably interfere with the normal business activities of the
Acquirer. The Acquirer shall notify the Shareholders if at any time prior to
December 31, 2005 it intends to destroy any or all of the Buyer Records and the
Shareholders shall have the right to review and remove the Buyer Records at the
Shareholders' expense. As used in this Section 11.11.2, "Buyer Records" shall
mean all books, documents and records which are part of the Corporation and
relate to the period prior to the Closing Date, including accounting records,
correspondence, and other written materials.
11.12 Conflict Waiver. Following the Closing, EBG may continue to
represent the Shareholders with respect to any matter whatsoever, whether
related or unrelated to the transactions contemplated by this Agreement. In
amplification, and not in limitation, of the foregoing, EBG may continue to
represent the Shareholders in connection with any post-closing claims arising
pursuant to this Agreement or otherwise including, without limitation, any
claims arising pursuant to Article VIII hereof or under any of the Employment
Agreements referenced herein. The Acquirer hereby irrevocably waives any
conflict of interest claim that could arise as a result of the continuing legal
representation described above, notwithstanding the fact that EBG has, in the
past, provided legal services to the Corporation. The foregoing waiver is made
knowingly and voluntarily after the obtaining of advice of counsel with respect
to the same. As used herein, the term "EBG" means ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Green P.C.
and any individual attorneys who are members, partners or employees thereof (the
"Covered Lawyers"). The provisions of this Section 11.11 are intended for the
benefit of the Shareholders, and the Covered Lawyers, and the Covered Lawyers
are intended third party beneficiaries hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date written above.
BRIDGELINE SOFTWARE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
BRIDGELINE ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
SHAREHOLDERS
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
STREAMLINE COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
President
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INDEX
Exhibit A - Shareholders Counsel Legal Opinion
Exhibit B - Acquirer Counsel Legal Opinion
Shareholders Disclosure Schedules
25